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contractual issue

23 replies [Last post]
Tue, 2007-08-21 09:08
ashraf alawady
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Dear all,
can you give me your opinion in the following case:-
The project starting date is 10/11/2005
The project completion date is 09/11/2006
During the construction period there were different delays events , some out side the contractor contraol and caused by others and the majority of the remaining delays events are the contractor own reposibility due to lack of resources and bad manegement.
The engineer has issued many letters to the contractor based on clause 46.1 of the general condition of contract exepressing the engineer concern regarding the contractor delays and low rate of progress due to lack of resources and bad manegement .

In the same time the contractor has sent many letter to the engineer for the delays of other parties and authorities for example to issue the neccessary No Objection Certefecates
to the contractor to start the works in the begening of the projects and some delays from the engineer due to delays in approving the shop drawings and delays in reply to the submitted Requuests for Informations.....etc.

The project has been delayed and actual completion date was 31/07/2007 .

There are meny failure in the quality tsets specially in the asphalt layers and non compliance with the contract specification which give the engineer the wrihgt to instruct the contractor in this stage to reove many areas and to make a major reconstruction works which will cause high cost and need more time from the contractor to do all these rectification works and the engineer has refused the contractor request to hand over the project and to undertake to do all the necceessary rectification works during the early stage of the defects liability period.

To accept that solution the engineer has asked the contractor to drop all his claims.








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Replies

Wed, 2008-04-16 17:04
#1
Abdelmoneim Youss...
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I worked in many projects in Time extension some projects as a consultant for the client and other projects as a consultant for contractor to claim extension of time

I have a case when I were a consultant for the client I were fair with the contractors so, he reduce the claim time from 90 days him self to 65 days just he know that I will be fair with him, then he need extra 120 days because he order the material from USA and need that time, so we change the scope of contract and move that work to another contract with the same contractors to help the contractors, and the contractor was claim for 100,000 ADE /day for each extension day but he at the end of the contract and hand over the project he agreed to let that money .

The same contractor with the same client in another contract because of the consultant was try to be bias to the client ,the claim convert to disputes and no solution up to now
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Wed, 2008-04-16 17:04
#2
Abdelmoneim Youss...
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Groups: GPC Malaysia, GPC Qatar

I worked in many projects in Time extension some projects as a consultant for the client and other projects as a consultant for contractor to claim extension of time

I have a case when I were a consultant for the client I were fair with the contractors so, he reduce the claim time from 90 days him self to 65 days just he know that I will be fair with him, then he need extra 120 days because he order the material from USA and need that time, so we change the scope of contract and move that work to another contract with the same contractors to help the contractors, and the contractor was claim for 100,000 ADE /day for each extension day but he at the end of the contract and hand over the project he agreed to let that money .

The same contractor with the same client in another contract because of the consultant was try to be bias to the client ,the claim convert to disputes and no solution up to now
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Wed, 2008-04-16 12:01
#3
Mike Testro
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Hello Everybody.

I hope you don’t mind me butting in on this interesting discussion.

When there are two causes of delay each from the Contractor and the Employer then the rules of "Concurrency" need to be considered.

This follows a detailed delay analysis when the Cause and Effect of each event is considered one by one.

If late RFI was the first event then this must be addressed first to see what the delay effect was.

If the Contractor delay on bad workmanship was next then that is addressed to see if any further delay was caused.

You now need to consider when the work was being delayed on the site - this is known as Causation Period.

If there is a clear gap between the end of the RFI causation and the start of the Contractor causation then there is no concurrency and time and money can be allocated pro rata to the delay effect.

If the causation periods overlap then you do have concurrency and this is where your problems start.

The SCL protocol sets out some rules for concurrency but these are applicable to English Law and they are now out of date.

As a general rule if the Employers causation delayed the work then the contractor gets his time extension provided that his causation had no further delay effect.

The contractor does not get his over run costs for the period when the causations overlap.

This is simple enough when there are only two distinct causations - it gets really interesting when there are a hundred or more all overlapping each other.

