The following Construction guidance note Produced in partnership with Mayer Brown International LLP provides comprehensive and up to date legal information covering:
This Practice Note examines price under the 1999 editions of the Red, Yellow and Silver Books, the Gold Book 2008 and the Pink Book 2010. For information on price in the 2017 editions of the Red, Yellow and Silver Books, see Practice Note: FIDIC contracts 2017—price.
Price is a key consideration of any construction contract. The FIDIC forms of contract follow two different methods of determining the price. The Red and Pink Books are remeasurement contracts, whereas the Yellow, Silver and Gold Books are lump sum fixed price contracts.
An initial estimate of the value of the works is determined by measuring the quantity of each work item (which will be set out in a document referred to as a bill of quantities) and multiplying it by the agreed rate for that particular item. This calculation is then made again at the end of the project once all the quantities have been remeasured to ascertain the contract price. The contractor is typically paid a portion of the contract price on a monthly basis following monthly measurements and valuations of the works.
The use of this approach means that the price can both increase and decrease depending on the adjustments of the quantities. The advantage of this is that the employer will only pay for work that was actually done. Unfortunately the
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