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Construction Law/Deriving New Rate or Price


Dear Alina,

I am grateful, if you would kindly clarify the following.

General Conditions of Contract: FIDIC First Edition 1999 for Building and Engineering Works Designed by the Employer.

Clause: 12.3 - Evaluation

The clause describes,how new rate or price is to be derived,
1.0 "From any relevant rates or prices in the Contract, with reasonable adjustments, taking account of the matters described in sub-paragraph
(a) and/or (b), as applicable."
  I can detect the relevant rates/prices.
  Please explain, how reasonable adjustments are made to those  rates/prices as specified.

2.0 "If no rates or prices are relevant",
 i."Reasonable cost of executing the work"
 ii."Any other relevant matters" are to be considered.
    May I know, what are reasonable cost of executing the work
    Any other relevant matters available,
    which were not present in deriving the initial rate/price for the
    quantity available in the BOQ.

    Thank you.

Dear Basil,
If there are relevant rates or prices in the Contract, the new prices are derived from these relevant prices, keeping what is in common, and replacing what is different in the existing/new item. I will give you a simple example: you may have in your contract a rate for installing pipe of 25’, but you have to use pipe of 20’. You take into account the breakdown of prices for the existing rate – material, transport, manpower etc. – and remove the price for material – the pipe of 25’ itself - and include the price of the pipe of 20’ itself; the same for other parts of the rate that are different (maybe the price of manpower is different for the new pipe comparing with the manpower for the pipe included in the Contract).
The case 2 in your question refers to cases like, for example, you had direct foundation for a bridge and now you have to make the foundation on drilled columns and you don’t have drilled columns in your Bill of Quantities. This case, a reasonable cost of executing the foundation refers to the reasonable expenditures – see the definition of Cost, at – plus overhead, to which you add reasonable profit, as per 12.3. The reasonable expenditures may be those incurred by the Contractor doing himself the respective work with the resources he has, or subcontracting the respective work to a subcontractor having the market prices (average, or cheaper I would say), or the subcontractor which is available – and no cheaper one being available, and allows the Contractor to finish on time, or not disturbing the other Works (too much).
According to Webster dictionary, reasonably means fair and sensible; fairly or moderately good; not too expensive. So, these characteristics should be taken into account when trying to understand what reasonable cost means.
Any other relevant matters may refer to the availability – see above – or, for example, if you have to repair an existing equipment - and this repair is not included in the BoQ, but became necessary during the contract implementation and there is only one supplier of the necessary spare parts, you cannot choose, you have to use that one irrespective of the cost.
Hope that the examples above make the things clear.
All the best,

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Alina Valentina Oprea


I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.


Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on

Dispute Resolution Board Foundation

see ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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