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Partial Taking Over Certifcate

9 replies [Last post]
Tue, 2009-04-14 05:00
Sajid Balma
User offline. Last seen 13 years 51 weeks ago. Offline
Joined: 8 Jun 2007
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Dears
We have been involved in a project which is based on FDIC Silver book & where the construction/installation is 100% achieved. The left over part is Testing & Commissioning.

We knew for quite some time that the Employer is not ready, for the plant to be tested & commissioned, as he needs to provide certain facilities to us to carry on these tests.

The Employer had been involved in blame shifting game for quite some time just to sneak out of this limbo. Fortunately (for us), we were better prepared and as of now demonstrated effectively that it was his problem that the T&C could not be started.

Finally, he informally asked us to suspend the job as he might not able to provide the required services for another 4-5 months. He is willing to issues a Partial Taking Over Certificate and require us to come back for final Testing & Commissioning in September 2009. The Contract does say for a suspension that could go to a maximum of 84 days and after that we are entitled to terminate the Contract. Further during this suspension period we are entitled for all the site related costs & EoT.

Now, my questions are

1. What other costs I should be including during the suspension period???

2. I already have an un-settled EoT with the Employer. If I get an EoT based on this suspension, should I be entitled for EoT from the contractual finish to this new contractual finish. I mean suppose

Contractual Finish: Feb 2008
Unsettled EoT : Nov 2008
Anticipated Finish (now): Sep 2009

Then would my Eot Entitlement be from Feb 2008 to Sep 2009 or from ‘now’ to Sep 2009????

3. What contractual liabilities I should get rid of.

Thanks for reading my post and your comments are highly appreciated

Regards
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Replies

Wed, 2009-08-05 15:57
#1
Samer Zawaydeh
User offline. Last seen 6 years 14 weeks ago. Offline
Joined: 3 Aug 2008
Posts: 1664
Groups: Civil Engineering, Regional Representatives
Dear Sajid,

You need special assistance at this stage. I would recommend that you hire a local expert in these matters.

Your opinion is understandable, your management opinion has more wisdom into it and possibly will nurture the future relationship with the client. The strategic decision is of course is left to your upper management.

From your side, you need to go through chapter 16 thoroughly and make sure that you cover all the basis.

Remember that you Contract works under the law of your Country. Hence, you can not be released from your obligations and responsibilities even if you terminate.

Did you ask the Engineer for a determination as per clause 3.5. This is the number on issue any netural party would ask. Make sure that you cover this step as well.

With kind regards,

Samer
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Wed, 2009-08-05 01:32
#2
Sajid Balma
User offline. Last seen 13 years 51 weeks ago. Offline
Joined: 8 Jun 2007
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Dear Samer
Thanks for responding to my post.
Here is the update

From client side, its only complete silence like I am talking to a wall shifting of blame. Although, they have miserably failed to prove anything against us but they are still in total denial phase.

Yes, we are effectvely demobilized from the site but not 100%. Our team consisting including the project manager of 4-5 guys are still attending the site on almost daily basis.

All claims with 100s of pages of contemporary records have already been submitted to the client & again no news on any assessment whatsoever.

I hope you find the above information useful to comment on my earlier post more effectively.

Regards
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Tue, 2009-08-04 18:04
#3
Samer Zawaydeh
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Dear Sajid,

What happened from the Client side from June until August. And did you demobilize all your team off site since June?
Did you submit all your claim with the supporting data by now?

Thank you.

Samer
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Tue, 2009-08-04 06:25
#4
Sajid Balma
User offline. Last seen 13 years 51 weeks ago. Offline
Joined: 8 Jun 2007
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Hi again
Thanks for those who participated earlier.

So, going back to original post, couple of days back, we had a meeting with the client as we have served a Termination Notice in June. The reason of that Termination Notice was "Employer substantial failure to observe his obligations under the Contract" [sub Clause 16.2 (c)].

Now, I was more convinced to terminate the Contract as pursuant to cluase 16.4 (a), the Employer has to return our Performance Security. Further, I went through the whole of the Contract Documents and to my best understanding, I will retain all my rights even after Termination and meanwhile shed all my obligations.

To me, ths sounds more promising. But, I have a difference of opinion with my superiors who are looking for Partial taking Over Certificate; get our 50% retention out, kick off DLP and warranty. I have the opinion that terminating the contract would mean cease of our obligations.

So, what way I should be heading that serves me the best???

Thanks in advance.

Regards
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Wed, 2009-04-15 14:47
#5
Samer Zawaydeh
User offline. Last seen 6 years 14 weeks ago. Offline
Joined: 3 Aug 2008
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Groups: Civil Engineering, Regional Representatives
Dear Sajid,

In the Silver Book, you will find a chapter on the Test on completion.

