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New to claims, What to look out?

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Skan Bu
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Hi all,

I just discover this site & is most interesting & good.

I am new to the construction industry & like to learn more.

I am on a project site with a visiting SQS but have little time to teach so rely all at college & friends.

I deal mainly with subcontractors.

Now working on a project where the subcontract is on a Fidic contract?

I see the subcontractor had already submit extension of time claim, although mainly dealt with by SQS but I like to know more.

What should I be watching out for?
Please guide me step by step since I am a little green with all this.
I would appreciate some sort of procedure or flowchart guidance so I can look in while at the office & what type of info I need to back me up against the claim?

The sub contractor order is on a BQ, They were given some drawings and a whole lot of specifications. They submitted a schedule when quoting.

Thanks

Maybe my query is very basic compare to the questions asked in this forum but I always believe in getting the basic right. Please educate me & guide me.

Skan

Replies

Charleston-Joseph...
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Hi Skan,

The best you can do is look at the previous thread in this main thread: Contract, Claims & Claims Assessment.

Since you are new, as a start: Always follow the post of Mr. Andrew Flowedew and Mr. Stuart Ness.

You can come back to all the post and read the opinion of others.

I place my bet that if you will seek the opinion of the two gentlemen i mentioned, you can practically work as independent claim consultant. And hopefully, you will not become a competitor to your shensei.

Cheers,

Charlie

Andrew Flowerdew
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Skan,

Is it a variation or not? - that is a question that often comes up.

To decide this you have to define the scope of the work that is included in the contract. This is harder than it appears as it is the legal concept of the scope of work which needs defining and not what’s covered by the documentation - B of Q, specifications, etc.

The concept of "reasonable" often crops up in contracts, eg, what an experienced contractor would expect to find - this phrase limits the contractors obligation to what is it reasonable to expect an experienced contractor to believe he would find when excavating the foundations given the information available to him and that extra information which it is reasonable to expect him to find out by himself. I would suggest it is generally not reasonable to expect the contractor to carry out his own SI during the tender unless there are circumstances to indicate otherwise.

What is reasonable is obviously open to debate but a common sense approach would normally come up with the right answer.

On the basis of what you’ve said and the concept of reasonable defines the contractors risks, I would say you are correct in your assumptions in cases 1 and 2. In case 3 the notation on the drawing would suggest that the contractor should have allowed something in his tender for over excavation and mass concrete fill. Again, using common sense and reasonable thinking, decide what he should have allowed. If this correspond to what was actually done, then contractor is not entitled to anything. If it turned out to be wholly different from what you’d have expected then the contractor may be entitled to the difference of what was to be reasonably expected and what was actually done.

All that said, lawyers often try to to put all the risk on the contractor when drafting contracts, especially lump sum contracts, so a check of the contract is needed to see what it says and what risk the contractor has taken on.
Skan Bu
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Hi,
Thanks

My understanding:

If the Contract Administrator(RE or Arch or PM) issues a SI, ie an instruction to carry out something. That SI may not necessary is a VARIATION to the contract. It could me an instruction to the contractor to carry out something which is already in the original contract.
(Maybe this something could be a method of working or an agreement to use a similar approved product etc)
Is this correct?

Even if it is a Variation, it might not attract financial cost or time on the "something".
What is a VARIATION?

This is where I am sometime confuse defining Variation.

My understanding in the case I mentioned:
Case 1:
The contract documents are not clear on this point and the drawings etc do not show the soft strata
My opinion is that The Contractor could not have known about the soft strata too.
Therefore, this is a Variation. This variation will incur cost because it was not allowed in the BQ, the extra 200% increase in qty must be pay for. At what RATE the extra 200% should be paid? Can we use the same rate as those excavation in the BQ?- why?
Is there a case for EOT? - why?
How can we work out the time for the extra excavation or EOT?

To complicate further if it is a lump sum contract, is it a risk that the contract should have allowed?

In case 2:
The soil report showed incohesive soil below 4m and the foundation only excavated to 3.0m.

I would have thought this will definately constitute a Variation and there is no way the contractor should bear the the extra work. the design only show to 3.0m and the soft strata is 1.0m below the bottom of the foundation. Should the Contract Administrator issue the SI, he/she obviously think that this must be excavated below the 3.0m as designed and further, passed the 4.0m and further until a suitable strata is reached. Again the same conclusion as Case 1.

