Understand how the 25% limit under Law 14.133 applies to construction supervision, what changes with extensions, and how to structure compensation, staffing and a new procurement.
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Construction supervision is the technical service that follows project execution to verify compliance, progress, quality, measurements, risks, changes and other obligations under the main contract. When the works are delayed, however, a specific contractual question arises: can the supervision contract automatically follow the new project duration and receive proportionally higher compensation? The current understanding of Brazil’s Federal Court of Accounts (TCU) is no.
Article 125 of Law No. 14.133/2021 establishes, for unilateral changes, a limit of 25% of the updated initial contract value for additions or reductions in works, services and purchases. In 2025 and 2026, TCU consolidated the application of this limit to construction supervision, inspection and management contracts: merely extending the main contract does not authorize an indefinite increase in the value of the ancillary contract. Planning must anticipate the need for a new procurement, except in an exceptional situation in which the disadvantage of that measure is unequivocally demonstrated and justified.
At the same time, time and value are not the same thing. A supervision contract may be extended in time without a proportional increase in compensation; proven additional costs may exist when the team remained effectively mobilized because of an event not attributable to it; and contracts paid by deliverables, milestones or results require a different analysis from contracts structured by person-month. Sound procurement must distinguish these situations from the Terms of Reference onward.
What the 25% limit means in construction supervision
Supervision is part of execution governance and must remain compatible with the main contract, its limits and the pace of the works. To place this control within the full lifecycle, see What TCU verifies in the procurement of engineering works and services.
The limit derives from Article 125 of Law No. 14.133/2021. The provision states that, for unilateral changes under Article 124(I), the contractor must accept, under the same contractual conditions, additions or reductions of up to 25% of the updated initial contract value. For the renovation of a building or equipment, the law raises only the limit on additions to 50%.
In construction supervision contracts, the issue has a specific dimension because the service normally follows a main scope-based contract. If the works were expected to last 24 months and instead last 32, it is natural that the Administration continues to need inspection, supervision or management. That need, however, does not turn the ancillary contract into an unlimited financial arrangement.
TCU has distinguished the technical need to continue supervision from the legal and economic possibility of expanding the same contract. That distinction is central.
| Situation | What it means | Automatic effect on value? |
| Main works contract was extended | The project schedule changed | No |
| Supervisor needs to remain on site | There may be an additional operational need | No, exige análise e comprovação |
| Person-month quantities increased | There is a quantitative change to the supervision contract | Subject to the statutory limit |
| Contract is based on deliverables or milestones | Compensation depends on the defined deliverable | The mere passage of time may not generate an increase |
| A new procurement is possible and more advantageous | The current contract is approaching or exceeds the limit | A new procurement procedure should be planned |
| A new procurement is demonstrably disadvantageous | Situation excepcional | Requires robust justification and specific documentation |
Therefore, 25% is not a “project delay limit.” It is an economic boundary applied to contractual changes in the supervision service.
The former idea that supervision could follow the works without limit has been superseded
For many years, the discussion was influenced by TCU First Chamber Decision 90/2001. In summary, that understanding allowed the supervision contract to be treated as ancillary to the main contract and admitted its continuation for as long as the need to monitor the works remained.
That understanding did not remain static. TCU’s own Public Works Cost Engineering Guide, 2026 edition, records that the earlier guidance was expressly superseded by later decisions.
The evolution can be understood in four steps.
The first step was recognizing the quantitative nature of additional person-months
When compensation is structured as a number of professionals per month, extending the teams’ stay means increasing contract quantities. The fact that the change was caused by a qualitative modification of the works, a delay or an extension of the main contract does not change the quantitative nature of the modification to the supervision contract.
This interpretation prevents a recurring argument: “the works did not increase by 25%; they were merely delayed, so supervision can increase without limit.” For the supervisor’s contract, adding team-months means adding paid units.
The second step was reaffirming the 25% limit
TCU Plenary Decision 2,391/2025 consolidated the understanding that amending a supervision contract beyond the statutory 25% limit violates Article 125 of Law No. 14.133/2021, even when the increase results from an extension of the supervised works.
The Court established a practical consequence: the Administration must take timely measures to conduct a new procurement rather than wait until the contract reaches the limit and only then discover that several months of work remain.
