Construction Law/conflit about employer's instruction for change in caracteristics and improvment of works.
QUESTION: Dear Mrs,
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?.
ANSWER: Dear Sir,
Since the request/instruction to modify came after signing the contract, this should be subject of a variation.
Regarding the unit price, please pay attention to the fact that the addition in your Particular Conditions imposes a cumulative condition: "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’’. So, both conditions shall be fulfilled to be entitled to a change in rate.
Also, you may be aware that the clause 2.5 states that the Contractor shall comply with the instructions of the Engineer, therefore the contractor cannot refuse to comply.
In case you have a disagreement regarding the price of the variation, you have the contractual mechanism involving the claims to deal with this issue.
Hope it helps.
---------- FOLLOW-UP ----------
QUESTION: "Dear Mrs
Thank you for the answer.
The unique prejudice raised by the contractor is the contract price of asphalt hot mix which is too low. ME, THE enginner i know this but according to clause 52.2 the contractor has not the right to claim new price.
now, the contractor refuses to resume works on the asphalt layer right the acceptance of the new price. is there any possible compromise for the interest of the project?
The price of the asphalt hot mix is low because this way the Contractor put it in his BoQ, I presume - was someone else that fix in any way this price?
If this price was put by the Contractor and it is too low and the Contract, through the conditions mentioned before does not entitle the Contractor to have new prices, then these conditions were accepted by the Contractor when putting his offer and signing the Contract: low price for the asphalt hot mix , that can be changes only if the above mentioned conditions are fulfilled. And they are not. So, no contractual entitlement.
But in a Contract it is always room for discussions and negotiations. Maybe the Employer wants the works to be ready faster, or some other modifications, and when agreeing these also a new possible price for the asphalt hot mix could be agreed, as part of the overall negotiations. In the interest of the project, as you said.
Hope this helps.