You are here:

# Construction Law/"Fixed rate Items" according to the FIDIC 1999 and onward.

Sisira Kumaragamage wrote at 2016-07-30 17:50:53
There is an implied maxim underpinning the FIDIC conditions of contracts. That is neither party should suffer undue disadvantage and neither party should gain an undue advantage. Paragraph 12.3 is one of the strongest areas that is supported by this maxim.

12.3 does not give authority to Engineer to determine a new rate on his own judgment where he thinks the three conditions are satisfied. He should rather discuss and “negotiate” the case with the contractor and the employer.

I take this example. Say, that the BOQ requires that 10 cubic meters of rock to be removed from a proposed road pavement. In this case the contractor calculates the unit rate by taking into account the transport of a drill and excavator from his depot that is located 100 km from the site, say 400 dollars for both ways, daily rate of equipment 200 dollars per day, and local hire of a truck, say 100 dollars per day.  This gives the unit rate of 400+200+100/10 + 10% profit = 77 dollars per cm. If the volume of the rock proved to be only 7 cm or 13 cm, them it seems that the change of volume is not substantial hit on the large BOQ. In these circumstances the original rate is 77 is applied.

However, if the new geo tech investigations revealed that there is another area of rock to be removed of around 2000 cm, is it reasonable for the contractor to claim 77 per cum? In such a case the new calculation of rate could be governed by the daily output of the equipment. If the excavator’s output per day is 20 Cum, and the truck may be hired every other day, the unit rate may be reduced to 18-20 dollars per cum. It is the engineer’s role to prepare the case for both parties, to be used during negotiation.

Does the new rate is applied for whole amount or only for the increased amount?

Well, this depends on the circumstances. If the variation was informed to the contractor “after” the performance of initial work, then the new rate is only for the increase. If on the other hand, if the contractor was given the notice of the increase of the volume and the new calculation of the rate, before the performance of initial work, then the new rate is applied for whole amount.

In another example, let’s assume the BOQ requires supply and installation of 40 air condition unites. The rate quoted was 500 dollars per unit. Units were imported from China by the contractor. Imagine after the work is completed, employer and the Engineer decide to increase the number of air conditioners to 41 at the same rate…? Is the contractor bound by the direction of the Engineer?

#### Femi Alofe

##### Expertise

I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts

##### Experience

Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

Organizations
1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

Publications
1. AACEI RP on Estimating, 2010

Education/Credentials
1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

Past/Present Clients
1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar