FIDIC Contract Claims for Delayed Payments

Comments are given in red fonts below:From: Alex Peter [mailto:alexpeteralex@yahoo.
com]
Sent: Thursday, May 26, 2011 5:36 PM
To: sam99@eim.ae
Subject: Re: Q&A plus Message
Dear Sir,
Thank you for your continuous support.
I am working for a Project Management Company.
Sir, I have a question in regards to the late payments and the impact of delayed payments in
payment process mechanism.
Our current payment evaluation is a multi-tier system which involves Employer, Project
Manager, Cost Consultants, Design & Supervising Consultants. Due to this multi-tier system
some of the payments are got delayed. Now the Contractor has claimed for the interest for
this delayed payments and claimed for the EOT with prolongation costs due to this.
FIDIC 1987, reprinted 1992 and FIDIC 1999 are adopted as the form of Contract for different
projects by our Client.
Please comment on the Contractor's position for their claim and the Clients position in
regards to this to amend the payment process mechanism.
Many Thanks.
Regards,
Alex Peter
Under FIDIC 1999, the Employer has the obligation to pay within 56 days of Engineer
receiving the Statement and details from the Contractor, and therefore if the certification
process is not completed within this 56 days (or if certified but Employer does not pay), then
the Contractor would have a successful claim for interest from the 57th day onwards until he
is paid (in addition to his right to suspend/decelerate/terminate for late payment).
Under FIDIC 4th Edition, the certification has to be done within 28 days and payment should
be made within a further 28 days, and therefore:-
if the certification is done in less than 28 days, then interest is due from the 29th day of
certification (if payment is not made)
if the certification is not done within 28 days, then interest is due from the 57th day of
submission of the statement and details (even if no certification is made but the claim
should be in respect of damages for breach of contract, as according to the contract,
the obligation of the Employer to pay starts only after a certificate is delivered to him)
in both cases the interest is in addition to the Contractors right to
suspend/decelerate/terminate for late payment.

Any claim for EOT would not be successful unless the Contractor has suspended/decelerated
the progress of work which has delayed the project completion. This is a subject that we
discuss in detail during the Advanced Class.
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
-----Original Message----From: Ajay Kumar Thakur [mailto:athakur@altayerstocks.com]

Sent: Wednesday, May 25, 2011 11:50 AM
To: sam99@eim.ae
Subject: Penalty vs Liquidated Damages
Dear Sir,
I hope my mail finds you in good health.
I came across some literature related to Penalty & Liquidated Damages which has generated
some questions in my mind.
I understand that, there is no scientific calculation done to arrive at a Penalty Value, and
penalty value/ penal payment is an extravagant value which might not match with the actual
loss due to breach of contract.
On the other hand, Liquidated damages are scientifically calculated probable loss which a
client may suffer due to breach of contract.
So, if a contract condition says,
Penalty - AED 10000/- per day to the max of 10% of contract value ----- is this a penalty or
liquidated damages ?
I also understand that penalties are not enforceable by Law ( Considering English Law, No
idea about UAE Law), where as Liquidated Damages are.
If what I understand is correct, can a contractor challenge the penalty value (Like the one
mentioned above) in the court of Law or Arbitration, asking for detailed calculations. So that,
contractor is charged only the actual losses incurred by client subject to a maximum value of
10%, which ever is less.
I need your thoughts on this sir. Thanks.

Your understanding is correct. Under the English law it can be challenged if the amount is
more than a realistic pre-estimate of the loss. However under the UAE law, the lawyers in
UAE say that penalties are permitted and therefore such challenges would not be successful.
Regards,
Prof. Sam.

From: Bovis Wijesooriya Thakshila [mailto:bovis_thakshila.w@rta.ae]

Sent: Thursday, May 26, 2011 9:54 AM
To: sam99@eim.ae
Subject: RE: SCA Q&A
Dear Prof.
Please kindly let us know whether it is a requirement of the Dubai Emirati Law No.6 for the
government departments to consider the working week as 48 hours. I do not recall such a
requirement in Law No. 6.
We have a claim for additional services provided by one of the overseas consultants who
provides Independent Assessment services. The contract is a lump sum fixed price. He has
calculated his costs on a 40 hours working week basis over the additional time spent on the
extra work by the staff.
Is it correct for us to request for a proportional discount on his costs if the Law No.6 requires
48 working week for government contracts. If the Consultant performed its services as
required by the contract to the satisfaction of the other party, then it is unlikely that a claim
for a reduction of the fees would be successful on the grounds that the number of hours spent
was less than a general provision of a law (unless the contract expressly stated that the
Employer can make such a reduction).
Regards,
Prof. Sam.

