Construction Law/FIDC- Hormonizesd, May 2005-Contractual Implications
Dear Ali Irvali,
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.
I understand that the project consists from two parts, first part is 35 Km length with four lanes and second part same length however only two lanes.
The time for Completion was 30 Months for both parts or is there any different delivery time for each milestone ?
The Employer, now wants to take 15 Kms, however it is not very clear that the next 15 Kms, under State Government Funds shall also be taken from the scope of present Contractor?
The basic answer without knowing the facts is;
Clause 12.4, Omissions stipulates that " Whenever the omission of any work forms part (or all) of a Variation, the value of which has not been agreed, if:
(a) the Contractor will incur (or has incurred) cost which, if the work had not been
omitted, would have been deemed to be covered by a sum forming part of the
Accepted Contract Amount;
(b) the omission of the work will result (or has resulted) in this sum not forming part
of the Contract Price; and
(c) this cost is not deemed to be included in the evaluation of any substituted work;
then the Contractor shall give notice to the Engineer accordingly, with supporting
particulars. Upon receiving this notice, the Engineer shall proceed in accordance with
Sub-Clause 3.5 [Determinations] to agree or determine this cost, which shall be
included in the Contract Price."
In accordance with above, the Contractor may have a point to ask cost which he will incur (or to be incurred) for the removal of such work from his scope, and the Engineer needs to decide in accordance with Sub-Clause 3.5 (Determinations). But if there is a delay attributable to the Contractor, then the Engineer/Employer shall have a power to negotiate without paying any cost to the Contractor.