CONTRACTUAL RISKS

Cl.1.9 Drawings

Cl.2.1 Site

Cl.4.7 Setting Out

Cl.4.12 Unforeseeable

Cl.4.24 Fossils

Cl.7.4 Testing

Cl.8.4 EoT

Cl.8.4 Adverse Climatic Conditions

Cl.13.7 Legislation

Cl.13.8 Changes in Cost

Cl.14.8 Delayed payments

Cl.19.4 Force Majeure

Project Control Issues

Cl.1.9 Delay to details

Cl.2.4 Finance Details

Cl.2.5 Employers Claims

Cl.3.3 Instructions by Engineer

Cl.4.1 Method Statement

Cl.4.21 Reporting

Cl.8.3 Programme

Cl.12.1 Measurement

Cl.13 Variations & Value Engineering

Cl.14 Payments

Planning

Funding & Budget

Disbursement approval

Cl.18 Insurances

Cl.20 Contractor’s Claims / Records

THE FIRST 100 DAYS

Pre Award Check List General

Document negotiated changes

Prioritise and sign changes – Cl 1.5

Agree terms of insurances – Cl 18.2

Agree DAB membership

Confirm communication and addresses – Cl 1.3

Engineer’s Duties & Authority

Employer names Engineer

Employer’s constraints on Engineer’s Authority – Cl 3.1

Delegation of Engineer’s Authority to Resident Engineer – Cl 3.2

Engineer’s Determination – Cl 3.5

Employer’s Risks

Right of Access - Cl 2.1

Provision of Specifications – Cl 1.8

Supply of Drawings – Cl 1.9

Award to Commencement Date

General

Formal Letter of Acceptance signed – Cl 1.1.1.3

Contract Agreement - Cl 1.1.1.2, 1.6

Date on which the Contract becomes legally binding

Instruction of Commencement Date – Engineer Cl 8.1 – 7 days notice

Time for Completion – Cl 1.1.3.3

Contractor’s obligations

Performance Security – Cl 4.2

Consent for sub-contractors

Commencement of sub-contract wks

Compliance with applicable laws, etc prior to Commencement

Employer’s obligations

Obtaining planning, zoning etc permits for the Permanent Works – Cl 1.13

Ensuring that the Contractor will have right of access to and possession of all parts of the Site

Commencement Date to + 28

Employer’s Actions

Right of access & possession – Cl 2.1

Ensuring Employer’s personnel are aware of responsibilities – Cl 2.3

Preparing evidence of Employer’s financial arrangements – Cl 2.4

Provision of copies of the Contract and Drawings Cl 1.8 & 1.9

Engineer’s Responsibilities

Advising Contractor of Engineer’s Authority and Delegations – Cl 3.2

Ensuring assistants are suitably qualified

Providing reference survey points, lines and necessary data – Cl 4.7

Contractor’s Responsibilities

General obligations – adequacy, stability & safety – Cl 4.1

Provide Performance Security prior to access to Site – Cl 4.2

Submit name of Contractor’s Representative for consent – Cl 4.3

Give notice of any delegation of CR’s responsibilities

Obtain consent for sub-contractors not named in Contract – Cl 4.4

Give notice of commencement of sub-contract work

Provide details of suppliers not named in Contract (see Cl 4.16)

Make objections to any Nominated Sub-contractors who the Contractor does not wish to employ

Submit detailed time programme within 28 days of receipt of the notice to commence – Cl 8.3

Give notice of probable future events or circumstances which may increase price or delay completion

Confirm working hours – Cl 6.5

Site health & safety facilities – Cl 6.7

Appoint Accident Prevention Officer

RESPONSIBILITIES

Employer

Cl.2

• Provides Access to the Site

(not access & other areas – Cl.14.15 & 14.23)

• Assists Contractor with Permits

• Financial Arrangements

See Variations & Cl.16.1 Suspension (strike out??)

• Notice of Claims

Appoints the Engineer Cl.3.1

Cl.14.7 make Payments !!

Cl.20.2 appointment of DAB members

Engineer

Exercises stated authority

Employer’s Approval – Particular Conditions

When he exercises specific authority deemed to have Employer’s approval

Acts for Employer

• Cl.3.5 – “Fair Determination”

Cl.3

• Employer undertakes not to impose further constraints (Breach of Contract)

• No authority to amend contract

• Acts for Employer

• No authority to relieve the parties of duties or obligations etc.