Thakshila
From: Darren Burke [mailto:dburke@alec.ae]

Sent: Saturday, June 04, 2011 11:22 AM
To: sam99@eim.ae
Subject: General Queries on Presentation 3rd June 2011
Prof Sam,
Kind regards for yesterday evenings session, a lot of information to take in and well
presented.
I have a few queries, that when you get time, that you may assist with clarifications;
1.
2.
3.
The example Concrete framed building example referred to,
You referred to the employer and contractor concurrent delay where the
mitigation measure adopted was precast floors to save 2 weeks of the 5 week
delay was the contractor mitigating his own delay OR that of the Employer
He has the obligation to mitigate both.
If the mitigation comes with additional cost, would the contractor receive
re-imbursement for this as it could be considered HIS delay?? Mitigation at
additional cost to the Employer cannot be done unilaterally, without first
notifying and arriving at a mutual agreement if the Contractor expects to get
reimbursement, where the delay is Employers Responsibility.
Where the delays above occur and the contractor cannot mitigate the
delays, is he still entitled to E0T 5 weeks. Yes
Where a subcontractor is involved
If the Main Contractor receives an EoT for the works should he inform
all his subbies officially??? Yes, if the subbies in turn have claimed EOTs or if
they are affected by such EOT.
Main Contractor gets EoT during the EoT period the Main Contractor
has now been negligent and further delays the project where the MC is now
liable for LDs
If the Main Contractor fails to advise the subbies officially after the 1st
EoT that the Time for Completion has been distended, is Time at Large
with respect to the subcontractor?? No
If so, where the Employer exercises his right on the Main Contractor to
impose LDs for the Main Contractos negligence, does the MC forfeit his right
to impose LDs on the Sub-Contractor because he did not grant EoT(1) even
though the Sub-Contractors negligence may have given rise to the Min
Contractors negligence?????
An EoT (1)is awarded without cost for concurrent delay 3 months extension
During the extended phase the Main Contractor incurs further delays as a
result of the Employer and submits EoT(2) before the elapse of the 1st EoT
Time for Completion
The 1st EoT Time for Completion then elapses and the Engineer states
that he cannot assess the merit of EoT(2) as there is NO APPROVED
updated baseline programme following award of EoT(1)
The Main Contractor had previously submitted the Revised Baseline

Programme after award of EoT(1) BUT the Engineer has difficulty approving
it as he has arguments that the Revised Baseline does not reflect the Impact of
4.
5.
the Works at that given moment in time giving rise to the EoT(1) award
They are currently using a completions programme from a monitoring purpose
ONLY!
Is Time at Large in this case as the EoT(1) Time for Completion has
elapsed??? Time does not become at-large in a contract where a
comprehensive EOT clause exist (such as FIDIC 4th), because if the Engineer
does not determine it, then a subsequent arbitrator can determine it. Time
would be set at-large only in contracts where there are no EOT provisions or
the existing provisions are poorly drafted and therefore cannot be used to
award EOT in certain circumstances.
If both parties have difficulty agreeing the Revised Baseline following

EoT(1), how does the Engineer assess the merit of EoT(2) as the Main
Contractor argues that his Revised Baeline is correct?? The matter is likely to
proceed to dispute resolution at which the independent third party would
establish which programme would be used to determine EOT (It is quite
common at arbitrations for an Expert to come up with a programme which
would be the ideal one in those circumstances, but quite different to what the
contractor prepared and/or Engineer consented to.)
If it is now considered that Time is at Large does the Employer now

forfeit his right to impose LDs as the Engineer cannot assess EoT(2)??
When notifying of a claim
Do you reference ALL the clauses that gave rise to the claim, ie, claim 6.4
for late drawing issue by the Engineer whilst referencing Clause 44.1 b, whilst
referencing Clause 52.1 or 52.2 where rates cannot be agreed There is no
requirement in FIDIC to mention clause numbers, but it is good practice to
refer to specific clauses which are relevant to the issue.
If the Contractor does not agree with the fixed rate Clause 51.2 notified
by the Engineer to the Contractor in writing has he any other avenue to
pursue as it may have been an impartial view by the Engineer?? If the
contractor disputes the fixed rate then arbitration (with the preceding amicable
settlement option) is the available avenue.
FIDIC Comparisons
Is there a comparsions document (spreadsheet format) comparing like for

like for the various editions of FIDIC, ie, comparing Clause 8.3 programme
(FIDIC 1999) v Clause 14.1 programme (FIDID 1997 Red book)???? We
do this comparison in detail at the CA-AC class.
What are the differences between both contracts as I assume both have
similar clause but numbered differently?? They are so numerous that cannot be
stated in this short Q&A forum.
Regards,
Prof. Sam.

