Analysis of Price Adjustment Claim during Project Time Extension
Publication: Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 16, Issue 1
Abstract
Uncertainties surrounding price adjustments, delays in index selection, and ambiguous escalation clauses compound the complexities of the construction environment between an owner and a contractor. This study investigated disputes and price adjustments within Nepal’s construction industry. Utilizing a mixed-methods approach, the qualitative analysis uncovered obstacles from index selection delays and contract management inadequacies related to price adjustments, and the quantitative analysis emphasized key project milestones and notable discrepancies between claimed and certified amounts. The research underscored the tribunal’s recommendation for an average adjustment approach, advocating for transparent communication and adherence to contract terms to facilitate fair dispute resolution. The study was motivated by the need to address the intricacies of the absence of specific price indices in construction projects, especially in the context of significant delays. It revealed the errors made by both parties in formulating and agreeing upon price adjustment clauses. The research assessed conflicts related to price adjustment, highlighting its significance in construction contracts and examining the impacts of incorporating accurate price indices on projects. The study also emphasized the implications of inadequate contract management expertise in resolving price adjustment disputes. The findings underscored the necessity for transparent methods and coherent contractual provisions. The tribunal’s endorsement of the average adjustment approach presented a balanced solution, mitigating index disparities and fostering equity. This approach underscored the importance of clear communication, consensus building, and steadfast adherence to contract terms. Ultimately, this research provided a nuanced exploration of dispute resolution dynamics, price adjustments, and the efficacy of alternative dispute resolution (ADR) methods within Nepal’s construction context. The findings and lessons learned presented in this paper could benefit owners, contractors, and other stakeholders by reducing the potential disputes related to price adjustment in the construction industry.
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Data Availability Statement
All data used during the study are available from the corresponding authors upon reasonable request.
References
List of Statutes
Arbitration Act 2055 (1999), Nepal Law Commission.
Public Procurement Rules (PPR) 2007 (2064 B.S.), Nepal Law Commission.
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Information & Authors
Information
Published In
Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 16 • Issue 1 • February 2024
Copyright
© 2023 American Society of Civil Engineers.
History
Received: Apr 20, 2023
Accepted: Sep 27, 2023
Published online: Nov 29, 2023
Published in print: Feb 1, 2024
Discussion open until: Apr 29, 2024
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