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Construction Law/Performance Bond and Retention second half

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Question
Dear Sir,

I manage 22 large contracts on JICA Funded Road Project. My position is CRE. I am from Sri Lanka. Conditions - Bank Harmonized version.


S.Clause 14.9 says that is the amount in Performance Guarantee is less than the second half of retention money with held, the contractor can make it a combined bond and ask for the release of retention When you execute this provision, the contractor's liability would be limited the sum guaranteed in Performance Bond. If the contractor does not attend to rectification of defects identified towards the DNP, should we encash the total bond value of should we claim the rectification cost from the guarantor only.

If any contractor failes to complete the contract within extended period, can the Employer recover delay damages and extra supervision cost that would be payable to the consultant.

expect sir your valuable clarifications.

best regards,

CRE

Answer
Hi Samarasinghe

When the contractor does not attend to rectification of genuine defects then the employer may recover the costs of the repair works from the retention fund or from the performance bond - returning any unspent balance.
If the costs exceed the sums held then the employer may recover the balance through the courts.

Damages for delay are limited to the Liquidated Damages which are agreed to cover all of the employers costs.

Best regards
Mike Testro

Construction Law

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Mike Testro

Expertise

Anything related to extensions of time and delay analysis.

Experience

45 years in the Construction Industry 15 Years as a consultant delay analyst - I now hold myself to be expert in this field.

Organizations
Society of Construction Law Adjudication Society ex Planning Engineers Organisation

Publications
6 articles on the relevance of the India Contract Act 1872 and its relevance to modern construction in India. Waiting Publication

Education/Credentials
Associate Member of the Institue of Building

Past/Present Clients
Currently employed in India by Punj Lloyd as expert delay analyst. Engaged in ongoing arbitrations and EoT claims. Prior an Indepenent consultant in delay analysis.

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