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# Construction Law/New Rate

Question
Dear sir;
My question is related to sub-clause 12.3 of Fidic MDB version 2010.
Please guide me that what does the term 'Measured Quantity' in sub-
Paragraph 'a(i)' means? Moreover, in what conditions does sub-paragraph 'a'
apply for determination of new rate for an item of work?

Dear Tahir,

Thank you for this question.

In its standard form the MDB Harmonised form of contract is a "measure and value" contract as set out in sub-clause 12.1; it requires every item of work to be measured and calculated and evaluated using pre-agreed rates and prices. The term "measured quantity' therefore means the actual (final) amount of work performed against the item for which the need for a new rate is being considered.

When considering the need for new rates, the form of contract lays out two set of criteria. A new rate or price shall be appropriate if all of 12.3(a) OR 12.3(b) apply. Sub-cluase 12.3(b) is relatively;y straightforward, but 12.3(a) often causes problems for users.

Sub-clause 12.3(a) only becomes the basis for determining that a new rate or price is needed if ALL of the sub-clause 12.3(a)-(d) inclusive apply.

By way of example, the concrete in foundations may have increased so that you think a new price is warranted. The accepted contract price was \$10,000,000. Sub-cluase 12.2(b) would not apply because there are existing rates and prices for the originally anticipated work scope for foundations. A new rate would only be relevant under 12.2(a) if:

(i) The amount of concrete in the foundations was more than 125% of the original volume. (For example it may have increased from 1,000m3 to 1,300m3 - a 30% increase).

AND

(ii) The increased in quantity (300m3) when multiplied by the item rate > (Accepted Contract Amount) x 0.25% (i.e. that is more than \$10 million x 0.25% or more than \$25,000)

AND

(iii) The increase (300m3) causes the unit rate to increase by more than 1%. (For example it mat have to move from \$150.00/m3 to more than \$157.50/m3

AND

(iv) The original rate was not what is called a fixed rate item. The wording of FIDIC here is not certain but, usually, a fixed rate is one that does not vary as a result of inflationary cost increases for example.

I hope that this assists you.

Kind regards,
John Dowse

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#### John Dowse

##### Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

##### Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister