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Remember to read the important news at the end of this Q&A list

My comments are given in red fonts below:From: terence drummond [mailto:terry-china@hotmail.com]


Sent: Sunday, September 05, 2010 2:54 PM
To: Prof. Sam
Subject: RE: Q&A
Dear Professor Sam
I have attended the CA course in 2008. If I plan to move away from the UAE to another
country such as Australia would the CA-AC (Advanced Class) be of benefit to me for the
industry over there or not? Australia has its own Standard Form of Contract which
is somewhat different to FIDIC and is the Form used for practically all the
Government/Local Gov Contracts. However if a foreign party is engaged in a
private development, there is a possibility of the latest FIDIC being used. Second
half of CA-AC is about the latest FIDIC and may be useful in such specific cases.
First half of CA-AC deals with Termination, Suspension & De-Scoping quite
common during economic down turn and therefore (though we look at FIDIC
provisions) would definitely be useful.
I also have two questions to ask.
1. Main contract is a lump sum. Building is a office tower block. FIDIC 1987 Fourth Edfition
with 1992 amendments is being used. I know that the client may reduce or omit any item
through an Engineers instruction (clause 51) but in doing so can they omit the full value or
do we as contractor still have the right to hold back loss of profit and overheads? If so, in
which clause is this referred to or implied in the contract? There are no provisions in the
Contract to claim loss of profit, but Overheads can be claimed under 52.2(a)
provided that the omissions are in excess of the percentage stated in 52.3.
However loss of profit too can be claimed under the applicable law if such
omission amounts to de-scoping which we would be discussing in detail during
the Advanced Class (CA-AC).
2. In the same lump sum project we priced for the Tower crane in the prelims. The
prelims had in the qty column 2no tower cranes and we inserted our price. If we are only
using one tower crane does the client have the right to ask for a saving? However, we have
been using a forklift and mobile crane for a period which were not itemized in the prelims
but this will not last for the complete project? Unless the Contract clearly states that
this particular item in the Prelims Bill is a re-measurable item, the Contractor
should be paid the full amount given against that item irrespective of the method
used by the Contractor for hoisting.

Regards,

Prof. Sam.
Prof. Indrawansa Samaratunga PhD, DSc
FRICS, FAIQS, FIQSSL, FCIArb, FCIOB, FCMI, FASI, FBEng
Chartered Surveyor, Chartered QS, Chartered Manager, Chartered Builder

Arbitrator / Mediator - London Court of International Arbitration


Arbitrator / Expert - Dubai International Arbitration Centre, UAE
Middle East Representative - Australian Inst. of Qty. Surveyors
PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668

Your feedback will be much appreciated.


Many Thanks
Kind Regards
Terry Drummond
Contracts Manager

The Following Questions have been raised during the recent SCA classes:Question:
What are the Contractor's entitlements if the Engineer fails to certify
a payment application and/or the Employer fails to pay?
Answer:
Under FIDIC - 4th, Employer's failure to pay, gives the Contractor an entitlement
to suspend the work or decelerate the progress (and to EOT and Costs if
consequently the Time for Completion is exceeded) in addition to termination
of his employment under the Contract (but under the UAE Law this cannot be
done without a court order). For Engineer's failure to certify, the Engineer
would be liable in tort for negligence or the Employer would be liable for
damages for breach of contract for his failure to get the Engineer to discharge
Engineers duties in a proper manner.
Under FIDIC 1999, Engineers failure to certify too entitles the Contractor to
terminate the Contract (but under the UAE Law this cannot be done without a
court order). We discuss these two topics in great detail with other
termination/suspension/de-scoping issues in relation to UAE law, in great detail
over some 9 hours at the Advanced Class. (After September 2010, next
Advanced Class is in March 2011).
Question:
Can the engineer under FIDIC force a contractor to carry out
additional works prior to agreeing its value, where such additional
works are not deemed necessary for completion of the originally
contracted works?
Answer:
No. However, though it is not necessary but if it is appropriate then it can be
instructed (under FIDIC 4 th) and valued in accordance with the Contract. (See
your notes of Session 1 - "Variations and Valuation of varied works"). If the
Contract is FIDIC 1999 then there are problems to do this due to the absence of
wording such as necessary and appropriate and therefore the legal

provisions would come in to play. We discuss in detail, the deficiencies/errors in