In Case 3:
Because of the "Shaded Area" & the notation,
My opinion is that The contractor is at risk and they should have allowed financial implication in their tender for this risk or have it excluded in the conditions of their tender.

Assume that the Contractor did not exclude this in their conditions.
If the C.Adm. issue an SI.
Is this a variation?
Is this a variation that attract cost and time?
How do we assess this?
NOT ORGETTING THAT THIS IS A LUMP SUM CONTRACT.

Wow! this is where I am not experiece enough to answer.

The above is looking from the basic layman approach with the understanding/knowledge I have.

What do you all think & enlighten me or correct me if I hav eapplied incorrectly?
It may seem that I am pro contractor but I am actually on the client/designer side but acting fairly as per reason given.

Thanks

I would like to take this further to programming analysis too base on these situation and would appreciate some of you more knowledgible planner can assist in educating me on pogramming analysis to this.






ashraf alawady
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Hi, Skan
This is my own assisement:-
1- When RE has issued an SI to carry out extra excavation ,as you said, the amount increased to 200% over those in BOQ so,i can observe that it is not a variation for new item but the matter is the increase in quantity of one of the existing item in the original scope of works.

from the above ,the contractor has the right to submit offcial notification to the engineer for his entintion to claim EOT and all related costs.then, he has to use the latest approved impacted programme to show the impact of the increased quantities on tha programme.

Taking into consideration that the icrease in quantities for certain activity may or may not has an impact base on the available total float for that activity on the latest approved impacted programme at the time of issuing the instruction.

For the other 3 cases, in my opinion, it is the contractor own resposibilities to chec and varify all the details mentioned in any part of the contract documents and to be sure that all the available details is applecable and matching with the site conditions.

Any professional contractor has to understand the contract requiremnts and to make all his own study and soil investigation during the tender stage and if he foud any confilictions he has to raise the same in the tender’s quaries to get a reasonable responses form the employer at the tender stage.

In our contracts,it is mentioned clearly that NO additional payment will be allowed for any error or misunderstanding by the contractor of the works involved. We are dealing with the contractors as professionals and they are not supposing to do any works blindly but we assume that they have professional engineer whom can understand all the contract’s requrements,studing all the expected risks,risk analysis,risk managment,,,etc
and he has to structure his works programme based on the worest cases and to allow enough durations in the programme to accommodate with the above requierments.
Andrew Flowerdew
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Skan,

Would be right in assuming the lump sum is for the construction only, not the design - it appears it is.
Damian Smith
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Dear Skan Bu

For case 1, if the RE instructed the contractor to complete extra excavation, then yes he could claim EOT & increase revenue.

For case 2, presuming you mean the excavation depth is 3m and incohesive soil at 4m depth. Then yes the contractor should been entitled to EOT & revenue if he is required to dig deeper. The contractor is only building what he is being told too. This I feel is the design teams problem not the contractors.

For case 3, the contractor should have tagged his tender or site quote to say that he is will excavate to a certain depth and mass fill to that depth only. For this case, I’d say it could go either way depending on the contract conditons, ie unforeseen physical conditions.

Just my view anyway.
Skan Bu
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Hi
Thanks.

In a Lump Sum Contract:
What happened if the RE or Contract Administrator issue an SI to carry out the excavation, say the strata below the pad foundations were unsuitable and filled with mass concrete. Say the amount excavated is 200% over those in the BQ. Could the contractor claim the extra for the increase and EOT too?
Csae 1:
Lets assume that other contract documents were not clear on this point and original tender drawings or soil report do not show that soft strata.

Case 2:
Assumed that the soil report showed incohesive soil below say 4.0m. The drawing showed foundation from commencement level is only 3.0m.

Case 3: Assumed that the soil report showed incohesive soil below say 6.0m. The drawing showed foundation from commenecement level is only 3.0m but shaded under foundations "To be mass fill concrete to suitable ground" but do not state depth of this shaded area.

In each of the cases above, Lump Sum Contract, what will be the position of the Contrcator?

Thanks
Andrew Flowerdew
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Skan,

If the project is remeasurable then that’s exactly what you do, remeasure it and the contractor gets paid for what he does. The original B of Q is stated to be an estimate of the quantities and will usually vary by abit. If it varies by alot then an EoT will usually be awarded - some contracts state a permissable variation which the contractor is deemed to have allowed for in his programme, eg 15% from stated bill quantity, others don’t.

