Construction Law/FIDIC 2010

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Question
QUESTION: Clause 13.1 Variations, how should a consultant fix rate for new item not included in BOQ. How to apply price adjustment once the rate is fixed.
Should the fixing of rate should be based on present day rate and price adjustment calculated based on the present day base index or the rate should be fixed based on base rate 28 days prior to contract submission and the price adjustment calculated accordingly as for other items in BOQ

ANSWER: Dear Madan

My apologies for delayed response; mainly due to busy schedule during Diwali and travelling etc.

If BoQ or any other Schedules forming part of the Contract do not stipulate a similar rate; the analysis will be made as per prevaing market rates for all resources.

In such situations when similar items do not exist in BoQs; mostly the Engineer will refer to the closest item within the Contract else current market rate will be applied.

Hope this helps else please put up a follow-up question with more details.

Thanks

Manish


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

QUESTION: Happy Diwali (although belated).Thank you very much for your response.

We will fix rate for new items based on prevailing market rate. If the work for this item continues for more than a year, price adjustment  will be applicable. In that case we will have to calculate price adjustment separately for this item as the price adjustment for other item will be based on indices prior to 28 days of bid submission. Do you agree with what i understand?

Answer
Dear Madan
Here, are you are discussing about escalation?. In such case, Price adjustment formulae are always provided in FIDIC forms (See Scl 13.8)

The use of such formula will primarily depend on the interpretation of such Clause in General and particular conditions. Some of the variables in such formulae refers to base period or current period.

In case of argument you may refer to the approved programme wherein planned purchase of that particular item will be refrenced. The price index prevailing during that time might be considered.

To discuss furter you may send me the specific details of your case in question.

Thanks

Manish

Construction Law

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Manish Gupta

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I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.

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7 Years with Contractors 12 plus Years with Owners & Consultants

Organizations
Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

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MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

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