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Construction Law/Variation order after taking over certificate.

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Question
Dear Sir.
I am currently work on a ADB project in Pakistan. The contract document is based on FIDIC Multilateral Development Bank Harmonised Edition June 2010. During the execution of the project the scope of the work has been changed and quantities of BOQ Items are abnormally increased / decreased. We have submitting our variation order # 2 with a financial impact of 8.62% above before fifteen days of completion date. During checking of the variation order the project was completed and substantial completion/taking over certificate was issued by the employer.
Now the Resident Engineer of Consultant says that after issuing of taking over certificate, we can not process the case of variation order # 2, and order us to submit an IPC with actual workdone of varied items , and says that they would withheld the quantities of all the increased item and release us the remaining amount of quantities which are within the BOQ , after this we have to submit statement at completion having all detail of wordone and they process the case of statement at completion.
My question is that what is the hindress for not processing a Variation order after issuance of substantial completion certificate, the amount of varied items i.e. 8.62% of contract cost is released after the approval of variation order. so approval of variation order is to much essential for us because now a days we are facing some financial troubles.
What is the actual procedure according to the fidic mentioned above for releasing the amount of varied items after issuance of substantial completion / taking over certificate.
Some guidelines in this regards was highly be appreciated.
Thanks & Regards.

Hamid Naveed Ahmad.

Answer
Dear Hamid,


Thank you for your question.

It seems indeed, you are in trouble, as VOs can not be signed after works completion. It is a pity you did not complete all contractual steps prior works execution, or at least prior Taking Over Certificate issuance

However, I trust you did not just proceed executing the varied works, without written instructions - I'll develop my answer on that basis.

If there is agreement between the Parties and good collaboration, such written instructions should constitute sufficient basis for you to be paid.

If on the other hand the Employer wants to exploit that situation, you will have no other option but to trigger a dispute and base your case on rather legal reasonings, rather than contractual.

You can show that you have been instructed by the Engineer to execute the varied works and according to the Contract you were bound to carry out the instructions given by the Engineer.

Depending on the local law - suggest you consult a local lawyer, you should be able to demonstrate that a legal right to be paid has been thus constituted and such right can not become extinct.

Then, you should show that lack of such payment would also constitute an "unfair enrichment" of the Employer.

Basically, these are the directions I would suggest you to explore, as these should be basic principles that should be existent in various legislations.

But as I am not familiar with the Law of the Country, I strongly suggest you consult a local lawyer.

Your dispute will be at a large extent of legal nature.

Hope that helps, good luck!

Construction Law

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Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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