The third step was demonstrating the economic risk of disproportionate growth
TCU Plenary Decision 648/2025 examined a situation in which the supervision contract accumulated growth far greater than that of the main contract. The case exposed a governance problem: ancillary contracts may expand through temporal inertia and lose their economic relationship with the actual progress of the works.
The point is not to require the works and supervision to always grow in the same proportion. Their cost structures are different. The warning is different: supervision cannot be treated as an immutable fixed cost throughout all additional time, regardless of the physical pace of the works.
The fourth step was systematizing the rule in the 2026 consultation
TCU Plenary Decision 1,753/2026 organized the understanding under Law No. 14.133/2021. The Court stated that construction supervision, inspection and management contracts:
- cannot be amended beyond the statutory 25% limit merely because the works were extended;
- require timely planning for a new procurement;
- may admit exceptional treatment when a new procurement is unequivocally disadvantageous, provided this is duly demonstrated;
- are subject to specific criteria for recognizing costs arising from time extensions;
- should preferably adopt compensation models linked to deliverables, milestones or results;
- should provide for reduction or suspension of compensation when there is a significant slowdown or shutdown of the works.
This is the reference that should guide new Terms of Reference as of September 2026.
Extending the term is not the same as increasing the value
A contract extension under Law 14.133 must be analyzed across at least three different dimensions:
- execution period, which indicates the time available to perform the obligations;
- contract term, which defines the legal existence of the contract and may cover acceptance and closeout;
- value, which pays for contracted deliverables, resources, quantities or results.
In a supervision contract, a six-month delay in the works may require the contract term to be adjusted to allow final monitoring. This does not mean that the contract value should automatically increase by six months of a fully mobilized team.
The correct economic question is: which additional resources were actually required because of the extension, and which additional deliverables were produced?
If the works remained practically halted, a team originally composed of a coordinator, field engineers, technicians, surveyor, laboratory technician, administrative support and vehicles may not need to remain fully mobilized. Paying the same structure throughout a period of low production transfers to the Administration a cost that may not correspond to the service actually required.
The four conditions in TCU Decision 1,753/2026 for extension costs
TCU established four cumulative conditions for applying Article 124, paragraph 2, of Law No. 14.133/2021 to supervision, inspection and management contracts.
The supervisor must not have contributed to the delay
The first control concerns causation. If the supervisor itself directly or indirectly contributed to the schedule change, it would not make sense to compensate it additionally for time it helped create.
Examples of contribution may include unjustified delays in document review, failure to identify schedule deviations in a timely manner, interface-management failures, failure to notify nonconformities affecting the critical path, or other obligations within its scope.
This reinforces the need for contract oversight based on obligations, changes, payments and acceptance, supported by contemporaneous records. Without a decision history, it becomes difficult to distinguish an external event from a failure by the supervisor itself.
The supervisor must have remained effectively mobilized
The mere existence of the contract does not prove cost. The Court requires evidence that the contractor remained effectively mobilized and available to the Administration during the additional period.
In addition, the impossibility of demobilization, even partial, must be demonstrated.
This point changes the economic design of the contract. If the works slow by 70% and only two work fronts remain active, keeping the original team fully mobilized requires technical justification. Otherwise, the structure can be resized.
The costs must actually have been incurred and proven
The third condition rules out abstract estimates. The additional amount must correspond to an actual expense incurred because of the extension and demonstrated by reliable documentation.
Depending on the contractual model, relevant evidence may include:
- payroll records and charges for the team actually mobilized;
- allocation and time records;
- rental of facilities and vehicles;
- stay and mobility expenses;
- essential support contracts;
- evidence of presence and field activities;
- technical deliverables produced during the period;
- records of meetings, inspections, measurements and decisions.
The analysis should not be limited to adding costs. It must test causation: would the expense have existed without the delay? Was it generated by the supervised contract? Was it unavoidable, or could it have been mitigated?
The compensation model cannot make the passage of time irrelevant
The fourth condition is particularly important. If the contract pays for deliverables, milestones or results, merely extending the term is not sufficient grounds to increase the value when there has been no quantitative or qualitative increase in the deliverables.
