Construction Law/Indexation

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Question
QUESTION: BoQ was written in 2010 and the project expired in June 2012 which was the clients fault in delaying the project.The contractor is supposed to apply for indexation. what indices should he used for the application. Theres no table of adjustment data in the appendix to tender.

ANSWER: Dear Jerry
Hello
Your question is not quite clear,regarding the matter of claim. I am trying my self to understand the quastion.You are asking for the "Adjustments for Changes in Cost" during the period of delay due to fault of the Client.
“table of adjustment data” means the completed table of adjustment data for local and foreign currencies included ie Schedules. If there is no such table of adjustment data, the Clause for"Adjustments for Changes in Cost" shall not apply. Your claim will be for an Extension of time for completion will be applicable only.
I hope this will help to you.
With best regards
Sanjay Khandelwal


---------- FOLLOW-UP ----------

QUESTION: Thanks you.
please lets forget about the clause for now.See we are supervising a project which ended in July but there is a lot more to do,and is not the Contractors fault. The client has agreed to give price indexation,so I need an overview of the indices and how they should be applied.
please me is very urgent.

best regards
Jerry

Answer
Dear Jerry
hello
The formulae shall be of the following general type:

Pn = a + b Ln/Lo + c En/Eo + d Mn/Mo + ......
         
Where

“Pn” is the adjustment multiplier to be applied to the estimated contract value in the relevant currency of the work carried out in period “n”, this period being a month unless otherwise stated in the Contract Data;

“a” is a fixed coefficient, stated in the relevant table of adjustment data, representing the non-adjustable portion in contractual payments;

“b”, “c”, “d”, … are coefficients representing the estimated proportion of each cost element related to the execution of the Works, as stated in the relevant table of adjustment data; such tabulated cost elements may be indicative of resources such as labour, equipment and materials;

“Ln”, “En”, “Mn”, … are the current cost indices or reference prices for period “n”, expressed in the relevant currency of payment, each of which is applicable to the relevant tabulated cost element on the date 49 days prior to the last day of the period (to which the particular Payment Certificate relates); and

“Lo”, “Eo”, “Mo”, … are the base cost indices or reference prices, expressed in the relevant currency of payment, each of which is applicable to the relevant tabulated cost element on the Base Date.

The cost indices or reference prices stated in the table of adjustment data shall be used. If their source is in doubt, it shall be determined by the Engineer. For this purpose, reference shall be made to the values of the indices at stated dates for the purposes of clarification of the source; although these dates (and thus these values) may not correspond to the base cost indices.

In cases where the "currency of index” is not the relevant currency of payment, each index shall be converted into the relevant currency of payment at the selling rate, established by the central bank of the Country, of this relevant currency on the above date for which the index is required to be applicable.

Until such time as each current cost index is available, the Engineer shall determine a provisional index for the issue of Interim Payment Certificates. When a current cost index is available, the adjustment shall be recalculated accordingly.

If the Contractor fails to complete the Works within the Time for Completion, adjustment of prices thereafter shall be made using either (i) each index or price applicable on the date 49 days prior to the expiry of the Time for Completion of the Works, or (ii) the current index or price: whichever is more favorable to the Employer.

The weightings (coefficients) for each of the factors of cost stated in the table(s) of adjustment data shall only be adjusted if they have been rendered unreasonable, unbalanced or inapplicable, as a result of Variations.
I hope this will help you.
With best regards
Sanjay Khandelwal

Construction Law

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Sanjay Khandelwal

Expertise

I can answer related to the various construction contracts forms related with disputes and claims.Expertise in to evalute the extension of time,cost and profit claims.I can answer regarding the contract management in civil works.

Experience

I have the experience of construction industry, as a consultants,executor of construction activities of infrastructure development like road and buildings. I have the experience of various software related to design of highways and quantity evaluation.

Organizations
I am life member of Indian Road Congress,INDIA I am presently employed with M/s Lion Engineering Consultants,INDIA

Education/Credentials
My educational qualifications are as below: I am engineering graduate from MITS, INDIA,1987 I have completed my Post graduation from NIT,INDIA,2011

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