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Construction Law/12.3 Evaluation new unit price


The following is from our Contract;
Except as otherwise stated in the Contract, the Engineer shall proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine the Contract Price by evaluating each item of work, applying the measurement agreed or determined in accordance with the above Sub-Clauses 12.1 and 12.2 and the appropriate rate or price for the item.
For each item of work, the appropriate rate or price for the item shall be the rate or price specified for such item in the Contract or, if there is no such item, specified for similar work. However, a new rate or price shall be appropriate for an item of work if:
(a) or:
(i) the measured quantity of the item is changed by more than 25% from the quantity of this item in the Bill of Quantities or other Schedule,
(ii) this change in quantity multiplied by such specified rate for this item exceeds 0.25% of the Accepted Contract Amount,
(iii) this change in quantity directly changes the Cost per unit quantity of this item by more than 1%, and
(iv) this item is not specified in the Contract as a ―fixed rate item‖;

* there is an increase in some measured units done by the Engineer; is these increases require new (lower) unit price?
* can this be applied to all increases of more than 25%?
* what is the criteria to define new unit price, if any?
* if new price is defined; is it applied to all payments for this unit or only for those after 25% increase?
* can you give a guidance to comment on these items (i) - (iv)of 12.3.

Dear selim,

Remember that all four criteria must be fulfilled.  It is a case of AND, not either or, so a 25% increase alone is insufficient.  For increased/reduced quantities, it is important to consider over/under recovery of overheads.

New prices are calculated from existing similar rates, (excavate trench 1 m wide as a basis for excavate a trench 1.5 m wide) or market rates if there are no similar items.  

The common sense principle is that new rates apply to incomplete work, so that work that is complete prior to the notice of extra work are paid at the old rate.  Some team work is need to reach an agreement.

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Peter M. Elliott


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 before submitting a question.


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.
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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
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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')

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

B Sc(Hons) in Civil Engineering

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