Imagine a supervisor contracted to deliver 24 monthly reports, 12 milestone verifications, a commissioning report and a final report. If the works are delayed, it is not enough to state that “there were six more months.” It is necessary to verify whether the contract began to require new deliverables and whether those deliverables have a contractual basis for compensation.
Person-month is simple to estimate, but creates an incentive to remain mobilized
For decades, supervision contracts were often structured around monthly staffing: senior engineer per person-month, mid-level engineer per person-month, technician per person-month, and so on.
This model has an obvious operational advantage: it is easy to size the estimate and measure resource availability. However, it also creates an economic incentive for compensation to follow time even when the physical volume of the works declines.
TCU has recommended linking compensation, whenever possible, to measurable deliverables or results. This does not mean eliminating resource analysis. Effective supervision still depends on staffing, field presence and technical capability. The change lies in the unit used to control payment.
| Model | Main payment unit | Main advantage | Main risk |
| Person-month | Monthly professional availability | Simplicity and fit with continuous activities | Compensation grows with time even when production is low |
| Deliverable | Report, stage, package or deliverable | Payment linked to evidence | Deliverable artificial ou mal definido |
| Milestone | Completion of a verifiable phase | Aligns payment with progress | Milestone muito longo pode afetar caixa |
| Result | Performance or condition achieved | Encourages effectiveness | Requires a very well-specified metric |
| Hybrid | Fixed portion + deliverables/milestones | Preserves availability and delivery | Requires sound measurement architecture |
The choice must reflect the nature of the service. Daily site inspections may require a presence component. Design reviews, measurements, reports, work-front releases and acceptance activities can be structured by deliverable or milestone.
Deliverable-based compensation does not eliminate on-site supervision
There is a risk of the opposite interpretation. Linking payment to deliverables does not mean turning supervision into document production disconnected from the field.
The deliverable must represent a real technical obligation. A measurement report, for example, has value only if it results from quantity verification, inspection, evidence and compliance analysis. A monthly report should not be repetitive text produced merely to release payment.
The Construction Measurement Report illustrates this logic: the document must embody a verification that was performed, not replace the verification.
For this reason, sound contracts distinguish:
- minimum required availability;
- continuous field activities;
- inspection events;
- technical deliverables;
- progress milestones;
- specific decisions and technical opinions;
- provisional and final acceptance.
Slowdowns and shutdowns should reduce compensation when they reduce the service
TCU Decision 1,753/2026 expressly recommends that contracts provide for reduction or suspension of the supervisor’s compensation when the pace of the works weakens or the works are fully halted.
The logic is one of bilateral economic-financial balance. If the works stop, the contractor should not be required to maintain indefinitely resources that are no longer necessary; nor should the Administration pay for a full structure without corresponding activity.
A technically useful clause should answer:
- which indicators characterize a slowdown;
- which roles are considered the minimum core;
- which roles can be reduced by work front;
- how the demobilization order occurs;
- how quickly the team can be remobilized;
- which demobilization and remobilization costs are admissible;
- how monthly deliverables are adjusted when there is no progress;
- how activities that continue during a shutdown are handled, such as preservation, security, deterioration inspection and document management.
Without these rules, the Administration negotiates under urgent conditions precisely when the project is already in crisis.
Supervision should not be confused with simple labor supply
The supervision service is predominantly intellectual and oriented toward the project’s technical management. The team is a means of execution, not the final economic object.
A contract structured exclusively around staff positions may shift the focus to physical presence and lose accountability for technical outcomes. Conversely, a contract based exclusively on reports may hollow out field capability.
The design must reflect the supervisor’s responsibility matrix, for example:
- analysis of the execution plan;
- monitoring of the critical path;
- validation of measurements;
- quality control;
- review of submittals and materials;
- RFI management;
- change control;
- event logging;
- claims analysis;
- test monitoring;
- support for acceptance;
- consolidation of As Built documentation and final records.
This approach brings supervision closer to Owner’s Engineering: the contractor’s technical representative transforms execution information into documented decisions.
The main contract and the supervision contract do not need to have the same cost curve
It is common to compare growth percentages for the works and supervision as though they should be identical. This comparison can be useful as a warning signal, but it is not a mathematical rule.
The works have a strong variable component: materials, equipment, services performed and productivity. Supervision has a significant share of costs that depend on time and technical resources.
