Claim Advice Note Rev 1 Issued PDF

Dar Al Hijra (Madina Haj City) Madina Phase 1
Packages 1 and 2
CSA-00167
Al Fouzan Trading and General Construction
Company
INITIAL REVIEW AND STRATEGY

DEVELOPMENT ADVICE NOTE
Name Designation Signature Date
Brian O’Connor Director

Prepared: Thiru Mohanades Associate Director
Peer Review: Tim Whealy Partner
STAGE 1 ADVICE NOTE
FOR AL FOUZAN TRADING & GENERAL CONSTRUCTION
Office 705 (B), Bin Homran Ctr. REF NO: 44357 REV 2
Al Tahlia Street, Jeddah
Kingdom of Saudi Arabia DATE: 19 APRIL 2018
CONTENTS
1 EXECUTIVE SUMMARY 5
INTRODUCTION 5
THE ISSUES 5
PREVIOUS CLAIMS AND AWARDS 5
HKA OBSERVATIONS 6
HKA’S FINDINGS - STRENGTHS 6
HKA’S FINDINGS - WEAKNESSES 7
STRATEGIC ADVICE – HKA RECOMMENDED STRATEGY 7
2 INTRODUCTION 9
HKA AGREEMENT AND DELIVERABLE 9
BACKGROUND 9
SCOPE OF WORK 9
3 REVIEW OF CONTRACT DOCUMENTS 10
GENERALLY 10
SCOPE OF WORK 10
GOVERNMENT TENDERS AND PROCUREMENT LAW 11
IMPLEMENTING REGULATIONS OF GTPL 13
ANALYSIS OF MAIN CONTRACT PARTICULARS 15
ANALYSIS OF KEY PROVISIONS OF SPECIAL CONDITIONS of CONTRACT 16
ANALYSIS OF KEY PROVISIONS OF GENERAL CONDITIONS of CONTRACT 17
4 THE CONTRACTOR’S PROGRAMMES AND PROGRESS 19
SHOP DRAWINGS 19
MATERIAL APPROVALS 19
CONSTRUCTION WORK PROGRESS 21
5 INITIAL IDENTIFICATION OF DELAY EVENTS 22
HKA’S HIGH LEVEL REVIEW SUMMARY 22
PAYMENT DELAYS 23
6 PACKAGE 1 - PROGRAMME & SCHEDULE ANALYSIS 27
INTRODUCTION 27
CONTRACTUAL PROVISIONS AND APPROVED PROGRAMMES 27
SUITABILITY OF THE BASELINE PROGRAMME FOR DELAY ANALYSIS 27
CRITICAL PATH 30
PROGRESS UPDATES 31
CRITICAL PATH DRIVING ACTIVITIES 32
OTHER DETAILS OF BASELINE PROGRAMME UPDATES 33
SELECTION OF THE DELAY ANALYSIS METHODOLOGY 34
SUMMARY AND RECOMMENDATIONS 35
7 PACKAGE 2 - PROGRAMME & SCHEDULE ANALYSIS 37
CONTRACTUAL PROVISIONS AND APPROVED PROGRAMMES 37
SUITABILITY OF THE BASELINE PROGRAMME FOR THE DELAY ANALYSIS 37
CRITICAL PATH 39
PROGRESS UPDATES 39
CRITICAL PATH DRIVING ACTIVITIES 40
OTHER DETAILS OF THE BASELINE PROGRAMME UPDATES 41
SELECTION OF THE DELAY ANALYSIS METHODOLOGY 43
SUMMARY & RECOMMENDATIONS 43
8 ADDITIONAL COST AND / OR LOSSES 45
INTRODUCTION 45
FINANCIAL RECORDS NECESSARY TO COST PROLONGATION 45
FINANCIAL AND OTHER RECORDS NECESSARY TO COST DISRUPTION 45
HKA’S REVIEW OF PAYMENTS RECEIVED FROM THE EMPLOYER 45
CONTRACTUAL ENTITLEMENT 45
CONCLUSION 46
9 APPENDICES 47
SCHEDULE OF APPENDICES 47
LIST OF TABLES
Table 1: Summary of Package 1 EOT Claims ............................................................................................... 6
Table 2: Summary of Package 2 EOT Claims ............................................................................................... 6
Table 3: Package 1 Contract Details .......................................................................................................... 10
Table 4: Package 2 Contract Details .......................................................................................................... 11
Table 5: Relevant GTPL Chapters Descriptions and Article References...................................................... 12
Table 6: IR Chapter Descriptions and Article References............................................................................ 14
Table 7: Contents and Articles of Main Contract Document ........................................................................ 15
Table 8: Package 1 Shop Drawings Status ................................................................................................. 19
Table 9: Package 2 Shop Drawing Status................................................................................................... 19
Table 10: Package 1 Material Long Lead Approvals ................................................................................... 20
Table 11: Package 1 Material Short Lead Approvals................................................................................... 20
Table 12: Package 2 – Material Approval Status......................................................................................... 20
Table 13: Initial Identification of Package 1 Delay Events ........................................................................... 22
Table 14: Initial Identification of Package 2 Delay Events ........................................................................... 22
Table 15: Table showing late payments and overdue durations on Phase 1 – Package 1 ........................... 25
Table 16: Table showing late payments and overdue durations on Phase 1 – Package 2 ........................... 26
Table 17: Relationships used in the baseline programme. .......................................................................... 30
