Claim for cost escalation
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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