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Construction Law/Profit on Profit (Main Contractor OHP on Subcontractor OHP)


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

FIDIC GCOC does not advise on the way OHP need to be reimbursed. However in most of the cases, the Engineer or Contract Admin insert amendments as part of PCOC wherein they stipulate such percentages.

In your case I understand that such information is missing. In such case you need to negotiate best OHP percentage with the SC and MC.

However while calculating OHP for MC, you may choose to deduct SC OHP and then calculate MC OHP.


VO Amount = AED A

SC OHP = OHP% x A = say B

Amount Payable to SC = A+B = say C

OHP for MC = OHP% x A  = Say C ( not OHP% x C)

Total VO Amount = A+B+C

Hope this clarifies.

Best REgards

Manish Gupta  

Construction Law

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Manish Gupta


I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.


7 Years with Contractors 12 plus Years with Owners & Consultants

Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

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