Table 18: Programme updates based on the baseline programme.............................................................. 31
Table 19: Relationships used in the baseline programme. .......................................................................... 38
Table 20: Programme updates based on the baseline programme.............................................................. 40
AL FOUZAN
STAGE I REPORT
HKA STRATEGY REPORT DATED 19.04.18 PAGE 3 OF 47
PAGE 3 OF 46
LIST OF FIGURES
Figure 1: Pie chart showing ratio of on-time to late payment of IPCs – Phase 1 2016.................................. 23
Figure 5: Summary level WBS of the baseline programme Activities and Milestones .................................. 29
Figure 6: Critical path of baseline programme............................................................................................. 30
Figure 7: Driving activities of the critical path of the programme updates. ................................................... 32
Figure 8: Inconsistencies in the Duration % Complete of programme update. ............................................. 33
Figure 9: Increase in remaining duration of the activities. ............................................................................ 34
Figure 10: Summary level WBS of the baseline programme. ...................................................................... 38
Figure 11: Critical path of baseline programme........................................................................................... 39
Figure 12: Driving activities of the critical path of the programme updates................................................... 41
Figure 13: Activities without successors in programme update with data date of 25 May 2015. ................... 42
Figure 14: Inconsistencies in the Duration % Complete of programme update. ........................................... 43
LIST OF ABBREVIATIONS
Contractor Al Fouzan Trading & General Construction Company Limited
Employer Public Investment Fund / Saudi Company for Real Estate Development
EOT Extension of Time
GCC General Conditions of Contract
GTPL Government Tenders and Procurement Law
IPA Interim Payment Application
IPC Interim Payment Certificate
IR Implementing Regulations
PIF Public Investment Fund
Project Dar Al Hijra (Madina Haj City) Madina Phase 1, Packages 1 and 2
PWC Public Works Contract, Kingdom of Saudia Arabia
SCC Special Conditions of Contract
AL FOUZAN
STAGE I REPORT
PAGE 4 OF 46
1 EXECUTIVE SUMMARY
INTRODUCTION
1.1 This advice note sets out HKA’s advice with respect to the Extension of Time (“EOT”) Claims already
submitted by Al Fouzan Trading & General Construction Company (“the Contractor”) and its potential
additional Cost claims for prolongation and disruption in connection with the Packages 1 and 2 of
Phase 1 of the Dar Al Hijra (Madina Haj City) project in Madina, Saudia Arabia (“the Project”). In
addition, HKA has made recommendations about the potential options available to the Contractor
going forward.
1.2 This report also contains an analysis of what HKA considers to be the principal strengths and
weaknesses of the Contractor’s position with Saudi Company for Real Estate Development
(“Employer”).
THE ISSUES
1.3 In summary, HKA understands that the genesis of the problems encountered on the Project can be
summarised as follows:
(a) The extensive delays in receipt of payment from the Employer;
(b) The impact of variations instructed by the Employer and/or its team;
(c) The impact of additional work undertaken by the Contractor but for which it has not
received a formal instruction.
1.4 In addition, HKA also understands that the Engineer has de-scoped large amounts of work from
Packages 1 and 2, on terms that are unfavourable to the Contractor. HKA understands that the
Contractor has assessed current Package 1 de-scoping works1 in the amount of SAR
303,075,394.502 and also SAR 144,670,218.353 and Package 2 de-scoping works4 in the amount of
SAR 220,310,223.00.5
1.5 The Engineer has challenged some of these valuations on the basis that the Contractor has over-
valued work in progress, has not got material approval for certain claimed materials, etc. and has
written numerous letters6 regarding the de-scoping works.
1.6 To complicate matters further, HKA understands that further large scale de-scoping is also being
considered by the Employer and possibly even the cancellation of the remainder of the Contract.
1.7 HKA notes that the GTPL prohibits de-scoping of more than 20% of the Contract Sum and the
Employer will be well aware of this and this will therefore be an important consideration in the
Contractor’s strategy going forward.
PREVIOUS CLAIMS AND AWARDS