Lump sum contract, theB of Q will not generally have any relevance, if the quantity goes up significantly then tough on the contractor. A good and old example (but still the laws starting position today) of this was the case of Sharpe v San Paulo Railways in 1800’s. Earthworks went from 2million cubic yards to 4million cubic yards - contract was lump sum and contractor could not claim extra for the increase. Again it depends on the contract, it may have a % variation clause as described above allowing the contractor to claim more but if not, then hard luck to the contractor.
Skan Bu
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Hi,

May I know (As the M.C.) Remeasurable contract: how/what part the BQ plays in such a contract? Are you saying that if it is a remeasurable contract,the qty in BQ for the excavation is provisional and the subby should not use the BQ to plan the duration in the original submitted programme? Therefore ACTUAL: the qty of excavation increased, the M.C. should not award EOT based on the increase in excavation?

Whereas, if it is a lump sum contract then even if there is a BQ given to the subby to tender and in ACTUAL: the qty of excavation increased, the subby should not have claim EOT or there is a case to EOT?

Please explain since I am not very familiar with the significant of the differences and how/what part they play.
I would appreciate if someone can give a LOGIC flowchart how/what we should have considered.(even if ageneric one that can apply to all different sort of contract(lump sum, remeasure etc)

Thanks
Andrew Flowerdew
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The relevance of the B of Q depends on what type of contract you have.

Remeasurable contract, normally extremely relevant.

Lump sum contract, may have no relevance at all, in fact there may not even be a B of Q.

Something falling between the above, difference relevance.
ashraf alawady
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HI, all
I have some contractual points should be taken onto cosideration:-
*THe contractor shall not use the BOQ as the basis for a construction programme or for the purpose of ordering materials or arranging sub contractors.
*The rferance of the above said activities shall be the darawings, the specification and instructions issued by the engineer.
*the whole of te quantities shall be treated as approx. only and are given to provide a common basis for tendering only.
Skan Bu
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Hi all,

It had been sometime since I last contributed.

Just to update everyone, we reviewed the EOT claim and decided that due to the increase in excavation, we have awarded EOT to the sub contractor. We based our calculation from their original submission wjhch is 2 weeks of say X m3. X divided by the 10 days to reach production in m3 per day and the extra excavation is calculate for the award.

Anyone might have any comment? I would like to know if any other method or items that I should have considered and/or argument for or against. Let make it a little more interesting if anyone who reply, please state whether your comment is for the Main Contractor(That is me) or the against (from the Sub Contractor).

In fact the project had moved on and the building is completed and there is another issue which I will post later regarding SECTION COMPLETION CERTIFICATE and how to assess the date.

Thanks

regards
Jawad Al-Nimri
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Dear All,

You are handling verry interesting points and am falling in love with this site.

first of all.
the quantities in the BOQ (Bill of Quantity) are normally and commonly described in the "preambles to the BOD" as being APPROXIMATE. and thats why they are subject to remeasurement.

Approximate means informally about 85% correct, the FIDIC allowed for change in quantities to be a cause or event giving raise to claim should the overall (PRICE) of the contract varried by more than 15%.

making the price parameter of the overall contract is the measuring parameter is due to the different nature of quantities performed under the contract where at the end they are all (labor, Equipment and managerial attention) are translated in terms of $$.$$$.

Your concern about if the EOT shoild be granted should be dealt with as follows:
1- See the Baseline schedule and the time duration assigned to the earthwork quantities and try to obtain the progress rate.
2- the first 15% increase in the contract price due to this wrong quantities is assumed by the Contractor.
3- the remaining quantities are assigned the the calculated progress then the rasonable "Extra Time" is calculated say it was found we need additional 6W. now trying to apply any recovery measures say using two crews if applicablble.
4- if the delay is anticipated (avoidable) study your alternatives wheather to grant EOT or to give acceleration directives and compensate for the lost productivity due to the synartgatic effect,

I have worked on similar issue, unfortanately the change ib the contract price was less than 25% (in our case)
regards,
Damian Smith
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Anthony,

