By

Khawaja Hamid Mushtaq

Deputy Director,
B.E Civil, Mst Const. Law(Melb)
CIArb PGD in International Commercial Arbitration, Oxford UK,
PMP
 Price Adjustment is a compensatory
Mechanism under Clause 70 wherein the
Contractor is entitled to compensation of
enhanced costs

 Three types of Price adjustments i.e freezing

of conversion rates at the time prevailing at
the Bid submission time, Price adjustment
allowed on specified material & enhanced
costs due to subsequent legislation
 Under some circumstances, the FIDIC
conditions entitle the contractor to
compensation of Money or Time or Both;
 Cost Only:-
 Clause 52 applies to both Variations under
Clause 51 and all additions to the Contract
Price for Valuation purposes
 Clause 2.1, work executed in Emergency
 Clause 17.1, incase of error in position, level
etc or any incorrect data, Employer is
responsible for cost
 Cost Only:-
 Clause 18.1, incase Engineer instructs in writing
to carry our Exploratory works like drilling etc,
Employer is responsible for cost

 Clause 20.3, In case of Employers risk, the cost

of repair is to be borne by the Employer

 Clause 31.2, Contractor is entitled to claim

compensation, if some other Contractor uses its
roads, equipments etc of which the main
contractor is responsible for its maintenance ,On
the request of the Engineer
 Cost Only:-
 Clause 36.4, incase Engineer instructs testing of material,
plant or equipment that is not specified in the Contract,
Employer is responsible for cost

 Clause 38.2, In case of contractor opens up any covered

part of the works for Engineer’s examination and that part
is found in conformance of specifications, Employer is
responsible for cost of re-doing.

 Clause 48.5, if the Contractor is prevented from carrying

out Test at Completion due to any reason, the work will be
deemed to been taken over and if the tests are then
carried out during DLP, Contractor is entitled for extra
costs
 Cost Only:-
 Clause 49.3, Cost of remedying defects during DLP is
paid to the Contractor, if the defects is for any reason
for which the Contractor is not responsible.

 Clause 50.1, If the Engineer instructs the Contractor

to search for any specific defect, for which the
Contractor is not liable under the Contract, cost of
search is to be paid by the Employer

 Clause 51.1, if the Contractor carries out any

Variation under the Instructions of the Engineer, he is
entitled for compensation.
 Cost Only:-
 Clause 44.1, Exceptionally adverse climatic
conditions
 Clause 44.1 (e), Forces Majeure events loosely
defined by the FIDIC Red book 1987 as

 special circumstances which may occur, other

than through a default of or breach of
contract by the Contractor or for which he is
responsible
 Cost Only:-
 Clause 65.3, Part of works in damaged under any
Special Risk (except for the risks insured), the
contractor is entitled for compensation, if not
already paid

 Clause 65.5, the Contractor shall be

compensated for cost of remedying any defect
associated with Special risk

 Clause 70, Price Adjustment

 Cost & Time Both:-
 Clause 6.4, delay in Issuance of Drawings
 Clause 12.2, delay due to adverse physical
obstructions or conditions, if the Engineer
finds that these were not reasonably forseen
by an experienced contractor.
 Clause 27.1, Discovery of Fossils from site
 Clause 36.5 (Testing), If the Engineer
instructs Tests not intended or provided in
the Contract & works are found to be in
conformance
 Cost & Time Both:-
 Clause 40.2, If the Engineer instructs
suspension on grounds other than default of
the Contractor
 Clause 42.2, delay in giving possession of
site for construction
 Clause 69.4, When the Contractor opts for
suspending the Works or any part or slow
downs the pace of his work to compel
payments of certified sums
 Remedies Available to the Contractor:-
 Right to Terminate the Contract:-Clause 40.3,
when suspension on part or Whole of the
works exceeds 84 days & despite
Contractor’s Notice to the Engineer for
permission to recommence, Engineer does
not issue Permission, the Contractor can give
Notice of Termination under Clause 69
 If suspension is on part of the Work, the
Contractor can give notice to under Clause 51
to omit the work.
 Remedies Available to the Contractor:-
 Right to Terminate the Contract:-Clause 69.1,
Contractor is entitled to terminate the
Contract by giving 14 days prior Notice to the
Employer, incase of default of certified
payment within 28 days after expiry of the
cushion period Or obstructs or refuses to
approve the certification of amount due or
becomes Bankrupt, etc defaults
 Remedies Available to the Contractor:-
 Right to Suspend the Contract:-Clause 69.4,
In case the Employer fails to pay the Certified
amount, Contractor is entitled to suspend or
decelerate the work by giving 28 days Notice.

 Right to Interest on Unpaid Sums:- Clause

60.1, On all unpaid sums which are certified
by the Engineer, Contractor can claim
interest.
 Remedies Available to the Employer:-
 Right to Terminate the Contract:-Clause 65.6,
In the outbreak of War.
 Termination for Convenience is usually
provided in Particular Conditions. It comes
with Equitable compensation

 Right to Expel from Site:- Under Clause 63.1

for Contractor’s Default or Under the
provision of Particular conditions dealing with
Bribes
 Remedies Available to the Employer:-
 Release from Performance (Frustration):-
Clause 66.1, Contractor shall be released
from performance if subsequent
circumstances arise, beyond the Control of
Both the parties.
 Release of performance discharges the
parties from the obligations under the
Contract.
Thank You