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Construction Law/Design-Build Contract

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Dear Florin,

Hope you are doing fine.

I am really having the benefit of your expert advice.
My question today relates to a Design and Build project.
Just to give you background information: The Employer’s requirement lists co-ordinates of the extremities of the project; i.e. the beginning and terminal points, termed control points within the contract.

There were two junctions [FIRST JUNCTION and SECOND JUNCTION]. The name given to the project indicated that the project would start from the FIRST JUNCTION. However, the co-ordinate given in the Employer’s requirement was such that the project would start from the SECOND JUNCTION. There is a difference of 4km between the two junctions.

The Employer’s representative required that the starting point of the project shall be the FIRST JUNCTION, the coordinates of which does not match with what was given in the Employer’s requirement. By the way, the concept design and the Contractor’s alignment submitted at the time of the bid showed the starting point at the SECOND JUNCTION.

The Employer’s representative view was that the contract requires the Contractor to make consultation of stakeholders, local people and administrators. The preference of the stakeholders, local administration and the Employer was that the project starts from the FIRST JUNCTION as the name also implied and as the roads should pass through settlement areas.  

1.   The Contractor claims that the starting point should be the SECOND JUNCTION as described by the coordinates given in the Employer’s requirement or otherwise variation should be initiated under Clause 14 for the starting point to be the FIRST JUNCTION. What is your view- was the Employer’s representative obliged to initiate Variation or not?

2.   The Contractor states that as the Design-Builder, he should be free to select the best and economical route as far as the proposed route fulfills the requirements of the contract in relation to the control points, which the contractor has to connect. Issuing a center-line and additional control point other than the original control points named in the contract is a change of the contract requirements.  

The Contractor claims about the addition of control points other than what were specified. The Employer’s representative’s advised the Contractor to make the route pass through additional control points not mentioned in the Employer’s requirements and also follow in some sections as the Contractor submitted ‘prescribed and fixed center-line’ based on the preference of the stakeholders.

The Contractor submits that under the term of consultation, the Employer’s representative instructed the Contractor to change the original design route from that upon which the contract was based. And this constituted Variation under Clause 14. What is your view- was the Employer’s representative obliged to initiate Variation or not?

3.   Because of the above, the Contractor submits that significant increases in quantities, no and types of structures and length of the project would happen.

How would an increase in the length of the project from the contractor’s proposal be dealt with? Would quantities be the bases for determining the effect of the increase? If so,

•   Does it mean that it has to be waited until the design is completed;

•   Does this not change the essence of the contract to a re-measurement type.

I am deeply indebted in advance for your expert advice.

Alemu

Answer
Hello Alemu,


Good to hear again from you, glad to hear you're benefitting of my expertise, it means I can send you the bill now! KIDDING!

To answer your queries:

- doesn't matter the name, shame the title is misleading, but it matters what the Contract says. If Contract says SECOND JUNCTION, then second be it!

- Employer’s representative may require whatever he may like, providing it is in line with the Contract. If outside of it, Variation Order is the name of the game.

- consultation of stakeholders: was it required in the Contract or not? If yes, what were the stakeholders to be consulted on? Was it for them to determine such a major change? Please analyse these questions and see where you are.

Normally, a Contractor should be told very clear at tendering time what is he supposed to execute and not to leave the "job description" at the mercy of 'stakeholders', which once invited, will come up with a long wish list.

1. Having in mind what I said above, answer is "YES", Contractor is right. If any change, VO needed. I just don't understand reference to Clause 14. What kind of Design and Build Conditions of Contract are you using?

2. I am uncertain on that, as I do not know what the Contract says in respect of freedom to choose alternatives. If nothing specified, then you might be right.

But additional control points, are outside original Contract requirements.

I am uncertain on your last paragraph under point 2, I do not understand what you mean - sorry! As a general principle, whatever was not requested in the beginning, explicit or implicit, is outside the Contract requirements.

3. Again, based on information made available, You should ask for VO(s) and indeed, as the case may be, issue immediately Notice of Claim, to secure your rights.

Substantiation of claim can be left for later on, you will agree on that with the Engineer/ Employer, if not, you will go ahead with dispute resolution.

• No, do not wait until the design is completed. Issue your claim now and you'll agree the details later on.

• change to a re-measurement type: NO. But probably, you will have to use (estimated) quantities of original and of modified solutions, to compare them.


Hope that helps, good luck!  

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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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