My comments are given below:-

From: Asanga Ratnayaka (Highgate Snr. Quantity Surveyor)

[mailto:asanga@highgate.ae]
Sent: Tuesday, May 10, 2011 8:59 AM
To: sam99@eim.ae
Subject: Short Form of Contract

Dear Prof. Sam,

How are you? Hope you are doing well.
Im having doubt on one of our project payment terms. Hope you can help me to find
best definition for that.
We are doing one ID project and COC is FIDIC Short form 1999 (Green Book)
In the Contract payment terms was amended by appendix (As below.
Please see the attachment for more info)

Item

Time for Payment by Employer following receipt of

Payment Certificate

Sub
Clouse

Date

11.3

30 days

1. Actually how many days Client can hold Contractors payment after we raised it?
29 days
2. Is there any provision in Short Form for Engineer to certify contractors payment
application? No. (Short Form is not meant to be used in contracts where there is an
Engineer involved. It is meant for very small projects to be dealt directly between the
Employer and Contractor.)
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

Thank you in advance for your helps.

Kind Regards,
Asanga Rathnayaka
Following Questions have been raised by participants during the SCA public
classes or during other CPD events:1. Can the Contractor get an Extension of Time if a delay event
occurs after the Originally Scheduled Date for Completion?
Answer:
Yes. EOT should be given retrospectively from the original Date for
Completion. However, the Contractor would be liable for penalties/LDs, for
the initial delay (i.e. for a number of days equivalent to the period from
the original Date for Completion up to the date when the Contractor was
scheduled to complete), if it is a delay for which the Contractor is
responsible. (See hand-out of SCA Session 2 Extension of Time and
Prolongation Costs, especially the slide on Waltham HC case and Lord
Dennings judgment).
2. How can the loss of contribution to Head Office Overheads be
calculated?
Answer:
By using a formula such as Hudson, Emden, Eichleay or Hank Laan if the
two parties agree to use it. Otherwise (and ideally) by collating the actual
total head office overheads costs of the company for the delay period
(from the Head Office books of accounts) i.e. except those that are not
admissible, and thereafter apportioning it to all the Contractors projects
in an equitable manner (ideally based on cost of resources excluding
material & Plant), thus arriving at the relevant allocation for the delayed
project, similar to the demonstration through the worked example at SCA
Session 6 Formulae for recovery of Head Office Overheads.
3. If, after the tenders have been received, the employer decides
not to proceed with the work, is there any possibility for the
Contractor to recover the costs associated with tendering?
Answer:
As discussed during SCA Session 7, an invitation to offer is not an
offer and therefore the submission of a Tender in response to the clients
invitation cannot be construed as an Acceptance forming a contract
under which the client can become liable for damages. Moreover, the
instructions to tenderers generally stipulate that the client is not obligated
to accept any tender (and/or that the Tenderers should bear their own

costs of tendering.)
4. Is a Contractor responsible for the defective design of a
nominated subcontractor?
Answer:
Yes, unless the Main Contractor expressly excluded such responsibility at
the time of entering into contract with the Employer. However, if a
nominated subcontractor submitted his design prior to the Contractor
entered into a subcontract with him, and there were clear
instructions/stipulations from the Employer/Engineer that the said design
should be the basis for such subcontract, then there is room to argue that
the design responsibility lies with the Employer.
5. What are the circumstances under which contractors are
entitled to be paid for materials stored away from site as part of
an interim payment or payment?
Answer:
(a) where the contract has express provisions for such payment, or
(b) where the contractor can demonstrate that he ordered the material in
a timely (not premature) manner and when they arrived on the
appropriate dates, the originally allocated places on the site for such
storage (or the places of work where they are to be installed) are not
available to him due to any culpability of the Employer or of others for
whom the Employer is responsible or due to events for which the
Employer has retained the risk under the Contract, thus necessitating the
materials to be stored off-site (If payment is not made for off-site storage,
the financing charges for late payments would become the subject of a
claim)
6. Where the Contractor submits a quotation for extra work which
quotation is accepted/approved by the Employer/Engineer, is the
accepted quotation deemed to include for any resultant delay
costs?
Answer:
Under FIDIC 1999, YES. Under FIDIC 1987, NO. Due to the many
differences between FIDIC1999 and FIDIC 1987 which are not so obvious
from the wording in FIDIC 1999, many disputes are likely to occur as most
contract administrators would inadvertently follow the FIDIC 1987 routines
when administrating FIDIC 1999 contracts as well. One purpose of the CAAC course was to educate the contract administrators on how to identify
those not so obvious differences, but due to the poor attendance in the
May 2011 class, there would not be any CA-AC class this year unless the
SCA Alumni request for one. Please email me if you need an advanced
class, to consider the viability of a class in August/September.
7. Due to an estimating error made by the Contractor if there is

an unrealistically low rate in the bills of quantities, can he be held

to that rate if the quantities substantially increase?
Answer:
Yes. If the Quantity increase is not due to a variation that is neither
necessary nor appropriate, then the rate is applicable despite being
unrealistically low. Refer to ALSTOM COMBINED CYCLES case referred to in
the hand-out of SCA Session 1 on Variations and Valuation of varied
work.
8. If some of the original scope of work is omitted by way of a
variation is the contractor entitled to loss of profit?
Answer:
If the omission is necessary or appropriate, then the answer is NO.
Otherwise such omission would amount to de-scoping giving a right to loss
of profit. De-scoping is dealt in detail together with suspension and
termination and the Contractors rights to loss of profit and other damages
(with reference to a UAE case and all the relevant provisions in the Civil
Code) in the CA-AC class.
9. If an extension of time is awarded, is there an automatic right
of the Contractor to the recovery of loss and expense?
Answer:
No. Entitlement to reimbursement of Loss and Expense should exist
separately as discussed during SCA Sessions 2 & 3 either under the other
provisions in the contract or in law (as damages for breach of contract).
10. Are claims for head office overheads based on Hudson or
Emden formulae accepted by courts or must the contractor show
an increase in expenditure on head office overheads due to the
delay/EOT?
Answer:
As discussed in detail during SCA Session 6, Hudson and Emden formulae
cannot be used with FIDIC contracts. Moreover, It is not an increase in
expenditure of head office overheads, that needs to be demonstrated but
an increase in the contribution from the delayed project towards the Head
Office overheads (which overheads may not have increased) that requires
evidence, such as the amounts charged to the site monthly by the Head
Office in a reasonable manner being more than what was reasonably
allowed within the Contract Price. Many of the SCA Alumni recently
collected the SLQS Journal No. 6 in which there is an article explaining this
subject in great detail. If you missed the opportunity to get a copy of this
journal, contact your colleagues in the Alumni to get a copy of the Article.