Construction Law/Price adjustment


Muhammad Iqbal wrote at 2014-03-21 16:56:41
AOA. SIR I HOPE U LL BE FINE BY THE GRACE OF ALLAH.if any other adjustable item(s) is not used in a particular billing period then the ratio of current date price and base date price for that particular adjustable item(s) shall be considered as one.I VE QUOTED IT FROM PEC DOCUMENTS. IS IT MATHEMATICALLY CORRECT ? IS THIS PRACTICE BEING ADOPTED INTERNATIONALLY ?

Abdul Majid Khan wrote at 2014-05-13 15:44:53
Dear Iqbal

My point of view is that the formula given in PEC document is used to compute the Adjustment factor Pn. For this purpose only a few item are selected to be used in the formula which represent all the other items. This is why this formula is independent of the fact whether certain item appears in that monthly statement or not. The formula does not compute the adjustment of prices of certain item but computes the adjustment factor which in turn gets multiplied with the total work done during the month. This work done includes also those items which even does not appear in the list adjustable items.

Nowhere in the PEC document you will find the novel idea of taking the factor unity when a specified material is not used. If you make an exercise taking this assumption, you will end up with a loss to the contractor if the prices are increasing and to the Employer if the prices are reducing. I myself have done this exercise by taking four months where steel is not used and six months where steel is used. If you take proper weightages for steel in this example you will end up with result I described above.  

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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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