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Construction Law/TOC date and Price Adjustment on Punch List Items

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QUESTION: Assalam 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 of difference in Base Price and Current Price as per quantity consumed. The Employer is WAPDA and Works are almost completed and process of TOC is underway. There are some items like a few Km gravel road, boundary pillars, distance markers, sign borads, signals, dowels at some places, operator's huts etc which are under execution while canals have been operated and water is being utilized by farmers. My first question is

(1) what shall be the date of TOC. It will be the start of releasing water in canals or (ii)it will be the date when all works mentioned above will be completed actually at site. or (iii)it shall be the date when canals runs at full capacity for some period and then inspected jointly and declared that no major damages observed?

(2)  If TOC is issued while some items mentioned above remains under execution in DLP; then Price Adjustment shall be payable for Basic materials mentioned in contract & used in completing those punch list items or Price Adjustment is not payable after TOC for materials and manpower used in completing punch list items?

ANSWER: Dear Bhatti sahib,
Thank you for the question.
I have following comments to offer on two questions raised
1.A trial operation on completion is a pre-requisite for taking over a canal project involving hydraulic considerations under clause 10 of fidic EPC format.So TOC is to be given on completion of these tests i.e. when canals run at full capacity and no damage observed.I am not clear if contractor has met  notice requirement of 14 day  when works are completed in his views ? If the ancillary works mentioned do not constitute any hindrance to operation activities by joint agreement,it can be possibly reviewed as a seperate section as envisaged in  clause 10.2
2.The price adjustment has to be in line with provisions in contract's particular conditions.In case not clarified there,punch list items do not qualify for price adjustment after TOC in my opinion (as long as it is not for something for which employer is responsible directly or indirectly)
With best wishes,
Liaqat Hayat  

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

QUESTION: Assalam O Alikum Dear Sir!

Thanx a lot dear sir!

Your answer for Price Adjustment after TOC date is not clear. Kindly explain a little more. Sir, say TOC is issued w.e.f 30 Nov 2014, and the Contractor completes the punch list items upto 28 Feb 2015. He may use diesel, manpower and other items for which Price Adjustment was payable in the Contract for punch list items. My question is he will be paid Price Adjustmt as per fixed rate of Oct 2014, or as per month of utilizing say, Dec'14, Jan'15 and Feb '15,or he will not be paid at all.

I think as per FIDIC and PEC document of Price Adjustment under clause "Price Adjustment after completion date" if works not completed in valid contract period, them Price adjustment shall be paid at a fixed rate of last month of Contract Finish Date or the corresponding period of utilization of items which is more favourable to the Employer. So, as per this concept, we shall be paid Price adjustment as per Oct 2014 rate.

Answer
Dear mr. Bhatti
PEC provide as "--until date of completion of the works shall be made using either the indices or prices relating to the prescribed time for completion or current indices or prices,whichever is more favourable to the employer provided eot is granted as per clause 44 ---" and is it provided in your contract? That is in line with your views but i have given my views in general and on the basis of assumption that PEC regulation are not a part of your contract as is  normal with fidic 1999 based documents.Time extension is normally given for excusable delays and is  mostly attributable to client's liability and hence adjustment is valid in such cases.This is what i meant by my bracketted sentence .Hope it is clear now
Regards-liaqat hayat

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Liaqat Hayat

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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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