You are here:

Construction Law/Pricing of variation orders

Advertisement


Question
Dear Mr. Elliot,
there is a work which is to be executed by our company, we didn't receive official variation order yet, but client has already requested the quotes. The Contract is FIDIC Harmonised Edition. We provided priced BoQ for the them, now the Client doesn't like our quotation and requests breakdown of the prices. My position is not to give any explanation and just inform them that they can find another contractor for this part of work because I don't intend to lower the prices and the BoQ is already detailed enough. Also the work which is to be executed based on variation affects the whole project and it is in our and Client's best interest to start it as fast as we can. My questions are:
1) Am I obliged to provide calculation for variation estimates?
2) Can Client force me to do the work at the prices I don't like?

Thank you in advance.
Regards,

Answer
Dear Roman,

Q 1. You are not obligated to provide detailed calculations to support your variation estimates but see Q 2.  

Q 2. The Employer can issue you an instruction which you must comply with, including stating his rates for the work.  If you disagree with his rates, you must submit a claim under clause 20.1  within 28 days of receipt of the instruction.  In the case that the Employer does not agree your claim and you go to DAB or Arbitration, you will have to justify your claim including detailed calculations of your rates, so you might as well release them now.  Remember that any rates must be within the logic of the Contract.  In accordance with clause 12.3, any new rates must be based on existing rates where possible.  If the work is the same as existing work, then you must use the same rates.  You cannot increase a rate to correct a mistake, nor can the Employer reduce a rate if he thinks that it is too high.  So your detailed calculations merely have to refer to existing rates where possible.  

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Peter M. Elliott

Expertise

First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

©2016 About.com. All rights reserved.