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Construction Law/PINK BOOK FIDIC 2010

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Question
DEAR SIR,


THANK YOU FOR MY QUESTION OF DAB .BUT HOW I RATE ON YOUR PROFILE I HAVE THREE QUESTIONS FOR YOU FOR RESPONSE

SIR HOW WE PROPOSE THE RATE PROVISIONALLY AS PER CLAUSE 12.3 OR VARIATION CLAUSE 13.3.
HOW TO AMORTIZATION DEDUCTION FROM RUNNING BILLS
CLARIFY THE CLAUSE 12.3 a (I),(II),(III) AND IV AND ALSO 12.3 B (I),(II),(III) IN DETAILS

Answer
Dear Imran,

Thanks for the question and welcome again. When allexpert.com send my answer to you, they also ask you to rate the Expert at the end of the answer. This is important for the Expert to know whether the questioner was satisfied with his answer by looking at the rating given to him. Further you can go through the FAQs given on the page or you can send an email at my mailing address given at the end of this answer.

Now coming to your new question. This is not one but a combination of three questions. I would request you to further elaborate your second question regarding Amortization deduction with certain example or with reference to a situation or clause. The answers to the first and third questions are as under:

As explained in the clause 12.3, "the appropriate rate or price for the item shall be the rate or price specified for such item in the Contract or, if there is no such item, specified for similar works". This means that if such rate is available and the engineer understands that such a rate is applicable, then the Engineer may after making necessary adjustments which he deems fit, will agree to the rate or price. In case there are no such rates, but if the Engineer understands that it can be derived from any rate available in the Contract, then he will try to derive it and agree it with the contractor before himself agreeing to it or recommending it to the Employer for approval, if any required under the Contract. In case none of the above options are available, then the Engineer will determine a rate or price based on his analysis of a reasonable cost of such item keeping in view the market prices of such items. This exercise may take longer to determine, therefore till such time, the Engineer may propose a provisional rate on which payment should be made provisionally for the work. Upon determining the final rate with the agreement of the parties, adjustment will be made in the contractor payments due. I may here add that the Engineer would have some good estimation about the reasonable rate for such item by that time. However, Engineer, while determining a provisional rate, should keep in mind that such rate be reasonably less than the rate he is going to agree or determine in future as, generally speaking, the contractors assume that the rate to be finally agreed would be more than the provisional rate as no body would like a deduction from his monies due in any future payments.

Clause 12.3 (a) (i) to (iv) are applicable when there is a substantial variation in the quantities mentioned in the BOQs or Schedules and a new rate is determined if these conditions are met.

(i) It is simple and means that the quantities actually measured are more by 25% of that item mentioned in the BOQ or Schedule. This is the first condition to determine a new rate for the item.

(ii) The increase or decrease in quantity is computed and multiplied with the rate in BOQ or Schedule and the answer is compared with the Accepted Contract Price, as defined in the Contract. Then if it is found to be in excess of 0.25% of the Accepted Contract Price, the new rate will be determined.   

(iii) this means that the cost of this item is divided by the measured quantity and the new cost of work is determined. For example suppose that the original quantity was 1000 units and the cost was Rs.100,000, then the cost of work was Rs. 100 which was also the BOQ rate. Now suppose the actual measured quantity is 1100 units, then the cost per unit of this item comes to be 100000/1100= Rs. 90.91. This new cost per unit is compared with the BOQ rate and if the variation is in excess of 1%, then the new rate will be determined. and finally

(iv) that this item of work is otherwise nowhere described in the Contract as a fixed item rate which is self explanatory.

 Now the conditions for new rate of a variation item are described under 12.3 (b) as under

(i) and (ii) are self explanatory, stating that the new item be included in the variation order under Clause 13 and that no item rate for such item is available in the BOQ or Schedules.

(iii) It states that no item in the BOQ or Schedule is considered appropriate for the new item because of the character or conditions under which the new item is executed. In this case, the procedure mentioned in third para of this answer will be adopted.

I hope this answers your question. I will request you to kindly send more detail as required above for your question # 2 enabling me to answer it.

Abdul Majid Khan
email gandapur49@yahoo.com

Construction Law

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Abdul Majid Khan

Expertise

I am interested in questions related to time Extension, Liquidated Damages,variations, price adjustments,payments, disputes and Dispute Board under FIDIC IV, FIDIC 1999 and FIDIC 2006 Harmonized Documents.

Experience

I have been heading the Construction Management Division and Contract Divisions of National Engineering Services Pakistan (PVT) Limited, NESPAK, the largest Consulting Engineering Firm in Pakistan, for more than seven years and two years respectively. I have also worked as "The Engineer" on a number of projects. I have been working in Saudi Arabia for about seven years on a road projects. Additionally I worked as Arbitrator and am member of few Dispute Boards in individual capacity on Asian Development Bank funded projects.

Organizations
Inland and in Middle East. I have worked with National Engineering Services Pakistan (Pvt) Limited (NESPAK)as my Employer for more than 27 years in Pakistan. In Saudi Arabia I worked for Rashid Engineering, Consulting Engineers during 80s. After retirement I provided advisory services to NESPAK on technical and contractual matters to its various divisions and lately I was appointed as Advisor to Managing Director NESPAK on Technical and Contractual matters. Currently I work as Free Lance Contract Specialist on Fidic Form of Contracts.

Education/Credentials
I am a graduate with a B.E (Civil Engineering) degree. My year of graduation is 1970.

Awards and Honors
A few appreciation Letters and Honorariums during my service in NESPAK. I remained member of Administrative Committee and Board of Management of NESPAK. I had been part of the Management Committee in the absence of Managing Director.

Past/Present Clients
Most of the Clients used to be Government Departments, Corporations and Authorities. In Saudi Arabia the Client was Ministry of Communications. As Arbitrator and Dispute Board (DB) member, I provide services to various Government Departments and Contractors.

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