Cl.3

• Delegation – except Cl.3.5

• Instructions in writing

Oral – confirmation by contractor – written

• Employer instructions to Engineer

• Determination

Consult – agreement – fair determination

Give notice

Give effect unless Cl.20

Cl.4.1 Method Statements

Cl.8.1 Give Commencement Notice

Cl.8.6 Rate of Progress

Cl.12.1 Measurement

Cl.13.1 Variations

Cl.14.6 Interim Payment Certificates

Cl.20.1 Records / Determination

Contractor

Cl.4

• Execute & Complete the Works

Cl.8.1 due expedition & without delay

Adequacy & safety

Method Statement

Fit for purpose

• Performance Bond

• Engineer’s Approval of Representative

• May delegate

• Fluent in language

• Sub Contractor approval

Setting Out to lines & levels of Engineer

Quality Assurance

• Details in Specification

• Procedures

• Compliance documents

Site data

• Costs included

• Risk

• Inspections

• All relevant data – obligation

• Care in Tender – failure to provide

Sufficiency of Contract Amount

Unforeseeable Physical Conditions

• Excludes climatic conditions

Cl.8.4 & 17.3h

• Extension of time

• Payment of cost

(see Cl.1.1.4.3 includes off site)

• No profit

(as a general rule not included where risk is not the fault of either party)

Transport to site

Protection of the Environment

• Emissions

• Surface discharges

• Effluent

• Local Law

Progress Report

Monthly – 6 copies

• See also (Cl.4.9 procedures) and:

• Cl. 6.7 Accident Records

• Cl. 6.10 Personnel

• Cl.14.3 Application for payment

• Cl.20.1 Contemporary records

Progress Report:

• Charts

• Photographs

• Manufacturing report

• Personnel

• QA documents

• Claims Cl.2.5 & 20.1

• Safety statistics

• Progress

Security

Staff & Labour

• Facilities / Health & Safety

Tests on Completion Cl.9.1

Value Engineering Cl.13.3

Application for Payment Cl.14.3

Contemporary records Cl.20.1

Nominated Subcontractors

Clause 5

Applies to Subcontractors and suppliers nominated by Employer or as instructed by the Engineer under Cl.13

Payment Cl.5.3

Grounds to object Cl.5.2

Reasonable Objection

Supporting details

Lack of competence, recourses, financial strength

Lack of indemnity

Lack of obligations and liability

Staff & Labour

Clause 6

Engagement of Staff & Labour

• Payment, housing feeding & transport

• Cl.8.4d & 13.7

Rates of pay & conditions

NO Poaching !! (Cl.6.3

Labour Laws (including immigration)

Working Hours (days of rest)

Facilities (including Employer’s Personnel)

Health & Safety

• Medical staff & facilities

• Accident prevention officer

• Records

Cl.4.3 – Contractor’s Representative

Cl.6.8 – Superintendence (Language)

Personnel – qualified, skilled, experienced

Records monthly (cl.4.9 procedures

Plant Materials & Workmanship

Cl.7

Execution of works as specified

• Recognised good practice

• Proper facilities

• Non hazardous materials

Samples

• For consent

• Labelled origin / intended use

Inspection:

• Access to locations of natural materials

• Place of manufacture

• Provide access, facilities, permissions, safety equipment

• Give notice and provide opportunity

• Testing – may proceed after notice

• Delay claim

• Test Reports & Certificates

Rejection – Retest – costs Cl.2.5

Remedial works

Ownership of Plant & Materials

• Local law

• When delivered

• When contractor entitled to payment under Cl.8.10 (suspension)

Royalties

COMMENCEMENT DELAYS & SUSPENSION

Contract becomes effective when Letter of Acceptance has been received by Contractor

Cl.8.1 Commencement Date

• Engineer SHALL

• Contractor SHALL

Engineer determines the date or 42 days after the LA

COMPLETION

Cl.8.2 Fundamental obligation to complete within Time for Completion

• Includes all of Works

• Includes all tests

• See Cl.10.1

PROGRAMME

Programme of Works Cl.8.3

• Within 28 days

• Specific requirements of programme

• Methods of execution

• Details of personnel & equipment

Engineer does not approve (21 days)

Employer may rely on programme

Specific, Probable, Future events

Revisions to programme

Monthly progress charts

Engineer may request a revised programme

Extension of Time

Contractor SHALL be entitled

• Not dependant upon further decision

• If no extension then “time at large”

• Variation

• Sub Clause giving delay

• Exceptionally adverse climatic conditions

• Unforeseeable shortages personnel & goods

• Employer’s delay

Cl.20.1

Cl.3.5 Engineer’s Determination

Cl.20.1 & 3.5 give time limits to Engineer to Determine – or Cl.13 shall not be unreasonably withheld or delayed

