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Performance Guarantee for Variations

1 reply [Last post]
Sun, 2010-03-28 02:56
Francis Moyalan, ...
User offline. Last seen 6 years 5 weeks ago. Offline
Joined: 12 Feb 2005
Posts: 105
Groups: None
Hi Friends,

We are having a situation where, client is asking for issuing the Performance Guarantee for the Variation Works instructed formally.

Contractor is not agreeing to this as there has been no consensus on several instructed variations. The value claimed by the contractor for several variations are not agreed by the Engineer. In this situation please advise as per FIDIC Red Book for Lump Sum Contracts what the provisions say?

Thanks in advance.
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Replies

Sun, 2010-03-28 10:14
#1
Samer Zawaydeh
User offline. Last seen 6 years 16 weeks ago. Offline
Joined: 3 Aug 2008
Posts: 1664
Groups: Civil Engineering, Regional Representatives
Dear Francis,

Clause 4.2 in FIDIC RED book is covering the issue of the Performance Security. If you do not have a copy, let me know and I will post it here.

The client can only ask what is written in the Contractual Documents. If you have nothing stated in the particular conditions, then you only need to read the general conditions. They are silent about this issue. So neither party can do anything without the agreement of the other.

The Performance Guarantee is in exchange for the down payment given by the Client at the start of the project.

So I suggest that you check you last interim payment and check how much money did the Client Recover from the interim payment against the down payment. Since the Performance Guarantee is still valid, then your Client is on the safe side for at least the amount recoved until now.

Seems to me that you have tension on both sides. I would suggest that you work on improving communication and ease the tension. Take them to a resort for the weekend and let them have fun.

It will be more productive for each side. Find out how much time they are spending fighting and put a dollar amount on the cost per minute for your project, you will find out that a vacation is a trivial cost. That is without calculating the improved managerial performance afterwards.

With kind regards,

Samer
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