1.8 Prior to the date of this Advice Note, the Contractor has submitted three EOT claims for Package 17
and two EOT claims for Package 28. These claims can be summarised as follows:
1
For multiple items scheduled by Al Fouzan.
2
Refer to Al Fouzan letter ref. no: S14006-P1P1-FTCO-DAR-LET-1047 dated 26 November 2017.
3
Refer to Al Fouzan letter ref. no’s: S14006-P1P1-FTCO-DAR-LET-1122 dated 22.02.18, 1128 dated 26.02.18 and in particular LET-
1133 dated 13.03.18 for: Thermal Energy Tanks, Chillers, Medium Voltage Cables and High Voltage Cable Ladders.
4
Metals, Wood & Plastics, Finishes, Furnishings, Specialities and Exterior Improvement Works, Earthwork and Roadworks.
5
Refer to Al Fouzan letter ref. no: S14006-P1P2-FTCO-DAR-LET-643 21.1.17 dated and LET-694 dated 27.02.18.
6
Refer to DAH letters ref. no’s: S14006-P1P1-DAR-FTCO-LET-1699, 1703, 1850, 1854, 1855, 1857 and 1859. S14006-P1P2-DAR-
FTCO-LET- 1253, 1256, 1257, 1258, 1259, 1260, 1261, 1262 and 1266.
7
P1 EOT 1 was based on delay events 1 to 9 and 14 (late payment) as indicated in Table 13 of this report, EOT 2 was based on
additional delay events 10 to 13 and EOT 3 was based further effects of delay in payments
8
P2 EOT 1 was based on delay events 1 to 4 as indicated in Table 14 of this report, EOT 2 was based on the remaining delay events.
AL FOUZAN
STAGE I REPORT
PAGE 5 OF 46
Claim Revised Completion
Date EOT Claimed EOT Awarded
Ref Date Claimed
1 1 May 2016 632 26 April 2018 2319
2 29 January 2017 461 25 June 2018 Nil
3 28 August 2017 673 23 January 2019 Nil
Table 1: Summary of Package 1 EOT Claims
1.9 HKA notes that the February 2018 Progress Report projects a 28 August 2018 completion date.
Claim Revised Completion
Date EOT Claimed EOT Awarded
Ref Date Claimed
1 16 October 2016 591 23 July 2018 Nil
2 10 September 2017 806 24 February 2019 Nil
Table 2: Summary of Package 2 EOT Claims
1.10 HKA is not aware of any further update on the current projected completion date for Package 2.
1.11 HKA notes that the Contractor has not submitted any cost claim(s) to the Engineer or the Employer
associated with the EOT claims that have been made. HKA also notes that the Contractor has not
submitted any claim(s) to the Engineer or the Employer for the recovery of additional cost arising
from Employer generated disruption and loss of productivity.
HKA OBSERVATIONS
1.12 Although the Contractor has referred to the relevant correspondences in relation to the EOTs
submitted, HKA notes that the submissions lack the following elements of a comprehensive and
properly particularised claim:
 Reference to relevant contract clauses and explanation of the contractual basis on which the
EOT claim is made;
 Detailed narratives to explain the delay events on which the EOT claims rely;
 Explanation of the delay analysis methodology employed and why it was considered suitable
for the Project; and
 Detailed explanation of the delay analysis.
1.13 While the Contractor’s baseline programme of works is suitable for delay analysis, there remains a
number of rectification works10 to be carried out that are necessary to the baseline and the
programme updates to ensure that the true critical path is reflected. This work will need to be
attended to prior to any delay analysis work can be commenced.
HKA’S FINDINGS - STRENGTHS