Kind regards again.
Darren
Darren Burke
Contract Manager
From: Joseph Ligin

Sent: 27 Jun 2011 10:12
To: 'Dr. I. Samaratunga'
Subject: Piling Works - Measurement of Reinforcement
Dr. Sam,
Could you please clarify the below query
Reference: POMI Clause C3.1 The weight of bar reinforcement shall be the net weight
without addition for rolling margin, supports, spacers or tying wire.
What is the meaning of net weight in POMI Clause C3.1 whether the lap length is payable or
not? Laps should be added when calculating the weight of the bar reinforcement, because
there is no express exclusion of laps. (See C3.3 where laps are excluded for fabric
reinforcement). Moreover, in calculating the weight, the bar diameters and lengths are takenoff from bar-bending schedules and therefore laps get added.
Regards,
Prof. Sam.

Await your valuable comments

Thanks and regards
L Joseph
From: Mohammad feroz [mailto:feroz_mohammad786@hotmail.com]
Sent: Tuesday, June 14, 2011 4:27 PM
To: sam
Subject: RE: SCA Q&A plus Message
Dear Dr. Sam,
How are u I have one contarctual question for you Please comment.
My project at international city which is commenced now so question is contractator has
given the discount 10% on Balance works to be done. so while we are omitting any of BOQ
item which is not required applying 10% discount on the same.hence we should apply same
discount while any additional BOQ item to be included?
For Example:
Item A - Amount AED 20,000.00 is required to omit by client so net deletion will be AED
- 18,000.00
Item B - Amount AED 25,000.00 is required to add to complete the works so in this case
Net Addition will be AED -22,500.00 . Is this correct procedure to evaluate the variations?
Unless expressly stated that the 10% discount shall apply to rates and prices in the valuation
of variations, all omissions and additions should be valued without considering the discount.
The discount would be a lump sum discount (which should be deducted from the final
account) calculated as 10% of the value of balance work that was foreseen as required to be
completed, as of the day when the discount was agreed.
Regards,
Prof. Sam.

Regards,
Feroz
From: Silvestrece Imelda Syril [mailto:isssilvestrece@yahoo.com]
Sent: Sunday, July 10, 2011 6:57 PM
To: sam99@eim.ae
Subject: a point of inquiry
Dear Prof. Sam,
Good day! I am Imelda Syril Silvestrece - Razzaq. I was one of your attendees in sound
Contract Seminar/workshop last January 2008 held in dubai when i was still working in
Rection Project Management as QS. I am now currently working here in Vietnam as Quantity
Surveyor. I am having a difficulty dealing with employer because they seemed to have their
own contract understanding.
I would like to ask some question. hope you could help me clear up this things.
1) does the employer have the right to with hold the Payment Certificate let's say from the
month of March 2011 and April 2011 which was already been certified by the Engineer and
on the table of the employer (Project Manager) for his signature for final approval? for the
reason that the Project Manager on employer side doesn't want to pay a certain item in the
BOQ.. ( Reinforcement Steel Bar)
sample:
a) ..all costs, including material costs for mechanical splices since according to him, already
included in the unit price of the related pay item under the contract.
b) Quantity, which is additionally arisen from the Construction Method of statement of the
contractor, shall not be paid.
Actually, i have been reading the contract, it's a FIDIC Conditions of Contract, and haven't
found any stipulations that state that the employer have the right to with hold or stop the
payment. General conditions and Particulars.
Even in Engineer's Duties and authority Clause 2.1 of the Particular condition, there's only a
certain or specific stipulations that the engineer needs the Employers approval, most of it is in
Variation and extension of time.
Really, they have there own International Vietnamese Standard.. as what my YYY nationality
boss said..
XXX, who is of YYY nationality is THE ENGINEER, wants to continue to pay the Payment
Certificate of March and April and just make the adjustment or changes for the next interim
payment since it's still a dispute and both sides are not agreeing yet.
Thank you for your time.
Though there is provision to correct a certificate subsequently pursuant to 60.4, if those who
certify are confident that payment is not due exactly as claimed by the contractor, then they
should certify only that part which in their opinion is fairly due to the contractor. They should
not hold the certification of the total amount just because some of the figures within it are
incorrect. The contractors remedy for unjust interference in certifications is found in SubClause 69.1(b) of FIDIC.
Regards,
Prof. Sam.

