Construction Law/Prolongation Claim


I refer the question and answer by you (append below the question and answer for your easy reference)

Fidic Yellow

This Contract has had its fair share of Variations, and we (The Contractor) is currently preparing an EOT, and subsequent Prolongation Claim.
We fully recognise that recurring charges are easy to include, we just demonstrate that we are still paying through the period of delay.  However, there is a considerable amount of money tied up in Capital Equipment, which could be used on the next won Contract (necessitating further purchase) or in some cases there is a scrap value which would benefit the Contractor once the works are complete.
The prolongation as stated may cause further purchase, at worse the residual value whether scrap or re-sale is deferred by virtue of the delay.
Would you consider this a perfectly reason sub-heading to be costed in the EOT?

Dear Philip,

Generally costs are recovered for the period of delay, not the period of extension.  If you can prove actual costs, such as the hire costs for alternative equipment or financing charges for loans to replace the funds released by the sale of the superfluous equipment, then you could include them as a sub-heading to be costed.  The problem as always is proving your case and then getting it agreed by the Employer."

When you said that "Generally costs are recovered for the period of delay, not the period of extension." Do you mean that when the period of extension is says 90 and we completed the work said by 60 days, we are entitled to General cost for 60 days?

Dear wong,

If the agreed delay was 90 days between months 12 and 15 of a 24 month contract, then the costs associated with months 12-15 are recoverable.  The costs for months months 24 -27 (the extension period) would generally be much lower due to the reduced resources required at the end of a contract compared to those required in the middle of the contract.  If you complete the Works within a two month extension, then you have saved the cost of overheads for that month, but the Employer cannot reduce his award.  

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Peter M. Elliott


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 before submitting a question.


Value . . .
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Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

B Sc(Hons) in Civil Engineering

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