Construction Law/Reduction of Penalty
We would like to receive your comment on the following.
In accordance with Clause 47.2 (Reduction of Penalty) of the Conditions of Contract,
“If, before the Time for Completion of the whole of the Works or, if applicable any Section, a Taking-Over Certificate has been issued for any part of the Works or of a Section, the penalty for delay in completion of the remainder of the Works or of that Section shall, for any period of delay after the date stated in such Taking-Over Certificate, and in the absence of alternative provisions in the Contract, be reduced in the proportion which the value of the part “so certified” bears to the value of the whole of the Works or Section, as applicable. The provisions of this Sub-Clause shall only apply to the rate of penalty and shall not affect the limit thereof.”
Assuming that the total length of a Sewerage Network Pipe is 1,000 Mtrs including 50 manholes thus costs Dhs. 625,000/- and a TOC has been issued for 400 Mtrs of pipes including 20 numbers of manholes which costs Dhs250,000/- However on the same date the amount certified through Interim Payment Certificate is Dhs. 475,000/-
Is the penalty on the network to be reduced on the basis of the certified value of the TOC, or on the value certified in the interim payment certificate? In other words does the word "so certified" in the above clause refer to the amount certified in TOC or the amount certified in the Interim Payment Certificate?
Your comment for the above will be appreciated.
Ninan M.M, Quantity Surveyor,
JV III Infrastructure Supervision,
Thank you for this question.
The phrase "so certified" relates to the quantity of work to which the Taking Over Certificate relates. If the quantity of work when correctly valued has an attributed value at contract rates and prices (not cost) of Dhs 250,000 it is that sum which is taken as being the proportion of the Works; 250,000/625,000 or 40%.
I hope that this assists you.
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