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Construction Law/Suspension-Price escalation


Dear Sir,

A prolonged suspension had taken place during which time a clear direction was not issued from the Engineer.
Further, it is also a known fact that the contract period for the subject project had lapsed at the time an instruction to recommence/resume was received.

1.Does this bring change in the execution of the contract? By the way, the contract is FIDIC 1987, 4TH EDITION.
2.   The Contract has price escalation provision.

2.1   Would there be any additional costs that would be incurred due to the time element to the tune of the amount not covered with the basic materials price escalations.

2.2   Can the Contractor request for revision rates for the execution of the remaining works, stating that the contract only allows for recovery of basic material escalations only? If so, what factors have to be considered when making rate revisions?

3.   Can the contractor claim additional payment stating that on instruction to resume/recommence; additional resources had to be mobilized to the site to carry out the remaining works.

I am deeply indebted in advance.


Dear Alemu,

Here are the answers in seriatum:

1. Yes,It may bring the change in execution as per weather and site conditions.
2. Since the Contract has price escalation,the Contractor may demand some compensation for fixed portion of the Price Adjustment formula in addition to Price Escalation
2.1. Yes ,the Contractor will have to bear additional overhead, Home office Overhead, and Site office expenditures ,if has mobilized at Site.
2.2 Yes , he may demand for new rates-- New rate may include the current rates of the materials involved,overhead and profit and impact of any legislation , if occurred  during that period.
3.If Contractor do not claim new rates--He may raise claim for additional payment,It may include Depreciation  and FCCM cost of the equipment and the Personals for the idle period in addition to Home office overhead cost.

Engr. Arshad Mahmood

Construction Law

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Arshad Mahmood


I may answer to the questions relating to FIDIC 4th as well as FIDIC 2010 MDB Harmonized version,price adjustment ,Variations,Eot and Cost claims,EPC Contract,Bidding Document,consultancy Contracts,certification,Standard Forms, Dispute resolution; and others pertaining to Contract implementation.


Contract management and Contract Administration, using FIDIC Conditions of 4th Addition as well as Fidic 1999 Red, Yellow and Silver Books including MDB Harmonized Edition 2010. Particularly in the area of Procurement of Contracts, Certification,Price Adjustment, variations,disputes management, EoT and Cost Claims; and other contractual issues arises from time to time during currecy of the Contracts.

Member -Pakistan Engineering Council Member -Pakistan Engineering Congress Member -FIDIC Organisation

Joint Venture and Consortium Agreements for Pakistan Engineering Council,Pakistan

BSc Civil Engineering; Basic Management course; Hydro power Projects; and various other on Job Trainings

Awards and Honors
Commendation Certificate for the excellent management qualities and dedication at Ghazi Barotha Hydropower Project; and Certificate of Excellent work performed during Survey Camp.

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Water and Power Development Authority (WAPDA),Associate Consulting Engineer(ACE) and National Engineering services Pakistan(Pvt.) Limited (NESPAK)

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