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Construction Law/Origin of Price Adjustment Formula


Dear Sir,
I am doing my MS Thesis on price adjustment formula. I am not finding any literature regarding the history and origin of this formula. Also please guide me regarding the advantages & disadvantages of this formula. And if you could recommend any book or document which can help me getting a bit more on the topic.

I shall be very grateful to you.


Kamran from Islamabad.

Dear Kamran Hafeez,
Thank you for your question.
There are not vary many documentation available on the subject of price adjustment but to start with i would suggest that you go through provisions made on this account in Pakistan Engineering Council(PEC) standard document "Standard form of Bidding document" downloadable from the website After its study, you will have certain questions and that we can discuss online at / on my cell number: 0333-5610760 as you are from Islamabad. Another immediate source is FIDIC website with its FAQs etc. Let me state here that price adjustment clause is basically a FIDIC clause and has been taken from there by PEC. Regarding your question regarding necessity of this clause, i may give you a very simple answer that it means uncertainty of price variation for the contract period and hence they will fill up very high rates. The general principle in construction is that risk distribution should be such that it falls on a party which is in the best position to take it. With this small note, I wish you good luck and happy studies. I am also happy that there are institutions in Pakistan now which can deal with and teach contract to new Engineers.
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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