You will also find a section in teh "Employer’s taking over" for the events when an "Interference with Tests on completion"

You will need to apply what is stated in both chapters.

Bascially, the works will be considered as "handed over" if the tests are not done on time. But, the Contractor will be asked to conduct the testing if the works are ready for testing within the Defects Notification Period.

Of course, the point that I was trying to make earlier, that the FIDIC clauses have a time limit for application. You must make sure that you present the information within that time limit. Otherwise, it gets more complicated to reserve your rights.

The other point that you need to keep is that you need to be smart enough to account for all the cost that your company paid and not to overcharge or inflat these costs. This will make it more difficult for the other party to refuse your claim, and at the same time you will be allowed to make a "reasonable profit".

Let us know if you need more clarifications.

With kind regards,

Samer
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Wed, 2009-04-15 05:01
#6
Gary Whitehead
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The facts as I understand them are:

before the issue with T&C phase arose, the project was forecasting completion in Nov 08, vs feb 08 contractual completion. Contractor submitted EOT claim, client disputes it.

Since then, client has admitted T&C phase cannot proceed in good time because of their failure to supply necessary equipment, and have asked for a suspension, which would push completion out to Sep 09.

If you loose the argument with client over the original EOT claim (to Nov 08), then the client can rightfully say that you are responsible for the delay up to Nov 08, and enforce appropriate penalties (LDs, etc). This is because you were the first party to be responsible for delay, and whatever happened regarding T&C equipment supply later on would not change this.

The delay from Nov 08 to whenever suspension formally begins is the cleint’s repsonsibility, and they should not disupte the EOT for this period.

The period of suspension would, I assume, be covered by the suspension clause in your contract, and not EOT. I say this because for EOT claim, you can claim for the unexpected cost of running the whole site for additional time. Suspension is a planned activity agreed in advance, not an unplanned delay like EOT. And during suspension, presumably the site will be closed and hence costs will be much lower. I see suspension as being more like a new instruction from client whose scope of work is ’wait 3 months’, rather than an EOT claim.

Again I stress that the contract is your first and most important reference point. Some of the other guys who have more experience with FIDIC claims may be able to give you expert advise, but I am no contracts expert.
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Wed, 2009-04-15 00:43
#7
Sajid Balma
User offline. Last seen 13 years 51 weeks ago. Offline
Joined: 8 Jun 2007
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Hi Gary
Thanks for your reply. But, I wanna make myself clear. When an EoT is claimed?? For me the answer is "when the extension is required for Time for Completion" So, if I am right in the definition then I would be granted an EoT from Feb 08 to Sep 09 as I can not complete the whole of the Works and subsequently can not have a Taking over Certificate. Please correct me if I am wrong assumption.

Hi Samer
Thanks for your reply too. But I am missing the EoT part in your reply. Will you please comment on what I have said above.

Regards
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Tue, 2009-04-14 13:11
#8
Samer Zawaydeh
User offline. Last seen 6 years 14 weeks ago. Offline
Joined: 3 Aug 2008
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Groups: Civil Engineering, Regional Representatives
Dear Sajid,

You need to be compensated for the actual costs that you paid. Make sure that you have a proper system to account for it.

Make sure also that you follow the time limits for submitting the notice of claim as per FIDIC and the supporting documents following that within the time limit stated.

The most important thing is to keep your client updated with all the costs and its supporting documents. Eventually, you will be able to sit down and settle.

With kind regards,

Samer
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Tue, 2009-04-14 06:38
#9
Gary Whitehead
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I’m no contracts expert, so if anything I say goes against what’s in the contract, then follow the cotnract!

1)This would need to be agreed with the client. some areas to consider would be:
a) management time
b) site maintenance, utilities & security
c) cost of hire / depreciation of any plant or test equipment already procured for T&C phase which cannot be put to productive use elsewhere during suspension
d) Any key staff required for T&C phase. -Unless you have a convenient 3-4 month project you can assign them to during suspension, you may have to retain their services at the project’s expense.
e) Cashflow. -Depending on the payment arrangements, delaying T&C may have an adverse affect on your cashflow which should be catered for.
f) All the above for any subbys

2) you need to get the original unsettled EOT settled, as this will take precedence. If the client wins the argument that you are responsible for delay up to Nov 08, then the delay to T&C phase won’t help you for that period. There would be a seperate (and presumable un-challenged by client) EOT claim for period Nov-08 to whenever the suspension period formally begins.

3) The only contractual liabiltiy that springs to mind is maintenance periods / defect warranties. Make sure the clock starts ticking from the Partial TO cert. You might also need to look at rentension.

HTH
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