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Construction Law/Adjustment for change in Cost

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Question
Dear Sir,

In accordance with Sub-Clause 14.3 of FIDIC MDB Harmonized Conditions of Contract 2010 edition,

“The Contractor shall submit a Statement in six copies to the Engineer after the end of each month”

Is the submission of Statement at the end of each month is binding on the Contractor? Is the Contractor can submit Statement other than one month period?

My second question relates to Sub-Clause 13.8 [Adjustment for changes in Cost], this Sub-Clause states,

“ “Ln”, “En”, “Mn”, … are the current cost indices or reference prices for period “n”, expressed in the relevant currency of payment, each of which is applicable to the relevant tabulated cost element on the date 49 days prior to the last day of the period (to which the particular Payment Certificate relates); and”

If the Contractor submit Statement for the period of 3 months, then is it correct to use indices applicable on 49th from the last day of the period? Or is it necessary to divide the works month wise in order to apply indices separately for each month?   

Thanking you in anticipation.

Regards,

Umer Shabbir

Answer
Dear Umer,


Thank you for your question.

As you can see, Sub-Clause 14.3 does not indicate any repercussion on the Contractor if they submit their Statements after longer periods.

Moreover, it may well be that Contract includes in the Contract Data (Appendix to Tender), a minimum amount of Interim Payment Certificate. If such threshold is not reached, then obviously, Engineer may not issue the IPC, hence Contractor may decide not to submit their Statement.

That one month period is nothing but a minimum period, Contractor has the freedom to choose a longer period.

In respect of Sub-Clause 13.8: It is stated that:" “Pn" is the adjustment multiplier to be applied to the estimated contract value in the relevant currency of the work carried out in period "n", this period being a month unless otherwise stated in the Contract Data;"

Hence, unless otherwise stated in the Contract Data, you must refer to monthly periods.

As such, should the Contractor decide to submit their Statements for periods longer than a month, they will indeed have to period included in the Statement in months and apply the calculation accordingly, as you well spotted too ("apply indices separately for each month").

Trust that answers your queries and will help.

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Florin NICULESCU

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Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

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Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

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