Dear Fellow please advise if a Variation Order can be issued during the Defect Liability Period

8 days ago

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Ritu Das, PMP, CCE, Javier Lecaros and 2 others like this
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Bhairav Desai Defect liability starts when projects completed and accepted by clients.therefore no point to issue VO. contractor is duty bound to rectify defects if any.whats needs to b done has to b done without extra cost to client. So variation except specification is not require .
2 days ago Like

Follow Bhairav

Bhairav Desai Defect liability starts when projects completed and accepted by clients.therefore no point to issue VO. contractor is duty bound to rectify defects if any.whats needs to b done has to b done without extra cost to client. So variation except specification is not require .
2 days ago Like

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Ruben Salgado You are entitled to your own opinion and I respect that.
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Follow Clarence Elmer

Clarence Elmer Quismundo Andy, you are really a clever "devil". Anyway, as you can see it all boils down to the same conclusion that I summarized. Nadim has actually asked if a VO "can" be issued. Grammatically speaking, he has not asked if it is legal or illegal, contractual or not. The answer is ANYTHING IS POSSIBLE AND CAN BE DONE. See the "can" word there. So as I've said before, if the contracting parties can mutually agree, why shouldn't we? Anything that they mutually agree, as long as it is not against the Law, would be a valid agreement or contract. At least that is what our local Civil Code says. Best regards.
2 days ago Like

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Vic Sto. Domingo In FIDIC 87 no time limit is expressly stated within which the Engineer may issue a Variation. However, while it may be argued that the VO may be issued any time, it could not be interpreted to mean forever; there has to be a reasonable time limit. In case of dispute as to what constitutes the reasonable time, and if the dispute has a considerable material effect to either or both Parties, they should consider referring the matter for adjudication (arbitration or litigation). In my view, the reasonable time in this case should not necessarily have to end at a specified date, but rather it should be the time within which the issuance of the VO will serve the mutual interests of both Parties, and the Doctrine of Consideration shall be satisfied fairly and equitably. In short, the Contractor may be instructed to vary the works within a reasonable time during the DLP provided that it will mutually benefit both Parties. In FIDIC 99 however, the term at any time has been qualified in Sub-Clause 13.1 to mean at any time prior to issuing the Taking-Over Certificate for the Works. Thus, although Sub-Clause 3.3 allows the Engineer to issue (at any time) instructions and additional or modified Drawings it clarifies that if any such instruction or drawing constitutes a VO, Clause 13 shall apply; which then effectively prevents the Engineer from initiating a VO after issuing the TOC. In fact, even if the Engineer tries to initiate a VO after the TOC notwithstanding such expressly stated limitation, the Contractor under the same Sub-Clause 13.1 will not be bound by that VO if he gives a prompt notice to the Engineer that the VO triggers a substantial change in the sequence or progress of the Works.
2 days ago Like

Follow Mohammed

Mohammed Azad Hossain Friends, I thought the issue is already exhausted and most of the contributors agreed that a VO can be issued during DLP. I am sorry to say that some members still insist on their explanations that VO cannot be issued, giving reference to other contracts and specifically the FIDIC 99. As Ruben said, You are entitled to your own opinion and I respect that. FIDIC 99 is not the issue here, the question is related to FIDIC 87, which has been using in the Middle East/GCC from long time. See the sub-clause 49.3 (Cost of Remedying defects) of FIDIC 87, which Mountasser cited correctly: Sub-clause 49.3: "All work referred to in sub-clause 49.2(b) shall be executed by the contractor at his own cost..........If, in the opinion of the Engineer, such necessity is due to any other cause, he shall determine an addition to the Contract Price in accordance with clause 52 and shall notify the Contractor accordingly, with a copy to the Employer". 49.2 relates to any outstanding as well as defective work as I have explained earlier TOC (Substantial Completion) is not the final completion and there could be some minor outstanding works, snags as well as defective works. All such work shall be done and rectified during DLP without any cost to the Employer. Any additional work and its valuation shall be determined by clause 52 (i.e. variation) by the Engineer.
2 days ago Like

Follow Vic

Vic Sto. Domingo Dear Mohammed, The first three paragraphs of my comments relate to FIDIC 87, and in those paragraphs I did not say that a VO could not be issued during the DLP under FIDIC 87. On the contrary, I opined in the third paragraph that the Contractor may be instructed to vary the works within a reasonable time during the DLP provided that it will mutually benefit both Parties. The subsequent three paragraphs of my comments relate to FIDIC 99. Those comments were not intended to answer the original question of Nadim but were provided as a reaction for others who have shared their views with regard to FIDIC 99. Thank you for respecting the opinion of others and similarly, I also respect your opinion although I could not fully agree with them and thus please allow me to express my 10 cents worth. Clause 49.2 of FIDIC 87 refers to: (a) outstanding works, and (b) remedying of defects. Such outstanding works relate to any part of the original works (including all variations issued earlier) that have not been completed, as stated in the TOC. The TOC could not possibly include or state a work that will be the subject of a future Variation under Clause 51, and which may be instructed only after the TOC has been issued. Similarly, the remedying of defects relate to the same original works (and previous variations) as any work could not be considered defective even before they have been constructed or instructed to the Contractor under the future VO.

