Archive for the ‘Andy’s Blog’ Category

Contractors! Are Your Claims Responded to Correctly?

EC Harris’ (now Arcadis) Global Construction Dispute Report has, for many years, cited inadequately expressed claims as being one of the top five causes of disputes in the construction industry.

Although the reports do not specifically mention it, I suspect that inadequately and unfair determinations should also be somewhere near the top of this list. This is because over and over again, attendees at our courses complain that their claims have not been responded to either fairly or in a meaningful way.

So, what is the problem?

If we look at the FIDIC forms of contract as being fairly typical of the widely-used forms of contract, we can see that the Engineer has the following obligations when responding to claims:

  1. Respond to the claim within 42 days – Sub-Clause 20.1 (Contractor’s Claims);
  2. In a case of rejection, respond with detailed comments – Sub-Clause 20.1 (Contractor’s Claims);
  3. Include sums that the Engineer considers to have been reasonably substantiated as being due in interim payment certificates – Sub-Clause 20.1 (Contractor’s Claims);
  4. Consult with each party to attempt to reach agreement – Sub-Clause 3.5 (Determinations);
  5. Make a fair determination in accordance with the Contract – Sub-Clause 3.5 (Determinations);
  6. Give notice to parties with detailed particulars – Sub-Clause 3.5 (Determinations).

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Late Payment: What Can We Do When We Don’t Get Paid?

What can we do if we don’t get paid?
We get this question a lot.
In some regions, this is less of a problem because legislation is quite strict on payment terms, but in other parts of the world it is very common for the paying party to hang onto their money for as long as possible.

Most forms of construction contract will include some sort of remedy for non-or late payment, so you will need to check what these are on your projects, but as an example, let’s have a look at what the FIDIC Red Book, 1999 Edition has to say about late payment.

Sub-Clause 14.8 (Delayed Payment) states that:

‘If the Contractor does not receive payment in accordance with Sub-Clause 14.7 [Payment], the Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. This period shall be deemed to commence on the date for payment specified in Sub-Clause 14.7 [Payment], irrespective (in the case of its sub-paragraph (b)) of the date on which any Interim Payment Certificate is issued. (more…)

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Trying Your Luck – Where do you draw the line with your claim submissions?

I was recently asked a question by one of our distance learning students which, at some time or another, you may have asked yourself. The question was:

Where do you draw the line when it comes to ‘trying your luck’? Is it better to be realistic in your claim submissions, taking your own delays into consideration, or do you submit all, knowing that they’re incorrect, and wait for the Engineer to ‘catch you out’?’

Obviously, a scenario where the claim is solid and difficult to refute is preferred, but there will often be ‘grey’ areas when it comes to entitlement or quantum. When preparing claim submissions for clients, we give our client the benefit of the doubt within the claim and if the Engineer notices these or disagrees with them, then this will be a basis for negotiation. It’s always good to give the other side something where they can score a few points to show that they are doing their job. To answer the question though, I think that there should be two parts to my answer. (more…)

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20 Changes in the FIDIC 2017 Editions From a Claims Perspective

I have just returned from the FIDIC International User’s Conference in London, attended by roughly 400 delegates and speakers, all there to hear about the new editions of the Red, Yellow and Silver FIDIC Forms of Contract. In this blog, I have highlighted 20 changes that are of particular relevance to claims practitioners:

1. The Red Book now has 106 pages of General Conditions as opposed to the 1999 Edition which had 62 pages. The Yellow and Silver books have been similarly increased. The increased volume is said to bring greater clarity and include more procedures to be followed as a matter of contract.

2. The word “Claim” is defined as ‘a request or assertion by either Party to the other Party for an entitlement of relief under any Clause of these Conditions or otherwise in connection with, or arising out of, the Contract or the execution of the Works.’

3. There is a provision to include a percentage in the Contract Data (formerly the Appendix to Tender) and if no percentage is stated, the percentage shall be 5%. (more…)

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Why is it important to understand your contract (from a claims perspective)?

Did you know that there are 11 clauses in the FIDIC Red Book form of contract that allow the Employer to claim money from the Contractor and 16 clauses that allow the Contractor to claim either time, money or both from the Employer?

No? Well, to be honest, neither did I until I sat down and counted them when writing a book on the subject…and I have been dealing with the FIDIC contracts in detail and extensively for around 15 years!

This just goes to show that if an ‘expert’ such as myself is sometimes surprised by things, then less familiar users will almost definitely fail to appreciate all the nuances of what are very complicated contracts.

In the current market, money is tight in the construction industry. Employers are seeking the best (more…)

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