Construction Law/FIDIC 99 - Contractor's Care of the Works
We're currently drafting the Particular Conditions of contract for an infrastructure project.
This project will be executed using either the red or yellow FIDIC, and will be the first phase of a multilateral development plan. After this project will be completed, the site shall be handed over to a different contractor, who will be hired by the client under a different contract, and will execute the second phase (and so on).
My question is: my client worries that the second contractor may not be ready to take possesion of the site and start execution of stage 2, by the time the first contractor completes the execution of stage 1, and there may be a gap of a few months, or even a few years between the two sub-projects. However, the client does not want to take possesion and be responsible for the care of the works during such time, and wishes for the first contractor to remain responsible for the site and the works, even though his own works were completed.
How would you suggest this to be done? Can the employer delay the taking over certificate until such time the second contractor is ready to take possesion of site? Maybe the employer should issue the taking over certificate but extend the responsibility of the contractor according to sub-clause 17.2? Should the contractor be paid extra during his extra-time for care of the works? As far as you know, is such a mechanism at all common in international contracts?
Many thanks in advance for your insights.
At the end of the projects, the site is supposed to be "handed over" to another
The solution is, as already foreseen by you, to do the Taking Over and to have the Sub-clause 17.2 amended so that the Contractor keeps the responsibility for the care of the Works up to when the new Contractor will come. It is fair to pay the Contractor for this. If payment would not be foreseen for this, then the Contractor either will hide these costs in the other prices/costs, and the Employer would pay, anyway, or the Contractor will not do properly his job, not having money foreseen for this.
Another solution would be to allow the Contractor to finalize the Works - and, therefore, to have the Taking Over - later, but the costs would be higher, since the manpower, machinery, etc. for the Works should be maintained on Site longer, with bigger costs - in the first solution, only few things and staff will be maintained on site, with lower costs. In this second alternative, the Employer cannot be sure when the Taking Over should be done to not have the gap between the Contractors, so the first Contractor's risk is higher, therefore the Price of the first Contract would be higher to manage this risk.
Therefore, the recommended solution is, indeed, to amend the Sub-clause 17.2 as suggested, and Contractor to be paid for the extra-time of taking care of the Works (can be a monthly amount, plus the cost of the repairing Works that would be proven to not be caused by the actions or inactions of the Contractor). I don't know of a specific case like yours, but this solution is according to the FIDIC Contract logic and mechanisms. During this time, a small team of the Engineer can be maintained on Site, or the Employer himself can ensure the supervision.
Hope it helps.