How can such an error be done, that is amazing? I think an EOT would be the least of your worries when taking into account that the BOQ was so far out.
Karim Mounir
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once we have a condition in the contract which approves to have an EOT. it states to have an increase of qty. in certain item by a certain percent (25%) more than the estimated qty. in the BOQ.
Bryan Russell
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Tony, Your dilemma is slightly off thread but i feel you deserve some time and money. The BoQ is of estimated quantities only and subject to re-measure. Tenderers have no obligation to re-measure the Bill. If your tneder programme only took account of resources and time to do the billed quantity, you may have a small problem, but fundamentally the enquiry document was to get a price. If your rate was extended to take the full quantity you may not have been cheapest.
The "for construction" drawings were essentially a variation in terms of Sub-clause 51.1.a). therefore they must be measured and valued interms of S-Cl 56.1 and maybe 52.1 if the rate proves inappropriate. Have a look at Patman and Fotheringham Ltd v Pilditch (1904) Hudson 11th at 8.022

Best of luck
Bryan
Anthony Scarlett
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Stuart,

Interesting dilemma that I am currently facing.

We have a massive increase in earthwork BoQ quantities (36,000m3 to 500,000m3). However the drawings show the correct information i.e. the error is only in the BoQ. Since the drawings have higher priority than the BoQ and therefore, the work was always included in the scope - no EOT. Right or wrong?

The argument is a wide one I guess with the Contractor’s obligation to check quantities and strategically if we accept this as "additional" we might get the side effect of allowing the Engineer to vary the rate.

I would appreciate your thoughts. Limited info I know. Fidic 1994 by the way.

Cheers,

Tony
Andrew Flowerdew
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What was the reason for the additional excavation works?

Increased scope of work or contractors chosen method of work.
Stuart Ness
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Richard,


Many thanks for the added info. I am not over-familiar with the M&E version of FIDIC, since I more often use the Civil Works and the Turnkey versions of FIDIC Contracts.

However, in general terms, I would suggest that the excavation/earthworks item in the BQ is most likely to be subject to remeasurement, and the Preambles to the BQ should confirm this point.

If this is so, then it would be reasonable to allow a proportionate amount of additional time to carry out the additional excavation/earthworks as well as paying for the increased quantity. This view is consistent with Clause 13 of the Design-Build and Turnkey FIDIC Contract (First Edition) which allows for quantities in the BQ to be remeasured and the Contract Price is adjusted accordingly.

You may also find guidance in the Variations Order provisions and in the “physical conditions …which are exceptionally adverse…and were not foreseeable by an experienced Contrcator…”, which under the aforesaid FIDIC Conditions, are grounds for granting an EOT under Clause 8.3.

FIDIC generally allows for an EOT where there is an increase in the workscope; the more well-known FIDIC Civil Works (Red Book) specifically provides for this at Clause 44.1(a).

And in the wider world, Richard, I would suggest that it is equitable to grant the Contractor more time to complete more work that was expected by the original Contract provisions.

Hope this helps,

Stuart

www.rosmartin.com
Richard Quek
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Hi there,

In my case, the main contract is a FIDIC M&E Works inclusive erection on site.

In the 2nd schedule, Particulars of Sub Contract Docs:
Sub Con conditions
Drawings
BQ
Enquiry Docs
Technical spec
H&S Plan
Design risk assessment
Site Investigation Docs
Contract correspondences

Are there any differences if the a difference version of FIDIC is used?

In the correspondences, the Sub contractor submitted programme is one of the documents.

Thanks

Aneesuddin Zubair...
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Hi there,

What type of contract is it?? Lumpsum or....

Cheers,

Anees
Stuart Ness
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Guys,

A couple of quick questions, if I may!

What version of FIDIC are you working with, and is the BQ officially part of the Contract documentation; if so, where is it in the list of priorities for such docs?

Cheers,

Stuart
Richard Quek
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Hi Skan Bu,

I too am working with a Fidic contract for the 1st time too and your query is very legitimate. You are not the only one who can’t see what to look out for too.

The problem with today society is that the senior people just do not have the relevant experiences or the time to train the juniors and the situation is going to get worst too.

I too am experiencing a claim from a subby where they claim that due to increase in volume of excavation and they claim that their programme submitted during tender is based on the BQ qty. They want EOT for the extra work.

In my case, the drawings take precedence over BQ. Therefore, there is a case for them to calim the EOT but you will have to examine the other documents too.

I hope there are others out there who can contribute towards this tread and start from basic too.

Good on you