Construction Law/Price Adjustment



Dear Sir,

I am working for reconstruction of Karachi Port in Pakistan and charge of Planning Manager.

We have faced the problems with the Engineer for the application of Price Adjustment and argument between us and the Engineer
has been discussed due to the difference of interpretation for Contract Condition.

The formula for Price Adjustment is as follows:
"Pn = A + b*Ln/Lo + c*Mn/Mo......"
 (Pn = Adjustment Multiplier, A = fixed coefficient, Ln = Current Cost Indices, Lo = Base Cost Indices)

If you kindly refer to attachment, you could understand that it is the data from the Pakistan Engineering Council.
If you go to attachment, it is stated in last paragraph that
"Except labour and POL, if any other adjustable item(s) is not used in a particular billing period then the ratio
of current date price and base date price for that particular adjustable item(s) shall be considered as one."

However, i have objection on above view.
The Adjustment Multiplier is nothing to do with the nature of the work done.
It means that the Value of "Pn" itself is independent to the nature of work done.
In other words, the fact whether or not any work related to the indices has been carried out in a relevant period has nothing
to do with obtaining the figure of "Pn".

In this regard, i really want to have your advice on different interpretation of Contract Condition.

Yours sincerely.

Dear Chang,
I agree with your views and this is what i already answered your earlier question accordingly.I suggest you take up this matter officially with PEC and try to have their official version .This only then be acceptable to KPT
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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