Construction Law/Delay in Possession of Site
I highly appreciate the detailed and clear reply you provided to me on Interpretation of Priority of Documents.I hope, you will assist me in the present case too.
Conditions of Contract: FIDIC for Work of Civil Engineering Construction - Fourth Edition 1987
Reprinted 1988 with editorial Amendment only.
Reprinted 1992 further Amendments.
Clause:42.2-Failure to Give Possession
The present on-going Contract is composed of number of independent packages.
In the Letter of Award also it has been clearly stated that, the possession of the site in question would be delayed and has further advised not to incur any cost on it, until the Contractor is instructed to do so. This delay was due to the intervention of Third Party.
Finally, the Contractor was instructed to procure necessary resources and to commence work and the Contractor attended to it promptly.
But due to the same intervention, it was not possible to start permanent works as per the agreed Programme but instead, the Contractor was given some Contract Variations to demolish some existing buildings, uproot trees, cut branches and to build few rooms with wash rooms and security hut etc.throughout one full year and finally the site for actual work was released.
I suggest for your advice, it is appropriate to present this case under cl. 42.2 - Failure to Give Possession as quoted above, rather than based on cl. 6.3 - Disruption of Progress.
My present intention is simply to show,
1.Full value of our resources - Plant, equipment and vehicles and our full staff including Officers and labor force recruited to attend to programmed work but deployed for Variations during one year period -say Y.
2.To assess the value of actual work we had to do during the same period as per the agreed programme - say 100.
3. To assess the value of variations attended instead of above - say 40.
4. Therefore in the proportion of values in 2 & 3, the value of resources required to attend to variations was only Y/100 x 40 = 0.4Y
5. Therefore the resources has been under-utilized by Y - 0.4Y = 0.6Y.
6. If Y = say Rs.50.00 million,
0.6 Y = 0.6 x 50 = Rs.30.00 million.
7. To the value at 6 above, the agreed overheads will be added and also further adjustments for Preliminary and General Items and any other costs will be determined.
8. Extension of Time due to this case has already been given and only the above Cost Claim is to be finalized.
Please advise me on the above proposal and any other approaches.
Thank you sir.
Thank you for your question.
wow! i must first appreciate that, your intention to present the claim in the manner you have explained sounds logically good. However, you may encounter certain contractual limitation which may leave your way of presenting the claim wanting.
Firstly, you indicated that, the client informed you that the site possession would be delayed and that you should not be incurring any cost. You would therefore need to be ready for the ground upon which you are now incurring cost. Again, i will understand that, for your claim to be successful, you will need to demonstrate that, you have notified the client / Engineer even after receiving the notice of "no incurring of cost".
Now to the claims, firstly, it depends on whether there is a manner the contract indicate for the claim to be put together. if yes, that manner has to be followed. If no, then, you would need to first go through the process of putting up the claim based on the actual loss you suffered. It therefore means that, you would really need to justify and demonstrate that, the staff were there for that project, the salaries were being paid for them for that project even when they were not productive. You would also need to justify the fact that, you were unable to mitigate or limit the loss even when you were not responsible for the cause.
For overheads - site overheads, your preliminaries would be used alternatively, if you have actual records of expenditure, you could use that. Again, for head office overheads, you will definitely have a valid ground to make claims for this after adjustment of the proportion you would be entitled to under variation works.
If you have a valid extension of time granted and you can demonstrate with actual evidences with records and other relevant supporting facts that, you have incurred costs for this lost times which evidently is now prolonging the completion, then, your claim would scale through otherwise, you may face challenge.
I hope the above clarifies your doubt.