Sincerely,
Imelda Syril Silvestrece - Razzaq
----- Original Message ----From: Maria Victoria

To: "sam99@eim.ae" <sam99@eim.ae>
Date: Tue, 21 Jun 2011 10:09:06 +0400
Subject: Question on Contract
Dear Sir,
I am your student from this Junes class.
I have the following question and I appreciate if you could enlighten me on this.
We have a project with a sister company although tender documents are complete, the
Contract was not signed/not executed.
Instead we received a PO and on that PO the reference document is the tender docs and the
offer we have.
Now the project is completed, there has been many delays on this project some due to
Employer and some due to Contractor.
Client intends to impose LD and asking that we submit a letter regarding delays and our
explanation on this delays.
In the absence of the signed contract, can the client impose this LD. And how do we address
these delays and what is the implication of this on the finished project?
The wording in the PO (especially those of small print, and especially if you signed a copy
acknowledging the contents), may have formed a contract. Thorough investigation is required
to establish whether or not the contract formed. If the contract exists then the Employer can
levy Liquidated Damages, if you are in delay, or even otherwise he can claim damages for
your breach of not completing on time. It is left for you to demonstrate through a proper
claim and a delay impact analysis that either the delay was caused by the Employer or that
your delay was concurrent with that of the Employer and therefore you should be given an
extension of time in order to avoid Liquidated Damages.
Regards,
Prof. Sam.

Appreciate your time in answering this question.

Thanks & Regards,
Maria Victoria
Contracts Engineer
-----Original Message----From: Sasi Kumar [mailto:sasi.kumar@shapoorji.com]
Sent: Monday, June 20, 2011 2:33 PM
To: sam99@eim.ae
Subject: remeasure contract
Sir,
In a re-measurable Contract can the Engineer ask for a new rate for the
'Rate Only' item? No, but if the scope of, or the circumstances under which, the work is to be
carried out has changed due to a variation, then the Engineer can serve notice under SubClause 52.2(b) to vary the rate.
Regards,
Prof. Sam.

Regards,
Sasikumar
From: ABRAHAM VARGHESE (alexmon) [mailto:alexmon@emirates.net.ae]
Sent: Thursday, June 16, 2011 11:19 AM
To: sam99@eim.ae
Subject: Q A
Hi dr sam,
Your classes are really thought provoking and encourages us to think outside the box while
evaluating the contract
This is in reference to the answer given by you in the last Q & A regarding the possible
savings due to omission of shading system under FIDIC 87. In you answer, you have stated
that the contractor has to only give the current market price and not the BOQ amount.
can you please explain the Logic behind your answer since as per 52.1 rates in the contract
are to be used if they are applicable. I looked in the last 3 sets of Q&A sent but could not find
the one you are referring to. Please quote the Q&A list reference number.
in this context can you also restate the argument regarding savings for deletion of boundary
wall (200 m actual which was wrongly quantified as 50) which was wrongly measured in
the BOQ. Too complex to state in this short Q&A forum. We do a complete analysis of this
during SCA Session 1. Next SCA starts on September 9th. Those who wish to refresh can
enroll now.
can you please also give the Logic behind your argument that statement in clause 51.1 " No
such variation shall vitiate or invalidate the Contract" means that Engineer should not issue
variations which are not appropriate Incorrect. I said the Engineer should not issue
variations which are of a nature to make the contract ineffective or invalid (examples were
changing the bridge to a tunnel or Football stadium to an airport terminal). I recently had an
argument that the above statement is to circumvent the doctrine of certainty. The only other
two meanings that can be given are despite whatever variation instructed, the contract
should remain valid and effective, or Contractor is obliged to carry out variations. The
latter is already catered for in the Sub-Clause under Contractor shall do .. and
therefore there is no necessity to repeat, and the former would allow the Engineer to instruct a
tunnel instead of the bridge because it is necessary to provide access from Point A to point B
in the example quoted during the session ! No court or arbitral tribunal would accept that
such a variation can be validly instructed under a contract. To facilitate this only one
interpretation is possible which is to consider it as a warning to the Engineer not to issue any
variation which would make the contract ineffective or invalid.
also can you please clarify how the PC sum item is re-measured in the following scenario
1. Contract is lump sum with employer supplied quantities with out provision to change the
quantities or add additional items.
2. ditto with provision to change the quantities or add additional items
In both cases, since the contract is lump sum type, the quantities to be taken for the
calculation are the quantities in the contract drawings and not those in the BOQ. Therefore if,
say PC Dhs. 100/- per M2 for unspecified tiles were given and the Drawing quantity is 1000
m2, then the provision within the Lump Sum Contract Price for tiles is Dhs. 100,000/- Any
change from this when the selected tiles are instructed should be adjusted (+ or -) after
making the OH & P allowance, as explained in several previous Q&A Lists, and also given in
one of the answers below in this list.
Regards,
Prof. Sam.

