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

➤   Poorly prepared Variation Claims

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TERM of the WEEK 

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ONE TWEET 

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Happy Thursday.

A poorly prepared variation claim is a great source of loss.

 

It can eventually lead to a time-consuming and costly dispute.

A significant risk factor.

You can minimize that risk by;

➤   Understanding the proper ways of preparing a well-structured variation claim.

Answering these 3 questions will help build up your road map for that;

1. How will I COMPLY with the “Notice Requirements”?

2. How will I PREPARE and SUBMIT the “Claim”?

3. How will I RESPOND to the “Contractor Administrator’s Determination”?

In today’s newsletter; 

➤   We answered these questions in accordance with the 1999 FIDIC Red Book.

Do not ignore the power of well-prepared claims.

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

Answer 1: COMPLYING with the NOTICE REQUIREMENTS

You should understand the “Notice Requirements” by;

➤ Reviewing the Contract

➤ Determining the related Clause(s)

➤ Learning the prerequisites

and comply with the Notice Requirements by giving Notice;

➤ In writing

➤ To a selected party

➤ Within a time period after you became aware or should have been aware of the event

➤ Estimating the extent of any time and cost impact

➤ Including the supporting documentation

➤ Identifying the Works affected

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

28 DAYS TIME LIMIT for the CONTRACTOR

1.  The Notice to the Engineer 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.

Answer 2: PREPARING and SUBMITTING the EFFECTIVE CLAIM

You should prepare the effective claim by;

➤ Accurately defining the “Cause” of the claim event

➤ Perfectly explaining the “Effect” of the claim event

➤ Correctly establishing the “Contractual/Legal Entitlement”

➤ Sufficiently “Substantiating” the claim

And you should;

➤ Submit your completed claims with all the supporting documentation

FULLY DETAILED CLAIM

42 DAYS TIME LIMIT for the CONTRACTOR

1.  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 Engineer.

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.

Answer 3: RESPONDING to the CONTRACT ADMINISTRATOR’S DETERMINATION

You have to be active in additional stages, such as;

➤ Engineer’s Consultation

➤ Engineer’s Determination

➤ Engineer’s Notification

– Engineer’s Consultation –

You should participate in the consultation process.

If the agreement is ACHIEVED;

➤   You should give effect to the agreement 

If the agreement is NOT ACHIEVED;

➤   You should be ready for the determination process

– Engineer’s Determination –

After the Engineer’s assessment your claim will be;

➤ Approved, or,

➤ Rejected, or,

➤ Accepted with reduced quantum

Engineer’s Response

 

1.  Within 42 days, after receiving a Claim or any particulars supporting a previous claim or within such other period as may be proposed by the Engineer and approved by the Contractor, the Engineer shall respond with approval or with disapproval and detailed comments [2].

Agreement or Determination of the Claim

 

The Engineer is to proceed under Sub-Clause 3.5 [Determinations] to agree or determine;

 

1.  The Extension of the Time under Sub-Clause 8.4 [Extension of Time for Completion]. 

 

2.  The Additional Payment to which the Contractor is entitled under the Contract. 

– Engineer’s Notification –

 

After being notified by the Engineer;

 

If you are SATISFIED with the determination;

➤ You should execute the determination

If you are DISSATISFIED with the determination;

➤ You should revise under Clause 20 [Claims, Disputes and Arbitration]

See you next week.

[1]  Period which is proposed by the Contractor and agreed by the Engineer.

[2]  The same Sub-Paragraph letters are used as in Sub-Clause 20.1 of the 1999 FIDIC Red Book.

 

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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