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Construction Law/Change in Villa Design due to authority instruction l

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Question
Subject: Change in Villa Design – Design changes
Project: Construction of 500 Villas
Contract: Design & Built
Location: UAE
Contract: Bespoke
Dear Femi Alofe
Background of the issue:
During the inception stage, Client approved a mockup villa (in different emirates). The Contractor priced the project in line with the tender documents (master plan and approved drawing – Mockup villa Plan). Based on the approval by the client, the Contractor developed the Villa design and when it was submitted to the Local Municipality approval (different emirates) the authority rejected the design and asked the Contractor to change the design completely, saying that it does not match up with the local custom. The GFA as per old design and new design remains same. Municipality hasn’t introduced any new design. Client tried to convenience the Municipality and lost. Due to the instruction by the authority the Contractor suffered a
1.   Delay (EOT & Prolongation cost)
2.   Additional cost due to redesign and
3.   The construction cost (Increase in structural quantities of the villas as per the new design)
Contract Conditions: (usual one)
1.   Contractor should comply with all authorities regulations and the project budget must not vary
Question: Whether we (contractor) is entitled for the above claim
Regards
Mike

Answer
Dear Mike,

Apologies for the late response to your question.

I think the challenge in this type of your contract would be this type you have mentioned more so that the contract cut across different emirates that has (possibly) different type of design and approval regulations and procedures.

I know that, one of the principal basis of the D&B contract is the employers' requirement which "if changed during the currency of the contract would attract compensation of the Contractor on any incurred cost and or time. I will believe that the mock up for different emirates approved by the Client is simply "your employers' requirement" for this contract and as such would form the basis of the contract performance by the contractor.

In my opinion, If it therefore evidently clear and backed up with relevant documents by the different approving authorities in different emirates that "the employer requirements has changed" then, obviously; the Contractor would be entitled to any justifiably claimed cost and or time incurred additional on the contract as a result of the changed employers' requirement as the instance of the statutory authorities.

May i ask first and ofcourse, i will not doubt it (that it has), if your contract has a clause that say or that could be translated to mean " the Contractor's designs shall comply with all statutory authority requirements" and even if it does not; and except that, it states that or it could be inferred or implied from the Contract that ...."Contractor is expected to have been familiar with the statutory requirements in respective emirates and would carry out the works in line with such requirements to the satisfaction of the employer", then, it would rather be a challenge to demonstrate to the Client that; you (contractor) has not consider the requirement of the different statutory authorities into consideration when he was tendering and accepting the offer of the D&B.

Having said all, if the proposed design of the D&B contractor were not approved by the statutory authorities due to non-compliance with the local customs; it is possible that; the employer would not take responsibility for this because it is expected that; a D&B contractor is familiar with any existing design requirement and the local custom requirements that influences design approvals by statutory authorities in different emirates.

But, should the local customs requirements relating to the design as requested by the different emirates approving authorities are substantial or have substantially rendered the "employer's requirement" unachievable and changes substantially, then; the contractor may have grounds for EoT; Additional costs of design and also additional cost of construction for any increased quantities of the works.

For me, i would presume that; for the Contractor to be justified to any EOT, Additional cost of designs and Additional cost of construction (as mentioned above); he would need to demonstrate and prove that the local custom requirement is a newly introduced requirement by the authorities and can do that by proving one of all of the following:
1. That the local custom design requirements which was the major factor,  for the non-approval of the original design was not existing at the time of entering into the D&B contract.
2. That the designs (based on the completed mock ups)were initially approved by the respective emirates authorities as constructed and thereafter, demanded changes to conform with the local custom.
3. That there are express documentation to show that the completed mock-ups (as designed) were approved by the employer prior and then, forming the basis of the employer's requirement for either all the emirates or each of them thereof;

Finally; i will advise that; as you have explained; you may be having some important evidences that supports your claim and this should be able to give you an entitlement to EoT. I feel, the only challenge here (which is common to most of D&B contract) is that; to prove cost entitlements particularly where the contract place the responsibility of designs on the Contractor. And it May be held that; the Contractor has retained the risk for any flaws; omissions or error in commission on the designs whether in compliance with local laws, rules, regulations and or functionality. In this case; Cost may be a challenge and if this is the case; you may decide to adopt the Value Engineering principles where you could demonstrate to you client of possibility of alternative methods of achieving his requirements without any additional cost. This would in turn help the D&B contractor to also save cost while achieving same employer's requirement and performance of the contract.

I hope this helps.

Femi

Construction Law

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Femi Alofe

Expertise

I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts

Experience

Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

Organizations
1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

Publications
1. AACEI RP on Estimating, 2010

Education/Credentials
1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

Past/Present Clients
1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar

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