The document discusses several questions regarding contractual issues that arise when requirements from approving authorities change during construction projects.
One question asks about a situation where a pre-action firefighting system was not initially required for an operating theater in the design approval, but the authority later insisted on it due to design changes. The contractor claimed this as a variation, but the employer rejected it, stating that all authority requirements should have been known.
Another question asks about assigning subcontracts when a contractor's employment is terminated under an FIDIC contract. There is debate around whether the whole subcontract can be novated to the employer or just the benefits assigned.
A third question discusses retention money terms in a contract that are confusing regarding
The document discusses several questions regarding contractual issues that arise when requirements from approving authorities change during construction projects.
One question asks about a situation where a pre-action firefighting system was not initially required for an operating theater in the design approval, but the authority later insisted on it due to design changes. The contractor claimed this as a variation, but the employer rejected it, stating that all authority requirements should have been known.
Another question asks about assigning subcontracts when a contractor's employment is terminated under an FIDIC contract. There is debate around whether the whole subcontract can be novated to the employer or just the benefits assigned.
A third question discusses retention money terms in a contract that are confusing regarding
The document discusses several questions regarding contractual issues that arise when requirements from approving authorities change during construction projects.
One question asks about a situation where a pre-action firefighting system was not initially required for an operating theater in the design approval, but the authority later insisted on it due to design changes. The contractor claimed this as a variation, but the employer rejected it, stating that all authority requirements should have been known.
Another question asks about assigning subcontracts when a contractor's employment is terminated under an FIDIC contract. There is debate around whether the whole subcontract can be novated to the employer or just the benefits assigned.
A third question discusses retention money terms in a contract that are confusing regarding
The document discusses several questions regarding contractual issues that arise when requirements from approving authorities change during construction projects.
One question asks about a situation where a pre-action firefighting system was not initially required for an operating theater in the design approval, but the authority later insisted on it due to design changes. The contractor claimed this as a variation, but the employer rejected it, stating that all authority requirements should have been known.
Another question asks about assigning subcontracts when a contractor's employment is terminated under an FIDIC contract. There is debate around whether the whole subcontract can be novated to the employer or just the benefits assigned.
A third question discusses retention money terms in a contract that are confusing regarding
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My comments are given in red fonts below:From: Sampath prithikumara [mailto:sampathqs@gmail.
com] Sent: Tuesday, September 04, 2012 1:57 PM To: sam99@emirates.net.ae Subject: Termination (FIDIC 87) Dear Sir, Hope you are doing great. I have participated in your SCA in Dubai few years ago. I have a contractual problem where the employment of Contractor is going to be terminated soon. The type of contract for aforesaid project is FIDIC 87 4th ed. and my question is with reference to the following clause therein. Assignment of Benefit of Agreement 63.4 : Unless prohibited by law, the Contractor shall, if so instructed by the Engineer within 14 days of such entry and termination referred to in SubClause 63.1, assign to the Employer the benefit of any agreement for the supply of any goods or materials or services and/or for the execution of any work for the purposes of the Contract, which the Contractor may have entered into. Question: When a Contractor is terminated of his employment under clause 63, can the Employer/Engineer request from the Contractor to novate the contracts between the Contractor and his Sub-contractors to the Employer under this clause or via any other clause, in order to complete the remaining Works? (strictly under the contract provisions without any mutual agreement). Dear sir, my argument was that this clause refers to an assignment (or transfer) of any benefit only (not both rights & obligations) which the Contractor was entitled prior to termination. AND not that the remainder of whole sub-contract can be novated to the Employer. benefit should not be construed to mean only benefits accrued prior to the termination. Benefit also extends to the benefit to the Contractor (had his employment not been terminated) of having the work / services provided by the subcontractors / suppliers until their performances are completed according to the subcontract / supply agreements. The intention of the Sub-Clause is to facilitate the completion of the project using those subcontractors / suppliers and therefore this assignment should rightly be construed as the assignment of subcontracts / supply agreements (notwithstanding the reference to benefit),
similar to that of a novation. This would be the proper construction of this SubClause. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
I truly appreciate if you can please clarify my confusion, since I am unable to
obtain a satisfactory answer from literature surveys or from senior QSs in this regard. Thank you. -Kind regards, Sampath -Yasiru From: asanka udayanganie [mailto:audayanganie@yahoo.com] Sent: Monday, September 03, 2012 10:03 AM To: sam99@eim.ae Subject: Re: Some more Q&A Dear Sir, Further to my previous question, Please comment regarding below.
