Construction Law/loss of OH & P
Hi ,Dear Madam,
We are the Main Contractor for Road construction project to which FIDIC May 2005 MDB Harmonized edition is applicable.it is a re-measured contract.
Original Contract price 600 US $ Million and final contract sum is 450 US $ Million due to reduction in quantities of BOQ at actual execution.
Meantime some of critical items were increased (Asphalt Surfacing Works) and EOT was approved by the Employer.
1. Part of the Overhead (OH) and Profit planned from the Contract has lost due to reduction of Contract price.
2. Additional OH has incurred due to prolongation.
Can you please provide points to handle the proper contractual claim such as loss of overhead and applicability of Cl 12.3 (a) and 12.4 w.r.t this situation.
We have already given the notices(Cl 20.1) for loss of OH and Profit due to reduction in Contract price and additional payment for prolongation.
I am trying to clarify the matter;
1. First of all I think reduction in contract price due to less quantity utilised or BOQ items ommitted with othe items against Bill Of Quantities of contract, then sub clause 12.3 allow to new rate of the items with some conditions;
"However, a new rate or price shall be appropriate for an item of work if:
(a) (i) the measured quantity of the item is changed by more than 25% from
the quantity of this item in the Bill of Quantities or other Schedule,
(ii) this change in quantity multiplied by such specified rate for this item
exceeds 0.25% of the Accepted Contract Amount,
(iii) this change in quantity directly changes the Cost per unit quantity of this
item by more than 1%, and
(iv) this item is not specified in the Contract as a “fixed rate item”;"
from above it is clear that contract has the provisions to compensate the price for change in quantities. For change in quanties of the item is negative then rate may be compensate with OH and profits on executed quanties for new rates.
For ommitted item You can proceed with the provisions of clause 12.4 of contract with the notice to the Engineer with the calculation of loss of OH and profit.
2. Prolongation cost can be calculated as per "SCL Delay & Disruption Protocol".
Your claim will be submitted to the Engineer with all documents for his determination under clause 3.5 of contract.
I hope this will resolve the issue.