Construction Law/FIDIC Clause 8.7 Delay Damages
Query related to imposing delay damages in FIDIC red book 1999:
1.The completion date of the contract was extended by an approved extension of time claim but has past in the previous month. The contract is however still ongoing.
2.The Employer submitted a claim for delay damages to be imposed in the next interim payment certificate.
3.As per Clause 2.5 (Employer’s Claims), the Engineer must make a determination.
4.As per Clause 3.5 (Determinations), the Engineer must consult both parties to reach agreement.
5.The contractor objected to the imposing of penalties stating that it was unfair as there are other claims pending that may further extend the completion date.
6.The contractor has submitted a number of notices of intention to claim extension of time and 1 claim for extension of time. These have merit and the EoT is likely to exceed the duration of the delay damages to be imposed in the next payment certificate.
In making a determination, are delay damages normally applied irrespective of pending claims or can the pending claims be considered a reason for deferring the imposing of the delay damages until the claims are resolved?
The Contractor is also in financial difficulty and imposing delay damages will worsen this situation – can this also be used as additional motivation not to impose them as imposing the delay damages will have a negative impact?
Thank you for this question.
The Engineer, in assessing the Employer's claim, should take into consideration any matter which he considers impacts upon the Employer's entitlement. In the circumstances of knowing a further extension of time is due, or likely to be due, it would be wrong of the Engineer to find for the Employer.
You have noted that several notifications of entitlement have been issued but you have not followed up with the detailed claims. As such, I suggest that you call for a tripartite meeting as part of the Engineer's determination process, to discuss any extension of time issues that have not been answered.
If the Engineer continues and make a determination in the Employer's favour, you can raise the issue as a dispute for the DAB; however, I suggest that you use your time and resources usefully, and present your detailed claims.
I hope that this assists you.
Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to email@example.com, stating SUBSCRIBE in the subject line
Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to firstname.lastname@example.org (When e-mailing, please include “AllExperts” in the subject line.)