A project may increase 10% in value and be delayed 40% in time. In that scenario, supervision may suffer a significant time impact even without a proportional increase in the physical value of the works.
The problem is not the difference in percentages. The problem is failing to explain it.
A technical memorandum should demonstrate:
- cause of the schedule change;
- responsibility for the event;
- evolution of the physical pace;
- supervision resources required in each phase;
- possibilities for partial demobilization;
- additional deliverables required;
- proven incremental cost;
- contract position relative to the statutory limit;
- alternatives for a new procurement.
Example 1: a six-month delay with a full team does not mean automatic payment
Consider a R$ 1,000,000 supervision contract to monitor works over 20 months.
The works are delayed six months because of an unforeseen public-utility interference. The supervisor did not contribute to the delay.
An automatic interpretation could add 30% to the contract value because the period increased from 20 to 26 months. This would raise the contract to R$ 1,300,000, exceeding the 25% limit.
The correct approach is to analyze:
- which team remained necessary;
- whether part of the team could have been demobilized;
- which additional deliverables were required;
- what actual cost was incurred;
- how much of the addition fits within the limit;
- when a new procurement should have been initiated.
If a new procurement is the legally appropriate and economically advantageous solution, the Administration should not wait until the 25th month to start the process.
Example 2: halted works do not justify maintaining one hundred percent of the structure
Consider a project with five work fronts and a supervision team sized to monitor all of them simultaneously.
Because of budget constraints, four fronts are halted for five months. Only preservation activities and one residual front remain.
The need for supervision does not disappear, but its scale changes. It may still be necessary to keep a coordinator, the professional responsible for the active front and periodic visits to halted areas. Other resources may be temporarily reduced.
If the contract has a resizing clause, the decision is predictable. If it does not, disputes arise over availability, demobilization, remobilization and idle costs.
This is exactly the type of situation that TCU Decision 1,753/2026 seeks to anticipate.
Example 3: a deliverable-based contract requires evidence of an additional deliverable
Suppose supervision is paid through twenty monthly reports, five release milestones, a provisional acceptance report and a final report.
The works are extended by four months, but during two of those months there is no relevant production. The contract should not simply add four identical monthly installments.
The analysis needs to verify whether there were:
- new complete inspection cycles;
- new measurements;
- new milestones;
- extraordinary reports;
- inspections required for preservation;
- replanning;
- additional deliverables formally requested.
If there was no increase in deliverables, the mere passage of time is not enough to increase compensation.
The Administration must start the new procurement before reaching the limit
The most operational consequence of TCU’s understanding is this: the 25% limit turns monitoring of the contract balance into a planning trigger.
It is not enough to monitor only the value already consumed. Future value must also be forecast.
A management dashboard can track:
- updated initial value;
- additions already formalized;
- percentage of the limit already consumed;
- remaining supervision period;
- forecast duration of the works;
- forecast physical completion;
- estimated monthly supervision requirement;
- lead time for a new procurement;
- risk of discontinuity in supervision.
If the forecast indicates that the contract will reach the limit before the works are completed, the replacement procurement process should begin far enough in advance to accommodate the Preliminary Technical Study (ETP), Terms of Reference, estimate, selection, qualification and transition between teams.
The exception for disadvantage cannot become a rule of convenience
TCU makes an exception for situations in which conducting a new procurement is unequivocally disadvantageous. This requires more than stating that a new procedure “will be burdensome” or may cause delay.
A robust demonstration must compare alternatives.
The following may be assessed:
- time required for a new procurement;
- cost of mobilizing a new team;
- loss of accumulated knowledge;
- risk of discontinuity in inspection;
- transition cost;
- physical stage of the works;
- realistic remaining period;
- economic value still required for supervision;
- possibility of emergency procurement when legal requirements are met;
- ability to preserve competition and value for money.
The exception should not compensate for lack of planning. The more foreseeable the approach to the limit was, the harder it is to justify that the only remaining alternative is to maintain the existing contract.
The Terms of Reference should provide for what happens when the works slow down
The best time to resolve the issue is not in an amendment. It is during the initial procurement.
A supervision Terms of Reference may structure, as appropriate:
Scope by phases
Separating mobilization, full execution, lower-intensity phases, commissioning, acceptance and closeout helps size resources realistically.
