Construction Law/Profit on Profit


Dear Sir,

I am working in a consultancy firm in UAE.

Our Main Contractor submitted a VO proposal, in his cost submission,
they include the Main Contractor Profit plus Subcontractor Profit.

Based on the new items they used a rate from supplier quote and coming up with a total cost. After that MEP Subcontractor added 10% OHP on top of the Main Contractor added 15% OH & Profit. Now my question is, this Profit on Profit allowed or applicable in to FIDIC 1987 reprinted 1992, 4th Edition contract?

Please note that MEP Subcontractor is not a nominated Subcontractor.

Hope to hear from you the soonest



Dear Gadhvi

Thanks for your Question and Sorry for late reply.

I was on leave for 2 weeks therefore cannot reply earlier.

Regarding your question

It is a normal practice, that Main contractor ("MC")add their OHP over the subcontractor ("SC") OHP.

The % of OHP should be as per their Contract.

The reason for adding the OHP to the Supplier Cost is for their coordination and deployment of manpower.

The supplier will only supply the goods but actual work is done by the SC and will be supervise by MC. To recover this cost they added OHP.

I hope this will clear your query.

Please leave a positive feed back for me.

Feel free to contact me if your need any further advice.


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Vineet Shrivastava


I can answer any question on 1. Project Planning 2. Delay Analysis - Extension of Time 3. Project Management 4. Contract Management 5. Construction Methodology I can't Answer any question 1. Cost related issues


I have 22 year experience in construction industries at Singapore, India and Australia. I worked as Planning Manager and delay analyst for contractor. I am currently working with claim consultancy as Associate Director.

Navigant Consulting APAC Pte Ltd E C Harris Sinagpore Pte Ltd McConnell Dowell SEA Pte Ltd Kajima Oversea Asia Pte Ltd Taisei Corporation

B.E (Civil), PGDMA(PM), Graduate Diploma (Const. Management), MSc (Intl. Const. Management),LLM In Construction Law (Arbitration & Adjudication), FSIArb, MCIArb, MIES, MSIB MIIAM, MMIArb

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