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Construction Law/PINK BOOK FIDIC 2010


dear sir,

kindly expain with examples fixed rate items,fix portion for price adjustment and back up working for indexes and finally 12.3 a (iii) with example.

Dear Imran,
Thank you for your questions,
You have asked my comments on 4 points and so give my views on these as follows.

1.Fixed Rate Items:-
In my understanding these are the items in BOQ for which rates can not be varied subsequently. There is however no definition given in FIDIC for the term except mentioned in 12.3(a)(iv). It appear to have some resemblance with BOQ items for which no rate is mentioned therein.

2.Fix portion for price adjustment:-
The formula used in clause 13.8 has this portion as fixed portion which is meant to be not affected with the change of indices published by a statuary body in the country. In other words the Contractor is to cover this portion of the rate (such as overheads and profits) for the purposes of any escalation in this part as his risk.

3.back up working for indexes:-
Please note that i am not discussing weight-ages but indices shown in the formula to record ups and downs in its value from a base date.My discussion with statistical bureau officials indicate that it is based on that item cost given by different sources for a particular city  and then an average is found to record present price level of the item. This when compared with base line (which is given value of 100), provide new value of the indices on that scale.

4. Clause 12.3 with Example:-
The condition (i), (ii) and (iv) are fairly simple but i do agree that condition 3 needs to be explained for clarity as i have answered already this question at a number of places. To start with let me say that it indicate nothing more then that the criterion has been specified in order to avoid minor rate adjustments in rate by less than 1 % only. The quantity changes sometimes brings in additional costs or un-recouped overheads due to omission etc. There could be instances where methodology has been changed by the contractor to effect saving while actually carrying out the work as compared to his methodology considered in rate analysis at biding stage. The idea is that at the time of execution the actual rate of execution, if differ too much from quoted rate due to additional / varied work, thus may be compensated. I leave this here for you to come back if you still have any point of non-clarity. To put it simply, i will advise that the new rates to be applied is only to take care of the overheads that may have been improperly utilised. For example, the project overheads (particularly site and head office overheads) was scheduled to cover the scope of original priced quantities and if such scope is now being reduced, it means the overtime is lost on work not performed (where the effect is omission )and must be gained back by the contractor so as to put the contractor back to the position he anticipated or should have being while as expected while entering into the contract.
Liaqat Hayat.

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Liaqat Hayat


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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