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New Rates for Variations

6 replies [Last post]
Sat, 2006-07-01 01:56
Vic Sto. Domingo
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Hi everyone,

I just came across this forum and decided to join as I have an issue with regard to Clause 52.2 of FIDIC 1987 and a sub-clause added under COPA.

Clause 52.2 provides for adjustment of rate if a variation relative to the whole of the Works or to any part thereof has rendered the BOQ rate inapplicable. Then, our COPA qualifies: ‘Provided further that no change in the rate or price for any item contained in the Contract shall be considered unless such item accounts for an amount more than 2 percent of the Contract Price as stated in the Letter of Acceptance and the actual quantity of work executed under the item exceeds or falls short of the quantity set out in the Bill of Quantities by more than 25 percent.’”

Based on the word “and” in the COPA, our Engineer (and Employer) insists that before a rate can be adjusted, the quantity of the varied work should exceed 25% of the original BOQ quantity and that the corresponding cost of such variation should exceed 2% of the Contract Price. In other words, even if the change in quantity is more than 25%, if the corresponding change in cost is less than 2% of the Contract Price, no adjustment in rate can be allowed.

In my understanding, if the variation exceeds 25% of the BOQ quantity, the rate should be adjusted even if its corresponding cost does not exceed 2% of the Contract Price. The 2% relates only to the value of the work item before the variation.

I would appreciate it if anyone can share his views in this regard.
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Replies

Thu, 2011-07-07 10:00
#1
srinivasagam srin...
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PL CLARIFY WHAT IS ACTUAL QUANTITY   TO UNDERSTAND COPA SUB CLAUSE 52.2  FOR ACCOUNTING 2 % OF CONTRACT PRICE . IS IT VARIED QUANTITY OR BOQ QUANTITY  MOST URGENT

 

S.SRINIVASAN

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Wed, 2011-07-06 13:58
#2
Gary Whitehead
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s.srinivasan,

 

No need to reply to topics that are 4 years old.

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Wed, 2011-07-06 13:31
#3
srinivasagam srin...
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it is  mentioned that the actual   quantity must be valued with tender rate then amount of such item should be more than 2 % of contract sum then one will have right to negotiate for new rate.  under the circumstances can we consider that the actual quantity is the executed quantity of work and in that event the executed quantity of work to valued with tender rate to meet   more than   2% of contract price pl clarify 

s.srinivasan

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Sat, 2007-07-14 03:55
#4
Bolisetti Jogiraju
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Hi Domingo !
Please let me explain you,that your aurgement not exactly correct.
First of all,as you mentioned above,this is not a definite variation.
even,actual quantity of work executed under the item increases or decreases from the quantity set out in the BoQ by more than 25% you are not eligible to vary the rate,unless such item accounts for an amount more than 2% of contract sum.
then,to satisfy the above clause,you actual quantity must be valued with contract rate,then amount of such item should be more than 2% of contract sum,then you will have right to negotiate for new rate.
Hope,you understand the correct interpretation of Sub-Clause 52.2.

Cheers
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Sat, 2006-07-08 02:50
#5
Vic Sto. Domingo
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Dear Brian,

Thank you so much for your views. It is nice to know that I am not alone in my interpretation.

I wonder if any body else in this forum would have any opinion contrary to ours….?

Cheers,
Vic
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Wed, 2006-07-05 01:18
#6
Bryan Russell
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Vic,

Your Engineer and Employer are not reading the Contract correctly.
If you regard the clauses as a filters through which your problem must pass in order to qualify, it is transparently obvious.
Firstly 52.2 entitles you to a new rate if it has become inapplicable because of a changed amount.
Secondly COPA says the BoQ item must be more than 2% of the Contract Price; LOOK in the sub-clause 1(e)(i) at definition. = the sum stated in the letter of acceptance. \
Thirdly,the reason for the adjustment is the fact that the quantity has changed by more than 25% of the BoQ quantity.

The variation has passed all the above and can then be calculated at a new rate. The answer cannot be seen to have to pass through the process again.

Incidentally, if the item in question is something like an increase in the length of a long retaining wall where an exepnsive shutter has already been paid for in casting the original quantity, an extension in the length of the wall will mean you have a free shutter and the rate should decrease!!

Best of Luck
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