Construction Industry/clause 52.2 fidic 4th edition
The contract is the FIDIC 4th edition 1987 reprinted 1988 and 1992.
The particular condition for clause 52.2 is ‘’ provide further that no change in the rate or price for any item contained in the contract shall be considered unless such item accounts for an amount more than two (02) percent of the contract price, and the actual quantity of work executed under the item exceeds or falls short of the quantity set out in the bills of approximate quantities by more than 30 percent ‘’.
1st question about the above - for the limit of 2 percent is it for the contract amount or for the (contract quantity plus the exceeded quantity) time the contract item price.
2nd question: as I understand, in case of new price , this should be applied to only the extra quantity over than 30% ( example if the exta quantity is 70% , the new price will be applied for the 40% , for the initial contract quantity and the 30% extra we apply the initial contract price) . IS THIS RIGHT?
3rd question : in order to calculate the new unit price for this extra quantity (40%) , could you please give me some reasons which can justify the escalation of the price?.
For me , the new price should be justified by any prejudice due to the escalation of the quantity, and/or to any prejudice in the initial price(omissions, escalation in material prices and labor rates…).
For examples :
- the fact, the contract is fixed prices , is it possible to use updated prices for materials and new rates for labors and equipments ?
- In case , the contractor has forgotten any article in his initial price break down , is it possible to include it for the estimation of the new rate? As example the price of concrete is including the mixing , but the contractor has forgotten the rate for the concrete mix plant in the initial cost break down .
- In case of omission of any item in the initial cost break down, is it possible to include it for the calculation of the new price.
I would like to inform you that , for the calculation of the new price I need to use the initial cost break down of the contract price , to which I proceed by corrections according to the above reasons.
thank you Mr Femi
I am extremely sorry for replying you late.
Now to your question no 1, the clause stated two condition which must be satisfied before there could be any change in contract rates for items in the Contract BOQ. The first conditions is that
- the item(s) which the rate could be reviewed upwards or downwards must have accounted for 2percent of the contract price in terms of amount (monetary sum) and not quantity. The second condition is that - the item(s) concern must have been varied (variation by instruction), upwards or downwards in excess of the 30per cent of the original quantity.
Your calculation of the quantity that the new rate will be applied is correct. The new rate would be applicable to the quantity over the 30 per cent threshold. Just as you have calculated it.
Thirdly, the manner in which the new rate is to be calculated must be substantiated. One of the reason is that, If the price of materials or Labour or plants or utilities have fluctuated (up /down) when compared with what it was as at the time of entering into the contract. The basis of such fluctuation could be supported with inflation index or any other statutory supporting documents and not invoice or receipts except where such receipts shown the cost effect being the direct result of the varied quantities. For example, if a concrete mix company has a price list for bulk order of -between 10,000m3 - 20,000m3, rate will be $115/m3 and between 25,000m3 - 40,000m3 has a rate of $100/m3. if the contractor by making bulk order for ready mix concrete is getting the concrete supplied at (say) $100 / cubic metres for the bulk order of 35,000cubic meter of concrete. If an additional quantity of 15,000cubic metre of concrete is added to the works and the contractor can show that, because the additional quantity I not up to 25,000 - 40,0000 cubic meter, the rate of $100/m3 will not be applicable but instead, the rate will be $115/m3. Then, it could be a basis to consider the change in rate as a result of the change in cost of materials caused by the additional quantities.
Equally, the contractor cannot profit from any omission or error for which he is responsible for. It is assumed under contract principle that, he has retained the risk for such error an or commission when the contract was signed and His consent to such error is understood that, appropriate provision has been made for compensation and as such, it is no more to be seen as error or omission but as a waiver. Except such error is obvious and both parties or one of the parties to the contract can prove that the error was not intended or contemplated nor was it understood to have been adequately waived by any risk factor or allowance included under the contract.
I hope I am clear enough.