Minimum team and variable team
Not all professionals need to remain at the same allocation level throughout the works. The Terms of Reference may define a core team and resources activated by work front or phase.
Deliverables and acceptance criteria
Each deliverable needs defined content, evidence, deadline and acceptance criteria. This makes it possible to link compensation to the activity actually performed.
Reduction triggers
The contract should provide for how a slowdown changes staffing, deliverables and payment.
Remobilization triggers
If the works resume, a reasonable period must be established for rebuilding the team and treating legitimate remobilization costs.
Control of the statutory limit
The manager needs an updated record of additions and a forecast of consumption of the limit.
The event schedule and supervision need to work together
The event schedule in public works organizes physical and financial events in the execution contract. For supervision, these milestones can serve as references for structuring deliverables and effort.
For example, completion of foundations, structure, installations, testing or provisional acceptance may trigger specific supervisor deliverables.
This connection reduces dependence on the monthly calendar and brings compensation closer to the generation of technical value.
It also helps address periods of low production. If a given milestone has not progressed, the contract may provide only for minimum preservation, recording and management activities instead of paying as though all fronts were in full execution.
The supervision contract itself also needs oversight
The supervisor inspects the works, but its own contract requires management and oversight by the Administration.
This means verifying:
- presence and qualifications of the promised team;
- actual mobilization;
- quality of deliverables;
- timeliness of analyses;
- compliance with technical SLAs;
- traceability of decisions;
- accuracy and adherence of measurements;
- evolution of the contract balance;
- need for resizing;
- conflicts of interest;
- the supervisor’s contribution to delays or their mitigation.
Without this control, it is impossible to correctly apply the four conditions in TCU Decision 1,753/2026.
How Owner’s Engineering reduces the risk of uncontrolled amendments
Owner’s Engineering can act before and during the procurement of supervision services to transform duration, deliverables and resources into a measurable contractual architecture.
This includes:
- maturity analysis of the works schedule;
- sizing of monitoring effort;
- definition of deliverables and milestones;
- responsibility matrix;
- staff reduction rules;
- change control;
- event logging;
- forecast of final time and cost;
- support for a new procurement as the limit approaches;
- technical analysis of supervisor claims.
The objective is not to prevent every change. It is to prevent the Administration from discovering too late that a supervision contract designed for twenty months must follow works that will now last thirty-six.
Checklist for procuring construction supervision under Law 14.133
Before publishing the bidding documents, verify whether:
- the supervision period derives from a realistic works schedule;
- the contract distinguishes execution period, contract term and compensation;
- the team was sized by phase and work front;
- there is a minimum core and variable resources where applicable;
- deliverables have objective acceptance criteria;
- milestones are connected to physical progress;
- compensation does not depend solely on person-months without justification;
- there is a clause for reducing compensation during slowdowns;
- there is a rule for total shutdown;
- there is a partial demobilization procedure;
- there is a remobilization rule;
- extraordinary costs require documentary evidence;
- the contract addresses causation of delays;
- the 25% limit is monitored prospectively;
- there is a trigger to start a new procurement before the balance is exhausted;
- provisional and final acceptance have specific supervisor deliverables;
- the Administration has a person responsible for overseeing the supervision contract itself.
What changes for contracts already under execution
Existing contracts conceived under the earlier logic must be analyzed based on their own instruments and the applicable legal regime. It is not technically appropriate simply to insert retroactively a compensation architecture that did not exist.
The manager should reconstruct:
- legal basis of the contract;
- measurement clauses;
- quantities originally contracted;
- amendments already executed;
- causes of extensions;
- available addition balance;
- team actually maintained;
- deliverables completed;
- proven costs;
- forecast period for completion of the works.
From there, it is possible to decide among an amendment within the applicable limits, resizing, reduction, a new procurement or another legally appropriate solution.
The 25% limit does not eliminate economic-financial balance
TCU’s understanding does not turn the contract into a unilateral relationship in which the supervisor must absorb any extension without consequence.
If an event outside the contractor’s control extends the need for resources that it could not demobilize, actual additional costs may exist. What has changed is the standard of evidence and planning.
The Administration must avoid two extremes:
- automatically pay for every additional month of the works;
- assume that every time extension must be absorbed by the supervisor at no cost.