thanks
abraham Varghese
From: NIKHIL [mailto:y2n@rediffmail.com]

Sent: Tuesday, June 14, 2011 10:44 PM
To: sam99@eim.ae
Subject: Query
Dear Sir,
Hope this will find you in good health. I was an alumni of the SCA2008, June Session. I had attended the full session and it had proven
fruitful in various occasions for me in my professional career. I moved
onto Qatar and at present am working for a Contracting Company am I was
posted as Contracts QS for a building project. This project is already
halfway through and a lot of variations were raised from the
Contractors side and none of them were able to be closed out completely
as the method or concept of evaluation of the variations are not able
to mutually agreed between the Engineer and the Contractor. For your
kind information, the project is a Lumpsum Project.
The Contractors arguments are as follows:
Type A: Due to Design or Drawing Change
The Calculations are based on Issued for Construction Drawings v/s
Tender Drawings and hence where the Design or Drawing is changed, the
Actual Quantities from the Tender Drawings (and not BOQ Quantities)
will go down as omissions and Quantities from the Issued for
Construction Drawings will be considered as additions. Rates to be
considered shall be BOQ rates in both cases. You do not say what drawings were used as
contract documents. Let us say Tender drawings formed part of the contract documents, and
the construction drawings were issued after the contract was signed. Regarding quantities, the
contractors argument is correct. Since it is a lump sum contract BOQ quantities cannot be
used. Therefore for omissions, quantities from Tender (contract) drawings should be used.
For additions, quantities from construction drawings and/or quantities actually built at site
should be used. The rates in the BOQ would however be either applicable or not, depending
on any initial quantity errors and whether there was a place in the BOQ to price such errors as
discussed during SCA session 1 Boundary wall case. This could either be to Contractors
benefit or to Employers benefit.
Type B: Due to Upgradation of Specifications (eg. Concrete grade
changed from C50 to C70)
The Calculations are based on the concept that if there is no change in
Design or Drawing and if there is a change in only the specifications
of an item, then only the variance in the BOQ rates and Revised
rates(due to upgradation of specs) must be multiplied with the
quantities of the Issued for Construction Drawings in order to obtain
the net variation. This argument is correct.
Type C: Due to New Item not covered in the BOQ (eg. Waterproofing
changed from EPDM to Crystalline)
The Calculations are based on the concept that if the Specification of
an item is enhanced by introducing a new system, then the New Agreed
rates is multiplied with the quantities of the Issued for Construction

Drawings in order to obtain the net variation. This is incorrect. Item being missed from BOQ
is at Contractors risk. This should be valued exactly as Type B, by calculating two rates for
the two types of waterproofing and the difference being multiplied by the quantities of the
construction drawings (or as built at site)
Now the Consultants arguments are as follows:
Type A: Due to Design or Drawing Change
The BOQ quantities will go down as omissions INCORRECT and Quantities from the
Issued for Construction Drawings will be considered as additions OK (or as-built quantities).
Rates to be considered shall be BOQ rates in both cases. See my comments in A above
regarding rates.
Type B: Due to Upgradation of Specifications (eg. Concrete grade
changed from C50 to C70)
The rates will change, No, only the difference between the two rates should be taken but
quantities will be considered only for BOQ
and not from Issued for Construction Drawings. Incorrect.
Type C: Due to New Item not covered in the BOQ (eg. Waterproofing
changed from EPDM to Crystalline)
The rates will change, No, only the difference between the two rates should be taken but
quantities will be considered only for BOQ and not from Issued for Construction Drawings.
Incorrect.
Its been some Eighteen months since the commencement of the Project and
till date none of the Variations are agreed due to this conflict in the
concept. Both parties are very affirmative about their stand and if
this situation persists it may lead to an arbitration stage. So I
humbly request your good selves to shed some light on this issue as we
need solid documented proof to prove our stance (if its right). Please
note that the Project is in Qatar and its not bound to any FIDIC form
of Contract. It does not matter that the contract is not FIDIC. Above arguments apply to any
type of contract if it is lump sum. But at least if I can get any information regarding the
Common code of practice as per the Construction Law so that it may be
interpreted in any way with the Conditions of Contract over here then
it might prove worthy. The issues appear to be so simple, and it is a pity that the parties have
to end up in arbitration. It may be fully worth for your company to sponsor and send all your
consultants, Engineers and Employers contract administrators together with your company
contract administrators for the full 10 sessions of the Sound Contract Administration starting
on 9th September 2011. Even considering a group of about 10 spending 3 week-ends in Dubai
hotels, the total cost of gaining this valuable knowledge is insignificant compared to the cost
of an arbitration. Many contractors in Dubai often use this course to educate their
counterparts in order to get their problems solved amicably, and to avoid otherwise
prohibitive arbitration costs. September class details are attached.
Regards,
Prof. Sam.