1.14 HKA considers the Contractor’s strengths to be as follows:
 The Employer has instructed significant change to the Contract and this generally appears to
be well recorded in the Contractor’s notifications, correspondence, and EOT claims;
 The Employer has already awarded the contractor an EOT of 231 days in respect of the
contractor’s first EOT claim and thus, accepts that there have been significant changes
made to the Contract. Whilst this is significantly short of what the Contractor has requested,
it has been issued before the works have been handed-over to the Employer, which is
significant and it is also contrary to Article 152 (2) of the IR.
 It is noted that the express terms of contract state that the Contractor shall be paid
9
Refer to DAH letter ref. no’s: S14006-P1P1-DA-FTCO-LET-1102 dated 12 October 2016 and in particular 1125 dated 24 October 2016
which awards EOT of 231 days shifting the project completion date to 21 March 2017.
10
Refer to Section 6 of this report for further details.
AL FOUZAN
STAGE I REPORT
PAGE 6 OF 46
periodically (monthly) and imply that the monthly date for payment of the Contractor’s
11
approved invoices can only realistically run from the date of the Engineer’s certificate. It is
HKA’s opinion that if this is not the case that the Contract is potentially unworkable, as the
clear intent of the Parties is that monthly IPA’s are made by the Contractor, monthly IPC’s
12
are issued by the Engineer and that at the least, monthly payments are made by the
13 14
Employer.
 The Employer has failed to pay the Contractor 15 payment instalments on Package 1 and 16
instalments on Package 2, thereby depriving the Contractor of crucial funds totalling in
excess of SAR 1Bn. This lack of payment is clearly unsustainable and can potentially be
argued to contrary Article 39 of the GTPL, Article 6 of the Main Contract Document and
Article 47 of the SCC (which supersedes and slightly modifies Article 50 (b) of GCC).
HKA’S FINDINGS - WEAKNESSES

1.15 Based on legal advice HKA has seen on other contracts which are subject to the GTPL, the
Contractor is not entitled to stop or slow the works in the event of non-payment by the Employer.
1.16 The Contractor’s contemporaneous records that have been made available to HKA do not appear to
be particularly robust in terms of protecting the Contractor’s entitlement to recover the cost and
schedule impact arising from the events complained of.
1.17 There appears to be a lack of notification in respect of cost claims (particularly prolongation and
disruption). The Engineer / Employer will potentially argue pursuant to Section Two Articles 44, and
Article 59 of the GCC that the Contractor is required to notify the Engineer within 30 days of the
event giving rise to additional cost and also that the Contractor is required to include full information
together with cost details on any such claims that the Contractor may have in its Monthly Statement
to the Engineer.
STRATEGIC ADVICE – HKA RECOMMENDED STRATEGY

