Construction Law/Price Adjustment


Dear Peter
In our Contract, Price adjustment is admissible for Labour, Diesel & Miscellaneous expenditure and a total 35% is accounted for that; while balance 65% is fixed.
As an example, formula for adjustment is: W x {0.15 x (Li Lo)/Lo + 0.05 x (Fi Fo)/Fo + 0.15 x (MIi MIo)/MIo }

where W= Total Value of Work done during the month.

Please advise, whether, W should include Over head & Profit and VAT & Tax OR Not.

Dear Biswas,

Generally W is the net value of the IPO for the relevant month, after deductions for retentions and return of advance payments.  If the IPC, i.e. the rates used in calculating the IPC, includes for Over head & Profit and VAT & Tax, then W includes for them; if not, then not.

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Peter M. Elliott


First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol before submitting a question.


Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
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I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
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The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

B Sc(Hons) in Civil Engineering

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