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

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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 Mr. Gerry Sverdlin
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
Gerry Sverdlin
Gerry Sverdlin  
28-Mar-2013

Dear Mike (UAE)

Thank you for your query as it seems well stated and articulated.  It appears that the Owner relies exclusively on the contract clause requiring the Contractor to comply with all local authorities’ regulations, whereas the issue is NOT of local regulations at all.  The local authorizes do issue sometimes confusing and/or contradictory regulations specific to each emirate –but these are, more often than not, stated in publicly-available publications, such as Subdivision Regulations, Zoning By-laws, Building Code, Electrical and Plumbing codes or regulations by the Fire dept. / Civil Defense – as all are issued for reasons of public safety.  These codes and publish regulations do indeed define the local custom for the purposes of mandatory compliance.  
If the Contractor complied with those in the process of the approval by various regulatory agencies and the Owner has agreed with the proposed design from the aesthetical / architectural standpoints, it would appear to me that the Contractor has fulfilled its obligations under the Contract.  

In UAE, with its multitude of architectural styles and wide range of aesthetical influences, there seems to be no unique local custom for the design of residential villas going from one village to another.  Just to name a few, the differences in styles between villas on Palm Jumeira - or Green Community, or Jebel Ali Gardens, or The Lakes, or Jumeira Triangle, or Arabian Raches or Khavaneej, or Hutta  - are so vast that no one could possibly define what the local custom of the villa design can be for the purposes of compliance.

What appears to me here, however, is that the local authorities engaged in architectural / aesthetic design review or re-design based on the un-stated and un-defined bureaucratic whims of the local officials – not tangible regulations, and with tacit “approval” of the Owner. (Maybe he did not have a good wuster or did not know whom to pay to push it through.)  If the rejection of the approval was based on some identified non-compliance with the local codes imbedded in the Contractor’s design, the Contractor will have to bear the cost of bringing the design back into compliance.  On the contrary, if the delayed approval and re-design was primarily due to re-arrangement of the floor plan, or changes in the footprint of the buildings without specific references to regulatory requirements dictating such changes – then the Owner has to bear the costs of re-design and additional costs incurred during the construction cycle.  But then I can’t reconcile this position with your statement, “Municipality hasn’t introduced any new design.”  

To a Contractor it is transparent and does not make any difference whether the Owner - or a 3rd Party who is not a party to the Contract – drive delay and re-work which is not required under the terms of the Contract.  If the Owner washed his hands, stepped back, and allowed the municipalities delay his project, the Contractor is entitled to be paid for all these delays which have arisen out of his control and with no culpability on his part.

If you can prove that the original design was compliant with the contract and regulations, then the Contractor may be entitled to the following categories of costs:

I.   Direct Costs
1.   Cost of Re-design;
2.   Costs of additional approvals and prolongation cost of delay associated with it;
3.   Additional construction costs (compared to original budget estimates)

II.   In-direct Costs
1.   Cost of extended Contractor’s presence on-site(s) due to changes in model villa design – prolongation costs;
2.   Cost of additional Bonding (Performance, Retainage), Insurance, Licenses (if separate from above)
3.   Home Office Overheads (under any definition or formulae)
4.   Loss of opportunity (hard to prove but not impossible)

I hope this is responsive to your inquiry.

Respectfully,

Gerry Sverdlin, PE, Esq.
Doha, Qatar.

Construction Law

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Gerry Sverdlin

Expertise

Questions I can answer or provide assistance to reflect the following subjects: contract terms and conditions, interpretation of ambiguity, construction management and practices, claims for costs and time, variation / change orders, disputes, dispute resolution techniques and organizations, claims for extra work or materials, delay analysis, disruption or interference, defective design and negligent supervision, construction risks and mitigation, warranties and insurance. Questions I can NOT answer: too numerous to list here.