1.18 In view of the fact that the Employer has issued multiple changes to the Package 1 and 2 Works, has
instructed the Engineer to de-scope significant works on both Packages, and has failed to pay the
Contractor on both Packages for circa 16 months, it is recommended that this matter be addressed
with the Employer via the submission of a comprehensive and detailed claim submission that
addresses, as a minimum, the following:
 A full chronology of the each event that the Contractor contends has delayed and disrupted
the Project;
 A delay analysis to demonstrate what the impact of the events is on the completion date of
the Project;
 Quantification of the prolongation cost arising from the Employer culpable delay
demonstrated by the delay analysis;
 Quantification of disruption cost arising from the Employer culpable events described in the
claim;
 Details of the other heads of claim that will need to be addressed as part of any negotiation
process. These heads of claim are likely to include:
o The value of de-scoped work;
o Extended warranty claims;
11
Refer to Article 63 of the IR.
12
Refer to Article 47 of the SCC and Article 50 (b) of GCC
13
Saudi Courts normally consider delay in payment as a valid basis in which to grant EOT
14
The caveat with HKA’s opinion is that this matter falls to be considered as a legal matter under Saudi Arabian law and is thus, strictly
outwith the scope of HKA’s remit and this Advice Note.
AL FOUZAN
STAGE I REPORT
PAGE 7 OF 46
o Preservation cost claims;
o Cost of unfixed materials;
o Uninstructed variations;
o Head office overhead claims;
o Visa costs;
o Demobilisation cost claims;
o etc.
1.19 The preparation of a comprehensive and detailed claim submission that addresses all of the heads
of claim detailed above is absolutely crucial given the Employer’s stated intention to either de-scope
major elements of the project or alternatively to terminate the Contract. Irrespective of route the
Employer selects, the provision of a well prepared and fully comprehensive submission is absolutely
crucial if the Contractor is to protect its contractual and financial position.
1.20 The Contractor’s hand is strengthened by the express prohibition on the Employer from de-scoping
more than 20% of the value of the Contract. HKA recommends that the Contractor should leverage
the Employer’s desire to extricate itself from this Project to negotiate a fair and reasonable
settlement to the claim that will be prepared.
AL FOUZAN
STAGE I REPORT
PAGE 8 OF 46
2 INTRODUCTION
HKA AGREEMENT AND DELIVERABLE
2.1 By an Agreement, dated 12 March 2018, HKA Global has been engaged by the Contractor to
provide advice in connection with the Project.
BACKGROUND
2.2 The Contractor entered into a contract with Employer on 23 July 2014 to develop a number of
facilities in Madina, Kingdom of Saudi Aribia. The Project is made up of two Packages:
 Package 1 has a contract value of SAR 3.31 Billion and involves infrastructure enabling
works which are required to facilitate the Package 2 Works.
 Package 2 has a contract value of SAR 2.71 Billion and involves the construction of five
office towers and three hotel towers together with a car park building.
2.3 The design of the Project is undertaken by the Employer’s Design Consultant. The Contractor’s
design obligations extend to the production of shop drawings only. The Contractor is responsible for
the procurement and construction of the Project.
SCOPE OF WORK
2.4 HKA was engaged to carry out a Stage 1 initial review of the project, which encompasses the
following:
 A brief review of the contract documents and framework between the Contractor and the
Employer including scope of work, specifications, and design obligations, etc.
 An overview of the contractual provisions that would entitle the Contractor to prosecute its
claims, including considerations of the interpretation of the Contract under Saudi Law.
 A high level review of the Contractor’s programme, updates and methodology for the
execution of the Works including a review of progress to date and the delays that have
occurred in executing the Works.
 A high level review of the delay events which have delayed and disrupted the Contractor’s
progress.
 A review of any claim as already prepared and submitted by the Contractor and of the
Employer’s reply thereon, if applicable.
 A brief review of the Contractor’s records identify the viability of preparation of a prolongation
and disruption cost claim.
 Workshop discussions with key project staff from the Contractor to clarify HKA’s
understanding of the issues and to take account of views and opinions.
2.5 At the end of Stage 1 Initial Review, HKA shall arrange a meeting and give an oral presentation of its
findings to the Contractor. HKA shall issue an Advice Note to the Contractor setting out what HKA
considers to be the strengths and weaknesses of the Contractor’s position as well as
recommendations about what HKA considers to be the best strategy to pursue and resolve potential
claims against the Employer.
AL FOUZAN
STAGE I REPORT
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3 REVIEW OF CONTRACT DOCUMENTS
GENERALLY
3.1 The Contract is made up of various documents all of which are set out below in the order of
precedence:
1. GTPL and IR;
2. Main Contract Document;
3. Special Conditions of Contract;
4. General Conditions of Contract; and
5. The Annex to the General Conditions.
3.2 This order of precedence from bullet point two down is stated in Article 2.315 of the Main Contract
Document and applies in the event of any conflict. However, the Contract Documents are also
subject to the GTPL and the IR and thus, the Contract Documents are subservient to it.
SCOPE OF WORK
PACKAGE 1
3.3 The Works are located three kilometres from “Masjid Al Nabawi” in Madina Al Munawwarah and
comprise various enabling works for Package 2 buildings. The Package 1 works referred to as the
“Infrastructure Package”. The under-noted table summarises key contract information for Package 1:
DAR AL HIJRA PROJECT - MEDINAH - PACKAGE 1
Employer: PIF / Saudi Company for Real Estate Development

