Construction Law/Can we apply Liquidated damage once the time extension is granted
QUESTION: Dear Mike,
I am managing several contracts here in Afghanistan under World Bank funds and we are using WB CoC (Harmonized FIDIC conditions of contract). for a project we have already granted extension of time assuming that the delay was beyond the control of contractor although it was not the case because there were also delays caused by contractor but to get the work done the extension of time was approved. Now the client is asking to apply liquidate damage because the contractor is asking for Price adjustment. can we apply LD at this stage. The project is completed and under DLP period.
ANSWER: Hi Mohammad
Once an extension of time is awarded it cannot be reduced unless there was a reduction in the works scope at final account - so LD,s cannot be applied.
You can review the contractor's claimed costs by reviewing the concurrency issdues in the original claim - the contractor cannot claim costs for his own delays.
It is normal to trade off LD's and costs in the final account negotiations.
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QUESTION: Dear Mike,
Thanks for prompt response. let me make my question simple and to the point, lets remove price adjustment and any other claims from contractor. can you please let me know that whether we can apply liquidate damages after we grant time extension assuming that the delay reasons were beyond the control of contractor?.
Once an EoT has been awarded then LD's cannot be applied up to that date - the award cannot be reduced.
If the work was further delayed by the Contractor then LD's may be deductable but if the Contractor finished within the extended period then nothing can be deducted.
If you are acting as engineer when you awarded the EoT then the client may ask you to explain why the award was given in the first place.
The answer is that you applied the latest concurrency rules and to refuse an EoT would have been an act of prevention which would have set time at large.