Construction Law/Price adjustment


QUESTION: sir,after the completion of construction project which is based on pec standard bidding documents.audit has suggested to recalculate the weightages of elements(appendix-c) because initially these were calculated on engineer,s estimate and after completion of the project weightages must be recalculated using completion a result fixed portion will also change to keep the sum of fixed portion and weightages of elements equal to 1.00
My questions are :
a.Is it a practice to recalculate the weightages of elements?
b.can we change the fixed portion ?

ANSWER: Dear Muhammad Iqbal
Thanks for the question. I may say that the Audit always have novel ideas. The weightages given in Appendix is subject to change in accordance with Sub clause 70.1 (f) as reproduced here under:

(f) Weightages
The weightages for each of the factors of cost given in Appendix-C to Bid shall be adjusted if, in the opinion of the Engineer, they have been rendered unreasonable, unbalanced, or inapplicable as a result of varied or additional work executed or instructed under Clause 51. Such adjustment(s) shall have to be agreed in the variation order.

In principle the Audit may ask for such revision if it is in line with the above provision. The Engineer has to see whether the final quantities of work done are so different than those given in the BOQ and in the opinion of the Engineer the weightages have been rendered unreasonable, unbalanced, or inapplicable.

Now coming to your questions (a) No, it is not a practice to recalculate the weightages of the elements except in circumstances mentioned herein above and

(b) Normally not as this was the very basis for price adjustment agreed by both the parties.The fixed portion is normally computed based on the share of such items which are to be carried out in the initial phase of the project without involving any adjustment and generally comprise items relating to overhead expenses not expressed in BoQs but indirectly charged by the contractor. Adjusting this component will always give rise to disputes of complex nature and therefore it is always good to avoid such a situation.

I hope this answers your question.

Abdul Majid Khan  

---------- FOLLOW-UP ----------

QUESTION: Sir what is the limit of variation in quantities of work done and BOQ at completion of project to recalculate the weightages of elements ?          secondly if it is decided by the Engr. to recalculate the weightages then fixed portion will be changed to keep the sum equal to 1.00 ?

Dear Muhammad Iqbal

Thanks for the Followup question. Sorry for the late response but it was beyond my control as my email was hacked and then there was problem in receiving certain mails. I came to know of these questions when i saw the pending questions. I futue I will make it a practice to check pending questions regularly.

Coming to your question, the limit mentioned in FIDIC IV under sub clause 52.3 is 15% at the time of issuance of TOC. The Employer generally change it in Particular Condition to 20% to get more flexibility.

The answer to your second question is that it all depends on the Engineer how he looks at the situation. Generally the Engineer does not change the fixed portion percentage but if he is convinced or a party, the Employer or the Contractor substantiate in such a way the Engineer is convinced that the changes made to the Contract were such that the ratio of the cost of fix portion, which normally consists of costs which are incurred in the very early phase of the contract and the contractor's overheads and profits,with respect to the new cost of works has significantly varied from that when evaluated taking the contract amounts. If the Engineer will not change the fix portion, which he normally does not, then he will adjust the factors,

I hope this answers your question. You are welcomed for any clarifications.

Abdul Majid Khan  

Construction Law

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Abdul Majid Khan


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.


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.

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.

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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