Balance depends on causation, mobilization, proof of costs, the compensation model and contractual limits.
Final considerations
The 25% limit applied to construction supervision is not an isolated amendment rule. It changes how the contract should be planned from the outset.
TCU Decision 1,753/2026 consolidated three operational messages. First, extending the works does not, by itself, authorize an indefinite increase in the value of supervision. Second, extension costs must be linked to responsibility, actual mobilization, inability to demobilize and proven expenses. Third, the compensation model matters: deliverables, milestones and results reduce dependence on the mere passage of time.
For the Administration, the main consequence is to anticipate decisions. When the schedule indicates that the ancillary contract may reach the limit before the works are completed, the new procurement must begin before a crisis emerges. For the supervisor, the benefit of a well-structured contract is equally relevant: clear rules for demobilization, remobilization, deliverables and extraordinary costs reduce disputes and provide predictability for compensation.
Effective supervision is not indefinite team presence. It is technical governance proportional to the risk and actual pace of the project, with measurable obligations, evidence and capacity for contractual adaptation.
Technical references
[1] BRAZIL. Law No. 14.133, of April 1, 2021. Public Procurement and Administrative Contracts Law, especially Articles 124 and 125. Available at: [Planalto — Law No. 14.133/2021](https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14133.htm).
[2] TRIBUNAL DE CONTAS DA UNIÃO. TCU Plenary Decision No. 1,753/2026. Supervision, inspection and management contracts; 25% limit; extension costs and compensation-reduction clause. Available at: [TCU — Decision 1,753/2026](https://pesquisa.apps.tcu.gov.br/doc/acordao-completo/1753/2026/Plen%C3%A1rio).
[3] TRIBUNAL DE CONTAS DA UNIÃO. TCU Plenary Decision No. 2,391/2025. Amendment of supervision contracts and statutory limit. Available at: [TCU — Decision 2,391/2025](https://pesquisa.apps.tcu.gov.br/doc/acordao-completo/2391/2025/Plen%C3%A1rio).
[4] TRIBUNAL DE CONTAS DA UNIÃO. TCU Plenary Decision No. 648/2025. Quantitative changes in supervision and management contracts. Available at: [TCU — Decision 648/2025](https://pesquisa.apps.tcu.gov.br/doc/acordao-completo/648/2025/Plen%C3%A1rio).
[5] TRIBUNAL DE CONTAS DA UNIÃO. Cost Engineering in Public Works: a guide of questions and answers. Brasília: TCU, 2026. Available at: [TCU — Infrastructure and publications](https://portal.tcu.gov.br/infraestrutura).
Frequently asked questions
Yes. TCU reaffirmed that construction supervision, inspection and management contracts are subject to the statutory 25% limit for contractual additions governed by Article 125, even when the additional need results from an extension of the main works.
No. Extending the works period does not automatically increase the value of supervision. Responsibility for the delay, actual mobilization, possibility of demobilization, proven costs and the contract’s compensation model must be analyzed.
The Administration should plan a new procurement in a timely manner to avoid discontinuity in inspection. TCU recognizes an exception when a new procurement is unequivocally disadvantageous, provided this condition is duly demonstrated and justified.
There is no general prohibition, but TCU has recommended models linked to deliverables, milestones or results whenever appropriate. Person-month arrangements require additional controls because compensation tends to follow the passage of time.
TCU Decision 1,753/2026 recommends that contracts provide for reduction or suspension of compensation in the event of a slowdown or total shutdown, consistently with the services actually required.
No. Execution period, contract term and value are different quantities. The contract term may need to be extended to allow completion of obligations without this, by itself, authorizing a proportional increase in compensation.
TCU requires that the supervisor did not contribute to the delay, remained effectively mobilized, demonstrate the impossibility of demobilization and document the costs actually incurred. The compensation model must also be considered.
The Terms of Reference should combine a realistic period, phase-based staffing, measurable deliverables or milestones, reduction rules during slowdowns, demobilization and remobilization, prospective monitoring of the 25% limit and a trigger for a new procurement.
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- Engineering Contract Oversight: how to control obligations, changes, payments and acceptance
- Contract Extensions under Law 14.133: execution period, contract term and time amendments in engineering works and services
