Construction Law/EoT associated cost
I am working for the Client on construction of road project. We had a dispute case with the Contractor related to tax payment on amount of work done which shall be paid to tax authority. Then the SDBM decides for the Contractor and we paid all amount right away with the corresponding interest for the delay of payment. An EoT has also been determined for the Contractor. Regarding cost, the Contractor did not specify the quantum on the dispute referral and Client also didn't comment on that. Our focus mainly was on the EoT. The Contractor didn't substantiate his cost claim too. Thus the SDBM said that the Contractor is entitled to prolongation cost but the amount shall be agreed by both parities. Then the Contractor failed to file his claim timely and submitted his claim after one and half years after the SDBM's decision when only couple of days remain from the end of the defect liability period. We use MDB Harmonized condition of contract. So my question is
1. Can the Contractor claim after the SDBM's decision whenever he wants? Can we consider it as any cost claim and decide that it is time barred?
2. the SDBM decision was mainly considering the TAX matter. But the Contractor had evidently concurrent delay. Even we deducted delay damages since the Contractor couldn't finish the work within the extended period granted related to the TAX issue. Further, associated costs claims are pretty contentious. Can we reject the claim with appropriate justification if we truly believe that the Contractor is not entitled?
My dear Bezawit,
In MDB Harmonized Conditions of Contract,there is precedent condition for serving notice by the Contractor under sub-clause 20.1 within 28 days after the contractor became aware of the event or circumstance, if he consider himself to be entitled to any EoT and/or any additional cost. If he has not served this notice within the specified time frame ,he is not entitled at all for any Eot or cost. Anyhow ,it is not necessarily that if EoT is granted, there will be a defiantly prolongation cost. It depend upon the type of claim and the event on the basis of which Eot was granted.
I don't understand what do you mean SDBM. Is it a dispute Board ?
In your case,it is not clear ,on what basis of EOT was given.If event was only the tax payment issue,its compensation has already been made by the client in shape of interest on delayed payment.There is a specific procedure for raising the claim (refer COC clause 20.1).Furthermore,if the Contractor has failed to substantiate his claim with documentary evidences,the Engineer may reject the claim or he may determine a reasonable cost on the basis of available data.
Hope,I have answered the Question,nonetheless,if you still feel further explanation,you may ask the same provided by sending the complete information/data of the issue.
Engr. Arshad Mahmood