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Construction Law/Negative variation exceeding 15% of contract value


we are using FIDIC 87 in a road project. the project was awarded at 20 million. after completion the actual quantities resulted in a payment of 12 million. the questions are;

(1) what is the contractor entitled to claim for in this situation
(2) which clauses are applicable in this case
(3) considering 20 million and 12 million we have a difference of 40%. is the contractor entitled to be paid 25% which remains when you subtract the 15%

Dear Simon Motai,

1. The Contractor can claim for loss of profit, site and general overhead recovery due to the reduced income beyond the 15%.  The Contractor is expected to allow for a variation of 15% in the Contract Price.  
2. Clause 52.3 is the relevant clause in this case.  
3. The Contractor is not entitled to the 25% which remains unspent, but only the loss of profit, site and general overheads.

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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.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
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
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
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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