Construction Law/Variation-Adjustments-EOT Cost
QUESTION: Dear Florin,
Hope you are doing fine. I am really content with your expert advice/guidance.
My question today again relates to a Design and Build project.
The Employer’s Representative required a change in the starting point of a road project. But he did not consider that he issued a Variation. Within 28 days, the Contractor requested the Employer Representative that it was a Variation and that he should issue a Variation. But the Contractor did not mention about any claim to be made as result. Whilst requesting a Variation to be initiated in line with Clause 14, the Contractor proceeded with the design and works as the Employer’s Representative required.
Raising the number of exchanges made whether the Employer’s Representative has instructed Variation or not, the Contractor submitted, almost a year after, that due to the fact that the Employer’s Representative has thus far failed to comply with his duties under Sub-Clause 14.3, he would thereby give notice in accordance with Sub-Clause 20.1 to claim for an extension of time, associated costs, and any additional costs and profits arising from what can only be termed as a Variation of the Contract.
Later, the Employer’s Representative accepted when the Contractor submitted his claim for Extension of time that a variation was in effect issued and determined adjustment to the Time for Completion.
My questions relate to notice requirement in connection with (1) Adjustment to the Contract Price, and (2”) Extension of time associated costs.
1. Adjustment to the Contract
Was the Employer’s Representative not automatically required to determine adjustment to the Contract Price too? Would the need to give notice within 28 days arise to comply with Sub-Clause 20.1? If so, can the Contractor be taken as failed in complying with the notice requirement seeing the above?
2. Extension of time associated costs
What about the Sub-Clause 20.1 notice requirement for the Contractor’s entitlement for extension of time associated costs? Under the circumstances stated above, would the need to give notice within 28 days arise to comply with Sub-Clause 20.1? If so, can the Contractor be taken as failed in complying with the notice requirement seeing the above?
As usual, I am deeply indebted in advance for your expert advice.
ANSWER: Hi again, Alemu,
Thank you for your new question.
Firstly, what kind of Conditions of Contract are you using? You indicate "Employer's Representative", rather than an "Engineer". And then you indicate a Variation, under Clause "14"!!! Ever since '99, all FIDIC books include Variations under Clause 13.
Now, coming to your questions: you say "... he would thereby give notice". Did the Contractor issued the Notice of Claim, or not?
If yes, did the Contractor include request for Costs and Costs related to EoT?
If yes, then the Employer's Representative (Engineer), have failed to answer all points and Contractor should ask for the costs to be dealt with too.
If not, then the Contractor simply did not ask, hence the Employer's Representative could not give what has not been asked for!
And worse, it is likely the Contractor ruined their chances to get these costs.
Depending on actual circumstances, it is not impossible to still ask for these, but would be better to ask for from the very beginning.
Thus, please have a look at these answers and let me know where you actually are. Based on that, we can further work on your queries, to clarifies all outstanding matters.
---------- FOLLOW-UP ----------
QUESTION: Dear Florin,
As usual thank you for your prompt reply and expert advice.
My follow question further is:
The Contract as you rightly put it is based on FIDIC 1999 for Design and Build.
What does adjustment to the Contract Price refers to in Sub-Clause 13.3- Is it only about evaluation of cost of variation excluding any time related costs or extension of time associated costs?
Is the Employer’s Representative not automatically required to determine adjustment to the Contract Price despite any notice from the Contractor's side?
I am deeply indebted in advance.
Thank you for coming back.
It is as simple as that: you don ask for it, you don't get it.
If the Contractor doesn't ask for costs related to EoT, Employer’s Representative / Engineer and indeed, anyone else, is under no obligation to assume you suffered any costs and more, can not assess the quantum for you.
When you ask for time and money, you must make sure you ask for the whole of it.
Otherwise, one can simply assume that whether there was no EoT related costs, it was negligible, or Contractor decided to make a favour to the Employer.
So yes, 13.3 allows you to ask for EoT related costs, but Employer’s Representative / Engineer is under no obligation whatsoever, to do Contractor's homework.
Would you expect the Employer’s Representative / Engineer to go and count Contractor's staff and equipment, kept idle? And to go in Contractor's accountancy and search for the actual losses? No, it is the Contractor that must do all that.
Conclusion: ALWAYS GIVE IT YOUR BEST SHOT! Ask for all you think you are entitled to, demonstrate your merit and substantiate the quantum.
Trust that clarifies the matter.