Best regards

Mike Testro
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Wed, 2008-04-16 09:39
#4
ashraf alawady
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Hi Abdelmoneim Youssef ,
can you give me your opinion to which side you believe the the major delay had caused by him and what is the basis of your opinion.
Reagards
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Wed, 2008-04-16 08:45
#5
Abdelmoneim Youss...
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Engineer (Consultant)

Should be Fair and behave as a judge not be baist to any side
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Sat, 2008-03-29 09:01
#6
ashraf alawady
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Hi, i’m working with the client(government)and stll we are studing this case with the consultant and the contractor based on the info available contractual issues of each Party, which is itemized below:

Engineer -
1. Delay of drawings, RFI’s
2. Delay outside the Contractors control

Contractor -
1. Delay due to lack of resources
2. Delay due to bad management
3. Poor quality
4. Rectification works


i beleive that the Engineer has stronger position vs. Contractor because the impact of the reasons of delays from the contractor side is more lager than the impact of the reasons of delays from the consultant side which definitly will effect as concurrent delays .
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Sun, 2007-12-23 22:26
#7
Larry Rino
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Shahzad,

Good day, I have no objection for an amicable settlement way of resolution, however, the stronger position I meant was further explained below:

Engineer can claim to Contractor (in accordance with the Contract) an amount of say 260,000USD due to Contractors delay.

Contractor can claim to Engineer (in accordance with the Contract)an amount of say 160,000USD due to Engineers delay.

Therefore, Engineer (or Employee) still gains 100,000USD which will benefit them and/or Employer, also will lessen the Project Cost by 100,000USD, and aside from Contractor will rectify the defective works at their own cost.
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Sun, 2007-12-23 09:56
#8
Shahzad Munawar
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Rino

I do agree with your comments except

If Engineer has stronger position vs. Contractor, why would the Engineer asked the Contractor to drop his claims?

It usually happens in our industry that Engineer never like that Contractor raise any claim and always try that the Contractor drop his claims to minimise the Project Cost or within the Original Contract Price and,

The ‘Engineer’ always do that to take more benefits from the Employer such as to maintain their fees after all he is ‘Employee’ of ‘the Employer’.


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Fri, 2007-12-21 20:34
#9
Larry Rino
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Ashraf,

Based on the info regarding contractual issues of each Party, which is itemized below:

Engineer -
1. Delay of drawings, RFI’s
2. Delay outside the Contractors control

Contractor -
1. Delay due to lack of resources
2. Delay due to bad management
3. Poor quality
4. Rectification works

You have mentioned that "the majority of the remaining delays events are the contractor own responsibility", which shows Contractor delay > Engineer delay in the approx. 260 calendar days delay (31/07/2007 - 09/11/2006).
E.g. If the Contractor delay is 160 and Engineer delay is 100, I think 100 days delay of Engineer can be resolved by offseting, then Contractor is still 60 days liable as LD. And, aside from Poor quality and Rectification works are obligation of Contractor.

If Engineer has stronger position vs. Contractor, why would the Engineer asked the Contractor to drop his claims?
I would suggest Contractor should be fined for his delay + rectify works.
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Tue, 2007-12-18 17:25
#10
Andrew Flowerdew
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Is that "with" ie consultant or "for" the employer, ie employee?

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Tue, 2007-12-18 17:04
#11
Shahzad Munawar
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When you complete your working with Employer,let us know the results of these issues
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Mon, 2007-12-17 07:23
#12
ashraf alawady
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Hi,
i’m working with the employer.
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Wed, 2007-12-12 20:10
#13
Andrew Flowerdew
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If the workmanship was of good quality and there was little concern about future defects then I’d agree that a negotiated settlement was a good way of proceding.

But as workmanship and quality appear to be a real issue, then extreme caution needs to be exercised. You don’t say if you are acting for the contractor, engineer ar employer.

If contractor, then it may be a commercially viable way to go.

If engineer, then advise your employer of ALL the possible future effects and get the employer to agree in writing to the deal. Otherwise make sure your professional indemnity insurance is paid up to date!

If the employer, consider that at some point in the future the asphalt may fail and you could end up ripping it up and replacing it, possibly along with other things, at your cost - along with a very expensive litigation action or arbitration to try and recover these costs. What might be a short term financial advantage today could come back and bite you in the future, for example, if you’re expecting things to last 20 years with minimum maintenance and you’re having to completely replace them in five years due to poor workmanship, a ’good deal’ now could turn out to be a bad deal in five years time.