I hope all the information are intact and thanking you in anticipation
of your kind comments, I remain,
Yours Sincerely,
Nikhil Sudarsan.
Thanks & Regards,
Nikhil Sudarsan
From: Lalani Dodangoda [mailto:lalani2011@hotmail.co.uk]
Sent: Tuesday, May 31, 2011 9:57 PM
To: sam99@eim.ae
Subject:
Dear Professor ,
Can u pls clarify the following issue regarding PC rates
Lump sum contract
Finishes
PC rate for marble is 1100 Dhs /m2
Unit Rate all inclusive - 1380 Dhs/ m2
Boq QTY - 1087 M2 ( which has an error )
Actual qty 2017 m2 ( CONTRACT DRG )
Pricing preambles describes that Contractor shall price the item adding O.H & Profit & other
allowances , installation to the PC RATE
As per Employers instruction Marble has been change to natural stone and the PC rate has
been reduced to 810 Dhs/ M2
Contractor has summarized the variation as follows
Addition
Natural stone - 2017 @ PC Rate 810 + O.H & Profit
Other costs
(1380-1100 ) = 2017@ 280 Dhs/ m2
and Omission
BOQ QTY 1087@ 1380/=
Contractor is arguing on this since the amount is fixed for the item in the BOQ deductions
should be made as per BOQ Value ( considering the risk )in this case
his rate is lesser than the PC RTAE provided ,because he has to carry out the actual qty of
2017 SQ.M @.......= BOQ VALUE
is this correct . Let us see how much is to be adjusted against the Lump Sum Contract Price
according to Contractors above calculation (assume OH&P to be 20%):Additons
Omission
2017 x (810 + 20%) = 1,960,524/2017 x (1380 1100) = 564,760/= 2,525,284/1087 x 1380

=(1,500,060/-)
Therefore Net Additions
= 1,025,224/-
My answer
Addition - 2017 @ PC RATE 810 +O.H & P + other cost @ 2017
other cost - 1100 + O.H & P =X
UNIT RATE 1380 - X = other cost
Omission
2017 @ unit rate 1380
Can u pls comment. Let us see what the answer is according to your calculations:Additons
2017 x (810 + 20%)

2017 x {1380 (1100+20%)}=
Omission
2017 x 1380
= 1,960,524/121,020/= 2,081,544/=(2,783460/-)
Therefore Net Omissions
= (701,916/-)
Immediately it is apparent that the Contractors calculation is incorrect, because it is a Lump

Sum Contract with the quantities at Contractors risk, and therefore the change from the
expensive marble to the economical stone should yield a saving and not an addition !
Your calculation, on the other hand shows a saving but since you dealt with the non-variable
cost part (installation etc.), there could be objections to the way you arrived at the saving,
though the final answer is correct.
The correct calculation should be as follows:Employer wanted all tenderers to make an allowance within their Lump Sum Prices which he
can spend to buy a suitable material @ 1100/- per M2. Therefore what is that allowance, the
tenderers should have provided ?
It is 2017 m2 x 1100/=
correct quantity of 2017 m2)
2,218,700/-
(Tenderers should have provided for the
However the Employer did not spend this full amount. He only spent 2,017 x 810 =
1,633,770/- and therefore the Employer must have his saving of 2,218,700 1,633,770 =
584,930/-.
If the instructed finish was more expensive, then instead of a saving, the Employer would
have paid more and should pay the Contractors OH&P percentage on that addition.
Likewise, the Employer can now get the same percentage calculated on the saving which
would amount to a total saving of 584,930/- + 20% = 701,916/- , which is the same answer as
yours, and we did not mess around with any non-variable costs.
Though I used the above to explain how I arrived there, the more straight forward method is a
simple, single line calculation as follows:Saving = 2017 x {(1100 810)+20%}
701,916/-
Regards,
Prof. Sam.

