CONTRACTUAL RISKS

Cl.1.9 Drawings
Cl.2.1 Site
Cl.4.7 Setting Out
Cl.4.12 Unforeseeable
Cl.4.24 Fossils
Cl.7.4 Testing
Cl.8.4 EoT
Cl.8.4 Adverse Climatic Conditions
Cl.13.7 Legislation
Cl.13.8 Changes in Cost
Cl.14.8 Delayed payments
Cl.19.4 Force Majeure
 Project Control Issues
Cl.1.9 Delay to details
Cl.2.4 Finance Details
Cl.2.5 Employers Claims
Cl.3.3 Instructions by Engineer
Cl.4.1 Method Statement
Cl.4.21 Reporting
Cl.8.3 Programme
Cl.12.1 Measurement
Cl.13 Variations & Value Engineering
Cl.14 Payments
Planning
Funding & Budget
Disbursement approval
Cl.18 Insurances
Cl.20 Contractors Claims / Records
 THE FIRST 100 DAYS

Pre Award Check List

General
Document negotiated changes

Prioritise and sign changes Cl 1.5

Agree terms of insurances Cl 18.2

Agree DAB membership

Confirm communication and addresses Cl 1.3

Engineers Duties & Authority

Employer names Engineer

Employers constraints on Engineers Authority Cl 3.1

Delegation of Engineers Authority to Resident Engineer Cl 3.2

Engineers Determination Cl 3.5

Employers Risks
Right of Access - Cl 2.1

Provision of Specifications Cl 1.8

Supply of Drawings Cl 1.9

 Award to Commencement Date
General
Formal Letter of Acceptance signed Cl 1.1.1.3

Contract Agreement - Cl 1.1.1.2, 1.6

Date on which the Contract becomes legally binding

Instruction of Commencement Date Engineer Cl 8.1 7 days notice

Time for Completion Cl 1.1.3.3

Contractors obligations
Performance Security Cl 4.2

Consent for sub-contractors

Commencement of sub-contract wks

Compliance with applicable laws, etc prior to Commencement

Employers obligations
Obtaining planning, zoning etc permits for the Permanent Works Cl 1.13

Ensuring that the Contractor will have right of access to and possession of all parts of the
Site
 Commencement Date to + 28
Employers Actions
Right of access & possession Cl 2.1

Ensuring Employers personnel are aware of responsibilities Cl 2.3

Preparing evidence of Employers financial arrangements Cl 2.4

Provision of copies of the Contract and Drawings Cl 1.8 & 1.9

Engineers Responsibilities
Advising Contractor of Engineers Authority and Delegations Cl 3.2

Ensuring assistants are suitably qualified

Providing reference survey points, lines and necessary data Cl 4.7

Contractors Responsibilities
General obligations adequacy, stability & safety Cl 4.1

Provide Performance Security prior to access to Site Cl 4.2

Submit name of Contractors Representative for consent Cl 4.3

Give notice of any delegation of CRs responsibilities

Obtain consent for sub-contractors not named in Contract Cl 4.4

Give notice of commencement of sub-contract work

Provide details of suppliers not named in Contract (see Cl 4.16)

Make objections to any Nominated Sub-contractors who the Contractor does not wish to
employ

Submit detailed time programme within 28 days of receipt of the notice to commence Cl
8.3

Give notice of probable future events or circumstances which may increase price or delay
completion

Confirm working hours Cl 6.5

Site health & safety facilities Cl 6.7

Appoint Accident Prevention Officer

 RESPONSIBILITIES
Employer
Cl.2

Provides Access to the Site

(not access & other areas Cl.14.15 & 14.23)

Assists Contractor with Permits

Financial Arrangements

See Variations & Cl.16.1 Suspension (strike out??)

Notice of Claims

Appoints the Engineer Cl.3.1

Cl.14.7 make Payments !!

Cl.20.2 appointment of DAB members

Engineer
Exercises stated authority

Employers Approval Particular Conditions

When he exercises specific authority deemed to have Employers approval

Acts for Employer

Cl.3.5 Fair Determination

Cl.3

Employer undertakes not to impose further constraints (Breach of Contract)

No authority to amend contract

Acts for Employer

No authority to relieve the parties of duties or obligations etc.