Consultant: Dar Al Handasah
Contractor: Al Fouzan Trading and Construction
Project Start Date: 3-Aug-14
Project Finish Date: 2-Aug-16
Revised Project Finish Date: 21-Mar-17
28-Aug-18 (Based on February, 2018 Progress Report -
Anticipated Actual Project Finish Date: noting that EOT Claim 3 dated 28.08.17 anticipates an
actual completion on 23.01.19)
Progress Achieved up to end Feb. '2018: 55.95% (Based on February, 2018 Progress Report)
Project Duration ( Days): 730
Revised Project Duration ( Days): 961
Contract Value (SAR): 3,306,009,251
Table 3: Package 1 Contract Details
PACKAGE 2
3.4 Package 2 are also located in Madina Al Munawwarah and comprises eight tower blocks made up
of: one ministry of Haj building; three four star hotels; and four office building together with an
16
underground car-parking building. .
3.5 The under-noted table summarises key contract information for Package 2:
15
Article 2.3 states: “In case of conflict between the rules of the contract documents, the previous document prevails the next one in the
sequence order as in the order in this article.”
16
This part of Package 2 works is on hold.
AL FOUZAN
STAGE I REPORT
PAGE 10 OF 46
DAR AL HIJRA PROJECT - MEDINAH - PACKAGE 2
Employer: PIF / Saudi Company for Real Estate Development

Consultant: Dar Al Handasah
Contractor: Al Fouzan Trading and Construction
Project Start Date: 10-Dec-14
Project Finish Date: 9-Dec-16
Project Duration ( Days): 730
Anticipated Actual Project Finish Date: 24-Feb-19 (Based on EOT Claim 2 dated 10.09.17)
Progress Achieved up to end Feb. '2018: 38.95% (Excluding car parking building)
Contract Value (SAR): 2,706,149,376
Table 4: Package 2 Contract Details
GOVERNMENT TENDERS AND PROCUREMENT LAW

3.6 The GTPL and the associated IR contain several Articles that are unhelpful to the Contractor’s case.
Notable examples are Article 54 (GTPL) and Article 152 (IR) which, in the case of Employer default,
require the Contractor to complete the Works diligently before filing compensation claims with the
Committee of Advisors.
3.7 However, despite this, there are also several other potentially helpful Articles in the GTPL which the
Contractor can rely on such as Articles 39, 51, 52 and also Article 77, wherein the Employer is
obligated to act in good faith, pay the Contractor monthly and whereby it can extend the duration of
the Contract and waive delay penalties, if the delay is due to unforeseen circumstances or caused by
matters outside the Contractor’s control.
3.8 If the Employer defaults in performance of its contractual obligations including delay in payment of
entitlements, the law permits the Contractor to file compensation claims to the Committee of
Advisors. Articles 54 and 78 of the GTPL refer. However, the IR and the GCC require the Contractor
to file notices within 30 days of the event occurring and also require the Contractor to provide full
information of any claims made in its Monthly Statement to the Engineer.
3.9 Furthermore, the Employer may issue a Suspension Order pursuant to Article 95 of the IR if the
annual funds are insufficient for the project or delay is not attributable to the Contractor. The
Contractor may receive time compensation pursuant to Articles 96 and 97 of the IR. HKA notes once
again that, in the absence of annual funding, the Employer should suspend the Works and a failure
to do so and insist upon performance (in the absence of funding / payment) pursuant Article 152 of
the IR is not compatible with the Employer’s over-riding duty to act in good faith pursuant to Article
77 of the GTPL.
3.10 HKA notes that the Employer is in clear breach of the payment terms and conditions of Contract as
pursuant to Article 6 of the Main Contract Document and Article 4717 of the SCC, the Employer’s
obligation is to make at least one progress payment per month to the Contractor.
3.11 A summary of the provisions in the GTPL that are considered to be most relevant are as follows:
17
Article 47 of the SCC re-phrases Article 50 (b) of the GCC but without altering the obligation to make at least one monthly payment
AL FOUZAN
STAGE I REPORT
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Article No. Chapter Description
36 Increase or Decrease of Contractor Obligations
39 Payment of Entitlements
48 Penalties and Extension of Contracts
53 (b) Penalties and Extension of Contracts
77 General Provisions
78 (b) General Provisions
Table 5: Relevant GTPL Chapters Descriptions and Article References
3.12 Given the potential importance of these provisions, HKA quotes extensively from same.
3.13 Article 36 clearly defines the extent to which works can be instructed and omitted from the Contract
and states:
“Contractor within the scope of the contract to an extent not exceeding 10% (ten
percent) of the total value of the contract or decrease such obligations to an
extent not exceeding 20% (twenty percent). The Implementing Regulations shall set
forth the necessary controls.” [Emphasis Added]
3.14 Article 39 states:
“The contractor’s entitlements shall be paid instalments according to the works

