Construction Law/Remeasurement contract
QUESTION: Dear Sir,
Conditions of Contract- FIDIC Red book 4th edition 1987.
The Contractor have attained an early completion by 4 months for a civil project and are qualified to obtain a predetermined amount of bonus for early completion under a new clause inserted in the Conditions of Particular application.
The original contract duration is 18 months.
As this is a re-measurement contract, the Employer now argue that they could deduct 4 months of the Contractor's overhead (time related items) since they have not been spent.
Please advise if the Employer is entitled to do so.
ANSWER: Dear John,
Thank you for your question.
In my views bonus is linked and based on difference between the substantial completion date and contractual completion date as extended. As i am not clear if any extension of time is involved or likely to be involved towards the end as in such case there may be few more points to be checked.
Anyway, FIDIC IV entitles the Employer to make recoveries as applicable against clauses 25.3,30.3,37.4,39.2,46,47.1,49.4,59.5,64,70.1 and 70.2 and so you can raise this point that Employer wants to deduct unrecouped overheads under which clause. In my views bonus award under clause 47/48 has to be dealt with separately from EOT award under clause 44. The other option is review Employer's reply as discussed earlier and then go for Engineer's decision under cl 67 in case matter is not resolved to your satisfaction. I can offer these comments at this time as logically Employer has a point but need not be linked with EOT.
---------- FOLLOW-UP ----------
QUESTION: Dear Sir,
Thank you for the kind reply.
With due respect, please allow me to make my question clearer as follows:
1. TOC, under GC cl. 48.1, had been issued by the Engineer at a date which is 4 months before the original contractual completion date and the Contractor is entitled to a predetermined early completion bonus as agreed by the parties.
2. It is a a re-measurement type of contract.
3. The project was completed 4 months ahead of the original completion date.
What I need to ask is whether the Employer have the right, under the Contract, to deduct an amount away from the time -related items which have been included in the "preliminaries" because of a shortening of 4 months from the construction period.
Thank you for coming back with more clarity of your question.
As mentioned in your clarification,the related items in the preliminaries are payable to the contractor as per actual duration and i have no doubt in my mind on this aspect. I was only trying to raise an other aspect of this that EOT consideration is a separate topic and is to be dealt with under clause 44 accordingly in which i see no entitlement for deduction by the Employer nor such a recovery is envisaged in any of the clauses mentioned by me in my first reply.
I am clear now that your contract provide for preliminaries separately in the BOQ and are linked with time duration and as such payable for the actual duration thereby meaning that 4 month period is not payable.
Regards and best wishes,