Cl.3

Delegation except Cl.3.5

Instructions in writing

Oral confirmation by contractor written

 Employer instructions to Engineer

Determination

Consult agreement fair determination

Give notice

Give effect unless Cl.20

Cl.4.1 Method Statements

Cl.8.1 Give Commencement Notice

Cl.8.6 Rate of Progress

Cl.12.1 Measurement

Cl.13.1 Variations

Cl.14.6 Interim Payment Certificates

Cl.20.1 Records / Determination

Contractor
Cl.4

Execute & Complete the Works

Cl.8.1 due expedition & without delay

Adequacy & safety

Method Statement

Fit for purpose

Performance Bond

Engineers Approval of Representative

May delegate

Fluent in language

Sub Contractor approval

Setting Out to lines & levels of Engineer

Quality Assurance

Details in Specification
 Procedures

Compliance documents

Site data

Costs included

Risk

Inspections

All relevant data obligation

Care in Tender failure to provide

Sufficiency of Contract Amount

Unforeseeable Physical Conditions

Excludes climatic conditions

Cl.8.4 & 17.3h

Extension of time

Payment of cost

(see Cl.1.1.4.3 includes off site)

No profit

(as a general rule not included where risk is not the fault of either party)

Transport to site

Protection of the Environment

Emissions

Surface discharges

Effluent

Local Law

Progress Report

Monthly 6 copies

See also (Cl.4.9 procedures) and:

Cl. 6.7 Accident Records

 Cl. 6.10 Personnel

Cl.14.3 Application for payment

Cl.20.1 Contemporary records

Progress Report:

Charts

Photographs

Manufacturing report

Personnel

QA documents

Claims Cl.2.5 & 20.1

Safety statistics

Progress

Security

Staff & Labour

Facilities / Health & Safety

Tests on Completion Cl.9.1

Value Engineering Cl.13.3

Application for Payment Cl.14.3

Contemporary records Cl.20.1

Nominated Subcontractors

Clause 5

Applies to Subcontractors and suppliers nominated by Employer or as instructed by the

Engineer under Cl.13

Payment Cl.5.3

Grounds to object Cl.5.2

Reasonable Objection

Supporting details

Lack of competence, recourses, financial strength

 Lack of indemnity

Lack of obligations and liability

Staff & Labour

Clause 6

Engagement of Staff & Labour

Payment, housing feeding & transport

Cl.8.4d & 13.7

Rates of pay & conditions

NO Poaching !! (Cl.6.3

Labour Laws (including immigration)

Working Hours (days of rest)

Facilities (including Employers Personnel)

Health & Safety

Medical staff & facilities

Accident prevention officer

Records

Cl.4.3 Contractors Representative

Cl.6.8 Superintendence (Language)

Personnel qualified, skilled, experienced

Records monthly (cl.4.9 procedures

Plant Materials & Workmanship

Cl.7

Execution of works as specified

Recognised good practice

Proper facilities

Non hazardous materials

Samples
 For consent

Labelled origin / intended use

Inspection:

Access to locations of natural materials

Place of manufacture

Provide access, facilities, permissions, safety equipment

Give notice and provide opportunity

Testing may proceed after notice

Delay claim

Test Reports & Certificates

Rejection Retest costs Cl.2.5

Remedial works

Ownership of Plant & Materials

Local law

When delivered

When contractor entitled to payment under Cl.8.10 (suspension)

Royalties
 COMMENCEMENT DELAYS & SUSPENSION
Contract becomes effective when Letter of Acceptance has been received by Contractor

Cl.8.1 Commencement Date

Engineer SHALL

Contractor SHALL

Engineer determines the date or 42 days after the LA

COMPLETION
Cl.8.2 Fundamental obligation to complete within Time for Completion

Includes all of Works

Includes all tests

See Cl.10.1

PROGRAMME
Programme of Works Cl.8.3

Within 28 days

Specific requirements of programme

Methods of execution

Details of personnel & equipment

Engineer does not approve (21 days)

Employer may rely on programme

Specific, Probable, Future events

Revisions to programme

Monthly progress charts

Engineer may request a revised programme

Extension of Time
Contractor SHALL be entitled

Not dependant upon further decision

 If no extension then time at large

Variation

Sub Clause giving delay

Exceptionally adverse climatic conditions

Unforeseeable shortages personnel & goods

Employers delay

Cl.20.1

Cl.3.5 Engineers Determination

Cl.20.1 & 3.5 give time limits to Engineer to Determine or Cl.13 shall not be unreasonably
withheld or delayed