If MC has terminated NSC, can he assign new SC without consent of
Client? All subcontractors, nominated or domestic, require the consent of the Engineer (not the Client !)
I think No he cannot because as per sub clause 4.1 Correct.
As this is a PS can main Contractor ask instruction for carry out balance work or other nomination from the Client? Not instruction from the Client but consent of the Engineer is required to carry out the balance work through another Subcontractor. After the first nomination, the Employer /
Engineer does not have obligation / duty to nominate a replacement
Subcontractor, but it would be good practice to enquire whether they intend to do so before making the Contractors proposal of a replacement.
If so under which clause he could ask such instruction? Consent should
be obtained under 4.1 to give to another Subcontractor Can the MC ask EOT until such re nomination or instruction? Cannot ask for re-nomination. If the Engineers consent for Contractors proposal is delayed, then EOT can be claimed under 44.1 (d) as the Employer is responsible for the acts and defaults of the Engineer.
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Thanks and Kind Regards
Asanka U.J.Muhandiram Quantity Surveyor, -----Original Message----From: Farnacio, Renato [mailto:RenatoFarnacio@hillintl.com] Sent: Thursday, September 20, 2012 10:59 AM To: Prof. Sam Subject: RE: Friday SCA Class - 7th September Dear Professor, I had a question regarding our project using Bespoke FIDIC 99 1st edition. Can i utilise Performance Bond for recovering delay damages. No, unless the final account (or the projected final account) shows clearly that the balance payments due to the Contractor are insufficient to recover delay damages. Even then, the Contractor should be first asked to pay the delay damages and if he does not, only then a call can be made on the Bond up to an amount just sufficient to cover the shortfall. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Regards, Renato M. Farnacio Quantity Surveyor From: Nimesha Nissanka [mailto:nimmiabc3@gmail.com] Sent: Thursday, September 20, 2012 10:17 AM To: sam99@emirates.net.ae Subject: Question - Retention money Hi Prof. Sam, We came across an issue regarding retaining money against value of work done in a valuation. This is a small lump-sum fit-out contract (FIDIC) which is for 75 days of contract period. The terms for the retention money in contract is confusing. 1.8
Performance/ Advance Payment / Retention Bonds
The Contractor shall provide the Employer with a first demand
unconditional retention bond equal to 10% (ten percent) of the Contract Sum, valid until one year after the issuance of the Certificate of Acceptance, to cover the defects liability period (the Defects Liability Period). 4.2 Stages of Payment The remuneration of the Contractor shall be in stages as detailed in Schedule (A) attached to this Agreement. Schedule (A) Payment Terms:(Total Contract Value-AED 4,920,101) 5% - Advance payment against equivalent amount bank Guarantee 75% - 02 progress payment (02 nos. maximum)
10% - Against commissioning of the project and handing over as-built
drawings along with post construction completion certificates from all local authorities Retentions 5% - to be released against financial closure of the project 5% - to be retained until defect liability period of 12 months the above texts in blue colour are the terms in the contract which related to retention bond. this highlights that contractor should provide a bank guarantee as well as Employer is going to retain money in interim payments also. Is it correct? Please clarify. It is very badly worded and therefore parties would try to give their own interpretations. However since it does not say when the Retention Bond is to be submitted, there is no obligation to submit the Bond at the beginning of the project. Because of the words to cover the Defects Liability Period, the Bond should be submitted at the beginning of the Defects Liability Period, to cover that period. The first 5% retention release is linked to a financial closure which has no definition and therefore could be the agreement of the value of work completed and handed-over. The second 5% is not linked to the end of the defects liability period but until that period, and therefore could be construed to mean the beginning of that period. Consequently, all the Retention Money should be released at the beginning of the Defects Liability Period or soon thereafter, and this interpretation would be just and fair as the Employer is in possession of the Retention Bond to cover the defects liability period. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Thanks, Nimesha From: balag [mailto:gybalag@yahoo.com] Sent: Monday, September 17, 2012 8:28 PM To: Prof. Sam Subject: Authority requirements
