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Construction Law/Price Adjustment under FIDIC 1999-RED Book


Dear Sir,
I am working on FIDC 1999 based MDB Conditions of Contract. Our Contract Specify 60% amount to be adjusted under sub-clause 13.8. THe BoQ contains a bill on General Items which includes Insurances that are paid as a lumpsum item at the start of the Contract. Is there any price adjustment for such lumpsum items like Insurances?
In this sub-clause, it is stated that Pn to be applied on Contract Value, Please also explain that which of the amounts to be considered in "Contract Value"?

Umer Shabbir

Dear Shabbir sh.
Thank your for your question.
Regarding your first point, I am not clear if insurance as  lump sump item is a part of 60 percent amount? I am also not clear about the provisions in the contract due to which you feel that there is no adjustment possible for this item. In my views there is no  such hindrance and may considered as part of 60 % amount unless negated somewhere in the contract directly or indirectly.
Regarding second point, i am inclined to include 60 % amount in the contract value. Lastly it is bit strange to have such 60 % amount condition in this way. There is a formula for price adjustment and the first item is A which should have been 0.4 and rest of the indices to make 0.6 balance. This is the normal way. Can you explain why this approach has been adopted?
Liaqat Hayat

Construction Law

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Liaqat Hayat


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" .

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