Delays by authorities

Rate of Progress
Engineer may instruct submission of revised programme

Contractor to proceed with due expedition and without delay

Delay Damages

Failure to complete by due date

Delay damages

Limit of damages

Suspension Engineer may instruct

Tests on Completion
Cl.9

Contractor shall give 21 days notice

Tests carried out within 14 days of notice

Certified report

Delayed tests

Employer Cl.7.4 or 10.3 apply

Contractor to complete 21 days after notice

 Failure

Retest

Cl.11.4

Taking Over Responsibilities

Responsibilities under Financing Agreement

Proper use of funds

Proper management of construction

Final payment

Responsibilities under the Contract:

Before Taking Over

After Taking Over

Before Taking Over:

Take over on Completion

Tests on Completion

Contractors request for TO Certificate

Cl.10.1 The Employer SHALL take over when:

Works completed

Tests completed

TO certificate issued

Employers Taking Over

Cl.10

TO Certificate issued when works completed and ready for intended purpose

Minor outstanding work may be completed after issue of TOC

Contractor may apply for TOC within 14 days of Works being complete

Sectional Completion

Engineer may

Issue TOC Reject application giving reasons

 Failure of Engineer to issue TOC or reject

Within 28 days

TOC deemed to be issued

Sectional Taking Over

Tests

Cost due to STO

Delay Damages reduced after STO Certificate issued

Reduction in ratio of value of STO Works

No difference to maximum damages

Reinstatement of ground or surface

Taking Over Certificate

Appendix listing all minor defects

Listing all works yet to be carried out

Contractor responsible to carry out repairs before end of Defects Notification Period

Defects Liability
Cl.11

Provides procedures and responsibilities under the Defects Notification Period

Works are accepted by Engineer on the issuance of Performance Certificate

Works & Documents completed

Fair wear & tear accepted

Complete all o/s work in TOC

Remedy defects & damage notified by the end of the DNP

Remedy works at Contractors cost

Extension to DNP

Max 2 years, or

Suspension Cl.8.8 or 16.1

Failure to Remedy
 Reasonable notice

Carry out work himself or by others

Contractor has no responsibility

Reduction in Contract Price

Recover all sums paid & costs

Removal

Further Tests

Right of access

Contractor to search

Performance Certificate
Performance Certificate

Contractors obligations complete

Engineer to issue

Date

Issue within 28 days of DNP expiry

After submission of all documentation

All tests complete

All remedying works complete

Constitutes Acceptance of Works

Liability for fulfilment of obligations

Removal of equipment, rubbish etc

Contractor may be liable for latent defects

Measurement, Evaluation & Variations

Measurement by Engineer

Standard method of measurement as specified in schedules

Cl.12.3 Basis of evaluation

Rates in contract will apply

 New rates may be determined

Qty changed more than 25%

Variation

Not specified

No appropriate rate

Reasonable Cost & Profit

Cl.12.4 Compensation

Cl.13.3 Determinations

Means of measurement may be necessary

Payment schedule linked to milestones Cl.14.4

Variations
Cl.13.1 Engineer has the right to vary

Prior to issue of TO certificate

List of variation inclusions

Value Engineering Cl.13.2

Development risk with Contractor

Savings 50/50

Variation Procedure

Engineer requests proposal from Contractor

Contractor responds with:

Description

Programme

Evaluation

Work proceeds without delay

Variation due to Legislation

Local law at Base Date

Cl.20.1 claim
 Extension of time

Payment of cost

Contract Price & Payment

Considerations:

Payment schedules

Disbursement approval

Particular Conditions

Budgeting

Funding availability

Additional Costs / Variations

Advance payment

Design

Mobilisation

Funding facilitation

Interim payments

56 days

Final Payment

84 days

Aid funding requires:

Authority approval

Timing

Variations

Routine audit checks

Time to transfer funds

Advance notice of change

Cl.14 requires prompt action within time constraints

Finance costs will lead to claims

 Alter Cl.14 by Particular Conditions to suit funding authority

Financial planning:

Check estimates & budgets

Prepare draft payment schedules

Update estimates & programme

Check funding

Cl.14.4 estimates each 90 days

Budget Forecast
Engineer prepares for Employer

Regular intervals

Updated budget

Report of changes

Data for report:

