Construction Law/inflation

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Question
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

Answer
Dear Sir,
The Contractor takes the risk of the price within the time for completion. During the extension of time the price should follow the market prices - not only the inflation. You may want to use the escalation formula from the Sub-clause 13.8 (FIDIC 1999 Red Book Contract) or other escalation formula which the industry is using in the country of the Contract. For sure using only the inflation you will get a lower price than the market would determine.
Hope it helps.
Best regards,
Alina

Construction Law

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Alina Valentina Oprea

Expertise

I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.

Experience

Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on www.alinaoprea.com

Organizations
Dispute Resolution Board Foundation

Publications
see http://alinaoprea.com/publications/ ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Education/Credentials
Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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