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Construction Law/Fidic 1987 - variations - Loss of Profit of Omitted work

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Question
Dear Mr Elliott,

I am currently working in highway infrastructure project in Cyprus and we seem to have a situation/issue with the engineer. Our contract is a translated version of the Fidic 1987 red book. Our situation is as follows:

-During tendering we priced for 2500m of 1000mm concrete pipes for drainage works.
-Without any variation order we constructed only 1400m as was our requirement found in the drawings. There was a not so clear mistake in the BOQ.
-The engineer claims this was simply a mistake and not a variation order entitling us to a new rate.

Questions:

1. What actually constitutes a variation under Fidic 1987? If quantities increase or decrease substantially without a variation order does this constitute a variation?
2. How can we use clauses 51 and 52 in this instance?
3. If clauses 51 and 52 do not apply how can we proceed?
4. Can the contractor claim for a loss of profit on omitted work and how can this be calculated and presented? (Please elaborate on this)


Thank you for your time

Answer
Dear Adonis,

1. Variations are defined by clause 51.1.  Cause 51.2 states :-

"Provided that no instruction shall be required for increase or decrease in the quantity of any work where such increase or decrease is not the result of an instruction given under this Clause, but is the result of the quantities exceeding or being less than those stated in the Bill of Quantities."  

Thus a variation order is not needed if the original measurement was incorrect.  

2. Only clause 52.3 applies, but you must wait until the Taking Over Certificate is issued before issuing a claim.  Any loss of profit or reduced overhead recovery is recovered through a new rate for the pipes.  You might include part of the cost of a new factory for pipes.

3. See answer 2

4. See answer 2.  

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Peter M. Elliott

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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 www.eotprotocol.com before submitting a question.

Experience

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)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
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
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
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')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

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