You are here:

Construction Law/Claification on Cl 12.3 (iii) FIDIC 1999

Advertisement


Question
Dear Sir,
How does the contractor justify change in cost per unit of the item under cl 12.3(iii) of FIDIC?
By the change in cost I understand the change in basic cost of material purchased.Is that correct?
If there is no schedule of basic rates provided in the contract,how does a contractor go about justifying the cost at the time of tender with relation to the change in cost later during the execution of contract?
Will it be necessary to provide proof of cost of the item to the Engineer?
Kindly advice.
Thanking you
Abdul

Answer
Dear Abdul,

Remember, all four conditions of clause 12.3 a must be fulfilled before you can adjust a rate, not just 12.3 a (iii).  The change in cost can be affected by all inputs into the BoQ rate, including, as applicable, labour, plant materials, on-site overheads, off-site overheads, profit and financing costs.  Generally, an increase in quantities will lead to a decrease in the rate, either through the economies of scale or over recovery of overheads. You do not have to justify the tender rates, but you do have to justify the changes.   

The Engineer will generally require proof of the change in cost.  

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Peter M. Elliott

Expertise

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 www.eotprotocol.com before submitting a question.

Experience

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')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

©2016 About.com. All rights reserved.