Cl.2.4, 2.5, 3.5, 4.21, 8.3, 13.1, 13.3, 14.3, 13.8, 14.3, 14.6, 20.1, 20.4

Advance Payment
Cl.14.2 Advance payment

Interest free loan for mobilisation

Guarantee

Application Cl.14.3

Performance Security approved by Employer

Repayment

Commence after when certificates >10%

Deductions 25% of each Certificate

Interim Payment
Cl.14.3 Application

6 copies

In a form approved (Cl.4.9)

 Cl.4.21

List of items (a) (g)

Note : Cl.20 items included

Cl.14.4 Schedule of payments:

Payment dates not recommended

Engineer determination Cl.3.5

Cross guarantees

Milestones preferred

Cl.14.6 Issue of IPC

Engineer determines FAIRLY

IPC SHALL not be withheld

Cl.14.7 Payment

IPC paid within 56 days after Engineer receives Statement

Cl.14.8 Interest on late payments

Non Payment
Cl.16.1 Suspension

Engineer fails to certify

Employer does not provide Cl.2.4 details

Non payment

21 days notice

Cl.16.2 Termination

Guarantees & Bonds

Cl.4.2 Performance Security

Contractor finance

Guarantee by Employer

No Cl.8.1 notice before Guarantee

Cl.14.2 Advance Payment Guarantee

 Risk & Responsibility
Cl.17.1 Basis for Indemnity

Cl.17.2 Full responsibility for Works & Goods until TO Certificate

Cl.17.3 Employers Risks

Cl.17.4 Compensation & Claims

Insurance
Cl.18

Employer to approve insurers

Agreed terms

Currency

Payments to be used to rectify loss

Cl.18.3 Appendix minimum amount

Force Majeure
Basic Principles:

Exceptional event

Not reasonably provided against

Not reasonable to overcome / avoid

Not attributable to either party

Beyond control of affected party

Cl.19.1 Definitions

(i) (iv) man made

Cl.19.4 Consequences

EoT

Man made cost

Man made in country cost

Cl.19.6 Termination
 CAUSES OF CLAIMS FOR CONTRACTORS
Unforeseeable ground conditions

Delayed drawings

Delayed payment

Lack of possession of site

Consequence of risk

Suspension

Force Majeure

CONTRACTORS CLAIM PROCEDURE

Clause 20.1

o Sets out Contractor procedure

o Condition Precedent

o Not later than 28 days

o Sets out Engineer procedure

o Contractor gives notice

o Within 28 days

o Contractor keeps contemporary records

o Engineer may monitor

o Engineer may instruct further records

o Fully detailed claim

o Supporting documents

o Within 42 days of event

Cl.20.1 continuing procedure

After 42 days:

o Claim submission is considered interim

o Further monthly claims

o Final claim with 28 days of end of effects

 Engineers Response:

o Within 42 days of receiving claim

o Approval / Disapproval

o Detailed comments

May ask for further details

Proceed with Cl.3.5

May certify interim sums

CAUSES OF CLAIMS FOR EMPLOYERS

Quality below Specification

Delay in Completion Date

Slow Rate of Progress

Defective Materials

Failures of Tests

EMPLOYERS CLAIM PROCEDURE

Employer gives notice

o As soon as practicable

Contractor Receives Notice

o No obligation to respond

Engineer proceeds with Cl.3.5

Contractor can dispute if dissatisfied

Engineers determination applied to Certificate of Payment

CONTEMPORARY RECORDS
Crucial for determination of claim

Records for any future dispute

Contractor obliged to keep records

Procedure for this work

Employer & Engineer to agree Engineers actions

 CLAUSE 3.5 DETERMINATIONS
Engineer makes a Determination

Makes his own evaluation

Shall NOT delegate Cl.3.5 authority

Engineer shall consult both Parties

Try to reach agreement

Give notice with supporting particulars

Where no agreement then Engineer makes a FAIR determination

DISSATISFACTION WITH Cl.3.5 DETERMINATION

Dispute : Refer to Dispute Adjudication Board

No definition of Dispute

o Rejection of Determination

o No agreement with continued discussion

o One party declines to discuss

o No progress in protracted discussion

Subsequent procedure - Clause 20.4