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Claim for cost escalation

1 reply [Last post]
Sat, 2009-04-18 04:31
Ahmed Elkordy
User offline. Last seen 13 years 11 weeks ago. Offline
Joined: 15 Jul 2008
Posts: 20
Groups: None
I need advice please..

Many are very familiar with EOT claims.
Anybody well experienced in extra cost claims??
There’s work redone or arising (not VO) in the project, due to consultant major design changes.
I’m preparing a claim to include both time and cost. (is that right?)
In the cost claim. I’m using two things:
1- Salaries for time added to project and compensation for extra money paid by us.
2- The manager requests that I also calculate Loss of profit due to time added. By multiplying profit per month (as calculated from original duration) by added months!

What are the standard procedures or methods for cost claims?

Thank You
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Replies

Sat, 2009-04-18 11:35
#1
Samer Zawaydeh
User offline. Last seen 5 years 25 weeks ago. Offline
Joined: 3 Aug 2008
Posts: 1664
Groups: Civil Engineering, Regional Representatives
Dear Ahmed,

Cost claims are divided into two items:

1. Extra Quantities in the BOQ.
In this case, you need to check the provision in your Conditions of Contract for changing the unit rates in the BOQ. If it is silent, then you can not ask for more money because this is your selling unit rate.

2. New Items.
In this case, you need to submit a new price and include a price analysis. The profit margin can be as per conditions of contract or it can be agreed upon.
I would advise you to include only the actual cost incurred by the Contractor. Be smart enough to have good accounting system and great supervisors and engineers at site to record the actual cost.

Try to avoid over reporting of expenditure, because it is very easy to reject extra cost due to your office support and supervision staff at site regarding these VOs. Since they are already calculated on the original Contract.

Loss of Profit can be calculated depending on the Approved Program of Works. Make sure that you do not have critical delays and that the Client delays (already approved by them) are shown in your analysis.

If you have any more questions, please let us know.

With kind regards,

Samer
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