Construction Law/Taking Over Under 10.2, FIDIC Red 1999
QUESTION: Dear Sir,
I am a Resident Engineer in EU funded project. Our project is governed by FIDIC red book 1999. The scope of the project is to construct 200 km sewerage pipelines. The Contractor completed almost 96% of the lines. Bu he unreasonable delayed tests, such as water tightness test&CCTV tests, until know, thus he completed test of 30 km only.
when the contractor completed a part, citizens near to this section connected his sewerage pipe to the system without asking anybody i.e. employer or contractor.
Considering the large area of the project it is impossible to prevent citizens to connect to the system whether it is substantially completed or not when considering the system as a whole.
it is self-evident that citizens in general has no concern our interest if the line is working as a whole or not. They just connect even if the line has death end 300 m later.
in this case I have a difficulties to distinguish the Employer use under 10.2 from public use (or illegal connection).
I would like to note that the although the physical progress is 96% there are important sections not completed in order to connect large areas to the collector lines. Moreover, there are substantial outstanding works as well as not performing any test as I mentioned above for the part which citizens are connected.
However the Contractor applied/alleged that almost 110 km lines are connected by the public therefore it is under use by the Employer and it shall be deemed to be taken over by the Employer.
I know 10.2, unlike 10.1, surprisingly does not refer to substantial completion, but I strongly believe that FIDIC 10.2 to is not well drafted in order to address problems I encountered in this project.
My intention is to decline Contractor's allegation that the parts are in use by the Employer. Considering the spirit of the Employer use, it is quite different from public use who has no any consideration/information/concern on the project.
If you could shed more light on the matter I will appreciate it.
Thank you in advance and regards,
ANSWER: Dear Halit Özeren,
I suggest that Contractor has been negligent in his protection of the Works by allowing illegal private connections. Think of a block of apartments where the first three floors have been occupied by squatters before floors 4-10 are complete. In this case, it is clearly the Contractor's responsibility to protect the floors against illegal occupation. Likewise with illegal connections to the network. Has the Contractor made any attempt to prevent illegal connections, either through the legal system, or using the local Police, or disconnecting any illegal connections or organising his plan of works to minimise the effect of any illegal connections?
The networks cannot be 'used' (by the Employer) until they are connected to an outfall or treatment plant. The effluent will merely collect in the pipes. If I were involved in the project, I would ensure that the Contractor started from the outfall or treatment plant and handed over suitable sections as early as possible. Then any illegal connections would be the responsibility of the Employer.
Further, I would suggest that it is bad practice to backfill pipes before testing them. What will happen if the pipes should fail any tests? I hope that you have not paid the Contractor for any testing which is incomplete and that there are sufficient funds for excavation and repair of any leaks, should the Contractor fail so to do. Once the project gets to about 75% complete, it is good practice to ensure that there are sufficient funds remaining, apart from any Retention or Performance Security, to ensure that the project can be completed. Generally there is a condition inherent within any IPC that the Works, for which payment is certified, are complete and compliant with the Contract. If they have not been tested, how can you be sure that they are compliant? You, or your employer, could be liable for a claim from the Employer for fraudulently certifying payment for non-compliant works. The Employer could be liable for a claim from the EU for reimbursement of the funds which had been disbursed in a non-compliant manner.
I guess that it is too late to get some discipline into the project, so your best plan is to advise your employer to advise the Employer of the situation, before the Contractor claims that you are acting unreasonably.
---------- FOLLOW-UP ----------
QUESTION: Considering connections more than 30000, in my opinion it is not practicable to expect the Contractor to take reasonable measures to prevent illegal connections even if he is responsible to protect the works until taking over.
do you think the contractor will have any change to treat these illegal connections as Force Majeure under Clause-19.
For payment certificate sub-clause 14.6 last paragraph states that " A Payment Certificate shall not be deemed to indicate the Engineer's acceptance, approval, consent or satisfaction. Don't you think this is enough to protect the Engineer against being blamed for fraudulently certifying payment.
By the way, the project stated at beginning of 2013 and I took the wheel on August 2015. So unfortunately I found myself in this mass, which I am trying to put right back to the limits of FIDIC red book.
It was really a big surprise for me as well when I was informed that test of only 30% of completed lines performed while previous resident engineer did not withhold any money for tests not performed.
I have a section which is connected to WWTP. Would you consider this section as is under use by the employer?
Thank you beforehand and best regards,
Dear Halit Özeren,
I have been in a similar situation. It is one of the problems of replacing some one without doing due diligence. The Engineer is at fault for not ensuring that the Resident Engineer fulfilled his responsibilities.
I suggest that the Contractor could have taken measures at an early stage to reduce the number of illegal connections.
No. This statement emphasises the Engineer's right to revisit and revalue any Certificate. It does not confirm that the work complies with the Contract and is liable for payment. Clause 14.6 states "Thereafter, the Engineer shall ... issue to the Employer an Interim Payment Certificate which shall state the amount which the Engineer fairly determines to be due, with supporting particulars."
Further "An Interim Payment Certificate shall not be withheld for any other reason, although:
(a) .....; and/or
(b) if the Contractor was or is failing to perform any work or obligation in accordance with the Contract, and had been so notified by the Engineer, the value of this work or obligation may be withheld until the work or obligation has been performed."
How do you certify payment for incomplete work?
Only if all tests were done and the section complies with the Contract. In fact, I would never accept that illegal connections were taking over by the Employer, unless the Employer had ordered or made the connections, in which case they are no longer illegal.