Construction Law/Engineer's Fee


QUESTION: Dear Engr. Liaqat Hayyat
I am working at Hospital Project , located in Riyadh-Saudi Arabia, based on Lump sum type of Contract. The Contract Conditions are NOT based on specific standard like FIDIC. In this Contract, the Engineer's design and supervision fee is some percentage of the total Contract value deemed to be included in the Contract Value.

The Contractor has submitted small variation "Splicing of MV and LC cables" agreed by the Engineer however the Engineer has comments to DEDUCT  their fee from the total variation cost comprising [cost of Material, Installation and Contractor's OH and Profit]. However in our submission the said fee was added over and above to the total variation cost.

Need your expertise either we shall deduct this fee from the variation cost or to deduct the only fee added over and above to the total variation cost.


ANSWER: Dear Sheraz,
thanks for the question.
I agree with Engineer's comments as Contractor's rates are inclusive of his fee .You have also correctly added this in variation costs as an expence that needs to be paid to the engineer by the employer subsequently.With your last para,I am in doudt if i correctly understood your question.Please come back if this is not clear
Regards-liaqat hayat

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QUESTION: Dear Engr. Liaqat Hayat
Thanks a lot for your quick reply and valuable input .

However, i need to elaborate the last para of my question;

i. Contractor's Calculations: The Engineer's fee was added as per below calculations in Variation;

1. Material cost (as per quotation):     A SAR
2. Installation cost (as per quotation): B SAR
3. Contractor's OH and Profit (Z%)    : [A+B] x Z% = C SAR
4. Total Variation Cost          : [A+B+C]= D SAR
5. Engineer's Fee (E%)          : D x E% = F SAR
6. Total Variation Cost Including Fee : D + F = G SAR

ii. The Engineer's Calculations        : D - F = H SAR
  (to DEDUCT Engineer's Fee)

iii. The Contractor's Stance          :G - F = H SAR
  (to DEDUCT Engineer's Fee)

In the above calculation's need your expertise either ii. OR iii. is applicable.

Looking forward,
best regards

Dear Sheraz,
Thank you for clarifing last sentense.
In case of above scenerio, I would go with contractor's stance for the simple reason that G is the cost of item as per contract on which Engineer's( fee is to be charged unless specified otherwise in the contract).
Regards-liaqat hayat

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Liaqat Hayat


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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