Letters Abbreviations

When Should You Use Abbreviations and Acronyms?

I have one piece of simple advice about using abbreviations and acronyms. Whether in claims, responses, contractual letters, reports or any important communications on your project:

Do not use them….

at all…

ever!

Let’s look at a real-life example of why this is so important.

Our consultancy business, Hewitt Decipher Partnership, was recently appointed by a contractor. Our job was to prepare claims on behalf of the contractor for an extension of time and additional payment on a large project.

Part of our process is to examine the project records for evidence of what happened. We select certain documents to include in the claims as substantiation of the facts.

The Problem

We soon realised we had a problem. It was extremely hard to understand the letters, meeting minutes, progress reports, etc. The reason? They contained so many abbreviations and acronyms, it was like reading documents written in code.

Even responses to our requests for information from the contractor were confusing because of this same problem. Maybethe contractor was encouraged in this. Because, at the beginning of the Employer’s Requirements, there was a list of no less than 271 abbreviations used in the document.

I was very disappointed to note and surprised that even an organisation such as FIDIC, who purport to draft contract conditions that are easily and clearly understood by engineers, has slipped into this unprofessional practice. The 2017 editions of the various FIDIC contracts use several abbreviations including “DAAB”, “EOT”, “FPC”, “IPC”, “NOD” and “QM”. Do you know what all of these terms mean?

No?

Well, neither did I until I looked them up in the Definitions section.

Comprehension is Key

It’s so important to remember that, when drafting formal documents, firstly they should be fully understood by your opposite number on the project when he or she receives the communication in a couple of days’ time. But also, by someone such as a person in the addressee’s head office, an adjudicator, an arbitrator or a judge. These people have no prior knowledge of the project and in some cases may not be experienced in the subject matter. Peppering a document with abbreviations and acronyms that only the personnel who are intimate with the project can understand is not going to achieve the necessary clarity.

Some people, including the drafters of the FIDIC 2017 editions, mistakenly think that including a list of abbreviations and acronyms at the front-end of the document is acceptable.

I disagree. Why?

Because people tend not to read all documents from front to back like a novel, but often only need to refer and understand isolated sections. Therefore, if they come across something referred to as “PL3” in the document they will have to break off from what they are reading to search for a meaning. This does not make the reader’s job easy. It may lead to confusion or misunderstanding, which is exactly the opposite of what we should be trying to achieve.

Why Is This Happening?

So, why do the drafters of documents think that the use of abbreviations and acronyms is a good thing? I can only think that typing “PL3” instead of “Podium Level 3” saves around two seconds of typing time. The authors give their two seconds a higher level of importance than a reader being able to understand what they have typed. Well, here is a top tip for lazy typists:

If you have to refer to “Podium Level 3” many times in your document, type “PL3” in your draft. Then, use the MS Word, sorry, Microsoft Word “find and replace” function to change “PL3” to Podium Level 3” throughout the document.

For the sake of clear understanding, I will repeat the advice that I gave a the beginning of this blog:

Do not use abbreviations or acronyms - at all! - ever!

If you'd like to learn more about how to write effective documents and achieve success with your claims, check out our Construction Claims E-courses.

 


Payment for Work Not in Accordance with the Contract

A former Claims Class student asked my advice on a matter which I thought would be an interesting case study to share. The Contract conditions are FIDIC and the question around non-payment of work which was not in accordance with the contract.

Background

Each month the Engineer makes deductions in the payment certificate for Non-Conformance Reports under Sub-Clause 14.6 (Issue of Interim Payment Certificates), sub-paragraphs (a) & (b).

The Contractor does not contest the Non-Conformance Reports. They state that the defects will be rectified. A problem being that this is likely to take some time to achieve.

The Contractor is contesting the Engineers right to deduct for defects in interim certificates. These deductions are for works not in accordance with the Contract. The Employer has performance security and 5% retention, so the Contractor claims they would be put at a further disadvantage of the deductions for NCRs.

My Advice

Sub-Clause 7.5 (Rejection) provides that the Engineer may reject work not in accordance with the Contract by giving notice. Hopefully, the Engineer has issued the NCRs as notices under the provisions of this clause. If not, you may want to take a look at this blog which answers the question, "what to do if you have not submitted a notice?". For the purpose of this article, we will assume they were.

Sub-Clause 14.6 (Issue of Interim Payment Certificates), sub-paragraph (a) states that if anything supplied or work done by the Contractor is not in accordance with the Contract, the cost of rectification or replacement may be withheld until rectification or replacement has been completed.

This allows the Engineer to withhold payment for anything not in accordance with the Contract, plus the cost of rectification. Subject to the issue of non-conformance reports, the work is not in accordance with the Contract.

The Contractor's argument that he is at a disadvantage is not sustainable. They are the party at fault by giving rise to the items of non-conformance.

The retention and performance bonds are there to provide money for the Employer to complete the works if the Contract is terminated. Not to provide security against defective works.

