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Omission of a lumpsum item

11 replies [Last post]
Tue, 2008-06-24 00:18
Karim Mounir
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Hi,

We are the main contractor in an infrastructure project, our contract is based on the FIDIC 99, the contract is based on re-measurement basis (except for some items which are lumpsum).

We have a relocation item in our BOQ, this item is lumpsum. The consultant sent a letter informing us that this item will be omitted from our BOQ.

I refer to the "omissions" and "right to vary" clauses in the FIDIC 99 but found nothing supporting us.

I believe that we can at least ask for the OH&P for this item, but are there any supporting clauses / cases similar to this issue?

Regards,
Karim
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Replies

Mon, 2008-07-07 19:43
#1
Andrew Flowerdew
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Have a read!

http://www.constructionlawonline.com/CLebulletin/lowercols_ebul.html
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Sat, 2008-06-28 02:30
#2
Karim Mounir
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Hi Stuart,

The client omitted this item because of the discrepancies between some drawings in the tender phase.

The consultant issued some drawings in the tender stage stating that the contractor will relocate this, this and that.
In a later stage (still in the tender phase), the same consultant revised his drawings mentioning that the contractor will relocate a part of this and that only.

The ironic thing is that the BOQ figure was estimated taking into consideration the earliest consultant drawing!

We anticipate that we’ll have later on a VO to execute these works again (part of this and that only)!!, the siblings will be invited to execute the rest of the works subsequently.

Karim
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Fri, 2008-06-27 16:00
#3
Gila El-Maayergy
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Stuart,
Totally agree with what you said regarding issuing frequent notices of default to the contractor for his inability to perform the work as specified under the contract before we can descope such works and give it to others.

But what do u think of the contractual implementation of the term contra charge/backcharge .. in which you hire others to do certain related work on behalf of the contractor due to his failure to do it, or his rejection to agree with the Engineer interpretation of an implied term/task
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Thu, 2008-06-26 13:37
#4
Stuart Ness
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Karim,

You are correct that the Client is prohibited from removing part of the Works from the Contractor and giving it to another Contractor without cause, unless the original Contractor was in default and a proper notice of default etc. was issued, giving the Contractor the opportunity to make good, but failed!

Then the Client could give the Works to his cousin/brother/granny to complete!

Hope this helps.

Cheers,

Stuart
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Thu, 2008-06-26 13:01
#5
Karim Mounir
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Thanks Larry / Stuart.

Unfortunately,there will be no supporting contractual documents in our case as I can see from your posts which will not assist us in claiming the OH for this item (unless settled amicably), hence we will send a letter to the consultant requesting confirmation for this -ve change order as per clause 13.1.d.

The client shouldn’t hire other contractor to do these works during the project’s duration, if this happen then I think that we can claim the whole value of this item.

Karim
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Thu, 2008-06-26 05:58
#6
Stuart Ness
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Larry,

I would consider that a downpayment is a vehicle providing a cash flow advance to the Contractor against costs incurred and to be incurred. As is is well known, there are substantial set-up and mobilisation costs that would not otherwise be recoverable by the Contractor until later in the Contract.

Of course, if the Contractor has been awarded a Downpayment/Advance payment and then shortly thereafter has had a big chunk of his workscope omitted, he has in effect "benefitted" to the extent that his Downpayment/ Advance payment will represent a larger percentage of the revised Contract Price.

Stuart
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Thu, 2008-06-26 05:51
#7
Stuart Ness
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Karim,

I think that Larry’s point is valid insofar as you can have a go at trying to convince the Client that you are "entitled" to some form of compensation (however you dress it up!) for the subsequent omission for your Contract Works, but my point is that I see no specific contractual entitlement per se that allows you to claim your "loss".

Pricing is all about evaluating risk; some you win, some you don’t!

Cheers,

Stuart
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Wed, 2008-06-25 22:37
#8
Larry Rino
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Stuart,

Karims Company can not demonstrate or convice the cost of OH&P losses by open book prematurely, however, their book estimate can show the cost impact against LS item deletion.

Also following your argument, a "Downpayment" is an OH(&P) entitlement which expenditure (especially overall expenditure) never took place.

Good day,
Larry
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Wed, 2008-06-25 11:44
#9
Karim Mounir
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maybe greediness after all the things?

Truly, even if it is OH only (sans P), my point is that since we estimated this item in our tender then it already had its weight in the overall OH&P for the project.
Now when the owner / consultant deleted this item, our overall OH&P (for the project) decrease.
especially because the item’s weight is nearly 1.67% from the total project’s budget.

Any ideas?

Regards,
Karim
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Wed, 2008-06-25 07:24
#10
Stuart Ness
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Mmmmm... what makes you think that you are entitled to OH&P (P of all things!!) on an expenditure that never took place??

Undue enrichment, methinks!

Cheers,

Stuart
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Wed, 2008-06-25 03:38
#11
Larry Rino
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Karim,
As far as I know theres no other supporting clauses in Gen. Conditions. However, you may as well check your Contract’s special conditions or commercial clarification clauses that may be applicable.
Also, your Company can demonstrate the cost of OH&P losses by open book (in order to convince your Client), where if you manage to convice them, Changes in the Works clauses may apply..
Good day,
Larry
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