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Construction Law/Price Adjustment (Escalation) on New items work done

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Question
Dear Sir,
Hope you are fine. i am working as Quantity Surveyor  in Pakistan 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(interim payment certificate).

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,

The Contractor is eligible for escalation for the Works as stipulated in the Contract, unless otherwise stated in the Addendum. However, since the Contractor base his new rates on prevailing market rates in 2012, escalation will be counted from such date of new rate analysis.

Best Regards

IRVALI

Construction Law

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ALI IRVALI

Expertise

FIDIC, Arbitration Procedures, Claim Management, Project Management.

Experience

I have experience of working at 6 countries in MENA region (algeria, Libya, Saudi Arabia, Oman, Pakistan)as the Regional Director and General Manager of a construction company. I have experience on various applications of FIDIC and construction law, arbitration procedures, claim management, project management.

Organizations
CEO of TURCON Construction presently. www.turcon.com.pk

Education/Credentials
M.S. Civil Engineer, Various Courses on Project Management, Seminars on FIDIC.

Past/Present Clients
National Highway Authorities of various countries, Water and Power Development Authorities, Karachi Port Trust, etc.

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