Expert: Emilian TRAISTA - 8/14/2009

Question
My question is;

 * The original contract price was for $216 million, the final value of all workdone, taking into account works executed as per original scheduled BoQ $175 million and all variation orders $113 million, resulted $288 million. Now because of the increase of $72 million which is 33% above original contract price, the Contractor is demanding to adjust the finial contract price under Clause 52.3 by refixing the rates.

 * Variations were issued for additional works based on existing BoQ rates and market/new rates were adopted where BoQ items not existed plus 40% of estimated variations included in order to enhance the overhead because of the difficult site conditions. That construed rerating under Clause 52.2.

 * Inflation cost separately dealt with Clause 70, Change in Cost and Legislation, and were not included in the above mentioned costs.

 * EOTs were also allowed for the completion of work even LDs waived off.

 * DLC has also been issued.

 Now please let me know wether the contractor will be compensated by increasing the overhead or a sum will be decreased by reducing overhead for the amount above 15% of the contract price under Clause 52.3.

 Thanks
 Jawaid


Answer
Dear Jawaid,

You have here a good subject for a Quantity Surveyor Examination.

I trust you don't expect a short-sharp answer to a rather complicate issue.

In an attempt to find a correct answer to your question we may start a private dialogue in discussing the subject.

Yours faithfully,
Emilian