Construction Law/Price Adjustment


Dear Sir,

This is my honor that i have an opportunity to question you and i would like to kindly have your advise on Sub-Clause 13.8(Adjustment for Changes in Cost) of FIDIC Edition 2005 (Multilateral Development Bank Harmnised Edition May 2005)

Let me reproduce such Clause as follows:

"Ln", "En", "Mn"... are the current cost indicies 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 49days prior to the last day of the period (to which the particular Payment Certificate relates); and

In this regard,if any index item is not used in a particular billing period then the ratio of Current Value and Base Value for that particular index item shall be considered as one.

Did we properly understand and interpret above FIDIC Clause?
or shall current date price be applied even any item(s) is not used?
- Case A : Current Value = Base Value, if item is not used in period
- Case B : Current Value shall be applied by actual Value,
         even item is not used in period

Which case is correct?

I am looking forward to hearing your observation on my question.

Yours sincerely

Dear Chang
thanks for the question for which i have simple answer
There are only two factors( weightages and indices published by a public body) that relate to and result into cost increase in this formula.there is no place for quantities whether used or not.If published indices not used,i am inclined to follow case B scenerio but base and current value should be from same source.Let me know if still there is a question
Regards-liaqat hayat

Construction Law

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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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