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Construction Law/Change Order contractual forms

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Question
Dear Sir

Our contract here in a Pipeline Petroleum project states in the section of "Administration of Contract" that a procedure of Change Order should be followed. A Change Order Request "COR" shall be issued by the Employer to the Contractor based on which the Contractor will reply thru a Change Order  Proposal (COP) and after  negotiations a Change Order (CO) shall be issued by the Employer to the Contractor. The Contract gives forms of all COR, COP and CO.
Also, in the section of "Conditions of Contract" and under the clause of "Change Orders", the last provision is the Change Order procedure will be handled as mention in the section of  "Administration of Contract".

Now I face a situation and need your advice. The Employer has sent a change request to the contractor but not thru the said COR but thru a normal letter and without copying or informing us as the Consultant so that I could advise him timely. I discovered the matter by accident when i saw the Contractor working on preparing his proposal, I asked him this based on what and he showed me the letter. I advised him that he should work on COR not a letter. The  Employer knew what I have advised him and today in the meeting he asked me we shouldn't be such bureaucratic and we should help in expediting the progress of the Change not to delay it. I replied to him very politely that the administration of the contract should be followed other wise it will be a deviation to the contract and when it will be  reviewed by legal and financial Depts we will be blamed, and moreover it will be a Non-Conformance case under any quality audit.

Now i have 3 quick questions ;
1- was my reply good enough?
2- are there other reasons that obligate us to follow the Change Forms as in Contract?
3- and from legal point of view, is it mandatory to follow such contractual forms or the Contractor will be in all cases entitled to the Change (cost and time if any)  even though it has been handled through non-contractual forms such as normal letters or else?

I am sorry for my inconvenience as usual but you are always my reference and my support.

Thank you

Khaled
Contract Administrator

Answer
I have following brief response to your 3 questions under the scenario as explained in the question raised.
1- WAS MY REPLY GOOD ENOUGH?
I agree with your advise given to the contractor and also to the Employer as any deviation made may have contractual consequences later on and can not be assessed at this stage. Secondly there should be a valid reason to make a change in the prescribed procedure. You could have highlighted another point that as a consultant it is your duty to inform you faithfully what is in your interest and what is not. You can in-fact refer the matter again to him in writing to him that the danger of this is when a dispute arises regarding quality and scope of work due to not following the prescribed forms and may later result in complication as to who order and approved the change order and what was the motive for this change etc. If your project is a public sector project, even the audit may raise an objection why prescribed forms were not filled in. Please note that contractor can receive instructions from the Engineer only and needs to be pointed out as it may result in some complications at later stage and so by doing so you have at-least performed your duty.
2- ARE THERE OTHER REASONS THAT OBLIGATE US TO FOLLOW THE CHANGE FORMS AS IN CONTRACT?
As in 1 above.
3- AND FROM LEGAL POINT OF VIEW, IS IT MANDATORY TO FOLLOW SUCH CONTRACTUAL FORMS OR THE CONTRACTOR WILL BE IN ALL CASES ENTITLED TO THE CHANGE (COST AND TIME IF ANY)  EVEN THOUGH IT HAS BEEN HANDLED THROUGH NON-CONTRACTUAL FORMS SUCH AS NORMAL LETTERS OR ELSE?
If the client side is still insistent on not following prescribed forms for some reasons, you may send him a proposal with all details for approval so that you have something in your hand to show that this change was necessitated due to Employer's insistence not to be too strict in paper formalities.Alternately,Please re-check your and construction contract to see if under clause 2.1 PCC if under this clause the Engineer need prior approval on any such aspect
With this i feel i have answered your question and if not, please come back with any specific issue still unresolved.
With best wishes and regards,
Liaqat Hayat

Construction Law

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Liaqat Hayat

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I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

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