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Construction Law/New rate under FIDIC 2002 red book

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Question
Dear Florin Neculescu
Hello
In one of the FIDIC red book 2002 agreement , The one BOQ item of construction of cement concrete drains is included in BOQ wrongly the quantities are very much less than required to execute at site as per drawings (unit of quantity denoted as meter in place of Kms in the BOQ).The contractor has qouted the rate at very much higher side and the BOQ item is not satisfying the conditions of Sub clause 12.3 of FIDIC red book 2002 for new rate of the BOQ item.The drawings and specifications are on priority of Scedule of items(BOQ) in the contract.
1. Please clarify that;If the contractor has executed the work as per drawings which is very much more than BOQ. Then contractor is asking for the payment as per qouted rates.
a.   Whether contractor has the right to ask the payment on the basis of of qouted rates or not?
b.   Engineer has denied to pay the amount and ask to the contractor for new rates of the Item. Action of Engineer is correct or not as per the provisions of FIDIC documents as the item is not satisfying the provisions of sub clause 12.3 of contract agreement.
The provisions are;
"Any item of work included in the Bill of Quantities for which no rate or price was specified shall be considered as included in other rates and prices in the Bill of Quantities and will not be paid for separately.

However, a new rate or price shall be appropriate for an item of work if:
(a)    (i)    the measured quantity of the item is changed by more than 25% from the quantity of this item in the Bill of Quantities or other Schedule,
      (ii)    this change in quantity multiplied by such specified rate for this item exceeds 0.25% of the Accepted Contract Amount,
      (iii)  this change in quantity directly changes the Cost per unit quantity of this item by more than 1%, and
      (iv)   this item is not specified in the Contract as a “fixed rate item”;"
Thanks in advance

SANJAY

Answer
Hello Sanjay,


Thank you for your question.

I understand you have an existing item, with a corresponding unit rate in the BoQs, except for whatever reasons, BoQs at tendering times shown a far lower quantity - my answer is based on that understanding.

The payment principle of the Red Book is re-measurement, i.e. Contractor is paid for as much as they work.

If the situation would have been opposite, i.e. quantities in original BoQs would have been far higher than executed ones, you would have only paid the executed quantities, at contracted unit rate (unless conditions in 12.3 would have been met).

Thus, just as similarly, you should pay as much as executed, at contracted unit rate.

New unit rates are to be determined/ agreed in two situations:

- when there is a new item, not existing in the original BoQs, which I understand it is not your case, or

- when quantities are varying up or down, as described in Sub-Clause 12.3, which you mentioned.

Since pre-conditions for the second option are not met, you can not re-negotiate a new unit rate for that existing item.

You indicate that "drawings and specifications are on priority of Schedule of items(BOQ) in the contract". Correct! That means the Contractor is obliged to execute as described in the drawings and specifications, not as in the BoQs.

And quantities are re-measured as per Clause 12 and Payment is made as per Clause 14.

As such, Contractor is entitled to ask and receive such payment and if I were you (I understand you are the Employer), I would draw the Engineer's attention to read more carefully the Contract and keep you away from trouble.

I shall make no further comments on their service, but such advice may lead straight to claims, disputes, delays, extra costs, etc.

Trust that answer your query, but if there is any detail I misunderstood, please come back with clarifications and will gladly further develop my answer.

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Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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