FIDIC 2017 Employer's risk events and new claim terms

FIDIC 2017 - 15 Top Tips For Successful Construction Projects

The FIDIC 2017 red, yellow and silver forms of contract were introduced seven years ago. Similar to previous new editions, they have taken time to gain traction within the industry. However, they are becoming more widely used. We anticipate that within the next few years, they will have become the “go to” forms of contract, gradually replacing the old editions in many regions internationally. 

Before you start a project under FIDIC 2017, you might want to arm yourself with some practical knowledge. In this guide, we provide an introduction to the current FIDIC contracts. Read on, to discover our 15 FIDIC 2017 tips to help you with your contract administration and management. 

The 2017 editions of FIDIC have 71% more pages and 64% more words than the previous editions. That’s a lot of changes to get your head around!

Obviously then, the new contracts are more complicated. Good contract administration demands that users become familiar with the extra content. 

FIDIC realised that project participants were not following what was essentially advice in 1999, so the 2017 editions contain more procedures. Many of the new procedures include new obligations for the parties and the engineer. 

Use the form below to access our top 15 FIDIC 2017 tips for ensuring project success with the FIDIC 2017 contracts...

 


contactor claim strategy

Claim Strategy: 6 Tips for Contractors

If you find yourself in a position where you need to prepare a claim, you will also need a claim strategy. Good news: Our involvement in countless claims over the years means we have a long list of key things you need to think about before you decide the way forward:

The Value of the Claim

Firstly, are you entitled to additional payment? Secondly, does the amount justify the time and effort needed to prepare and submit the claim? And finally, will the submission of small claims for each and every event on the project affect business relationships?

The Strength of the Claim

Is the contractor’s contractual entitlement clear-cut? Or is the event open to interpretation by the other side? If the claim could be contested, it may only be worth submitting it if it's a high-value claim.

Negotiation Margin

In some cultures and regions, no one ever pays the first price received. Negotiation may be expected. In others, it is more appropriate to submit a strong claim based on the contractor's view of their entitlement, with little negotiation margin. You need to decide which approach to take, depending on the environment you're working in.

The Person Responsible for Responding to the Claim

Does the responding party have well-qualified and experienced resources to deal with claims? Or will the claim be examined by someone with little experience? Both scenarios will come with their own challenges. An experienced professional will quickly highlight weaknesses in the claim. They may reject or reduce the value of the claim fairly easily. In such a case, it will be necessary to produce a robust submission to a good professional standard.

A less experienced professional is likely to look for excuses to reject the claim. They may not have the confidence to make an award. You may need to force their hand by giving no opportunity for rejection. Contractors should also bear in mind that the employer may bring in experts to examine high-value claims.

Suitable Resources to Prepare the Claim

Do you have experienced resources available to prepare the claim? If not, and if it's a high-value claim, consider bringing in additional support.

Client Relationship

Claims are usually bad news to clients. As a result, it's prudent to keep your relationship in mind and how you can maintain it. This applies both to your current project and in future. Would it be a good idea to submit low-value claims? Or, would it be better to restrict claims to serious issues and ensure you only claim a fair and reasonable amount? Above all, you must convince the employer that you are only asking for what you are entitled to. Ensure you can justify and substantiate your claim.

Want to learn more about construction claims? Join one of our e-courses


abbreviations-acronyms

Abbreviations and Acronyms: To Use or Not?

A couple of days ago, I spent a frustrating couple of hours reading a FIDIC report.

Why was it frustrating?

It was not because the report was particularly difficult to understand. It was because it was littered with so many abbreviations and acronyms.

I have a lot of experience reading contract documents, but even for me, it was difficult to make sense of.

Sure, FIDIC placed footnotes in the document to explain what the abbreviations stood for. But, the fact that I had to keep checking these disrupted the 'flow' of reading and again, made it harder to understand.Read more


construction claims vs perfect claim

Construction Claims vs. The Perfect Claim E-Courses: What's the Difference?

Students often get in touch and ask:

What's the difference between The Perfect Claim and Construction Claims e-courses?

Both courses deal with the fundamentals of claims management, so what sets them apart?

The Perfect Claim

The Perfect Claim focuses on a specific case study. We take students through a claim for an extension of time and the payment of costs on a project where there were unforeseeable ground conditions.

Using the case study, we work to build the claim from A-Z.

During the course, we cover:

  • the case study, potential claims and notices
  • preparing the claim and delay analysis
  • cost calculations
  • compilation of and preliminaries to the claim
  • cause and effect
  • additional payment
  • entitlement
  • finalising the claim

Basically, everything you need to know to prepare a claim to a professional standard and ensure its success.

Construction Claims

The Construction Claims courses are more generic. They are suitable for both contractors and consultants because they deal with things from ‘both sides of the fence’.

The courses cover:

  • contract administration for claims
  • how to identify potential claims
  • claim strategy and management
  • cause and effect
  • an overview of delay analysis
  • entitlement
  • responses and determinations
  • writing compilation of claims and determinations

Graduates will be able to manage, prepare and respond to claims at a professional standard.

Which Course To Take?

Both courses will give you a full understanding of claims and how to manage them.

For engineers responsible for assessing claims and issuing responses, I tend to recommend the construction claims courses as the later modules deal with these aspects of claim management.

If you're not an engineer, I would choose the course that appeals to you the most. Check the module descriptions for each course. See which course you like the sound of and go with it. If you’re excited by the content, you’re much more likely to stick with your studies and graduate.

