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Construction Law/Extended warranty period costs

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Question
Dear Mr. Shrivastava,

I'm in a position to analyze Contractor's Claim under the Red FIDIC 1999. In our Project, initially planned to be finished within two years, the Contractor has a right to EOT of 4 months under Clause 2.1. Looking into Contractor's costs specification under his Claim, there is an item called “extended warranty period costs”. The Contractor explains this item in the following way: he bought equipment from manufacturer in a timely manner, manufacturer's warranty starts when the equipment is purchased but Contractor was not able to install the equipment within initially planned 2 years. In that case, TOC will be issued 4 month later, so Contractor claims that he is exposed to additional risk for the period of the last 4 months of DNP, because this period is not covered by manufacturer's warranty.
Is this item acceptable to the Employer and is there any formula to calculate the “extended warranty period costs” on monthly level related to the equipment price?

Answer
Dear Aleksandar

Thanks for your question.

As you have mentioned, the Contractor is entitled for an EOT of 4 months, therefore all the associated cost (Prolongation cost) he is entitled too, except for the concurrent delays.

The extended warranty period for equipment is come under prolongation cost.

After reading you case, I believe the contractor is entitled for the extended warranty cost.

Feel free to contact me if you have any further query.

if you satisfy with my answer, please leave a positive feedback for me.

Kind regards
Vineet

Construction Law

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Vineet Shrivastava

Expertise

I can answer any question on 1. Project Planning 2. Delay Analysis - Extension of Time 3. Project Management 4. Contract Management 5. Construction Methodology I can't Answer any question 1. Cost related issues

Experience

I have 22 year experience in construction industries at Singapore, India and Australia. I worked as Planning Manager and delay analyst for contractor. I am currently working with claim consultancy as Associate Director.

Organizations
Navigant Consulting APAC Pte Ltd E C Harris Sinagpore Pte Ltd McConnell Dowell SEA Pte Ltd Kajima Oversea Asia Pte Ltd Taisei Corporation

Education/Credentials
B.E (Civil), PGDMA(PM), Graduate Diploma (Const. Management), MSc (Intl. Const. Management),LLM In Construction Law (Arbitration & Adjudication), FSIArb, MCIArb, MIES, MSIB MIIAM, MMIArb

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