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Construction Law/Consultant Supervision Fees

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Contract Copy
Contract Copy  

Contract copy
Contract copy  
Dear Sir,

I am currently employed in a consultant firm and handling a commercial and residential project in Abu Dhabi. Our contract fees for design and supervision of the project shall be a lump sum amount of 4.5% of actual construction value up on award as per contract clause schedule 03, fee schedule no 1.1 (Copy attached). The 4.5% lump sum value is equally divided in to two payment as follows.
1) Pre-construction fee (Design Fees) 2.25% (Payment Received)
2) Construction Supervision Fee (2.25%) is under conflict.

Please note the construction supervision fee (2.25%) of actual construction contract value (AED: 324,800,000.00) upon award is based on 26 months total construction period (Attached Contract clause No. 3.1). Also the consultant shall be paid the construction supervision fee commensurate with actual progress on the works and provided all conditions of the schedule 3 are met (Attached Contract Clause No. 03).

Accordingly, from August 2012 to August 2014 (25 months) we received our monthly supervision fees based on contractor actual progress value on site. Please note the current actual progress up to August 2014 is only 32% of total contract value. Most probably contractor not able to complete balance work (68%) with in the project completion date of September 2014 (One Month Remaining).

But, my supervision fee is based on 26 month of total construction period. Hence the remaining supervision amount should be compensated by this month (September 2014) based on attached contract clause No. 3.4.B. Moreover after 26 month of approved construction period the supervision fee is based on monthly salaries as specified in contract clause No. 2 page No.85.

Question 01 - The consultant supervision fee for 26 months (2.25% X 324,800,000) is equal to 7,308,800. whether We are liable to get the full amount as per our contract?? else only the contractor progress at site up to the contract period of 26 months.

Note : I attache two contract paper, remaining i will attach another mail.


Looking forward to your answer.

Thank You,

Answer
Dear Velmurugan,

I answered your last question first, but I see nothing here to change my opinion.  If the Contractor only did 32% of the work, why should you be paid 100% of your fees.  I have used the same method myself as a way of motivating the supervisor to be more pro-active.  If the Contractor has only 32% of the resources on site, why do you need 100% of the supervision resources.  I would have demobolised some of my resources as soon as it became evident that the Contractor could not achieve the required progress, or I would have had meetings with his management to ensure the he had sufficient resources to achieve the necessary progress.  

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

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Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

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B Sc(Hons) in Civil Engineering

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