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Construction Law/Preliminary and General Items

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Question
Dear sir,

I would like to get your opinions on some two issues in the preliminary and general items in a contract.

Item 1 reads as follows:-
Allow a provisional sum of Kshs 300,000 for the provision and maintenance of internet services in the Engineer's office for the duration of the contract.

While this is a clearly spelt out provisional sum, I agree that the contractor should expend the money against an instruction from the Engineer.

Item 2 (this is the contentious item) reads as follows.
Provide or Rent equivalent and maintain fully furnished and functional Type I House Resident Engineer's Accommodation to the approval of the Engineer as detailed in the drawings for 16 months (covering DLP)
The Contractor quoted a lumpsum amount for this item.

Whereas the Contractor provided the housing and was paid the whole amount as per his quotation, the auditor now wants a proof of the expenditure of the full amount arguing that the Contractor ought to have claimed and paid only for the amount spent. The Contractor on his part argues that he is the one who quoted for money and as such he is entitled to full pay as per his quote without any back-up information (invoices or receipts)unlike in item 1 above.

I am I right to support the opinion of the Contractor?

Is there any Clause in the FIDIC which I can quote to support my argument?


Thanking you in advance for your advice.

George.

Answer
Dear George,


Thank you for your question.

Suggest you check in the FIDIC book that you're using, there should be the definitions of the Lump and Provisional sums.

Provisional Sums are only to be used upon Engineer/ Employer instruction/ approval and Contractor is reimbursed against actual costs, against invoices and other supporting documents.

Lump Sum indeed, are to be spent by the Contractor as stated in their offer/ Contract.

If Contractor pays less, that's their gain, if they pay more, it's their loss. Contractor is not to produce and invoices or any supporting document for justifying the actual expenses.

The auditor, as probably most of auditors in this world, has only learnt some rules in his office, that any expenditure is to be demonstrated and satisfied himself to stay there and to not learn anything else.

Suggest you ask him to indicate the contractual basis under which he requires that. But before that, it may be useful he reads the Contract.

Hope that answer your query.

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Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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