Dear Prof Sam,
Good Evening , i had completed the CA-AC during the batch July 2012, I here by request your comments for the following in our on going hospital project Question #1 During the tender stage there is no requirement of Pre-action firefighting system in operation theater, even its not mentioned in the design approval issued by the civil defense Department in 2007 , while during the course of the project , the floor plan has been changed and during the revised design approval civil defense insisted for pre-action fire fighting system in the operation theater . As a contractor we claimed for variation, even though consultant approved variation claim , the employer rejected the claim and he stated in his rejection, all the authority approval /requirements to be known to the contractor regardless of the tender drawing and spec,. If you are a Design and Build Contractor then this is not a variation. If you are a build only contractor then this is a variation. Kindly advise the contract clause if any to defend our claims. Under Sub-Clause 8.1 of FIDIC-4th Edition by stating that your obligation to design is only if the Contract requires you to design, and that nowhere in your contract it states that you should design this system. Therefore your obligation is to construct what is designed and given to you by the Employer. Since the drawings and specifications given to you do not have such a design you should ask the Employer / Engineer to design and give you the design of that system (which would then fall under 51.1e). If they ask you to design same, 51.1e would still be applicable. If the Contract is FIDIC 1999 then Sub-Clauses 4.1 and 13.1e would be applicable. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Regards BALAMURUGAN.G From: BALAKRISHNAN SRINIVASAN [mailto:srini_ambb@yahoo.com] Sent: Thursday, September 20, 2012 9:20 PM To: sam99@eim.ae Subject: Re: Advanced Class - FIDIC 1999
Dear sir, How are you sir ? I am your SCA alumni student, I have attended your 10 session course at Dubai, Presently I have relocated to Chennai due to my personnel commitments . I am doing quantity surveying consultancy in Chennai. I request your support for any QS outsourcing opportunity from Dubai, I can do it from Chennai. If any possibility please help me and introduce with some of middle east contractors to utilize my services. If you need any help from Chennai, I am willing to do. ( I am 19 years experienced civil engineer including Gulf exp 15 years as QS) awaiting your possitive reply. thanks and regds. B.Srinivasan 0091- 9884392639 I am circulating your above request among the Alumni. From: Ian Gleadow [mailto:Ian.Gleadow@kpsworld.com] Sent: Saturday, September 22, 2012 10:40 AM To: 'sam99@eim.ae' Subject: Re: Congratulations Thank you Prof Sam and thank you for your amazing course. Regards, Ian Gleadow Senior Project Manager ----- Original Message ----From: Helmut Wehlitz To: "Prof. Sam (sam99@eim.ae)" <sam99@eim.ae> Date: Sun, 16 Sep 2012 01:31:25 +0000 Subject: Subcontract Sum and cash retention security Hi Prof Sam, Helmut von Moltke-Wehlitz, CA-AC Class of May 2012. Hope your well.
I have an interesting question that I need you help with.
Please read the Clause below:
ANNEXURE B PRICING Subcontract Sum means, where xxxxx accepted: (a) (b) (c)
a lump sum, the lump sum;
rates, the sum of the amounts calculated by multiplying the rate for an item by the quantity of that item actually directed and performed; or a combination of lump sum and rates, the aggregate of the sums referred to in (a) and (b) above, excluding any additions or deductions which may be required to be made under the Subcontract;
The Subcontract Sum is AED 10m, as agreed at the start of the Sub-Contract. With regards to cash retention security (10% of Subcontract Sum), according to the Clause above, is the retention fixed at AED 100,000 for the duration of the Sub-Contract and that no retentions is can be held on varied works or variations? Assuming that the Subcontract does not state what the limit (or maximum) of Retention Money is, it is not fixed at AED 100,000. What happens when scope is omitted from the Subcontract Sum i.e Subcontract Sum becomes AED 9m. Does the max retention still stay at AED 100,000. No. it will be AED 90,000, based on the same assumption above. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Your thoughts on this would be much appreciated.