Regards
Lalani.c.Dodangoda
Sr Project Quantity Surveyor
From:
Satvir
Singh
Add
to
Conta
cts
Sent: Wed, Jun 22, 2011 at 9:35 am
To:
Dr. Sam
Dear Sir,
I've attended the Sound Contracts Administration programme conducted by you during June2011 session.
I'll be very thankful to you for your kind clarification of the following: Contract is Lump Sum & based on FIDIC 1987 4th Edition, prior to commence with the
Construction work the Engineers had obtain the approval on Tender Design from the Local
Authorities. During the Construction Period the Contractor received additional Comments
from various Local Authorities on the submitted Shop Drawings based on Tender Design.
1. Is this will constitute Variation to the Contract Value. If the comment of the Authority
requires any design aspects to be changed (such as increasing the diameter of a pipe from its
previously designed diameter) then it amounts to a variation. It should immediately be
brought to the Engineers attention requesting him to issue a revised design or an instruction
to change the original design.
2. In case yes, then as per FIDIC 1987 4th Edition Clause 70.2 stated that the Contractor shall
be entitle for Cost plus OH only. How we can define the OH. In normal variation Contractor
OH&P is at 12%. Since it is a variation, it would be valued under Clause 52 (not under 70.2)
with OH and Profit. (If your question is related to a different claim under 70.2 then you need
to produce head office audited accounts to prove what your head office overheads are)
3. Contractor also submitted the EoT along with the Prolongation Cost. Is that Contractor is
entitle for EoT and Prolongation Cost. (EOT, Prolongation Costs and Profit too because the
delay was due to a variation as discussed during SCA session 2) As per UAE Civil Law I
presume that EoT will not attract any Cost in this issue. It will be treated as neutral event, It is
not a neutral event. It is a variation for which the Employer is responsible.
Please comment, in case of yes then how we can prove to the Contractor. Your request is not
clear. However, to prove you present facts, law, liability and quantum as discussed during
SCA Session 4.
Regards,
Prof. Sam.


Warm Regards,
Satvir Singh
----- Original Message ----From: "ABRAHAM VARGHESE (alexmon)"
To: sam99@eim.ae
Date: Tue, 17 May 2011 09:50:43 +0400
Subject: UAE civil code
sir,
iam a student of advanced contract administration course . i would be grateful if you can
provide pDF copy of the civil code.
the version i have seems to be considerably different from the version used by you
I don't have the full copy. I have only few articles. You can photocopy it at Dubai Chamber of
Commerce and Industry Library. I am also searching for a word file or PDF for the
preparation of Master Class. If anyone has a copy I shall be grateful for a copy.
Regards,
Prof. Sam.

regards
abraham varghese
From: Terrence Drummond [mailto:Terry_drummond@chinaconstruction.ae]
Sent: Sunday, May 08, 2011 2:47 PM
To: sam99@eim.ae
Dear Professor Sam
Thank you for your tireless effort to help us and we appreciate all you are doing.
I work on a project in Dubai. An office block of 62 levels. Contract is FIDIC 1987 with 1992
amendments but no particular conditions.
All interim claims are subject to a minimum claim value of AED 10million.
No EOT has been granted yet but we have submitted a number of claims.
The Client has now issued a Stop Works Order for all the finishes from 30th floor and
above, as they want to issue a redesign of these floors into a Hotel. This redesign may
take 3 - 4 months! The structure is to continue as normal.
Our question is this:
It is highly likely that our claim will not go through (below AED 10million) due to the stop
works order and it is CSCEC that will suffer with cash flow which may be a major problem
especially payment to subcontractors and suppliers.
Is there any remedy for us as contractor in terms of easing our cash flow? We have thought of
a few things such as;
1. taking our balance of preliminaries for the project and dividing equally until the
completion date. This may help to get us to AED 10million as we are now being paid on a %
of work done basis.
2. We could request for the Client to do away with the minimum AED 10million criteria. This
will help us to put in a claim each month no matter what the value.
We would welcome any of your thoughts and advice.
This appears to be a suspension of progress of part of the Works, within the ambit of SubClause 40.1. Therefore you are entitled pursuant to Sub-Clause 40.2 to Extension of time,
Prolongation costs and any other costs that you may incur. Such costs can include financing
charges for borrowing money to fund your needs resulting from inability to invoice the
minimum monthly payment due to the suspension. When you submit the claim for the first
month including such costs, you will be in a position to negotiate with the Employer to delete
or lower the threshold in return for dropping or reducing your claims for such costs in the
following months.
Regards,
Prof. Sam.

Many Thanks
Kind Regards
Terence Drummond
Contracts Manager
From: VATTIKUTI SATYANARAYANA [mailto:vsnpurna@yahoo.co.in]

Sent: Sunday, May 08, 2011 10:55 AM
To: sam99@eim.ae
Subject: Not Foreseeably- Clrification
Daer Prof. Sam,
Please clarify the followingWe found that the bore hole details and soil strata for 5 Bridges on a project have been mismatched with the levels and type of soils when compared with reports available with the
design report. The Contractor has noticed the above variation during the excavation for
foundation of first bridge and conducted Boreholes and detailed investigation for the rest of
the bridges. The Employer decided to revise the foundation design for all the five bridges.
Could you please explain whether we can consider the above as "Not foreseeable physical
condition". Yes it is a physical condition not foreseeable by the Contractor. I appreciate if
you explain with reference to the Clause 11.1(a) "Inspection of Site". Please note that there is
no instruction by the Engineer to go for exploratory bore as per clause 18.1. In fact the
Engineer is not in favour of issuing a variation saying that it is the Contractors responsibility
under clause 11.1 The words within parenthesis in Sub-Clause 11.1 makes it clear that the
Contractor during the tender stage is not required to undertake any borehole drilling to verify
the subsoil conditions. If due to the mix up, the design was incorrect, then a revised design
would result in variations to the work. Employer should honour the Contractors claims in
this regard, and may have a remedy to recover from the consultant who made the error.
Regards,
Prof. Sam.