Delays by authorities

Rate of Progress

Engineer may instruct submission of revised programme

Contractor to proceed with due expedition and without delay

Delay Damages

• Failure to complete by due date

• Delay damages

• Limit of damages

Suspension – Engineer may instruct

Tests on Completion

Cl.9

• Contractor shall give 21 days notice

• Tests carried out within 14 days of notice

• Certified report

Delayed tests

• Employer Cl.7.4 or 10.3 apply

• Contractor to complete 21 days after notice

Failure

• Retest

• Cl.11.4

Taking Over Responsibilities

Responsibilities under Financing Agreement

• Proper use of funds

• Proper management of construction

• Final payment

Responsibilities under the Contract:

• Before Taking Over

• After Taking Over

Before Taking Over:

• Take over on Completion

• Tests on Completion

• Contractor’s request for TO Certificate

Cl.10.1 The Employer SHALL take over when:

• Works completed

• Tests completed

• TO certificate issued

Employer’s Taking Over

Cl.10

• TO Certificate issued when works completed and ready for intended purpose

• Minor outstanding work may be completed after issue of TOC

Contractor may apply for TOC within 14 days of Works being complete

Sectional Completion

Engineer may

• Issue TOC Reject application giving reasons

Failure of Engineer to issue TOC or reject

• Within 28 days

• TOC deemed to be issued

Sectional Taking Over

• Tests

• Cost due to STO

• Delay Damages reduced after STO Certificate issued

• Reduction in ratio of value of STO Works

• No difference to maximum damages

Reinstatement of ground or surface

Taking Over Certificate

• Appendix listing all minor defects

• Listing all works yet to be carried out

Contractor responsible to carry out repairs before end of Defects Notification Period

Defects Liability

Cl.11

• Provides procedures and responsibilities under the Defects Notification Period

• Works are accepted by Engineer on the issuance of Performance Certificate

Works & Documents completed

• Fair wear & tear accepted

• Complete all o/s work in TOC

• Remedy defects & damage notified by the end of the DNP

Remedy works at Contractor’s cost

Extension to DNP

• Max 2 years, or

• Suspension Cl.8.8 or 16.1

Failure to Remedy

• Reasonable notice

• Carry out work himself or by others

• Contractor has no responsibility

• Reduction in Contract Price

• Recover all sums paid & costs

Removal

• Further Tests

• Right of access

• Contractor to search

Performance Certificate

Performance Certificate

• Contractor’s obligations complete

• Engineer to issue

• Date

• Issue within 28 days of DNP expiry

• After submission of all documentation

• All tests complete

• All remedying works complete

Constitutes Acceptance of Works

• Liability for fulfilment of obligations

• Removal of equipment, rubbish etc…

• Contractor may be liable for latent defects

Measurement, Evaluation & Variations

Measurement by Engineer

Standard method of measurement as specified in schedules

Cl.12.3 Basis of evaluation

Rates in contract will apply

New rates may be determined

Qty changed more than 25%

Variation

Not specified

No appropriate rate

Reasonable Cost & Profit

Cl.12.4 Compensation

Cl.13.3 Determinations

Means of measurement may be necessary

Payment schedule linked to “milestones” Cl.14.4

Variations

Cl.13.1 Engineer has the right to vary

• Prior to issue of TO certificate

• List of variation inclusions

Value Engineering Cl.13.2

• Development risk with Contractor

• Savings 50/50

Variation Procedure

Engineer requests proposal from Contractor

• Contractor responds with:

Description

Programme

Evaluation

• Work proceeds without delay

Variation due to Legislation

Local law at Base Date

Cl.20.1 claim

• Extension of time

• Payment of cost

Contract Price & Payment

Considerations:

• Payment schedules

• Disbursement approval

• Particular Conditions

• Budgeting

Funding availability

Additional Costs / Variations

Advance payment

• Design

• Mobilisation

• Funding facilitation

Interim payments

• 56 days

Final Payment

84 days

Aid funding requires:

• Authority approval

• Timing

• Variations

• Routine audit checks

• Time to transfer funds

• Advance notice of change

Cl.14 requires prompt action within time constraints

Finance costs will lead to claims

Alter Cl.14 by Particular Conditions to suit funding authority

Financial planning:

• Check estimates & budgets

• Prepare draft payment schedules

• Update estimates & programme

• Check funding

• Cl.14.4 estimates each 90 days

Budget Forecast

Engineer prepares for Employer

• Regular intervals

• Updated budget

• Report of changes

Data for report:

• Cl.2.4, 2.5, 3.5, 4.21, 8.3, 13.1, 13.3, 14.3, 13.8, 14.3, 14.6, 20.1, 20.4

Advance Payment

Cl.14.2 Advance payment

• Interest free loan for mobilisation

Guarantee

Application Cl.14.3

Performance Security – approved by Employer

• Repayment

Commence after when certificates >10%

Deductions 25% of each Certificate

Interim Payment

Cl.14.3 Application

• 6 copies

• In a form approved (Cl.4.9)

• Cl.4.21

• List of items (a) – (g)

• Note : Cl.20 items included

Cl.14.4 Schedule of payments:

• Payment dates not recommended

• Engineer determination Cl.3.5

• Cross guarantees

• Milestones preferred

Cl.14.6 Issue of IPC

• Engineer determines FAIRLY

• IPC SHALL not be withheld

Cl.14.7 Payment

• IPC paid within 56 days after Engineer receives Statement

Cl.14.8 Interest on late payments

Non Payment

Cl.16.1 Suspension

• Engineer fails to certify

• Employer does not provide Cl.2.4 details

• Non payment

• 21 days notice

Cl.16.2 Termination

Guarantees & Bonds

Cl.4.2 Performance Security

Contractor finance

• Guarantee by Employer

• No Cl.8.1 notice before Guarantee

Cl.14.2 Advance Payment Guarantee

Risk & Responsibility

Cl.17.1 Basis for Indemnity

Cl.17.2 Full responsibility for Works & Goods until TO Certificate

Cl.17.3 Employer’s Risks

Cl.17.4 Compensation & Claims

Insurance

Cl.18

• Employer to approve insurers

• Agreed terms

• Currency

• Payments to be used to rectify loss

• Cl.18.3 – Appendix minimum amount

Force Majeure

Basic Principles:

• Exceptional event

• Not reasonably provided against

• Not reasonable to overcome / avoid

• Not attributable to either party

• Beyond control of affected party

Cl.19.1 Definitions

• (i) – (iv) man made

Cl.19.4 Consequences

• EoT

• Man made – cost

• Man made in country – cost

• Cl.19.6 Termination

CAUSES OF CLAIMS FOR CONTRACTORS

Unforeseeable ground conditions

Delayed drawings

Delayed payment

Lack of possession of site

Consequence of risk

Suspension

Force Majeure

CONTRACTOR’S CLAIM PROCEDURE

Clause 20.1

o Sets out Contractor procedure

o Condition Precedent

o Not later than 28 days

o Sets out Engineer procedure

o Contractor gives notice

o Within 28 days

o Contractor keeps contemporary records

o Engineer may monitor

o Engineer may instruct further records

o Fully detailed claim

o Supporting documents

o Within 42 days of event

Cl.20.1 continuing procedure

After 42 days:

o Claim submission is considered interim

o Further monthly claims

o Final claim with 28 days of end of effects

Engineer’s Response:

o Within 42 days of receiving claim

o Approval / Disapproval

o Detailed comments

May ask for further details

Proceed with Cl.3.5

May certify interim sums

CAUSES OF CLAIMS FOR EMPLOYERS

Quality below Specification

Delay in Completion Date

Slow Rate of Progress

Defective Materials

Failures of Tests

EMPLOYER’S CLAIM PROCEDURE

Employer gives notice

o As soon as practicable

Contractor Receives Notice

o No obligation to respond

Engineer proceeds with Cl.3.5

Contractor can dispute if dissatisfied

Engineer’s determination applied to Certificate of Payment

CONTEMPORARY RECORDS

Crucial for determination of claim

Records for any future dispute

Contractor obliged to keep records

Procedure for this work

Employer & Engineer to agree Engineer’s actions

CLAUSE 3.5 DETERMINATIONS

Engineer makes a Determination

Makes his own evaluation

Shall NOT delegate Cl.3.5 authority

Engineer shall consult both Parties

Try to reach agreement

Give notice with supporting particulars

Where no agreement then Engineer makes a FAIR determination

DISSATISFACTION WITH Cl.3.5 DETERMINATION

Dispute : Refer to Dispute Adjudication Board

No definition of “Dispute”

o Rejection of Determination

o No agreement with continued discussion

o One party declines to discuss

o No progress in protracted discussion

Subsequent procedure - Clause 20.4