Construction Law/Variation order after taking over certificate.
I am currently work on a ADB project in Pakistan. The contract document is based on FIDIC Multilateral Development Bank Harmonised Edition June 2010. During the execution of the project the scope of the work has been changed and quantities of BOQ Items are abnormally increased / decreased. We have submitting our variation order # 2 with a financial impact of 8.62% above before fifteen days of completion date. During checking of the variation order the project was completed and substantial completion/taking over certificate was issued by the employer.
Now the Resident Engineer of Consultant says that after issuing of taking over certificate, we can not process the case of variation order # 2, and order us to submit an IPC with actual workdone of varied items , and says that they would withheld the quantities of all the increased item and release us the remaining amount of quantities which are within the BOQ , after this we have to submit statement at completion having all detail of wordone and they process the case of statement at completion.
My question is that what is the hindress for not processing a Variation order after issuance of substantial completion certificate, the amount of varied items i.e. 8.62% of contract cost is released after the approval of variation order. so approval of variation order is to much essential for us because now a days we are facing some financial troubles.
What is the actual procedure according to the fidic mentioned above for releasing the amount of varied items after issuance of substantial completion / taking over certificate.
Some guidelines in this regards was highly be appreciated.
Thanks & Regards.
Hamid Naveed Ahmad.
Dear Hamid Naveed,
Thank you for your question.
My general approach on the issue will be as follows and let me see if this serve your purpose.
Basically when taking over certificate has been issued, it means work is complete in all respect including all variations that may have been instructed during the course and hence it will not be appropriate to issue a variation order once defect liability period (DLP) has commenced. After all it is a contract between two parties and as such an amendment can be agreed if there are special circumstances making it compulsory to review and agree new arrangement due to the prevailing circumstances. You have of-course have to keep other aspects including financial implications involve as well. Half of the security deposit is normally linked with issuance of taking over certificate and you have to see how it effects your case. With this, i feel you have my general approach on the matter and we can discuss further if needed.