Construction Law/Penalty for Delay
Under a FIDIC 4th Edition contract the Penalty for Delay, to the Contractor, is capped at 10% of the Contract price, similarly it is applicable to nominated subcontractors at 10% cap of their subcontract price.
The question is; Is it possible for the Contractor at the time of accepting a nomination of a subcontractor to enforce additional compensation bye the subcontractor in case of his delaying of the works to narrow the gap between his Penalty for Delay and that of the Contractor's.
Thank you for this question.
If the Employer has negotiated the terms of the agreement for the nominated sub-contractor you should approach the Employer and the nominated subcontractor to discuss this and the impact you might incur in the event of a delay by the nominated subcontractor.
It is very common for there to be a differential in the level of delay damages payable by a subcontractor (even a nominated subcontractor); this is not least because of the nature of the subcontractors work and the fact that the contractor is often (although not always) able to mitigate the effect of a delay by a subcontractor by, for example, rescheduling.
If you can show that the nominated subcontractor's work is on the project critical path and that it is probable that any delay by the nominated subcontractor will not be recoverable then you have a good base argument for seeking to have the delay damages under the subcontract mirror, or be much closer to those under the main contract.
I hope that this assists you.
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