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Construction Law/Profit on Profit (Subcontractor)

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Question
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

Thanks,

Gadhvi

Answer
Dear Mr. Gadhvi,

Thank you for your question. My response on your query is as follows:

The profit in an analysis has to have one profit figure and other individual players like MEP Subcontractor etc. have to add their overheads in their rate analysis which may include their share of profit but not separately shown as profit. This is to be then checked and evaluated by the Engineer if all this amounts to a reasonable market price level. These are the only comments I can offer at this stage and believe would have done that way.

Regards,
Liaqat Hayat  

Construction Law

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Liaqat Hayat

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I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

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