Welcome to the new issue of Grow Your Knowledge Newsletter where you get free, ready to use, actionable, clear information regarding FIDIC Contracts and Construction Claims.

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Today at a Glance;

➤   Term of the Week

➤   One Tweet

➤   EPC Contracts: Suspension of Works

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TERM of the WEEK 

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ONE TWEET 

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Happy Thursday.

Suspension of work causes various problems for an EPC Contractor.

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An Employer may SUSPEND works to;

➤   Reassess the financial viability of the project

Due to the;

➤   Rise in inflation

➤   Supply and demand changes

➤   Environmental effects

➤   Political impacts

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And if you are an EPC contractor, it will inevitably bring a significant financial burden.

That means you will be entitled to claim;

➤   Extension of Time for the delay, and,

➤   Payment of costs which will be added to the Contract Price

But, preparing the effective claim is not always easy.

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In the beginning, you should identify the claim procedure.

While doing that you struggle with 1 of 3 challenges;

➤   You cannot determine how to ESTABLISH the ENTITLEMENT

➤   You cannot determine how to COMPLY with NOTICE REQUIREMENTS

➤   You cannot determine when to SUBMIT the FULLY DETAILED, INTERIM or FINAL CLAIM

At that point, 1999 FIDIC Silver Book provides an excellent guidance.

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How to ESTABLISH the ENTITLEMENT

You will be entitled to claim Extension of Time and Cost;

➤   When the Employer instructs suspension under Sub-Clause 8.8 [Suspension of Work]

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How to COMPLY with the NOTICE REQUIREMENTS

You should give the Notice within 28 days.

If you do not give the Notice within 28 days;

➤   You will not be entitled to additional payment

➤   Time for Completion is not to be extended

➤   The Employer is to be discharged from any responsibility

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When to SUBMIT the FULLY DETAILED, INTERIM or FINAL CLAIM

You should submit the Fully Detailed Claim within 42 days.

If the claim event has a continuing effect, you should;

➤   Consider the Fully Detailed claim as interim

After the end of the effects of the claim event you should;

➤   Give the Final Claim within 28 days

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Learn the process.

But do not forget every claim has unique needs.

Build your own claim preparation system.

Formulate the effective claim and present it in a professional way.

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Let’s elaborate more.

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How to ESTABLISH the ENTITLEMENT

Under Sub-Clause 20.1 [Contractor’s Claims] the Contractor is to be entitled to an Extension of Time and/or Payment if the Contractor suffers delay and/or incurs cost due to;

Employer’s Instruction for Suspension

Under Sub-Clause 8.8 [Suspension of Work], when the Employer instructs suspension, the Contractor is to protect and secure the Works against any loss or damage. 

Resumption of Work

Under Sub-Clause 8.12 [Resumption of Work], the Contractor is to make good all the deterioration, loss and damage regarding the Works and Plant and Materials which are affected by the suspension.

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How to COMPLY with the NOTICE REQUIREMENTS

Sub-Clause 20.1 defines and describes the “Notice to the Employer” procedure.

28 DAYS TIME LIMIT for the CONTRACTOR

1. The Notice to the Employer is to be given within 28 days after the Contractor became aware or should have become aware of the claim-related event.

2. If the Notice of Claim is not given within 28 days, the Contractor is not to be entitled to any additional payment, the Time for Completion is not to be extended and the Employer is to be discharged from any responsibility regarding the claim-related event.

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When to SUBMIT the FULLY DETAILED, INTERIM or FINAL CLAIM

Fully Detailed Claim

42 DAYS TIME LIMIT for the CONTRACTOR

Within 42 days or other period [1] after the Contractor became aware, or should have become aware of the Claim-related event, the Contractor is to submit the “Fully Detailed Claim” to the Employer.

Interim or Final Claim

If the Claim-related event has a continuing effect;

1. The Fully Detailed Claim submitted is to be considered as interim.

2. Monthly, the Contractor is to give further “Interim Claims” with the accumulated Additional Payment claimed and/or Extension of Time claimed.

3. After the end of the effects of the claim-related event, the Contractor is to give a “Final Claim” within 28 days.

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[1]  Period which is proposedby the Contractor and agreed by the Employer.

See you next week.

 

This information is provided for your convenience and does not constitute any “Legal Advice”. This document is prepared for the general information of the interested persons. This should not be acted upon in any specific situation without appropriate legal advice.

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