Many thanks Kind Regards Helmut Wehlitz
Contracts Administrator - 10115 Warrawandu Village
----- Original Message ----From: Palanivel To: "Prof. Sam" <sam99@eim.ae> Cc: "Palanivelvdm@gmail.com" <Palanivelvdm@gmail.com> Date: Thu, 13 Sep 2012 11:06:00 +0400 Subject: The delay caused by the Contractor due to "delay in approval of (shop)drawing / material submittal by the Engineer" Dear Sir, Further to our last week class, can please comment as the delay caused by the Contractor due to delay in approval of (shop)drawing / material submittal by the Engineer shall be claimed under which clause? The claim should be pursuant to Sub-Clause 6.4 (a) and 44 .1 (b) for EOT and 6.4 (b) for costs. Also it could, in the alternative be, pursuant to 44.1 (d) for EOT and 53.1 for costs (as damages for breach of contract), in the event the Engineer would not consider 6.4 to be applicable. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Thanks & Regards,
Palani ----- Original Message ----From: asanka udayanganie To: "Prof. Sam" <sam99@eim.ae> Date: Fri, 31 Aug 2012 22:29:40 -0700 (PDT) Subject: Re: Some more Q&A Dear Sir, Thanks for the commentss.
Please advise me on this also. As there is no provision in FIDIC 1987 Redbook to
terminate subcontract, If the Employer wanted to terminate nominated subcontractor due to NSC is in default how he could instruct to the Main Contractor on this? After the nominated Subcontractor is appointed and the Main Contractor has entered into a Subcontract with him, Employer cannot instruct to terminate that Subcontract. The remedy available is for the Engineer to issue necessary instructions to the Main Contractor under the Main Contract:- to replace/remedy/rectify defective/unacceptable work/materials/plant under Sub-Clauses 37.4, 39.1 etc., if the default is due to quality issues. - to mitigate delays under Sub-Clause 46.1 if the default is due to progress issues. - to remove personnel under Sub-Clause 16.2 if the default is due to the presence of incompetent/undesirable personnel on site. On receipt of such instructions, in order to avoid a termination of the Main Contract under Sub-Clause 63.1 for non-compliance with such instructions, the Main Contractor has no option but to ensure that the default is rectified either by himself or through others, if the Subcontractor is not rectifying them. Therefore it is the choice of the Main Contractor to terminate the Subcontractor or not, as long as the defaults are remedied. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Cc: Question related to Cost Savings - SCA Course Dear Prof. Sam, Thank you very much for your guidance and information over the Question & Answers, I am one of your Alumni Class of March 2012. Sir, I have a small question. If you could comment on this it will be much appreciated. Presently I am working for a Main Contractor and the project is a Lumpsum Design and Build Contract. As per our Tender stage the finishing of ceiling was Fibrous Gypsum board suspended Ceiling, but later Post Contract (Finishing stage) of the project Client changes major areas (Bedrooms) to plaster and paint from suspended ceiling. At present Client is asking for Cost saving for False ceiling to plaster and paint areas. May I know is any obligation of Main contractor to submit the Cost savings to Client or not?. If yes, any % of cost savings money benefit applicable to Main contractor? Which Clause dealing with this situation? If not, is any right to deduct the Client the cost saving amount from the Main contractor? If the contract has provision for the Employer to instruct variations, then the above appears to be an instructed variation which should be valued according to the contract, which is likely to be a saving to the Employer. You may be able to claim any under-recoveries and unforeseen costs, if any, provided that the contract has provisions similar to Sub-Clauses 52.2 and 52.3 of FIDIC-4th or 12.3 and 12.4 of FIDIC 1999. Regards,
Arbitrator / Mediator - London Court of International Arbitration
Arbitrator / Expert - Dubai International Arbitration Centre, UAE Middle East Representative - Australian Inst. of Qty. Surveyors PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
