Archive for the ‘Guest Writer’ Category

Top 10 Secrets of Successful Subcontract Commercial & Claims Management

It is no secret at all that subcontracting is one of the highest risk sectors within our industry. Subcontractors suffer more than most from the mistakes and misdemeanours of others. If the project is poorly funded then the Main Contractor’s first course of action is to reduce outgoings. The easiest way to do this is to delay or limit payments to Subcontractors.

If the Main Contractor feels the pain of liquidated damages or the rejection of interim payment applications then the first to feel the impact will again be the Subcontractors (and often for reasons completely out with the Subcontractors’ own performance!). This is not the result of malice, rather an unpleasant commercial inevitability in jurisdictions without statutory protection for Subcontractors.  The reality is that the further you are away from the source of the project funding, the less likely it is that the cash will find its way to you.

However, there is much that the weary and / or wary Subcontractor can do to minimise their risk and maximise their recoveries. Here are our top 10:

“Back to Back” or “Pay when Paid”- Is it really? The authors of this piece very much doubt that this is indeed the case. What people declare as being “back to back” is rarely so. A Main Contractor may not have been paid for a variety of reasons. Unless those reasons expressly relate to your performance then you may legitimately ask why this has anything to do with you at all. Ask yourself “If the Employer never pays the Main Contractor does that mean I will never be paid?” Is that what you actually signed? We find this rarely to be the case and is often a cause of great confusion between Contractors and Subcontractors who blur the difference between the commercial reality of their financial position and the conditions of the Subcontract they have entered into. (more…)

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The Second Edition of the FIDIC Rainbow Suite has Arrived

At a packed International Contract Users’ Conference held in London on 5-6 December 2017, FIDIC finally unveiled the Second Edition of the 1999 Rainbow Suite, Red, Yellow and Silver Books.  Whilst the Second Edition largely follows the 2016 pre-release version of the Yellow Book, FIDIC have taken on board some of the comments made by the friendly reviewers, and made a number of important changes.
Why have the Contracts been amended?

FIDIC have explained that the underlying philosophy and core aim behind the update is to achieve increased clarity, transparency and certainty which should lead to fewer disputes and more successful projects. Unsurprisingly, the update also addresses issues raised by users over the past 18 years arising out of use of the 1999 Form and reflects current international best practice. This is why a key theme of the Second Edition is the increased emphasis on dispute avoidance. And the way that FIDIC have chosen to address this is to make many of the contract provisions more prescriptive, setting out step-by- step what is expected from the Employer, Contractor and Engineer.

Dispute Avoidance

FIDIC is seeking to promote dispute avoidance in a number of ways: (more…)

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Crisis for Gulf Construction Companies?

Let’s take a look at what has been happening in the Gulf construction market recently.

Drake & Skull announced plans for a major restructuring after suffering losses in 2016 of AED 787M, an improvement on 2015 when they lost AED 939M. A few weeks ago 8,000 employees of the 40 year old company Saudi Oger received letters announcing that 31st July 2017 will be their last day at work. The company apparently owes $3.5Bn to Saudi banks. Arabtec needed a cash injection early this year too after announcing losses of AED 3.4Bn in 2016. In 2015 the losses were reported at AED 2.35Bn. In March last year Al Jaber missed a debt repayment of AED16.2Bn which had been put in place in 2014 to restructure the company and in August, they announced the sale of their share in ALEC and the Shangri-La Hotel Abu Dhabi to finance yet another restructuring exercise. Then there’s the fall out between Al Habtoor and Leighton, the list goes on and this is just the tip of the iceberg for the Gulf construction industry…the small sub-contractors, sub sub-contractors and suppliers don’t make news in the financial press.

What is going on with contractors in the Gulf? Is there no work?

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6 Key Actions UAE Contractors Should Take in Today’s Tough Market

UAE contractors are facing tough market conditions, with cash flow constraints and greater competition for fewer contracts placing a squeeze on margins. Expo 2020 is just around the corner now but much of the anticipated bonanza from Expo and related projects has yet to kick off. The region however still offers decent long-term fundamentals for companies prepared to ride out the current slowdown in the market.

In addition to the current slow down, UAE contractors still face pressure on cash-flow from trying to close out legacy projects, and be paid for projects delivered back in 2008-10. Many contractors are finding that market conditions in 2016 are tougher than in the previous year and most have witnessed an increase in construction disputes.

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Construction Claims Distance Learning Course | A Graduate’s Perspective

When I enrolled on the Claims Class Distance Learning Course, I was approaching 10 years of experience. During that time I had dealt with claims on both sides of the fence, with a reasonable degree of success, so I was by no means a novice.

So why did I enrol on the Distance Learning Course? I have seen claims presented in all shapes and sizes, good and bad.  I too have been guilty of structuring claims or responses in different ways, simply because I was unaware of a tried and tested method.  Knowing that this was something that I could improve on, I went in search of the answer and stumbled across the core text for the course: Construction Claims & Responses – effective writing & presentation, which goes through the preparation of a claim from A to Z in minute detail. I was that satisfied with the book that I decided to enrol on the Distance Learning Course. (more…)

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