final account disputes

Why do Final Accounts lead to Disputes?

I recently provided advice on a dispute of US$250M. This sum includes variations, prolongation costs, acceleration costs, disruption costs and delay penalties. The dispute crystalised when the contractor submitted his final account. This is a familiar occurrence. In fact, a large proportion of disputes occur when the project is either nearing or after completion.

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Construction contract FIDIC 2017

How Does FIDIC 2017 Affect Claims?

I guess like many of you, I have not had the opportunity to examine the 2017 editions of the FIDIC contracts in much detail, because as yet, I have not come across any projects that are using them. This situation will, however, gradually change. As it does, we will need to know what has changed and how it has changed. As such projects reach final account stage there will undoubtedly be claims to resolve and disputes to settle. I have recently been doing research for a forthcoming book, so thought it would be worthwhile to highlight the changes from a claims perspective.

Employer's Claims

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Progress Updates – Fact or Fiction?

Contractors often shoot themselves in the foot when preparing progress updates for the employer’s team. Many times we see months worth of updates which present a rose-tinted view of project progress.

Whilst it is tempting to keep reporting good news month-on-month, be wary. A less than competent consultant may believe such reports because good news will not involve them in additional and troublesome work. However, you could be causing problems for yourself further down the line.

Problems frequently arise when the contractor needs to submit a claim for an extension of time. It becomes very difficult for him to subsequently tell the employer’s team: “I know we kept telling you that there was no delay to the completion date, but actually there is and it’s not our fault, so please can I have an extension of time.

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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.

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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.

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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.

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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.

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