Construction Law/financial claim


Dear Sir,

We have lumbsum contract. And we have extension of time more than original contract duration. Fidic is part of our contract and the % of variations more than 15% . i wanna claim for increasing the contract value by amount proportionate to the inflation in my country which is 4% annually. the approved extension of time is 2 years. should i claim for amount of money equal to 1.04% or 1.08% of the original contract value.

Thanks alot

Dear Hosam,

Generally indexation for inflation is applied to the value of each IPC, rather than a general amount related to the annual inflation.  So you need to establish a base date and then work out the relative inflation month by month.  It would seem unrealistic to claim for inflation for the whole of the Contract Price for the whole of the extended contract period, so the inflation would apply to the value of work done during the extension period only.  

If your method were to be applied, then the figure would be 1.04x1.04 or 1.0816, as the interest should be calculated on a compound basis, not a simple basis.  However, I would go for the monthly calculation.  

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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)
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.Romanian Proverb 2002
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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
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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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