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Construction Law/MOS- Deductions for adv and retention -1999

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Question
Dear Sir,

We are following FIDIC 1999 and the contract is lumpsum for a building site.. Now the material on site has started and is applicable for 85% of the value of the material as per documents. Is deduction  for advance(25%) and retention ( 10 % )applicable for  Material on site .

Is deduction  for advance(25%) and retention ( 10 % )applicable for Variations also.

Thanks and regards,

Answer
As per FIDIC 1999;

Yes the material becomes part of Work Done and therefore subject to Advance.

However, if the same are subject to 10% retention is always a topic of argument in projects.


FIDIC 99; sc 14.3 , 14.9 and 19.6  can be referred.

Also refer to Sub Clause 14.3 excerpts below:

The Statement shall include the following items, as applicable, which shall be
expressed in the various currencies in which the Contract Price is payable, in the
sequence listed:
(a) the estimated contract value of the Works executed and the Contractor's
Documents produced up to the end of the month (including Variations but
excluding items described in sub-paragraphs (b) to (g) below);
(b) any amounts to be added and deducted for changes in legislation and
changes in cost, in accordance with Sub-Clause 13.7 [Adjustments for
Changes in Legislation] and Sub-Clause 13.8 [Adjustments for Changes in
Cost];
(c) any amount to be deducted for retention, calculated by applying the
percentage of retention stated in the Appendix to Tender to the total of the
above amounts , until the amount so retained by the Employer reaches the
limit of Retention Money (if any) stated in the Appendix to Tender;

In (c) it is clearly mentioned that Retention is applicable on "above amounts" only and "above amounts" do not have MOS. However the ambiguity is due to implied definition of "work executed" under Sub Clause 19.6....which includes "MOS" as part of Work Done...


Personally I do not consider retention due to sc 14.3 and also due to the fact that we are only paying 85% of Invoice value...

Hope this helps.






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