Thus, I believe that Clause 49.2 does not relate to a VO issued after TOC and it does not entitle the Engineer/Employer to issue a Variation under Clause 51 after the TOC. Clause 49.3 refers to (b) remedying of defects only; not to (a) outstanding works. It states in effect that if the defects are not attributable to the Contractor, the Engineer shall determine an addition to the Contract Price in accordance with Clause 52. However, it does not say that such an addition to the Contract Price shall constitute a Variation under Clause 51. Thus and similar to the above, I believe that Clause 49.3 does not relate to a VO issued after TOC and it does not entitle the Engineer/Employer to issue a Variation under Clause 51 after the TOC. Although such addition to the Contract Price is valued under Clause 52, it does not necessarily mean that the relevant rectification works is a Variation under Clause 51. Kindly note that Clause 52 clearly distinguishes the Variations under Clause 51 from any such additions to the Contract Price e.g., such addition prescribed in Clause 49.3. Thus, I believe that payment of any addition to the Contract Price resulting from remedying of defects under Clause 49.3 does not entitle the Engineer/Employer to issue a Variation under Clause 51 after the TOC. Notwithstanding the foregoing and considering the absence of an express provision in FIDIC 87 as to the time limit within which the Engineer may instruct a Variation under Clause 51, I still maintain that as I have stated earlier, the Contractor may be instructed to vary the works within a reasonable time during the DLP provided that it will mutually benefit both Parties. Cheers
1 day ago Like

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Ruperto Gonzalez To everyone: Now that a book of theory has been written by all the preceding contributors, and a good book it is, is there specificity somewhere or is this pure academic exercise? This would greatly help resolution of the question. Has the Client decided that they want to remove ceramic tile and replace it with granite? Doe the Client now wish to add another storey to the building? Did the materials specified originally not stand up to normal wear and tear, and thereby the Lobby looks 20 years old before Final Completion? Whatever the case, and with particular unit rates or prime cost sums that may possibly be applicable, and depending on the year of the FIDIC contract, this whole dissertation can be answered with an offer from the Contractor based on Client's designs, an agreed scope of work, an acceptance by the Contractor (if they're smart, they'll renegotiate the "old" rates) and a healthy extension of time with renegotiated preliminaries, does this translate into partial takeover of an expanded project (the initial 100% now becomes 97%) that now has an extension of time? Hmmmm...if so, can there be re-negotiation of terms that are probably 2 or more years old and when the Variation works are complete there begins a "Sectional" DLP??? how messy! The action suggested in texts above of a new contract would make this a lot cleaner and clearer, que no? The Contractor would likely prefer a new contract, new rates, new scope and time, and new preliminaries...
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Follow KC

KC CHANG To Ruben: For the Engineers right to order Variations after the issuance of TOC (under the 1999 FIDIC RB), there seems to be no consensus amongst the contributors above; but my observations is that there is a general tendency supporting that the Engineer have no such right, at least amongst the contributors having a common law background, of whom I am one. On the issue of Variation order you raised, despite it is digressing from the original issue raised, I would like to contribute my opinion. Your statement: Extra Works are additional works, new scope and are those not described in the original BOQ or has no contractual existing pay item, and thus, has no unit price. My comment: Clause 13.1(e) provides for the ordering of additional works. Clause 12.3(b) gives the rule for valuation of variations instructed under Clause 13. It states that a new rate or price shall be appropriate for an item of work if (i) the work is instructed under Clause 13, (ii) no rate or price is specified in the Contract for this item, and (iii) no specified rate or price is appropriate because the item of work is not of similar character, or is not executed under similar conditions, as any item in the Contract. Only if the above three conditions are all satisfied will a new rate or new price be appropriate. Hence if there is appropriate rate or price in the Contract for the valuation of additional works instructed under Clause 13, or that the additional work instructed under Clause 13 is of similar character to or is carried out under similar conditions to a specific item or items in the Contract such that it can be valued by reference to the rates or prices in the Contract for similar items of work, then notwithstanding that the works instructed are additional works, their valuation can still be based on the appropriate rates and prices in the Contract. This system of valuation of variations is long established and similar system is used in the ICE and JCT series of contracts. As an illustration, the Contract contains work for a concrete pavement of 500m long. The Engineer instructed under Clause 13 an additional length of concrete pavement adjacent to the original pavement, again of 500m long, which is considered as additional work. Assuming that the additional concrete pavement is to be carried out immediately next to the original pavement and the design of the two pavements are exactly the same apart from the slightly different location and alignment, and hence this additional work can be said to be of similar character to and carried out under similar conditions to the original work, there is no reason why the rates for the original pavement in the Contract cannot be applied or used as a reference for valuation of the additional work. Hence my reservations on your statement that Extra Works are additional works , and thus, has no unit price. Thanks.
17 hours ago Like

Follow Anton

Anton De Bloch Such a simple question and so much confusion.The contract terminates in law when the client takes over the works. The DLP or Warranty Period is completely separate and is self explanatory.Should client wish to issue a "work order" during this period he is at liberty to do so and the Contractor would normally oblige.This is not a Variation Order, as the contractual scope has been terminated when the client took over the works.Kind regards

16 hours ago Like

Follow Volker

Volker Motzkus @ Anton: Well yes, in Germany and some other civil law jurisdictions it does; in others, it does not. FIDIC most certainly only ends with the performance certificate in common law. That is why we are having this discussion. Regards Volker
15 hours ago Like

Follow Jarosaw

Jarosaw Woniak Hi! Honestly I am not surprised seeing so many extended comments, question is simple but touches a core matter - Variations! In general VOs during DLP, in the meaning of extra work (additional) is not contractual. The Engineer can issue VO, but the Contractor is not necessarily obligated to execute it, specially using Contract prices. It's individual case (question of cost-effectiveness, extra mobilisation, general costs etc.) On the other hand, after TOC, so during DLP we may have except guarantee works, also outstanding ones. For outstandings, VO is legitimate and logical. In my opinion the Engineer should keep his right to issue eventual VO after he incorporated those outstanding works in TOC protocol (normally listed in the attachment). Above concerns Original Fidic, Special Conditions may have influence of course. Regards Jaroslaw
13 hours ago Like