We are engaged as Fit-out subcontractors. As per our Contract agreement which is based on FIDIC 1999, pursuant to Clause 20.1, whenever the Engineer issued a modification in design, we have submitted our notice and substantiations as required by the Contract.
However, FIDIC 99 says that the Engineer has to make a determination within 42 days of receiving the complete particulars, which is not the case in our project.
We have pending variations since 6 months and the cumulative amounts of all variations are almost 50% of the Contract price. Kindly advice on how to deal with this issue as we are facing a cash flow crisis and the Main Contractor claims that it is the duty of the nominated Subcontractor to finance the execution and completion.
Such massive variations cannot be anticipated and our cash flow is hugely affected. Please advice.
Dear Mohamed Rabeeh,
Thank you for this question.
From your brief narrative I suggest that the Engineer is improperly managing the contract and you have a right to take the matters through the dispute resolution process. It is against the letter and spirit of the contract for such delays is addressing the payment of change orders; though, sadly, it is a very common occurrence.
Regarding the assertion that the nominated sub-contractor (which I presume is your company) is expected to finance the execution and completion, this could only be the case if the contract payment regime set out that intention.
I would be very pleased to assist you in preparing your statements of case for adjudication or any other dispute resolution process if this is the course of action you adopt.
I hope that this assists you.
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