Construction Law/Late Release of Retention Money
We are Contractor and working under FIDIC EPC 1999. Contract started on 08 April 2013. "Some circumstances lead the delay of overall project by 2 yrs. The Employer granted us EOT for 1 yr only (in Dec 2015). Say Original Contract Finish date was 08 Oct 2015. Now, new finish date is fixed as 08 Oct 2016. The 50% Retention Money was planned to be released on 08 Oct 2015 at TOC.
Sir! I have 3 Question. (1) Is the Contractor entitled to receive Financial Charges on late release of half of the Retention Money, because in new circumstances after EOT, 50% Retention Money will be released at TOC date which is now planned as 08 Oct 2016.
(2) Say Contract Amount is 100 m Rs. and Limit of Max Retention Money is 5% of the Contract Amount i.e 5 m Rs. On 08 Oct 2015, 88% of Total Retention Money (4.4 m Rs) was deducted in AIP's. My question is "Is the Contractor entitled to claim delay in releasing of half of 88% Retention Money. starting from 09 Oct 2015. The reason in support of his entitlement for Fin Chg is that his Retention Money is being kept for 1 more yr.
(3) The Employer has granted 1 yr EOT while 1 yr has not been granted. In other words 50% delay days are admitted on the default of the Employer. On this base, can Financial Charges of late release of half of Retention Money be claimed starting from mid of the extended period. What amount should be the principal amount: "half of 4.4 million or half of 5 million.
For information plz note , that in n Dec 2015, full 5% Retention Money was reached so no further Retention Money is being Deducted in coming AIPs.
Sir, yesterday I asked this question to Mr. Florin. He replied immediately. I am thankful to him. I tried to send him a followup question but his status today is being shown as "on Vacation". So,I hope you (& Mr. Florin) will not mind it and guide me.
Following are your Answers:
1)Yes, the Contractor may claim the financial charges and other incurred cost,if the EOT is granted purely on the delaying events attributable to the Employer.But, if it has been given on the basis of concurrent delay(on the basis of delaying events attributable to both the Parties to the Contract) and/or it was granted on the adverse climatic conditions,then the Contractor is not entitled for financing charges.
2) Please note that 50% retention is due on TOC. Has the work COMPLETED, if it is not completed as I foresee, then 50% retention will not be due for payment.However,if EOT is granted on the basis of Employers's risk and is compensable , then the Contractor may raise his claims, if he has followed the prescribed procedure of clause 20.1 and the other pre-requisites.
3) When the ToC under clause 10 will be issued, the Contractor may claim the release of 50% of the full 5% Retention Money.
It is not necessary that the Employer will grant further Eot of one year.It is possible that the Engineer has evaluated one year extension on the basis of Contractor's request for two year extension in time.
Engr Arshad Mahmood