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Construction Law/Retention money & Inflation


Hello Mr. Femi Alofe,

I served as a contractor for a Spanish company authorized to implement foreign works in the Gambia on behalf of Spanish Government grants to Government of the Gambia.
I completed all the civil works without a hitch. I was paid in Gambia's currency (Dalasi) by the local Spanish Expat supervisor. Now that I am about to get my retention payment from Spain after a year of defect liability period, I feel like I am being taken advantage of by them. When the 5% retention was being deducted during the course of the contract, the exchange rate was 1 euro = 37.5 dalasis to 1 euro = 38 dalasis....Sadly the exchange rate as we speak now is 1 euro = 42 dalasis. There are dire economic situations and inflationary pressures in the Gambia right now.

After I handed over the project they closed shop and went back to Spain.  I request for them to pay me the rate of the last retention deduction (1=38). The Spanish insist on paying me in euros based on the current exchange rate of today instead of the rate during the contract deductions period....Consequently I stand to lose 2% to 3% of my money.
QUESTIONS: Are they right for doing this?
         Does F.I.D.I.C. or any European  engineering /construction organisation support my point of view in adjusting for inflation?
         What other measures and instrument can I use?
I hope to receive your profession advice
Thank you

Dear Musa,

Thank you for your question and apology for the lateness in responding. I was actually away from my base on a special assignment.

I can understand that your question bothers on the currency exchange and fluctuations that has affected the value of the retention on your contract, and if this is the case, i would like you to know that usually, FIDIC contracts or most commonly used international standard form of contracts have provisions for the currency of the contract and this must be adhered to by both parties at any time while the contract subsists. You would need to check your contract terms and see what currency was included to be used under the contract and if there is any deviation from this, then, you will have a valid ground to seek a recourse.

For example, in FIDIC 1999 Yellow book clause 14.7 is very clear that the currency for the contract shall be stated under the contract; similarly, FIDIC RED book 1987/1992 clauses 71 & 72 also gave hint on indication of currency to be used for the contract and how it could be regulated in terms of fluctuation. In either cases, these currency could be stated under condition of particular application or rather, it could have been worded directly in the contract. You may need to check. Now, if you do not have such provision, it would actually be difficult to challenge your contract administrators as it would be treated that the contract is silent on such, and as such, fair decisions shall take preeminence which would definitely not be too far from what they have done to you by paying at current existing exchange rates.

Hope this clears your doubts?


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Femi Alofe


I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts


Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

1. AACEI RP on Estimating, 2010

1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

Past/Present Clients
1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar

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