Construction Law/Letter of Award

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QUESTION: Dear Mr.Manish,

Im working in Dubai with interior project based on fidic red book1999 ... the owner decided to directly appoint a contractor for his work to avoid any delay during tendering stage.

He (owner) issued letter of award (LOA) to that contractor stipulating the amount of contract ... and duration and defining the scope.

the LOA has a condition which is:

the contractor will commence with stage 1 .. which is defined as general items (preliminaries) and the owner mentioned the amount and duration for this stage also this stage includes shop drawings.NOCs and bids for MEP and rest of work.

also the remaining works (apart of preliminaries) will be stage 2 which has also duration and amount defined but the owner stipulated in the LOA that if the priced BOQ which will be submitted on stage1 is not acceptable for him (the owner) then he(the owner) has the right to cancel the contract and compensate the contractor.

Now the owner asked the engineer to prepare a contract for the project both stage1&2.

the questions are as below:

1) what are the issues that the engineer care about in this scenario?
2) as obviously looked there is no tender documents as it is directly assigned contractor .. what will engineer embody into the contract documents? particular conditions and general conditions with specs and drawings and appendixes ? please advise
3) what if the owner in his LOA which has already sent to contractor what if he mistakenly wrote wrong statements ? what is the best way to rectify this error ? issuing new LOA or sending addendum? taking in mind that the engineer drafted that LOA on behalf of owner and the engineer must rectify this error,but trying to minimize the embarrassment how he will do it?

thanks and regards

ANSWER: Dear Dzaie

Thanks for your question. I can understand that the situation if complicated and despite your efferots to put-up scenario in detailed manner; few ambiguities are still existing in your query and need to be clarified. However based on my understanding I would like to reply as below:

My understanding is that:

1. Are you working with Main Contractor or Engineer?
2. An LOA has been issued by the Employer to NSC and the work for that NSC is divided in two stages ie Prelim + Main Works

Your specific queries are:
1) what are the issues that the engineer care about in this scenario?

My Response: Engineer should ensure that the LOA atleast contains Scope of Works, Contract Price, duration and Time for Completion.


2) as obviously looked there is no tender documents as it is directly assigned contractor .. what will engineer embody into the contract documents? particular conditions and general conditions with specs and drawings and appendixes ? please advise

My Response: The Employer must have issued certain set of Specifications / Drawings/ emails/Meeting Minutes etc enabling that NSC to price. If yes, all such documents (with clarifications etc) will form part of Tender Documents.

With regards to Conditions of Contract, you may consider FIDIC 1999 with similar amendments of Main Contract (unless agreed otherwise with NSC)

3) what if the owner in his LOA which has already sent to contractor what if he mistakenly wrote wrong statements ? what is the best way to rectify this error ? issuing new LOA or sending addendum? taking in mind that the engineer drafted that LOA on behalf of owner and the engineer must rectify this error,but trying to minimize the embarrassment how he will do it?

My Response: I am not sure what you intend to ask. Notwithstanding your perception regarding errors by Engineer, the "wrong statements" or any "ambiguities" in LOA should be highlighted by the NSC and rectified with an amended LOA. If the NSC keep silent on this and the Engineer is aware that he (the Engineer) has made few errors in the LOA; he must issue an amended LOA highlighting the errors/wrong statements and amend those as required.

Hope this helps.



---------- FOLLOW-UP ----------

QUESTION: Dear Mr.Manish

Thanks for your appreciated response and pls note the below;

1. Are you working with Main Contractor or Engineer?
Employer’s representative

You mentioned ...
My Response: The Employer must have issued certain set of Specifications / Drawings/ emails/Meeting Minutes etc enabling that NSC to price. If yes, all such documents (with clarifications etc) will form part of Tender Documents.

Shall I include the word tender documents .. even though there is no tendering stage?

Regards

Answer
Yes, and you can do that and may include something like below:

---- start -----
It is understood that there was no fromal issuance of tender documents but this is to clarify that following documents shall constitute as tender documents for this Project:

i) x
ii) y
iii)z

------ end ------

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Manish Gupta

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I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.

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Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

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MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

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