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Construction Law/Claim for Loss of Profit for deduction of PC sum value


Hi Mr.peter,

I read most of your Answers and explanations and interest to convey my question for you.

The contract is based on 1981 ,3rd Edition of FIDIC and the main contract is Re measure contract.In the Prime cost sums, which describe some of Specialist contracts which can be happen and the Amount given by Client as 100 million.

The said Prime cost sum, decreased half(50 million) of the intial value then, can the contractor claim for Loss of profit? The PC sum value being reduced not because of default of client or contractor and it because of the market prices are gone down than the anticipated in tender stage.

There are few works which was in PC sums and later converted to Direct works.I assume those are payable for loss of profit..But for other works i need ur advice ??

If you can provide me case examples i would be appreciate to you..


Dear Pradeep,

I do not have a copy of FIDIC 3 with me so I will deal with this query in a general manner.  

You do not mention the total value of the Contract, nor the currency, so I have no idea of the relative value between the Prime Cost Sums and the Accepted Contract Sum.  Normally, Prime Cost sums are less than 1% of the Accepted Contract Sum, so any loss of profit would be less than 0.1% of the Contract, so the amount involved could be very small, relatively.  There is no certainty that Prime Cost Sums will be spent and thus they are often excluded from the Accepted Contract Sum for calculation of Bonds and Retentions, until ordered.  Generally, there is an item for overhead and profit connected with Prime Cost Sums.  I doubt that you would have grounds for recovery of loss of profit, but it depends on the exact wording in the Contract.  

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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
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
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
Match your presentation to the reader!
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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