Experience

Mr. Sverdlin provided over 20 years of services in dispute resolution and expert opinion of complex construction claims for extra work, delay & acceleration, defective design & installation, unauthorized deviations, differing site conditions, productivity loss, labor & material shortage, owner’s interferences, force majeure, bonding, warranties and insurance coverage. Mr. Sverdlin participated in dispute resolution proceedings regarding 10 mile sub-aqueous outfall tunnel at Deer Island Treatment Plant – Boston Harbor Project, and claims arising out of construction of the South Boston / South Bay Interchanges for the Central Artery/Tunnel Project in Boston, Massachusetts, USA, and multiple proceedings Middle East. Specialties: Mr. Sverdlin established expertise in construction contract preparation under EJCDC, AIA, FIDIC and agency-specific bespoke contract frameworks: procurement administration, resolving defects in scope of work coverage, specification and estimates, change order processing, project controls & cost recovery. Engineering practice encompasses design & procurement management of highway & rail transportation systems, wastewater treatment and drainage networks, key performance indicator regimen.

Organizations
2011 - CIArb Member Grade 1999 - Attorney at Law – Massachusetts Bar, BBO # 642980 1992 - Registered Professional Engineer - PE: Lic. MA-36839 - Civil Affiliated Memberships: MBA - Massachusetts Bar Association DRBF - Dispute Review Board Foundation TASA - Technical Advisory Service for Attorneys

Education/Credentials
2010 - 2011 - American University in Dubai -Grad. Sch. of Business Administration Construction Contracts, Means & Methods, Claims & Changes, Project Controls March 2009 - Chamber of Commerce, Colombo, Sri Lanka – Construction Management Seminar Changes & Claims, EOT/Delay Damages, Loss of Productivity – Measured Mile 2000- 2007– Boston Architectural Ctr & Wentworth Inst. of Technology - Construction Law 1991- 1993 - Northeastern University, Boston, MA – Land Surveying, Sewage Disposal System Numerous continuing education specialty courses Suffolk University Law School - Juris Doctor, law -1993 – 1997 Northeastern University - MS, Construction / Public Works Management - 1993 Polytechnic University - BS, Civil Engineering 1982 – 1985

Past/Present Clients
Representative Projects Dubai International Airport UAE Muscat & Salalah Int'l Airports Oman South River Dredging Mechanical Scituate, MA Permitting / Boundary Dispute (Title V) Worcester, MA Hazardous Material Site Assessment New Bedford, MA Groundwater Pollution Monitoring Burlington - Woburn, MA Hazardous Material Disposal - Site Clean-up Wrentham, MA Sewer Rehabilitation Project – STEP Abu Dhabi, UAE Dubai Metro - Road & Transportation Authority, Dubai, UAE Boston Harbor Project - Deer Island MWRA - BHP Winthrop, MA 1,200 MGD Waste-Water Treatment Plant Doha North Sewerage Treatment Works Ashghal, Doha, Qatar 254K m3/d STP, 25-km triple force mains, 33-km Interceptor Sewers 10,000 l/s PS Central Artery / Tunnel Project - MHD / MTA Boston, MA 116 lane-miles Old Colony Railroad - Commuter Rail (Boston, MA 70+ mi) Cherry St. Reconstruction Full-Depth Bridgewater, MA 2.1 mi Scenic Roads Reconstruction Town-wide Wayland, MA 8.7 mi Strawberry Hill Rd Reconstruction Full-Depth Concord, MA 1.7 mi Craigsville Beach Rd Reconstruction Full-Depth Hyannis, MA 3.4 mi Water Main Replacement Southborough, MA EMAAR – Gulf III Towers, Dubai, UAE Mixed-Use Hi-Rise Peabody Properties Residential Hi-Rise Lynn, MA Bristol Properties Shopping Mall Attleboro, MA May Institute (children w/special needs) Institutional Randolph, MA Bear Hill Executive Park Commercial Waltham, MA Prospect Hill Executive Park Commercial Waltham, MA Residential Community Subdivision 128 lots Hopkinton,MA Retirement Community Subdivision Residential – 126-lots Warren,MA Independence Mall Retail Kingston, MA Mashnee Village Subdivision Residential – 54-lots Buzzards Bay, MA Hyannis Industrial Park Heavy Commercial

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