Construction Law/Material on Site

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Question
We are working in re measurable contract ,there is allowance in payment clause to pay 75% of  the C.I.F value of material delivered at site subject to further 10%  retention .

My question : what is the meaning of "subject to further 10% retention" ,is the 75% value shall reduced by deducting of 10% (i.e. the net value will be equal to 67.5 % ).

what about the general 10% retention applied to all other estimated IPC  due amount ,it will applicable to to 67.5 as well ,and same shall be applied to recover the advance payment.

Many Thanks,

Ahmad

Answer
Dear Ahmad,

Apologies for the late response to your question.

From your question; i can immediately see the need to best analysis and interpret the clause for "75%  of the CIF value of material delivered at site subject to further 10% retention.." as meaning that the 75% value shall be further reduced by another 10% and therefore the net value (67.5%) would be added in the valuation or certification statement as "materials on site"

About the general retention; ofcourse, as you have already explained, it would be applicable to the 67.5% - net value of materials on site.

What informed my opinion is that, the clause is worded with strong word "...FURTHER 10% retention". Here, the emphasis is on the word "Further" and it means, the contract recognized that, there was an already existing deduction ----in form of "retention" or in the form of other "deductibles" - for instance, the 75% of the C.IF value is already a deductible and to further let both parties know that, the deductibles are through yet, then, they agreed to allow for another "deductions" in the form of "retention" before arriving at the value of net materials delivered to the site on the project.

I think, the intention of these, deductibles is to ensure that, the contractor is not overpaid on the materials since the C.I.F value is being used to pay rather than using the derived materials cost from the unit rates. You know, at times, if the Contractor has priced a low rates for any item and if the Employer or the Consultants should pay for materials on site based on the C.IF value, then, it is possible that; the substantial part of the unit rates must have been paid as materials on site, even when, contractually, the value of the material under the contract, does not represent the true value as the C.IF. For such instances, the procedure for payment to be certified for materials on site are carefully worded to safeguard any undue and avoidable overpayment.

I hope i make a little sense here??

Yours

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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