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Construction Law/EOT and Additional cost claim

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QUESTION: We are using FIDIC Yellow book.

We need approval for the general layout of the project before we proceed to design the work. The contract provides that approval shall be given within 21 days.
The Employer had made changes to the general layout. We have amended the layout for 3 times due to changes and additional requirements of the Employer. We finally got the approval after 2 months. We then give notice that we required EOT to complete the work and also additional cost to do the works.

The Engineer replied that we are not entitle to both by citing the following clauses

8.4 Extension of Time for completion

“If the Contractor considers himself to be entitled to an extension of the Time for Completion, the Contractor shall give notice to the Engineer in accordance with Sub-Clause 20.1 [Contractor’s Claims], whereupon the Engineer shall proceed to determine the Contractor’s entitlement, if any, pursuant to Sub-Clause 3.5 [Determinations].”

20.1 Contractor’s Claims

“If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Engineer, describing the event or circumstance giving rise to the claim.

The Notice shall be given as soon as practicable but not later than seven (7) days after the event or circumstance giving rise to the entitlement first arose and shall include details of the event or circumstance and its effect or expected effect on the Works. Notwithstanding any other provisions of the Contract, the aforesaid notice shall take the form of a letter (for the avoidance of doubt, minutes, reports and/or programs and the like shall not constitute notice pursuant to this Sub-Clause) in which the Contractor shall expressly identify the relevant provisions of the Contract pursuant to which the entitlement arises including but not limited to this Sub-Clause.
If the Contractor fails to give notice of a claim within such period of seven (7) days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim.”

He further stated the following:

Consequently, we do not agree that you a have any entitlement to claim for an EOT and additional payment in this matter.

However, should you be able to persuade the Employer otherwise, we may request you to prepare a "Time Impact Analysis", in accordance with Sub-Clause 8.4 of the Conditions of Contract.

What can we do next?

ANSWER: Dear Wong,

Thank you for your question.

Although extremely harsh, the Engineer is correct in saying the claim is time barred and indeed, you made a terrible mistake not to notify your claim immediately.

Providing your late notice did not deprived them of such an opportunity, you might still have a chance.

But I suggest you first ensure that design revision was not due to any error of yours and return to the Engineer/ Employer and show the deadline is to enable them to take mitigation measures in due time, rather than to deprive the Contractor from its rights.

As well check under the Law of the Country if your rights can become extinct just because of time barring.

If that doesn't work, initiate a dispute, as a DAB may accept to consider the claim despute the time barring.

And indeed, prepare your case and demonstrate the quantum of requested EoT and related extension costs.

For time, you better get a professional planner to apply any of the method of delay analysis needed to support your case.

Good luck!

---------- FOLLOW-UP ----------

QUESTION: Dear Florin,
Thanks for your prompt reply.
In fact the General Layout has still not been fully finalized as of today. I feel that the Engineer is most unfair. The Employer has not made up his mind on all his requirements. We only have a partial approval to work on. They are well aware of all the changes causing the delay. They are well aware of all the changes and should not have prevent them to have any mitigation measures in due time.
When will be the correct time to give notice of claim? We submit the first General layout in accordance to the conceptual design in the tender document about 2 months ago.The contract allow the Engineer 21 days to respond to approve or disapprove. However the Employer wanted some changes/additional requirements and we have to keep changing the layout every time the Employer changed his requirements. He done it in 3 successive times and we have to changed the layout for 3 times.
How and when shall the notice be given?
Must we give the notice upon the first change + 7 days?
How shall we write on this notice? Shall we say that that the Employer's changes/additional requirements will delay our completion and we hereby give notice pursuant to Clauses 20.1 and 8.4 that our project will be delayed and we need EoT to complete the work. The time impact and cost impact will be submitted to you after the   full changes/additional requirements of the Employer is dealt with?  
Further more we have 42 days from the event or circumstance given rise to the claim to submit the details time and cost impact, we have still not finalize the layout. What shall we do? Shall we write to the Engineer to request for longer time as provided in the clause 20.1?
Is it possible for us to consider that after the final approval is given, we only become aware of the delay and from then we have 7 days to give notice of claim?
Best regards

ANSWER: Dear Wong,


Thank you for coming back.


1. "When will be the correct time to give notice of claim?"

I understand that normal deadline of 28 days, under Sub-Clause 20.1, has been changed to 7 days.

Hence, you must issue the Notice of Claim in 7 days since event that triggered the claim. That should have been the first time when Employer changed the layout.

If layout would not have been accepted due to some errors attributable to Contractor, it would have been Contractor's responsibility, but I understand the Employer wants something different than requested originally.

Are you within the deadline since first change requested by Employer? I suspect not. In that case, you should try arguing that you only notified when it became obvious to the Contractor that an irrecoverable delay has occurred. Obviously, you'll have to demonstrate that => professional planner badly needed.

2. "How shall we write on this notice?"

Simple! Indicate it is a notice of claim under Sub-Clause 20.1 and that an event occurred under Sub-Clause XXX (for you to identify, but 8.4 e would be a good one) and that you will claim for time extension and related costs, including extension costs.

Obviously, you will need to quantify the time and money you will ask for!

3. "Further more we have 42 days ..."

I would not worry too much about that and as the Employer is still changing its minds, suggest you use last phrase of paragraph 5 of Sub-Clause 20.1 and indicate this is a claim with continuous effect, which will only cease upon Employer's final decision.

Just in case, you can ask indeed for an extension of that period of 42 days, but need to provide some good reasoning.

4. "Is it possible for us to consider that after the final approval is given, we only become aware of the delay and from then we have 7 days to give notice of claim?"

I don't think so. But anyway, even if the Engineer/ Employer will still time bar your claim, suggest you ask for DAB Decision under Sub-Clause 20.4. I am sure that most of DABs would remove the time bar and consider your claim, in the given circumstances.

Hope that helps, good luck!


---------- FOLLOW-UP ----------

QUESTION: To summarize, we need to give notice under sub-clause 20.1 otherwise we will lose our rights to claim. The clause is there for us to alert the Employer that his changes/additional requirements will result in additional time and cost to complete the project and to enable him to mitigate any additional time and cost (i.e. he can speed up the approval and reduce his requirements if he want to do so), otherwise he may say that he has no chance to mitigate them.
Regarding the actual impact, we may not be able to give the actual time and cost now if layout and/or additional requirements cannot be finalized. We also need to inform them the estimated time and cost impact within 42 days and also to notify them that the time and cost impact cannot be finalized if the layout and and/or additional requirements cannot be finalized. We can also work out with the Engineer a time frame to finalize them. We should continue to give update of time and cost impact on a monthly basis until we have finalized the layout and and/or additional requirements.
By changing the layout and/or additional requirements, it has constituted a variation order under sub-clause 13.3 already, only that the variation has not been finalized.
Did I understand the matter right? Regards

Answer
Hello Wong,


Welcome back, thank you for your new query.

Yes, described logic is sensible and based on available information, it makes sense.

Just make sure you indicate in your notice that this claim has a continuous effect, I think is paragraph of Sub-Clause 20.1.

You can provide the details you know already, i.e. the delay you have suffered already, indicating this is an intermediary assessment. Again, that 5th paragraph provides you the procedure to follow.

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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