Dealing with cost increase in works and supervision contracts.

Colleagues, this will be the first of my posting into the blog to share my concerns on our daily work.

One of the situations we face often in the works contracts is the increase of cost, due to additional works, variation orders and the like. On the one side we face that the cost increase is determined by the supervisor/engineer who orders that increase regardless the amount, or the amount of money available. To do so he/she excercise the powers attributed to him/her by the FIDIC rules. Up to there is right,the complication to us, and in particular in Indirect Managament comes when the Contracting Authority accepts those costs arguing that there is sufficient money in the allocated amount, in the Operational Identification Sheet or the Bilateral Project Agreement.

Hand in hand with the increase of the cost of the works contract comes the increase of the cost of the supervision contract. The longer and bigger the cost, the higher value of the supervision contract. Thus, at the end of the day we are put between a rock and a hard place to approve the increase of costs for both contracts as they retro-feed one each other.

An the worst case comes when the allocatioin of funds is exhausted, nothing left in the piggy bank, then regardles that we do not have money to finance the extra cost we are still part of the contract. What to do?