If this topic was of interest, you may find our Understanding Claims Under FIDIC E-course useful. Click here to find out more.


COVID-19

COVID-19: Options for Contractors, Engineers and Employers

In my last blog, I discussed the effects of COVID-19 under the FIDIC Red and Yellow Books. Particularly whether contractors are entitled to claim for an extension of time and/or costs.

My advice was just a few weeks ago. At that time, some contractors were anticipating delays. Firstly caused by supply chain problems associated with plant, goods or materials sourced from China. Secondly by the travel restrictions which were in place. My thoughts were that,  the Contractor will be entitled to an extension of time provided he can demonstrate delay to the Time for Completion and/or the incurrence of Cost. He may also be entitled to claim for additional payment for Cost incurred.

But since then things have changed drastically. Some countries are on total lockdown with people having to stay at home. Many countries have imposed travel bans. So the effects of COVID-19 are now extreme and likely to last for a long time.

Reconsidered Options

As a consequence, I thought it would be sensible to examine the options available to the Parties as the situation  develops further. Again, I shall look at the provisions of the FIDIC Red and Yellow Books.

Suspension

The Employer may consider that if the Contractor is not able to proceed with the Works for the foreseeable future, it may be sensible to suspend the Works. This may minimise any cost which may become due to the Contractor. Sub-Clause 8.8 (Suspension of Work) allows the Engineer to issue a suspension instruction. The Contractor would then be obliged to protect, store and secure the Works against deterioration, loss or damage. This would effectively ‘mothball’ the project until the Employer decides to lift the suspension. In a case of suspension, the Contractor would be entitled under Sub-Clause 8.9 (Consequences of Suspension) to an extension of time and the payment of Costs including mobilisation and demobilisation costs. The Employer must weigh up the options here.

However, sub-Clause 8.11 (Prolonged Suspension) allows the Contractor to terminate the Contract if the suspension affects the whole of the works and the suspension period continues for more than 84 days. We are unsure how contractors will react as and when things return to normal and operations may be resumed. Presumably, many of them will be willing to pick up where they left off.

FIDIC does not provide any options for the Contractor to suspend the Works under the circumstances arising from COVID-19.

Termination

There are two clauses in FIDIC which give the Employer entitlement to terminate the Contract. Sub-Clause 15.2 (Termination by Employer) allows the Employer to terminate because of various acts of default by the Contractor. In my opinion, it cannot be said that inability to progress the works in the circumstances of COVID-19 is a default of the Contractor. This is therefore inapplicable.

Sub-Clause 15.5 (Employer‘s Entitlement to Termination) however, allows the Employer to terminate for his own convenience by giving 28 days’ notice. Nothing can be sensibly predicted at the moment. But as things progress, some employers will simply decide not to proceed further with the project, or at least not for some considerable time.

My earlier blog suggested that it is uncertain whether COVID-19 constitutes a Force Majeure event under FIDIC. If the Parties agree that it does, Sub-Clause 19.6 (Optional Termination, Payment and Release) provides that if the Works are prevented from progressing for a period of 84 days or for multiple periods of 140 days by reasons of Force Majeure, then either party may terminate the Contract.

Sub-Clause 19.7(Release from Performance Under the Law) provides that ‘if any event or circumstance outside the control of the Parties arises under the Law which makes it impossible or unlawful for either or both Parties to fulfil its or their contractual obligations … the Parties shall be discharged from further performance…’.  This may become applicable in circumstances whereby governments have introduced measures  which havemade further performance impossible. It then becomes a further reason for termination by either party.

Finally

The circumstances arising from COVID-19 have never been experienced before, or at least not within my - long! - lifetime. They are drastic and far reaching. Whilst I have given my opinion on the applications of the FIDIC contracts to the situation, this has been from a purely contractual point of view. In my opinion, the FIDIC contracts do not really envisage such a situation.

That said, in a situation as serious as this, the Parties must think outside the box of the contract. It is important to find ways to work together to safeguard the personnel involved. Comply with government rules and regulations and seek ways to manage the project to the best abilities of both Parties. The ability to maintain progress and complete on time may well be out of the control of both Parties. Contractors may be expending substantial additional costs. They no doubt will suffer from cash flow problems and will be powerless to control this. In short – both sides of the contracting fence will undoubtedly suffer. In my opinion, it would be unfair for either Party to attempt to gain any advantage from the situation.

Don’t forget that, provided both parties are in agreement, contracts may be amended at any time. Despite what the contracts say, I would encourage all involved to seek to reach agreement on a course of action. Ideally one which will be the least harmful to the parties and the project.

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Top 10 Tips for Effective Letter Writing

One of the things I notice when I review the records to prepare a claim, review claims on behalf of the respondent, or review particulars put forward in a dispute, is the poor standard of letter writing. This ranges from “could have been better” right through to “I have no idea what this letter means”. If your letters fall into these categories, you are not doing yourself or your company any favours. In fact, you could be doing considerable harm. This blog, therefore, contains my Top 10 Tips for effective letter writing.

Read more