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Construction Law/EPC - Design Payment & Delay in approval / acceptance entitlement to EOT

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Question
HI FEMI,
        We have being awarded an EPC contract for carrying out MEP works for a process plant. The contract agreement was signed and we have initiated with the design and the calculations pertaining to equipment and systems.

The LS contract payment terms stipulates that we can claim 5% of the contract value for design.

we have submitted our design with calculations to the MC who has it's own internal consultant, the contract conditions stipulates that the consultant has to revert back within 14 days with approval or rejection or any query.

Based on the submission of design with calculations we have submitted the interim invoice for progress payment for 5% of the contract value, the MC is reluctant to certify it stating that only upon final approval we are entitled to claim the design, for submission of the design data and the revisions there would be only 50% certification of the 5 % of contract value for design.

secondly the MC is accusing us for low progress due to the revised submission of the design and calculations which were submitted in response to his query raised, moreover the internal consultant is taking more than 14 days for approval/rejection or query?

In this scenario kindly advice
1. Payment for design
2. Entitlement of EOT due to delay in approval /acceptance of design data and calculations

Note : It's a EPC contract tailored made by MC for MEP works.

Answer
Dear Rock,

Good afternoon. I sincerely apologize for delay in responding to your question. It was due to situations beyond my control.

Regarding your request for advice on the Payment for the design services your submitted; one of the first pertinent question that came to mind is that; we do not know how the payment terms was worded in your contract. You have indicated that the LS stipulates that you can claim 5% of the contract value for design but i do not know whether the wording mentioned something like " ...on submission of the design and calculation..." if not, then, the MC may interpret or manipulate this term or clause to mean ".....on approval of the submitted design and calculation.."
My advice would be that; you may need to comply with the interpretation that the MC may give to it and take the certified 50% of the 5%, then, put good plans in place to follow up the review process and to ensure prompt review so as to claim your balance of 50% of the 5%.
Summarily, i always advice that contract terms be worded in a very simple English that could only give an interpretation instead of multi-interpretation that could not be adjudged wrong as well.

On the EoT; we will still need to refer to the contract. You identified that 14days is required for review or and approval or and comment or rejection. Yes, indeed; you would be entitled to claim EoT if your submitted design and calculation overstayed with no response; beyond this duration notwithstanding the outcome of the review, whether approved or rejection or comments for amendments. However; if before the 14th day of the submission, the MC communicated to you about few comments to amend, then, you can weigh the amendment proposed; if it is what ordinarily, you supposed to have known and incorporated as an experience designers; then, you may not be able to have extension of time if the time for the amendment and eventual approval drag the duration over the planned dates. At worst scenario, this reason could fetch you EoT entitlement without cost.
Again; if the comments is rejection, and if the basis of rejection is that, your designs are completely unacceptable and not in conformity with the norms and standards and a the project requirements; then; you would need to also re-submit the design for approval and any duration spent more than planned duration would be borne by you.
And again; should the MC comments demands that new requirement be incorporated into the design; or that, the requirement being suggested for incorporation are not within what ordinarily is expected of an experience designers to incorporate; or that; what should not have been reasonably foreseen for inclusion in such design by the intent of the project requirement; then; you would be entitled to EoT with cost.

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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