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Construction Law/FIDIC 87 - Approval for Material

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Question
I am working with one of the Contractors as Quantity Surveyor. We are facing an issue in one of our projects. The project is an infra-structure development project. The Contract was based on  FIDIC 1987 4th edition in a traditional procurement route.

The Contract specified a brand for a particular material with strength 10N/m2 or equivalent product..  As an equivalent product the Contractor proposed another brand material with 11N/m2.  The Engineer’s Representative approved the material submission. The Contractor progressed with work completed 70% of work until the progress of Works was suspended on the instruction of the Engineer.

During the suspension, as mutually agreed with the Contractor, the Employer replaced the engineer and then the Works restarted. The newly appointed Engineer asked to resubmit all the material submissions. The Engineer disapproved the material submission the alternate material by the contractor stating that they do not comply with the Contract requirements. They also asked the contractor to submit method statement for rectify the work completed with
We demonstrated that the submitted material and so the installed materials fully comply with the Contract requirement. The specified material only had a compressive strength of 10T/m2 where as the alternate material proposed and installed by the contractor has compressive strength of 11T/m2. The engineer then tried to apply additional and unreasonable criteria for approving the alternate material. One of them was an undertaking letter from the material manufacture. We informed them that we are not liable to provide such warranties. The argument is going on now.
During the discussions I understood that newly appointed Engineer does not have confidence in the adequacy of the design by the previous consultants. He is trying to impose additional factor of safety without admitting that but by asking the Contractor to revise the material with his own cost.
This portion of the works accounts for only 15% of the overall scope. But delay in executing this will delay the other works to be carried out after this activity and the project delivery will be delayed.
We (the contractor) are confident that the material proposed and installed by them is complying with the Contract specification.  We are not sure about the design adequacy which is not our liability as per the Contract.
In this scenario; could you please answer my following questions?

•       Can the contractor continue with the previously approved material without getting the approval from the new Engineer?   - If yes; what will be te consequence?  . if no; as per which clause in contract.
•       Is the contractor is entitled for EOT if he continue to convince the Engineer and wait for the approval of the submitted material or revised design from the Engineer.  If yes; are there any risks in doing so?  (Notices will be served)
•       If the contractor resubmit the material as advised by the engineer and do the rectification also. Then while progressing with the work if he submits a claim for additional payment for rectification and revised material specification; contractually or legally is there any ground to get the claim approved?

Answer
Dear Rameesha,

A fairly common problem with a change in engineer, especially in your part of the World - the new Engineer does not wish to get replaced as the previous one was, so he will do as much as possible to avoid extra costs for the Employer.  Really, he is being a bit short-sighted, as he could easily put the blame for any problems on the previous Engineer.  

Anyway, how to resolve the situation.  Firstly, tread softly, but carry a big stick.  If you are too aggressive, the Engineer will ask for your removal.  The Engineer has the right to review and reverse any earlier decision, but he must act impartially, clause 2.6.  Approval is given only by the Defects Liability Certificate, clause 61.1.  

I presume that the strength is not the ruling factor in rejecting the material.  I suggest that you ask the Engineer to define the non-comformity of your proposed material in writing, so that you can provide the necessary documentation or remove the material.  I would also ask what would be an acceptable proposal for correcting the situation as requested, which may draw out the real reason for his rejection of your proposal.  It could be that a judge would decide that the Engineer was being unreasonable and thus he would be responsible for the costs in removing the material.  I would remind him of clause 6.4, giving the date when the issue has to be resolved so that there is no delay to the time for completion.  

If all else fails, you ask for an Engineer's Decision under clause 67.1 and then proceed to Arbitration.  Beware of the black hole in clause 67.1 and be sure that you meet the specified deadlines.  

I suggest that you look at clauses 39.1, 39.2 and 63.1, if you are considering ignoring the Engineer's rejection.  The Engineer has the power to terminate the Contract.  

If you ignore the Engineer's instruction, then it is unlikely that you will get an EoT.  If there is a revised design, then it is possible that you will get an EoT, but you will have to prove it.  

If you comply with the Engineer's comments, then it is unlikely that you will be recompensed for any extra costs.  Approval by the (previous) Engineer does not release you from your obligations.  By complying with the (new) Engineer's Instruction, prima facie, you are admitting fault and thus no recompense is due.  

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

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