Construction Law/Sub-Clause 12.4 (omissions) of FIDIC 1999
Dear Mr. Liaqat
I have some queries about above mentioned sub-clause as follows:
1- an item is required to be omitted by the Employer while the Contractor has not yet started at all in execution of this item. It's apparently no cost has been incurred yet so according to sub-paragraph (a) no compensation entitled However, overhead (OH) is a part of cost (cost as far as I know consists of direct cost and indirect cost which is namely called overhead) .. i.e. is the Contractor is entitled to OH compensation against the share of the item omitted in the estimated OH of his tender offer?
2- Please refer to the clarification of this sub-clause in the Guide which gave an example of form work which has been already supplied by the Contractor prior omitting the item. The Guide says that the Contractor in this case is entitled to cost and profit. my question is why profit? cost and profit means the price quoted by the Contractor for this item. why do i have to pay the whole price of the item after omitting it whereas 12.4 says only cost???
Hope you understand what is confusing me in my mind Sir (as usual)
Thanks for your interesting question.
Very briefly put,We have to understand difference between "cost" and "Cost".The word cost means ordinary meaning assigned to it and that means this cost has normal meaning i.e. costs reasonably incurred in the expectation of carrying out work INCLUDING PROFIT which has now been omitted.On the other hand,Cost has a defined meaning in FIDIC contracts as costs without profit .SO HERE SINCE CLAUSE mentions cost instead of Cost,the profit is also payable.Let me know if it is clear?