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Construction Law/Price Adjustment during EoT

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Question
Dear Alina,

My original contract period is 2 years and i was entitled 1 years time extension due to the events attributtable the Engineer. The contract is unit price under FIDIC MDB Harmonized 2006. Price adjustment was included in the provision of the Contract but only for major items and the items were already indicated in the Contract.

I have question regarding price adjustment/escalation for minor items during EOT period. In my opinion as minor items were not included in main price adjustment calculation, than in theory i could claim the escalation on these.Even though they were fixed price for the original contract period I assume the contract does not state that they are fixed thereafter. In valuation of the unit rates for minor items the Contractor covered the possible price esclation within its unit rates merely during original contract period.    

I need your opinion and how the FIDIC rules regarding price adjustment for minor items during EoT.

Warm regards,
Feri

Answer
Hi, Feri,
The Contractor has the risk of his own prices/offer for the original contract period.
Normally, the price adjustment applies to all the items. In your Contract it was an exception, that the Contarctor knew at the Tender time, and put his prices accordingly.
When EOT is granted, this means that the Engineer (as per your case) or the Employer caused the delay, and the Contractor is not obliged to maintain his prices any longer, especially if the Contractor demonstrates that the (market) conditions foreseen for the original contract period are different than the ones within the EOT period. It may help, also, if the applicable law has provisions for price adjustment (for all the items, of course), but this is only an extra help - the basic principle is within the General Condition of Contract.
Hope this gives you an idea about how to deal with this situation.
Best regards,
Alina

Construction Law

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Alina Valentina Oprea

Expertise

I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.

Experience

Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on www.alinaoprea.com

Organizations
Dispute Resolution Board Foundation

Publications
see http://alinaoprea.com/publications/ ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Education/Credentials
Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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