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Construction Law/CLAIMS ON CONTRACT TERMINATED AT CLIENT'S CONVENIENCE

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Question
QUESTION: I am Quantity Surveyor administering a construction contract based on the General Conditions of Contract similar to that of the World Bank (for small works-2008 Edition). What are the the heads of claim that are admissible when a Contract is terminated at Client's convenience during the mobilization period?

ANSWER: Dear George,

Almost anything that the Contractor can prove.  

Some thoughts, but there could be others

1.   Mobilisation costs actually incurred;
2.   Overheads actually incurred, including recruitment and tender costs,
3.   Bonds insurance policies and securities purchased;
4.   Plant and supplies purchased;
5.   Rental or purchase of offices and site facilities, and land for them;
6.   Loss of overhead recovery;
7.   Loss of Profit


---------- FOLLOW-UP ----------

QUESTION: To what extent/level would I allow a claim on loss of overheads recovery and loss of profit? Is it to based on 100% of the whole contract sum or part of it.

Answer
Dear George,

Difficult one.  You have to make a value judgement as to how long it will take to find alternative work, which will provide overhead recovery and profit.  Profit has to be based on the actual profit shown in audited accounts for past years, not on any allowances made when submitting the tender.  Unless it is a very short or small job, I would say less than 100%, but perhaps equivalent to six months of the contract overhead recovery and profit.  

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

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