the Variation Clauses and the Valuation Clauses of FIDIC 1999, during the
Advanced Class.
Question:
When should the Contractor accelerate?
Answer:
(i) When acceleration is physically possible, and when required to mitigate
his own delays, Employers delays or Neutral Delays, provided that such
acceleration should not cost the Employer anything more than what he
would otherwise have to pay to the Contractor, or
(ii) When acceleration is instructed, following the Contractors agreement to
accelerate (usually after agreeing the methodology of paying the acceleration
costs).
Acceleration Costs and Disruption Costs would be a detailed subject in the
Master Class (University talks are currently at a standstill due to their
attempts to reduce the previously offered exemption of 2 Modules to only one
Module). If the talks fail, then the Master Class would go-ahead in Mid 2011. If
the University talks are successful, then the Subject of
Acceleration/Disruption Costs would be included in the Bridging Course, as
the University Curriculum does not include them.
Question:
When a Contractor has money due to it arising out of a valuation
under Clause 63.2 at the time of termination, and the Employer/
Engineer delays certification of possible claims under Clause 63.3,
how does FIDIC envisage that the terminated Contractor may enforce
its claim/obtain those sums certified by the Engineer as being due to
it?
Answer:
63.2 valuation is not made for the purpose of making the due payments to
the Contractor. At the time of this valuation no money is Payable (even if it is
earned by or accrued) to the Contractor. It becomes due only after the
replacement contractor completes the Works and the Defects Liability Period
is over and the final account of the replacement contractor is finalized. At
that time any claims of the defaulting contractor would be taken into
consideration under 63.3 calculation. This is a somewhat complicated
calculation and we deal with it in detail during the Advanced Class.

Question:
Why the engineer's decision is requested under Sub-Clause 67.1 of
the Red Book prior to commencement of arbitration although he
already made his determination before in respect of the same issue?
Is he expected to change his determination previously made?
Answer:
Yes. He should change if appropriate. His previous determination may have
been given after consultation with the Employer (probably with the approval of
the Employer), and therefore with compromises. But in giving his decision
under 67.1 he is not required to consult the Employer anymore. He acts as a
quasi arbitrator, and therefore his decision should be impartial, fair and
professional, requiring any previous compromises to be rectified. The status is
however different under FIDIC 1999 as the Engineer is the representative of
the Employer (and therefore is not the impartial Engineer of FIDIC-4 th) and that
is why Engineers Decision is not sought under FIDIC 1999 for disputes.
Therefore DAB (Dispute Adjudication Board) is a must although this is mostly
not being used! We discuss the implications of the Engineer acting as the
Employers representative, during the Advanced Class.
Question:
If progress is slow can the Employer terminate the employment of
the Contractor?
Answer:
Yes, but this depends on the wording of the Contract and other pre-requisites.
In FIDIC-4th Edition for instance, when the Contractors progress is slow and if
the Engineer has issued a notice pursuant to Sub-Clause 46.1 regarding the
slow rate of progress and the Contractor has still failed to comply, following
which the Engineer has issued a certificate pursuant to Sub-Clause 63.1 (b)
(ii), then the Employer can terminate the employment of the Contractor by a
14 day notice. However, depending on the law applicable to the contract the
Employer would also have to obtain a court order prior to such termination
(as in the UAE).
The matter is more complicated under FIDIC 1999 as the wording refers to
Termination of the Contract (and not totermination of the employment of
the Contractor under the Contract). The difference is discussed at the
Advanced Class. (After September 2010, next Advanced Class is in March
2011).

Following is an email that was sent previously to you:-

Dear Alumni,
Soon your company too would recruit fresh graduates as their remuneration would be lower and
fewer facilities would be required for them, according to the following survey:-

Fresh faces for a brighter workplace


23 August 2010
DUBAI The global economic downturn has changed the mind of company managements in Middle East and North
Africa region as they have started focusing on fresh graduates as new team members for several reasons, according
to a latest survey. (Read the full Article on Khaleej Times Online)

They would also bring with them new knowledge as their latest study programmes / syllabi were
no doubt updated since you graduated in the past. Therefore it is important for you to be up to
date with the latest developments in the construction industry and the new findings, which were
not included in your study programmes in the past. This could only be achieved if you
continuously keep yourself developed professionally. You have already commenced this process
(CPD Continuous Professional Development) by completing the Sound Contract
Administration (SCA) training programme.
You can stay one step ahead of the fresh graduates, if you can gain knowledge on topics that may
not have been included in their study programmes. You have already gained part of such
knowledge through the SCA and now you can gain more of such knowledge through the
Advanced Course (CA-AC).
Regards,

Prof. Sam.
Prof. Indrawansa Samaratunga PhD, DSc
FRICS, FAIQS, FIQSSL, FCIArb, FCIOB, FCMI, FASI, FBEng
Chartered Surveyor, Chartered QS, Chartered Manager, Chartered Builder

Arbitrator / Mediator - London Court of International Arbitration


Arbitrator / Expert - Dubai International Arbitration Centre, UAE
Middle East Representative - Australian Inst. of Qty. Surveyors
PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668