Beruflich Dokumente
Kultur Dokumente
This session will deal with two contractual areas frequently encountered when
administrating a contract and which if not properly dealt with might result in a great
lost to the Contractor in terms of both money and time (which incidentally also
translates back to money).
These areas are the provisions of the Contract, which deal with: -
a) Extension of time
b) Loss & Expense (as often referred to by us)
The best kept secret about these Clauses are that they are provided to provide
assistance to client and their removal will actually result in great difficulty to the
Client (sometimes the removal of these Clause would trap the client in a very
uncomfortable position, contractually). Therefore if ever the client implies that the
extension of time or loss and expense are for the contractor’s advantage, he should be
reminded that the actual case is otherwise.
However the importance of these Clauses to us, are that they provide a contractual
avenue to claim additional time and money without actually resorting to litigation.
The reason both these Clauses are being dealt together is because the claim arising
would normally lead to a claim in the other especially in the case of an extension of
time claim.
Therefore let us proceed with the examination of the various different standard
contract forms and the provisions dealing with extension of time and loss and
expense.
e) other special circumstances, which may occur, other than through a default of
or breach of contract by the Contractor or for which he is responsible,
being such as fairly to entitle the Contractor to an extension of the Time for
Completion of the Works, or any Section or part thereof, the Engineer shall, after due
'consultation with the Employer and the Contractor, determine the amount of such
extension and shall notify the Contractor accordingly, with a copy to the Employer.
Provided that the Engineer is not bound to make any determination unless the
Contractor has: -
a) within 28 days after such event has first arisen notified the Engineer with a
copy to the Employer, and
Provided also that where an event has a continuing effect such that it is not practicable
for the Contractor to submit detailed particulars within the period of 28 days referred
to in Sub-Clause 44.2(b), he shall nevertheless be entitled to an extension of time
provided that he has submitted to the Engineer interim particulars at intervals of not
more than 28 days and final particulars within 28 days of the end of the effects
resulting from the event. On receipt of such interim particulars, the Engineer shall,
without undue delay, make an interim determination of extension of time and, on
receipt of the final particulars, the Engineer shall review all the circumstances and
shall determine an overall extension of time in regard to the event. In both such cases,
the Engineer shall make his determination after due consultation with the Employer
and the Contractor and shall notify the Contractor of the determination, with a copy to
the Employer. No final review shall result in a decrease of any extension of time
already determined by the Engineer.
THE FIDIC FORM (FOURTH EDITION OF THE FIDIC FORM)
Currently enjoying wide usage among internationally financed project and other large
civil project and also is similar to Civil Engineering Works Form used by JKR.
The above Clause allows for extension of time to be claimed for the reason stated.
However, any other event arising due to reasons beyond the control of the Contractor
would also entitle him to an extension of time, the main reasons are
c) inclement of weather.
h) change in construction method from that which would have been reasonably
used for the said works as would have been contemplated at the time of tender.
m) act of God.
n) force majeure.
o) strike.
b) The notice is to be sent within 28 days from the commencement of the event.
ii) There can be interim submission at intervals of not more than 28 days, and
iii) Not later than 28 days after the end of the event the final substantiations has to
be submitted.
There is no specific requirement, which means that there must be adequate evidence
of: -
All copies of documents to be filed in one file and all related documents subsequently
received also should be filed (copies of such documents) in the same file.
All claims should be recorded and kept in the standard form as in Appendix A.
Standard Correspondence
Dear Sir
CONTRACT:
SUBJECT: APPLICATION FOR EXTENSION OF TIME
The circumstances giving rise to delay/most recent circumstances giving rise to delay
are…………………………….
Clarification of ambiguity.
Yours faithfully
Note: - All events marked with an asteric (+) will also lead to a claim in loss and/or
expense, and item marked with a will be items for which the cost of the event has
to be borne by the Contractor.
Standard Correspondence
Dear Sir
CONTRACT:
SUBJECT: NOTICE FOR THE EXTENSION OF TIME
We herewith give notice of our intention to claim for extension of time pursuant to
Clause 44 of the condition of contract. This event which causes this delay commenced
on…………………………..and is still continuing/or ended on the…………………
The delay circumstance-giving rise to the delay or- most recent circumstance-giving
rise to the delay is: -
* Notice is also given that we shall pursuant to Clause make a claim for loss
and/or expense.
Please revert to us if you require any further information with regards to our claim for
extension of time and loss and/or expense.
Yours faithfully
PROCEDURE FOR CLAIMS
Upon the happening of the event referred to in Sub-Clause 53.1, the Contractor shall
keep such contemporary records, as any reasonably be necessary to support any claim
he may subsequently wish to make. Without necessarily admitting the Employer's
liability, the Engineer shall, on receipt of a notice under Sub-Clause 53.1, inspect such
contemporary records and instruct the Contractor to keep any further contemporary
records as are reasonable and may be material to the claim of which notice has been
given. The Contractor shall permit the Engineer to inspect all records kept pursuant to
the Sub-Clause and shall supply him with copies thereof as and when the Engineer so
instructs.
