Construction Law/Contractual implications- FIDC Harmonized May2005
QUESTION: Dear Sir,
I am working in a road project in India under the World Bank fund as a Resident Engineer on behalf of consultants. The contract is under FIDC, Harmonized Edition May’2005.
The project has 2 milestones each 35Kms. 4 lanning to be done for one mile stone and other is two lanning as per the original accepted contract price. The contract period is 30 months and also lapsed. The contract now is in under the extension of period. The EOT has been given on account of some encumbered length of around 8 Kms. The contractor not performed well in both the milestones. Contractor planned the works in the 1 st Milestone which is 4 lanne (around 12 Kms of BC completed) but after lapse of the original contract period 30 months the contractor not worked in the 2nd MS effectively (not even 1Km completed).
In this juncture, i.e after lapse of original contract period the Employer wants and proposed the 2nd milestone also 4 lanne by removing around 15kms from the scope of work with the same accepted contract amount. The proposal likely to be given consent by the World Bank also as the Employer assured that the remaining length of 15 Kms also shall be taken up for the works under State Government funds.
So, it can be presumed that the proposal of 4 lanne shall be materialized and the instruction for the change of configuration of work shall be issued to the contractor in the due course of time.
In the view of the foregoing, I would like to know the likely contractual implications and what are all the duties to be performed unbiasedly by an Engineer.
Kindly apprise me in this case.
ANSWER: Dear Sarwanon,
Here is my view point regarding your question.The Engineer may omit the works under Sub-Clause 13.1 through variation order.However, if the Contractor has done something and incurred some cost on the portion of work which is being omitted,he may raise the claim under sub-clause 12.4 and the Engineer should determine such claim under the provisions of the Contract.
The Engineer may issue the instruction for 4-lane as per requirement of the Client and for this variation,he will consider some additional time to take up this work while issuing such instruction.
It would be better in the present scenario to make an amendment to the Contract with the mutual consent of both the parties to the Contract, so that the Contractor may not raise his claim and the Employer cannot also impose liquidated damages,as the Contractor period has already been exhausted and huge work is still to be executed by the Contractor.Anyhow,If you still have any specific query,you may asked frankly.
---------- FOLLOW-UP ----------
QUESTION: Dear Sir,
Thank you for your kind reply.
My followup question is as under.
The original contract period is exhausted. But, still Employer is granting the only EOT (i.e. no cost compensation to the contractor) ignoring the contractor's inordinate delay in the progress and other lapses which are attributable to the contractor. Right now there are no claims from the contractor on cost compensations.
I would like to get clarification on the following:
1. Is amendment of contract a mandatory? Is only a mutual consent of both the parties enough? because the Employer/or either party might be reluctant going for the amendment of contract?
2. By changing 2 lane to 4 lane (change in configuration of work/some additional work) Is there any chance of potential claims for new rate by the contractor even though the quantities are within the contract BOQ?
You are well come for follow up question.
Although,the Employer is granting EOT only at present without any cost compensation but at latter stage ,the Contractor may raise his cost claims also on the basis of EOT granted.One thing is important to say that if the Engineer is not recommending EOT due to delays attributable to the Contractor,how the Employer can grant EOT to the Contractor.It seems that the Contract is not being implemented in its true spirit. Anyhow,here are the answers of your followup questions:
1.No, it is not mandatory for the said changes in scope of Works.
2.Yes there may be a chance for potential claim of new rats, if quantities increased/decreased and fulfill
the conditions of sub-clause 12.3 (a) or (b).