Sign up during Ramadan and be part of our Ramadan campaign: save 20% on all intermediate and premium e-courses and we'll donate 5% of every purchase to the UN Refugee Agency to support those affected by the recent earthquake in Syria and Turkey. Check out our Construction Claims and The Perfect Claim E-Courses today. 


fidic 2017 claims

FIDIC 2017 Claims: Andy Hewitt's Latest Release

I’m old enough to remember when the FIDIC 1999 contracts were published. If I remember correctly, it took a good 10 years for the industry to, not only adopt them, but to see their use as best practice on new projects.

At the time, I was lucky enough to work for a proactive company that sent me on a training course about the new contracts. They also bought copies of Brian Totterdil’s excellent book: FIDIC User’s Guide for all its contracts and claims consultants.

Fast-forward to the release of the FIDIC 2017 Editions...

It is now 6 years since FIDIC introduced the 2017 editions. The updated contracts aimed to improve, strengthen and clarify several aspects of the old editions.

Based on past trends, Read more


variations

Variations: How do you price them when the tender price has been adjusted?

I was recently asked this question about variations:

We agreed the Tender Price during contract negotiations. How do we apply an adjustment to the tender price when pricing variations?

This often causes contention and the following is a typical scenario:

  • The contractor submits a tender accompanied by a priced bill of quantities for the tender price.
  • The Employer meets with the contractor. They negotiate a reduction and agree the contract sum at a lesser figure than the tender price.
  • The parties prepare the contract documents. The documents include a bill of quantities with the negotiated price reduction shown in the final summary.
  • There is no clear record of the form of the price reduction that was negotiated, i.e. was a target price agreed, was it a lump sum price reduction or a percentage price reduction?

Common Problems

The problems start when variations happen that are measured and evaluated at the contract rates and prices.

The contractor believes that the rates and prices should be those shown in the bills of quantities. The consultants/employer believe that the rates and prices should be reduced by the same percentage as the price reduction agreed during tender negotiations.

So what do you do?

It's critical to look at the intentions of the parties during the tender negotiations. This would usually take one of two forms:

  1. the parties agree a lump sum reduction or;
  2. the parties agree a percentage reduction.

Without records to clarify the situation, we must look at the signed contract documents to find out the original intentions. Particular attention needs to be paid to the bills of quantities here. The following are the likely scenarios and outcomes:

  1. The parties show the agreed reduction as a negative lump sum in the final summary of the bill of quantities. Here, I would consider that the price reduction was made on a one-off lump sum basis and the rates and prices should remain as shown in the bill of quantities.
  2. The parties have re-priced the bill of quantities with the rates reduced by the agreed percentage. Here, it is clear that the parties should use the adjusted rates and prices for the evaluation of variations.
  3. The parties show the agreed reduction as a percentage of the tender price in the final summary of the bill of quantities. This scenario is not clear-cut. I would suggest though, that if the rates and prices were not amended in the bill of quantities by the same percentage, then variations should not be subject to the same percentage reduction.

Supporting Legal Principles

The legal principle of contra preferentem, supports my opinion in the third scenario. Osborn’s Concise Law Dictionary offers the following definition:

The doctrine that the construction least favourable to the person putting forwards an instrument should be adopted against him

where “instrument” is defined as:

A formal legal document in writing.

This means that the drafter of the document had every opportunity to produce a clear and unambiguous document. If any mistakes, ambiguities, or conflicts exist in the document, they must be interpreted in the favour of the other party.

If the employer, as the party responsible for compiling the contract documents, did not adjust the contract rates and prices in the bill of quantities to reflect the percentage price reduction, the parties should regard the reduction as a lump sum and should use the unadjusted rates and prices to evaluate variations.

Lessons

The lesson here is: those responsible for the preparation of the contract documents need to ensure that the principle and form of the negotiated reduction is very clearly shown in the bill of quantities. For more clarity, the parties could also include such details elsewhere in the contact documents.

Gain clarity on this and other complex contractual issues with our e-courses. Study with us today and take your career to the next level. 


legal construction

New Accreditation with Dubai Legal Affairs Department

We're pleased to announce that Claims Class is now an accredited training provider with The Government of Dubai Legal Affairs Department (DLAD) under their Continuing Legal Professional Development programme.

Now if you're not a practicing Construction Lawyer this news may not be of much interest to you. But if you are, read on...

Continuing Legal Professional Development (CLPD)

As we're sure you're aware, all practicing legal professionals in Dubai must undertake 16 hours of training each year. 8 hours are mandatory courses set by the DLAD. The remaining 8 hours are elective. As an accredited training provider, Claims Class courses can now be taken to make up the elective 8 hours. And even better news, all our courses have been awarded the maximum of 4 points.

Ways to Achieve CLPD with Us

In addition to taking our e-courses on construction contracts and claims, we can work with law firms to provide in-house training to construction law teams. There's obvious upsides to this approach including: a personalised experience, the option for us to come in and work with you one-to-one and get into the nitty gritty of the challenges you face, plus the usual customisation when it comes to course content.

The Details

  • You'll now see Claims Class listed on the DLAD website under Accredited Activities.
  • Our provider code is BB80.
  • To book any course, just contact us directly and let us know you'll be using it as part of your CLPD. We'll help you through the booking process and ensure you have everything you need when you come to file your CLPD records at the end of the year.

 

 


The Difference Between Claim and Dispute Submissions - FIDIC Omissions

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Often people ask us, 'what are the key things we must do to avoid disputes and claims?'. Good news - we've compiled all of them into one handy document of top tips to avoid claims and disputes!
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Why Choose A FIDIC Certified Trainer?

If you’ve followed Claims Class for a while, you’ll know the name Andy Hewitt, our newly certified FIDIC trainer!

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