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Construction Law/Source of Base Price for Price Adjustment


AFIDIC ssalam O Alikum Sir!

I am working at an irrigation project at DIK PK executed under EPC FIDIC 1999. We have Price ajustment clause as per PEC documents. It is like direct reimbursement in Base rate and Current Rate. In contract documents source of Base Price for Structural Steel is mentioned as "Metropolitian Steel KHI". We hired a sublet contractor for gates of regulatory strs who used steel items from different souces to manufacture the gates. The Employer has no objection on the quality of gates and ALL realted tests are OK. He paid amount of Gates But the Employer is not approving Price adjustment on gates on the plea that Contracor used steel items from different sources say Mughal steel, Pak steel, Khan hardwre etc and failed to provide Invoice of Metropolitian Steel. We told him that Selection of Brand  is our choice as long as the material has passed ALL related testing. He has not to impose any Brand on us. Plz further note that in our contract source of base price for cement is DG cement but we used Lucky cement and the Employer paid price adjustment on invoices of Lucky cement. At that time he did not raise any objection while approving adjustment in price adjustment of cement. But for steel gates at end of project, he is not accepting the same logic and saying that you purchased steel from many souces and I have to approve a lot of sources of steel and I have to face an Audit para for approving so many souces of steel. So I am not approving any source except Metropolitian. Plz guide us. With many thanx. M Ishaq Bhatti

Dear Bhatti sh.
Thank you for your question.I like to comment as follows.
I used Metropolitan steel on national assembly construction as PM of contractors MLC in 1976 and was surprised to find same name here also.As for as I remember, we did get rebar from many resources including metropolitan of karachi.You can't stick to one manufacturer for a mega project but it has to be strictly tested to the  same standards and also you should have valid and convincing reasons to convince the Engineer on this account but it not because you are saving some money only.Same is true for cement also please.I feel ultimately end up in a dispute under clause 20.1
Regards-liaqat hayat  

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Liaqat Hayat


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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