Construction Law/FIDIC 2010

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Question
DEAR SIR,

KINDLY EXPLAIN FOR CLAUSE 12.3 EVALUATION IN DETAIL SPECIALLY PART A(I) TO (IV) AND B (1) TO (III).

SPECIALLY THE CLAUSE 12.3 A PART (III)

Answer
Dear Mr. Imran,
Thank you for your question and have following to say to clarify the subject matter as much as is possible.
1.   Let us study this with an example with use of clause 12.3 evaluation in general specially Part A (i) to (iv) and then b (i) to (iii). Let us assume that following items are proposed by the contractor for appropriate new rate as per the such a provision in the contract agreement.

BOQ     BOQ        Executed   Percentage      Percentage   
item    QTY.       QTY.       Change          value change of contract value
DBM     16242      9819       39.54          24.51
BC      9148       5619       38.57          17.64
M-15    2065       978        52.61          2.16          

2.   Now let us see how to evaluate in general under Clause 12.3 for this scenario.
This Sub-Clause opens with a basic statement that ‘the Engineer shall proceed in accordance with Sub-Clause 3.5 (“Determination”) to agree or determine the Contract Price by evaluating each item of work applying the measurement by the appropriate rate or price specified in the Contract. However, a new rate or price is appropriate for an item of work if:’
(a)   
(i)…………
(ii)………..
(iii)………
(iv)………
         Or
(b)
(i)………..
(ii)……….
(iii)………
‘Each new rate or price shall be derived from …………………………………………………………… The Engineer shall determine interim rates and prices pending a final agreement.’

Recommending the new rate is by paying the actual cost of executing the work using the actual project overheads related to the value of the original scope prior to the omission as indicated by executed quantities in the table shown above. This means that overhead calculated earlier were as per whole quantities as per original schedule of work and have now to be spread it over the reduced re-measured quantities. It then means, the overhead on the project will be calculated per the whole quantities in the original scope and now spread it over the reduced re-measured quantities. The result will then vary the rate per unit of the reduced quantity.
Now if the omitted works or non executed works is as a result of an instruction of the Engineer, in such a case, the provision of clause 12.4 applies. The loss or the cost of incurred sums of 12.4 (a), (b) & (c) would be calculated in part or all from (a) to (c) as may be suffered by the Contractor.
With this I now leave it to you now to raise specific question still requiring clarity.
Regards,
Liaqat Hayat

Construction Law

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Liaqat Hayat

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I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

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