Construction Law/conflit about employer's instruction for change in caracteristics and improvment of works
Could you please answer my query?
I’ m the Resident Engineer for a Road project.
The contract is the FIDIC fourth edition 1987 reprinted 1988 and 1992.
In the basic design, the wearing for the road is:
- Asphalt concrete hot mix (thickness 5 cm) for the carriage way (7 meter width). Unit price A
- Single seal coat for shoulders (1.50 meter width for both sides). Unit price B.
Total width of the road is 10 meter.
The contract was established according to the above data.
At the start of the project, the Employer requested an asphalt concrete hot mix for the whole road width ‘’carriage way and shoulders’’ ( 10 meter width).
According to clause 52.1 and in my opinion, I don’t see any prejudice on the works of this task , the fact we use the material asphalt concrete hot mix for which the unit price is price A and the works for carriage way and shoulders are done in one go.
Our proposal was to pay the works with the contract price A , and in case, the whole quantity exceeds by more than 30% the contract quantity the contractor has the right to claim a new price for the quantities over 130%.( according to the particular condition added to clause 52.2 of the FIDIC- This particular condition is ‘’ provided further that no change in the rate or price for any item contained in the contract shall be considered unless such item accounts for an amount more than two (2) percent of the contract price and the actual quantity of work executed under this item exceeds or falls short of the quantity set out in the bills of approximate quantities by more than 30 percent’’.
The contractor refuses the employer instruction and stops asphalt works and claims a new price for shoulders. The contractor arguments his decision, saying the contract price A is too low.
According to this , could you please advice what could be the required decision?.
Based on the given details my clarification is as follows:
it is the case of clarity over the owner's right to vary.
The contractor has NO right to stop the work in protest to the engineer's instruction to vary. At the worst case he may proceed with the works as per the existing contract and later try to claim for the additional quantities (on shoulder area) at an escalated price as it was done on two different occasions and that resulted in additional plant and machinery expenses. In your case, the instruction has been given at the start of the project. So, that argument could not be entertained by owner / Engineer.
As per your particular conditions, the contractor would be eligible for rate escalation ONLY if the two conditions are satisfied:
1.The overall contract price should vary by 2% and
2.The individual line item increase / decrease by more than 30% (omission of complete line item will not be counted here)
When the contractor realizes that he has under quoted for any item, this is what they do normally. His argument that his rate a is too low could not be and need not be encouraged at this time.
the correct decision to this situation is, the engineer shall issue a determination confirming the above stand and notify the contractor that any delay already accrued / likely to occur in future on this pretext shall be attributable to contractor only.
I hope your question is answered