Construction Law/Liquidated Damages
In a water line construction project in United Arab Emirates awarded to contractor M/s XYZ under supervision consultant M/s ABC in the year 2009 with a 17 month duration during the progress of work construction was delayed repeatedly and to help for contractor to complete the work in time Client reduced 40% from the original scope EVEN THOUGH CONTRACTOR couldnot complete in time with delay by more than 12 months & delay and penalty will be applied with a cap 10%.maximum.i want to ask the 10% will be calculated from the total contract amount or from the effective contract price.
Client agreed & confirmed excusable delays 183 days & remaining considered as Non Excusable delays.
Please kindly guide me what action could I take other than applying LD ?
ANSWER: Dear Sir,
Thank you for your question
Before answering this question, I need to know type of contract and if it is based on FIDIC 87 or FIDIC 1999. Secondly, It is important to know what sort of provision is available in the contract specially in PCC and on that basis i can advice further.
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Fiddic 87 modified & if contract fail to complete in time than Delay penalty will be applied stats in Contract conditions
There are two scenarios to be considered as per FIDIC 87.
1- When there is only one completion date and there is no provision for sectional completion. In this case delay penalty shall be the specified percentage per day on the full amount (clause 47.1).
2- When there are sectional completions specified in the contract, The liquidated damages for delay in completion of the remainder of the works or of that section shall be applicable. (clause 47.2)
please come back if you have still any query.