Construction Law/Re rating

Advertisement


Question
QUESTION: Power of The Engineer to Fix the Rate.
"Provided 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 2 percent of the contract price, and actual quantity of work executed under the item exceeds or falls short of the quantity set out in bill of quantities by more than 30 percent."
My question is that if any item rate revised under this clause by the engineer than, (1) The revised shall be applicable on total quantity or (2) shall be applied on increased quantity from BOQ quantity or (3) shall be applied on increased quantity from BOQ+30 percent quantity.

ANSWER: Dear Farrukh sahib,
Thanks you for the question so frequently asked in this forum .I will sum up my views very briefly as follows.
(a)If the amount of individual item (based on varied quantity) accounts for less than 2 percent of the contract amount, no change in BOQ rates upto the limit of BOQ plus 30 percent of BOQ original  quantity .
(b)If the referred amount of the individual item is more than 2 percent and varied quantity is also more than BOQ+30 percent of  original BOQ quantity,the newly derived rate will be applicable on the quantity beyond original BOQ multiplied by 1.30  only as before this limit  it is covered by (a) above.
(c)As above
With best wishes and happy Eid
Regards-liaqat hayat


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

QUESTION: An item's quantity was increased by BOQ 40% of quantity and 4% impact on contract amount and its rate was revised by the Engineer under clause 52.2. upto VO#1.
Later on measurements up to next VO#2 this quantity more increased from VO#1 100% and its cost impact on BOQ amount is 10%.
Now question is that:-
a)May it rate revise again?
b)if, then the Application of rates respectively on BOQ, VO#1 and VO#2?

Answer
Dear Farrukh sahib,
Thanks you for the question and like to respond as follows.
I like to first explain how clause 51 and 52 FIDIC 1987 operate in general with respect to variation resulting from quantity and cost variations with time. Very briefly speaking, cl. 51 enable the Engineer to instruct the variation in the 6 scenarios mentioned therein the referred clause followed by its valuation under cl.52.1 to the contract price, based on direct BOQ rates or derived rates with issuance of variation order accordingly. The cl. 52.2, however, reviews existing BOQ rates if they are rendered inappropriate and unworkable after varied items have been instructed and re-fixed a suitable rate. Finally cl. 52.3 over review the whole scenario of as-built work cost plus varied items instructed by  comparing with original contract cost and decides to add or subtract a certain sum on the basis of final amounts exceeding plus minus 15% of the original value.This way the clause 51 & 52 reviews the final contract values from 3 angles.
Now coming to your question, you can analyze your scenario in this background. I am not very clear with the 2 questions you asked for but generally speaking Engineer can re-rate as per provisions in the contract as many times as required and is then finally re-adjusted/corrected at substantial completion stage under the provision of cl.52.3. This is so as the effective contract price at substantial completion stage includes varied items valued under cl. 52.1 and 52.2.
I hope i have answered your question and if not please come back with specific query.
WIth Best wishes
Liaqat Hayat

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Liaqat Hayat

Expertise

I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

©2016 About.com. All rights reserved.