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Construction Law/OH and Profit for Variations


Dear Peter,

We are currently working in a road project as a Main Contractor and  FIDIC 1999 refers. There is a Variation for LED Street lighting which we are going to do with lighting specialized sub Contractor. This sub-Contractor is not a Nominated Sub Contractor and this work is not to be executed under Provisional Sum where 15 % OH & P is specified in the Contract. Now the Engineer recommended 15 % while we have requested 25 % as all other Variations are paid. Please advise how this to be dealt with.
Thank you in advance for your response.

Dear Rohana,

You have to persuade the Engineer that 25% is a reasonable figure for OHP.  I presume that you have submitted justification in the past for your figure of 25%, so you should have no difficulty with this variation.  Otherwise, you have to accept his figure of 15% and then submit a claim for the difference.  You will have to submit sufficient justification of your claim in order to succeed.  You could ask him to justify the lower figure, but I see no road to success with this request.  

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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
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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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