Construction Law/Claim for complete change of contract rates
Hope things are working wonderfully fine with you.
I am going to seek you expert advice about the problem we faced on one road project. To this end, I have tried to provide my question along with details I thought would be necessary. As always, I am deeply indebted in advance for your itemized expert advices.
It is about a road project. The project works consist of construction of a gravel surfaced road including construction of structures like bridges, culverts and ancillary works along the roads stretch.
Previously the project had been awarded to one Contractor. But after progressing with it and undertaking the construction to different levels up to finishing some of the road stretches with gravel, the Employer terminated the Contract.
As such, the tender was again floated for execution of the remaining works (uncompleted works) of the project.
When the Employed did so, the Employer maintained the original design and specifications and other requirements of the contract. The Employed did not make changes to the original design drawings to show the site condition. Yet, the BOQs included in the Tender Documents were that of the remaining works (uncompleted works). This situation was well known to the bidders It was also clearly mentioned in the Minutes of Pre-Contract Award Discussion, which is quoted to have stated:
“…the BOQs included in the Tender Documents are that of the remaining works (uncompleted works) and the surveying data of the same will be given to the Contractor during commencement. However, the tender drawings are the ones prepared for the terminated contract and do not take into account the works already executed.”
MY questions are presented as follows.
1. What is the meaning of remaining works in its context as above? Does it mean that even in the sections reached to gravel surface, the Contractor would be obliged to complete any section that failed to reach the designed level [as these may fall within the definition of remaining works] with any method he proposes whether the contract specification applies or not?
2. Contract Document has no provision for repair and maintenance works. Would any maintenance and repair works required on to the completed road section be considered as out of scope? If so, can the Engineer issue variation order to address the repair and maintenance works?
3. Can any additional work or installation of additional drainage structure within the completed section be done with variation and if the additional work corresponds with an item description in the priced BOQ [or has related pay item in the BOQ] then can the rate in the bill of quantity be used to calculate the cost being considered as an increase in quantity of works?
4. The Contractor notified and expressed their concern that that the bid set drawing does not reflect the existing condition of the project in general and great majority of the design information in the design document is inconsistent with existing conditions.
The Contractor presented that despite the fact the project site had gone through many known and obvious physical and material changes that occurred over years, during construction and after the contract was terminated, the owner issued tender and awarded contract to complete the terminated contract based on the original design document. The rework to re-establish and maintain the original designed route posses extreme challenge both in terms of efficiency and cost.
Evidently, the design document that was provided was supposedly expected to depict the existing site condition and indicate the proposed improvement, did not reflect the existing site condition nor provide the related scope of work.
The changes are substantial and more adverse than the information provided to the contractor during the bidding stage. Such misrepresentations constitute owner risk and liability that should transfer back to the owner. The contractor could not have reasonably assumed the extent and the difficulty of the project nature during the bidding stage to fix appropriate rate and consequently was exposed to unbearable risk. The Contractor presented that “all works” within the road sections that were completed and/or partially constructed and left unprotected for several years, are maintenance works that will be carried out in a restricted manner that would result in under utilization of resource, which would make execution of work extremely difficult.
The Contractor claimed then that all works to be performed on completed and/or partially constructed and left unprotected by the previous contractor for several years are maintenance works.
The Contractor applied then for a complete revision of the contract rates.
Would the contractor have a claim if the site condition changed extensively but was considered to be known at the time of tendering? Kindly advise me if the Contractor has the right to claim as above?
Nothing happened, but only the drawings do not reflect the actual site conditions. The original design level remained same. The Contractor even considered that the drawing was not issued as such. The Contractor knew that the project was terminated and re-floated. In addition, a site visit was advised to be carried out at the time of bidding, so that bidders would become familiar with the actual site conditions and nature of the project. All tendered were advised to ensure sufficiency of their tender
Time taken between tendering and contracting was only few months. Date of bid submission was February 28, 2011. Date of Letter of Acceptance was August 9, 2011. Date of Contract was August 12, 2011.
As usual, I am deeply thankful in advance.
Thank you for your new question. Yes I am fine, I am actually on leave and making a trip in Western Europe with my family - for that reason, I'll be unavailable until 3 - 5 August.
But till then, let's look at your problem. Which is not simple and that kind of situations always lead to problems.
1. Yes, one can definitely argue that new Contractor must execute whatever is the difference between existing situation at the time of tendering and the situation depicted in the drawings.
I would simply complete the gravel and ask for the money.
Unless, there is anywhere specified that certain sections are already finished. In which case that would define the respective section as out of scope of Works, under the new Contract - Please check documents in the Contract and Tender Dossier (Bidding Documents).
2. In the light of the above, no, there are not maintenance works.
But if there is a DEFINED FINALISED SECTION, then indeed, it can be considered out of scope of Works, under the new Contract and instructed under a Variation.
3. Yes, if additional, i.e. not shown in the drawings, or mentioned in the Specifications/ BoQ, then it can be done with a Variation and either use rate of an existing similar item, or establish new rates.
4. That is definitely debatable and honestly, based on provided information, I find it difficult to agree with you.
Indeed, I may not know certain aspects, but reckon it would be very difficult to convince that you simply COULD NOT familiarise yourself with conditions of the Site at tendering time and hence demonstrate that is not Contractor's risk.
You can always try, but ...
Hope that answer your queries for now, I will be glad to help again after 3 - 5 August.