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Construction Law/Escalation on New items Workdone

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Question
Dear Sir,
        Hope you are fine. i am working as QS and facing problem regarding escalation.Bid of our project was approved for civil works in 2007. According to tender documents contractor is entitled for escalation on labor and diesel on the total work done of an IPC.

After 5 years in 2012 Electrical BoQs were revised. An addendum were also included in the revision of Electrical BoQs. All items in addendum were new items and contractor was submitted rate analysis of these items on the prevailing market rates.
  

Revised Electrical BoQs were included as addendum in electrical works in the original BoQs and were approved on May 05, 2012 by the competent authority. In the revised electrical BoQs, the contractor submitted rate analysis on the prevailing market rates with revised electrical BoQs and consultant also verified the same. As the addendum items were based on the prevailing market rates which are not tender rates.

1.the question is can contractor eligible for escalation claim on the addendum items work done ?

2. if contractor eligible for escalation on addendum items work done which base rate applies(base rate at the time of tender 2007 or base rate at the time of approval of addendum 2012)?
Best Regards,
Syed Afzaal Shah.

Answer
Dear Syed Afzaal Shah Sahib,

Thank you for your question and like to respond on two questions raised as follows:

1.   In principle, YES he is as the rates pertain to 2012 for the addendum items. In Public Sector jobs, once the additional items rates are approved they normally do not like to change them even for valid reason as the new rates agreed in 2012 should be valid for at least 06 months or so. Also this matter can be reviewed under Clause-52.2 if these are varied items and Engineer is entitled to review them if these become unworkable rates. So both ways new rates can be considered in principle but you have to have a detailed discussion with the Engineer first and may even go for dispute resolution on the matter through Clause-67.

2.   I will consider and prefer base rate at the time of approval of Addendum 2012.

Regards,
Liaqat Hayat  

Construction Law

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Liaqat Hayat

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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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