Within 28 days, or such other reasonable time as may be agreed by the Engineer, of
giving notice under Sub-Clause 53.1, the Contractor shall send to the Engineer an
account giving detailed particulars of the amount claimed and the grounds upon which
the claim is based. Where the event giving rise to the claim has a continuing effect,
such account shall be considered to be an interim account and the Contractor shall, at
such intervals-as the Engineer may reasonably require, send further interim accounts
giving the accumulated amount of the claim and any further grounds upon which it is
based. In cases where interim accounts are sent to the Engineer, the Contractor shall
send a final account within 28 days of the end of the effects resulting from the event.
The Contractor shall, if required by the Engineer so to do, copy to the Employer all
accounts sent to the Engineer pursuant to this Sub-Clause.
53.4 FAILURE TO COMPLY
If the Contractor fails to comply with any of the provisions of this Clause in respect of
any claim which he seeks to make, his entitlement to payment in respect thereof shall
not exceed such amount as the Engineer or any arbitrator or arbitrators appointed
pursuant to Sub-Clause 67.3 assessing the claim considers to be verified by
contemporary records (whether or not such records were brought to the Engineer's
notice as required under Sub-Clause 53.2 and 53.3).
The Contractor shall be entitled to have included in any interim payment certified by
the Engineer pursuant to Clause 60 such amount in respect of any-claim as the
Engineer, after due consultation with the Employer and the Contractor, may consider
due to the Contractor provided that the Contractor has supplied sufficient particulars
to enable the Engineer to determine the amount due. If such particulars are
insufficient to substantiate the whole of the claim, the Contractor shall be entitled to
payment in respect of such part of the claim as such particulars may substantiate to
the satisfaction of the Engineer. The Engineer shall notify the Contractor of any
determination made under this Sub Clause, with a copy to the Employer.
PROCEDURES FOR CLAIMS
This Clause deals with all additional claims for reimbursement not dealt with by other
provisions for payments in the Conditions.
This Clause is not an automatic provision enabling a claim for additional payment
each time there is an extension of time but reasons marked with an asteric (*) in the
letter for claim of extension of time can result in the operation of this provision.
NOTIFICATION
1) Notice to be issued within 28 days from the event giving rise to-the claim
(with a copy to the employer).
2) To keep records of all related documents and correspondence and to also keep
any other record as instructed by the Engineer.
4) Within 28 days of giving the notice, we must provide an estimate and the
grounds for the claim with documents and other evidence of the cost.
5) If the event is continuing, the action above (4) must be repeated at reasonable
interval as required by the Engineer and within 28 days of the end of the event
we must provide the final substantiation.
Failure to comply with the above requirements will result in us being unable to claim
more than what the Engineer or Arbitrator reasonably certifies based on the available
records.
If the claim is approved then we are entitled to receive the sum in our following
interim payment.
CLAIM SUBSTANTIATION
4) Material used.
6) Preliminary items.
Dear Sir
CONTRACT:
SUBJECT: CLAIM NOTIFICATION
We herewith notify your good office of our intention to make a claim for additional
payment in accordance to Clause 53 of this Contract pursuant to
Clause…………………of the conditions of the Contract.
Yours faithfully
Standard Correspondence
Dear Sir
CONTRACT:
SUBJECT: SUBSTANTIATION OF CLAIM
We herewith provide all necessary substantiation for our claim as entailed in our
letter ref…………………dated…………….as required pursuant to Clause 53.3.
Yours faithfully
JKR 203
Upon it becoming reasonably apparent that the progress of the Works is delayed, the
Contractor shall forthwith give written notice of the causes of delay to the S.O. and if
in the opinion of the S.O. the completion of the Works is likely to be delayed or has
been delayed beyond the Date for Completion stated in the Appendix or beyond any
extended Date for Completion previously fixed under this Condition
a) by force majeure, or
e) by reason of S.O. 's instruction issued under Clause 5 hereof, provided that
such instructions are not issued due to any default or breach of contract by the
Contractor or any sub-contractor nominated or otherwise, or
j) by the Contractor's inability for reason beyond his control and which he could
not reasonably have foreseen at the date of closing of tender of this Contract to
secure such goods and/or materials as are essential to the proper carrying out
of the Works, or
then S.O. shall so soon as he is able to estimate the then length of the delay beyond
the date or time aforesaid make in writing a fair reasonable extension of time for
completion of the Works, provided always that the Contractor shall use constantly his
best-endeavours to prevent delay and shall do all that may reasonably be required to
the satisfaction of the S.O. to proceed with the Works. The certificate issued by the
S.O. under this Condition shall be referred to as the "Certificate of Delay and
Extension of Time".