With Regards
V.Satyanarayana
From: Terrence Drummond [mailto:Terry_drummond@chinaconstruction.ae]
Sent: Monday, May 09, 2011 10:51 AM
To: sam99@eim.ae
Dear Professor Sam
I trust you are well and thank you for the advice on the contract.
The Contract is FIDIC 1987 with 1992 amendments but no particular conditions. It is a lump
sum contract.
The question surrounds the Engineers instructions.

FIDIC clauses 2.5, 7.1 and 52 deals with Engineers instructions. I believe (correct me if I am
wrong) instructions can only come from the following sources:
* issue of construction drawings.
* Written Engineers Instruction (proper E.I.)
* letter stating that he instructs the contractor to do something.
* reply to a CVI (i.e. verbal instruction)
The Engineer on our project is saying that instructions can also come from the following and
that we should immediately carry this work out.
* his comments / reply on our submitted shop drawings
* his comments on RFI's
* his comments on any other document that he replies to. (other than what is mentioned
above)
Since even verbal orders (telephone calls etc) too constitute instructions, any written
directions including comments too would constitute instructions. However, if such comments
are likely to introduce changes (omissions, additions, modifications), then the Contractor
should immediately write back to the Engineer stating that in the opinion of the Contractor,
they amount to variations for which the Contractor reserves its rights for additional payment,
EOT and costs, and would proceed with the variation unless instructions to the contrary are
issued immediately.
Regards,
Prof. Sam.

Thank you in advance.

Kind Regards
Terence Drummond
Contracts Manager

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Comments are given in red fonts below:From: Alex Peter [mailto:alexpeteralex@yahoo.

in both cases the interest is in addition to the Contractors right to

suspend/decelerate/terminate for late payment.

Arbitrator / Mediator - London Court of International Arbitration

-----Original Message----From: Ajay Kumar Thakur [mailto:athakur@altayerstocks.com]

I need your thoughts on this sir. Thanks.

Arbitrator / Mediator - London Court of International Arbitration

From: Bovis Wijesooriya Thakshila [mailto:bovis_thakshila.w@rta.ae]

Arbitrator / Mediator - London Court of International Arbitration

From: Darren Burke [mailto:dburke@alec.ae]

The example Concrete framed building example referred to,

The Main Contractor had previously submitted the Revised Baseline

If both parties have difficulty agreeing the Revised Baseline following

If it is now considered that Time is at Large does the Employer now

Is there a comparsions document (spreadsheet format) comparing like for

Arbitrator / Mediator - London Court of International Arbitration

Kind regards again.

From: Joseph Ligin

Arbitrator / Mediator - London Court of International Arbitration

Await your valuable comments

Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Mediator - London Court of International Arbitration

----- Original Message ----From: Maria Victoria

Arbitrator / Mediator - London Court of International Arbitration

Appreciate your time in answering this question.

Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Mediator - London Court of International Arbitration

From: NIKHIL [mailto:y2n@rediffmail.com]

rates is multiplied with the quantities of the Issued for Construction

Prof. Indrawansa Samaratunga PhD, DSc

Arbitrator / Mediator - London Court of International Arbitration

2017 x (810 + 20%) = 1,960,524/2017 x (1380 1100) = 564,760/= 2,525,284/1087 x 1380

Therefore Net Additions

2017 x (810 + 20%)

Therefore Net Omissions

Immediately it is apparent that the Contractors calculation is incorrect, because it is a Lump

(Tenderers should have provided for the

Arbitrator / Mediator - London Court of International Arbitration

Sent: Wed, Jun 22, 2011 at 9:35 am

Prof. Indrawansa Samaratunga PhD, DSc

Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Mediator - London Court of International Arbitration

From: VATTIKUTI SATYANARAYANA [mailto:vsnpurna@yahoo.co.in]

Arbitrator / Mediator - London Court of International Arbitration

The question surrounds the Engineers instructions.

Arbitrator / Mediator - London Court of International Arbitration

Thank you in advance.

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