How are variations to the specification for engineering or construction works normally dealt with?
The Civil Code regulates private works contracts and, in relation to additional or complementary works, it states that the contractor may only perform such works with the consent of all involved parties and if the works are necessary for the completion of the original contract or if they result from unforeseeable circumstances. The contractor must notify the developer of the need for additional works and the parties must agree on the scope and the price of the additional works.
Regarding price adjustments, the Civil Code allows for price revisions if there are changes in the work scope or if the cost of labour and materials increases significantly beyond what was initially estimated. The parties may agree on the terms and conditions of price adjustments at the time of contracting. If no such agreement is reached, the developer must pay the contractor a fair price for the additional work. However, the price of the works cannot be increased in cases where the increase results from defects or omissions attributable to the contractor.
The Public Contracts Code in Portugal regulates the execution of additional or complementary works and states that they may be carried out under certain conditions, such as being necessary for the proper execution of the contract or resulting from unforeseeable circumstances. The contractor must submit a request for authorization to carry out such works, which will be evaluated by the developer.
In terms of price adjustments, the Public Contracts Code allows for variations in the initial contractual price under certain circumstances, such as changes in the scope of the work, unforeseeable circumstances or changes in applicable legislation. The developer may also agree to adjust the price if the contractor presents evidence of increased costs due to factors beyond their control. However, any price adjustments must be based on objective criteria and subject to the approval of the contracting entity.
Given the exceptional situation verified in the supply chains resulting from the global energy crisis, the COVID-19 disease pandemic and the war in Ukraine, and its consequential increases in the prices of raw materials, materials and labour, an extraordinary price review mechanism applicable to public works contracts was enacted which aims to adapt the form of price review that exists in the relevant contract to the actual and effective structure cost of the contract. This review mechanism is enshrined in the Decree-Law No. 36/2022, of 20 May 2022, and envisages accommodating the changes in the prices of materials, labour and equipment support (under the terms already defined in the Decree-Law No. 6/2004, of 6 January 2004).
This exceptional and temporary regime of extraordinary price revision depends on the contractor's initiative and was designed especially for public works contracts whose ordinary price revision is mandatory pursuant to the provisions of the article 382 of the Public Contracts Code. However, this regime applies also, with the necessary adaptations, to public contracts for the acquisition of goods and services.
In everything that is not expressly provided for in Decree-Law No. 36/2022, of 20 May 2022, are applicable the rules contained in the Decree-Law No. 6/2004, of 6 January 2004.