THE JKR 203-CONDITIONS OF CONTRACT
Delay and extension of time for the delays in the JKR 203 are strictly limited to a few
applicable reasons. The Contractor bears the risk of any other event arising and
causing a delay, which is not the fault of either party.
1) force majeure.
3) S.0.'s instruction due to disputes with neighbouring owners, which was not
caused by the Contractor, his agents or his subcontractors.
4) Loss due to cause in Clause 36 as long as the loss or damage is not attributable
to the Contractor or his agents.
5) Due to the S.O.'s instruction in Clause 5 but 'the instruction should have been
issued to remedy a breach caused by the Contractor.
8) Commotion, strike, lockouts which are not the fault of the Contractor.
9) By others engaged by the Government executing work, which is not part of the
Contract.
10) Unable to secure goods/material by reasons beyond his control which he could
not have foreseen at the time of tender.
NOTIFICATION
1) The Contractor is to notify in writing to the S.O. of any delay stating the cause
of the delay.
2) The notification has to be done upon it becoming reasonably apparent that the
progress of the works is delayed - upon the delay actually happening and then
becoming apparent to the Contractor.
3) The notice must include the cause for the delay and also provide substantiation
to enable the verification of the cause.
1) Submission of notice.
CLAIM SUBSTANTIATION
Not expressly required but there is implication that the cause must be substantiated; -
Dear Sir
CONTRACT:
SUBJECT: NOTICE OF THE DELAY IN THE PROGRESS OF WORKS
We herewith notify you pursuant to Clause 43 that the progress of work has been
delayed due to…………………………, and that we are submitting the details of the
said cause for your attention (refer to attachment).
Yours faithfully
44. LOSS AND EXPENSE CAUSED BY DELAYS
If the regular progress of the Works or any part thereof that been materially affected
by reason as stated under Clause 43 (c), (f) or (i) hereof (and no other), and the
Contractor has incurred direct loss and/or expense for which he would not be
reimbursed by a payment made under any other Provision in this Contract. Then the
Contractor shall within one (1) month of the occurrence of such event of circumstance
give notice in writing to the S.O. of his intention to claim for such direct loss or
expense together with an estimate of the amount of such-loss and/or expense, subject
always to Clause 48 hereof.
LOSS & EXPENSE CAUSED BY DELAY
This provision for loss and expense in the JKR 203 Clause 44 is only limited to claim
for additional reimbursement for loss or expenses caused by limited types of delays.
The delays, which give rise to a loss and expense Claims are
1) Delays due to S.O.'s instruction [Clause 43 (C)] which was not due to any
fault of the Contractor.
3) By delay of other engaged by the Government but where 'the work is not
forming part of the Contract.
NOTIFICATION
Occurrence here means happening, therefore upon the beginning of the event
causing the delay, the event is occurring.
3) All the particular, documents and evidence must be furnished to the S.O.
before 3 months after the practical completion is achieved.
2) Lodge the notice for intention to claim loss-and expense and submit an
estimate all within one month from the beginning of the delay.
4) Submit all substantiation within the duration of three (3) months after practical
completion is achieved.
CLAIM SUBSTANTIATION
2) Material records.
5) Preliminary records.
6) Disruption records.
Note: Clause 5(d) allows for any loss and expense arising from any S.O.'s
instruction for which the loss and expense could not have been reasonably
known by the Contractor at the time of tender. The Contractor is also required
to notify as per Clause 44 but the time limitation is one month from the
instruction.
Standard Correspondence
Dear Sir
CONTRACT:
SUBJECT: CLAIM FOR LOSS & EXPENSE
We shall submit all relevant particulars in accordance to Clause 48 within the allowed
duration.
Yours faithfully
* Delete if not applicable, if applicable provide a rate for fixed duration which
can use to determine the amount.
PAM FORM OF CONTRACT CONDITIONS
CLAUSE 24
1. If upon written application being made to him by the Contractor, the Architect
is of the opinion that the Contractor has been involved in direct loss and/or
expense for which he would not be reimbursed by a payment made under any
other provision in this Contract by reason on the regular progress--of the
Works or of any part thereof having been materially affected by
a) the Contractor not having received due time necessary instructions, drawings,
details or levels from the Architect for which he specifically applied in writing
on a date which regard to the Date for Completion stated in the appendix to
these Conditions or to any extension of time then fixed under Clause 23 or
Clause 32 (I) (c) of these Conditions was neither unreasonably distant from
nor unreasonably close to the date on which it was necessary for him to
receive the same; or
b) the opening up for inspection of any work covered up or the testing of any of
the work materials or goods in accordance with Clause 6 (3) of these
Conditions (including making odd in consequences or such opening up or
testing), unless the inspection or test showed that the work, materials or goods
were not in accordance with this Contract; or
2. The provisions of this Condition are without prejudice to any other rights and
remedies, which the Contractor may possess.