No easy answer to this as all parties will have thier own priorities.
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Wed, 2007-12-05 10:22
#14
Shahzad Munawar
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Its really good news that negotiations have been started to settle the issues amicably otherwise you have to proceed through arbitration or litigation which consumes time and costs as well.
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Wed, 2007-12-05 10:22
#15
Shahzad Munawar
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Its really a good news that negotiation have been started to settle the issues amicably otherwise you have to proceed through arbitration or litigation which consumes time and costs as well.
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Wed, 2007-12-05 00:31
#16
ashraf alawady
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Dear all,
As advised by you,the engineer and the contractor now in the negoiation stage for amicale settelement to reach a commercial and contractual settlement .

i’ll inform you about the results as soon as we finished.
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Thu, 2007-10-25 01:26
#17
Waleed Mahfouz
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IMO, The contractor has to study all of the side effects for all case, and decide which case will lead him to the optimum case. As he is in a bad situation, so he should negotiate well.
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Mon, 2007-10-15 12:06
#18
Andrew Flowerdew
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Ashraf-

Stick to the book (contract). If in 2, 3, 4, etc years time there’s major problems due to the defective work then you’ll be glad you did.
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Sun, 2007-10-14 10:20
#19
Philip Alva
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With that situation, The only way that the Contractor can relieve itself will be by documentary evidences.
First, the contract must be existing and akcnowledged by both parties.
Second, you must have an original approved programme or a baseline programme.
Third, you must have an official documents that will support your alligations i.e. RFI’s, DQ’s, IQ’s etc... as you mentioned. That should also indicates the time and period of each documents and replies from the client.
Fourth, Prepare a bar & s-curve presentation that compares the original and actual programme and at the bottom of it count the number of events per documents sent and replied by the client per number of RFI, DQ, IQ etc periodically that will support the disruptions incurred by the contractor due to the client’s and/or engineer’s failure to assess on time with the contractor’s quieries.

I hope this solution helps.

Regards and goodluck.

Philip
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Thu, 2007-09-27 00:31
#20
Clive Randall
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There is nothing stopping the engineer and the contractor reaching a commercial and contractual settlement in the way you have described.

If the contractor believes he has a case stronger than the settlement offered he will go after it I am sure.

Equally the Engineer can refuse to accept that completion of the works has occured if defects exist in the works. In that case LDs can be levied.

I think you need to review the issues on a case by case basis.
Firstly the contractors entitlement or not is based on who was the delaying party and for how long. Once these have been defined each delay must be added to the programme baseline to ascertain the overall delay and therefore the resonsibility for the delay. If that means the contractor is justified in an extension so be it.

Then within the extended period the contractor should complete the contract works. If he does not through whatever reasons even regarding quality of works LDs can be levied.

Your engineer appears to be taking the pragmatic approach, one I would recomend where possible, however as they say it takes two to Tango.
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Mon, 2007-09-24 23:44
#21
ashraf alawady
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Dear all,
can you give me more opinions in the this case,please.
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Tue, 2007-09-04 10:50
#22
David Barker
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Based upon your argument it would appear that there is something wrong with you pre-qualification protocol. I suggest you review it;

Normally you should consider the Peto principle as No contractor is 100% perfect.

Furthermore,

remember the industry you are in;

do not forget the manner in which you procurred the contractor in the first place;

It is a well known premise that the lowest tenderer has made the biggest foul up in their pricing;

What training facilities does your organisation adopt?



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Wed, 2007-08-22 03:17
#23
Bolisetti Jogiraju
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Hi
Ashraf !

The same (100% similar) situation we have here with us now.

Even after all delays(most from contractor’s mis-management & lack of resourses) occured,The Contractor was given an EOT OF 7 weeks considering all delays from Engineer and Employer,there after penalty likely to be imposed by the Employer.

In fact,If Contractor is not able to manage,it means,Its clear indication that he can not substantiate his rights also in this type of scenerio.

He has to pay for it,if there is no mutual understanding.

Cheers
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