LOSS & EXPENSE CAUSED BY DISTURBANCE OF REGULAR PROGRESS OF
THE WORKS
This Clause deals exclusively with some named events, which can
result in loss and/or expense to the Contractor.
a) events that would enable the Contractor to claim extension of time in Clause
i) 23(f)
ii) 23(1)
iii) 23(h)
and this provision allows 'for reimbursement of the loss and/or expense, arising from
the disturbance to the regular progress of work. The following are the practical
implication of the provision: -
NOTIFICATION
2) Within a reasonable time after the loss and/or expense is apparent (know).
1) Writing in the notice that the progress of work has been materially affected
within the time limitation.
CLAIM SUBSTANTIATION
The requirements are similar to the requirements of the JKR's claim substantiation as
in JKR 203's requirement for loss and expense.
RECORD KEEPING & FILING
The requirements are similar to the requirements of the JKR'S record keeping and
filing as in JKR 203's requirement for loss and expense.
Standard Correspondence
Dear Sir
CONTRACT:
SUBJECT: CLAIM FOR DIRECT LOSS AND/OR EXPENSE
We herewith make an application for direct loss and/or expense pursuant to Clause 24
of the condition due to the regular progress of works being materially affected
by…………………
Please revert to us if you require any further clarification or information with regard
to the above claim.
Yours faithfully
Clause 23
EXTENSION OF TIME
a) by force majeure, or
(j) by the Contractor's inability for reasons beyond his control and which he could
not reasonably have foreseen at the date of this Contract to secure labour
goods or materials are essential to the proper carrying out of the Works.
then the Architect shall so soon as he is able to estimate the length of the delay
beyond the-date or time aforesaid make in writing a fair and reasonable extension of
time for completion of the Works. Provided always that the Contractor shall use
constantly his best endeavours to prevent delay and shall do all that may reasonably
be required to the satisfaction of the Architect to proceed with the Works.
EXTENSION OF TIME
The requirement in the PAM Form is only for a limited number of reasons, all other
reasons will not result in extension of time and the Contractor bears the risk and loss
for delays, which arise to no fault of either party, which are not provided for in the
provision.
The events that will result in an extension of time for the Contractor is: -
1) force majeure.
8) Delay by others employed by the Client executing works not forming part of
the Contract.
10) Inability to secure goods/material for reasons beyond the Contractors control
for which the Contractor could not have reasonably foreseen at the time of the
tender.
IMPORTANT LEGAL INTERPRETATION TO THE CLAUSE 23
3) Failure to give notice is a breach of Contract and therefore if the delay could
have been reduced by early notice such as extra period will not be taken into
account.
4) A notice not stating the cause of delay is still acceptable as a good notice.
5) The Contractor must provide all necessary information to enable the Architect
to make an accurate evaluation of the extension time.
The following are the requirements and duties arising from the provision: -
NOTIFICATION
As per the requirement set out in JKR 203's action plant and procedures section.
CLAIM SUBSTANTIATION
As per the requirement set out in JKR 203's claim substantiation section.
As per the requirement set out in JKR 203's record keeping and filing section.
STANDARD CORRESPONDENCE
AS per the requirement set out in JKR 203's standard correspondence section.
1.0 OBJECTIVE
c) The preparation of a joint action plan at an early stage to avoid any contractual
resistance or hindrance at a later stage.
e) The monitoring of all action undertaken and the progress of the claim,
including the subsequent adjustment of the Action Plan in the event there are
circumstances, which warrant it.
2.0 SCOPE
This procedure and all the related forms are to be used on all projects
undertaken by the Company immaterial of the type of Standard Form of
Contract being utilised in the Project.
3.0 DEFINITION
4.1 The successful implementation of this form will depend on prompt and
accurate reporting and recording all relevant information. All persons
described below are required to adhere and execute their respective
responsibilities accordingly.
4.2 The PIC of each Project shall have overall control and are to ensure that all
activities are executed promptly and accordingly.
They shall ensure that any new claim arising shall be documented in the
CCML.01 and that all the relevant information be included immediately. All
new claims shall be so recorded to allow for the compiling of a complete
master list.
They shall ensure that any contractual claim arising is immediately recorded
by him or any site personnel assigned by them to do so.
They shall also ensure that all incoming or outgoing correspondence related to
the claim (in any manner whatsoever) shall have its reference number
recorded and a photocopy made; this shall be done upon receipt or despatch of
the letter or document. The photocopy shall at all times be attached to the
original CCAS.01 form, which details the said claim.