completed and in accordance with the claims of payment approved by the government
authority.” [Emphasis Added]
3.15 This Article confirms that the Contractor’s entitlements are payable in instalments according to the
work completed. It is implied from the Implementing Regulations18 that these instalments are regular
monthly instalments.
3.16 The limit of liquidated damages is specified in Article 48 which states:
“If a contractor delays the execution of the contract beyond the specified time, he shall
be subjected to a delay penalty not exceeding 6% (six percent) of the value of supply
contracts and 10% (ten percent) of the value of other contracts.”
3.17 Article 50 refers to the Contractor also being liable for the cost of the Engineer’s supervision of the
Contract for the period of its own culpable delay.
3.18 Article 51 provides that the Contractor may receive an EOT and avoid delay penalties, if the delay
suffered by the Contractor is due to unforeseen circumstances or reasons beyond the Contractor’s
control. The Contractor will rely on this Article amongst others in its negotiations with the Employer.
“A contract shall be extended, and the penalty shall be waived by agreement of the
contracting government authority and the Ministry of Finance, if the delay is due to
unforeseen circumstances or for reasons beyond the contractor’s control, provided that
the period of delay is proportional to these reasons.”
18
Article 63 which requires payment to be “in accordance with the contracting terms’. The contracting terms pursuant to Article 47 of
SCC and Article 50 (b) of GCC states: “progress payment shall be paid periodically at a rate of at least one progress payment every
month.”
AL FOUZAN
STAGE I REPORT
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“The competent minister or the head of the independent agency may extend the term of
the contract in the following cases:
(a) If a contractor is assigned to perform additional works, provided that the period
of extension is proportional to the size and nature of the works and the date of
assignment.
(b) If an order is issued by the government authority to suspend the works or part
thereof for reasons not attributable to the contractor.
(c) If the annual funds allocated for the project are not sufficient to complete the work
within the specified time.” [Emphasis Added]
3.20 Article 53 addresses the situation where a contractor is in culpable delay or even slows the rate of
progress due to the Employer’s failure to honour its payment obligations. It is crucial for the
Contractor to demonstrate that the Project has been delayed due to reasons for which the Employer
is culpable. Article 53 states:
“A government authority may withdraw the work from a contractor and rescind the
contract or execute it at his expense without prejudice to the right of the government
authority to claim compensation for damage sustained as a result, in any of the
following cases:
(b) If a contractor delays commencement of the work, procrastinates in its execution

or is in breach of any of the terms of the contract and fails to rectify the situation within
fifteen days from the date of notifying him in writing to do so.” [Emphasis Added]
3.21 Article 54 is superficially beneficial to the Contractor, however it requires the Contractor to first
complete and hand-over the Works before making a referral.
“A government authority shall execute the contract in accordance with its terms. If it
defaults in the performance of its obligations, including delay in payment of
entitlements, the contractor may file these claims for payment with the committee
provided for in Article 78 of this Law.”
3.22 Article 77 will also be of value to the Contractor during negotiations with the Employer and states:
“Contractors and government authorities shall execute their contracts in

accordance with contract terms, in good faith and as the proper functioning and
interest of the public utility…” [Emphasis Added]
IMPLEMENTING REGULATIONS OF GTPL

3.23 The key Clauses in the GTP Implementing Regulations (”IR”) concerning the Contractor’s position as
determined by HKA are as follows:
AL FOUZAN
STAGE I REPORT
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Article No. Chapter Description
49 Conclusion of Contracts and Execution Periods
58 Increase or Decrease of Contractor’s Obligations
59 Increase or Decrease of Contractor’s Obligations
63 Payment of Entitlements
84 Penalties
90 Penalties
93 Penalties
102 Penalties
152 Procedures of the Committee for Review of Compensation and Boycott of Contractors
Table 6: IR Chapter Descriptions and Article References
3.24 Article 49 of the IR will inter alia, cover the situation where the Employer defaults on its payment
obligations and states:
“A contractor may not refuse to carry out his obligations on grounds that the
Government Authority is in default of its obligations.”
3.25 Article 59 of IR addresses, inter alia, the execution of work for which the Contractor does not have a
properly executed instruction and states:
“The contractor may not execute any works or services not covered by the quantities
and Items of the contract unless instructed to do so in writing. Otherwise, the contractor
shall not be entitled to the value of works executed.”
3.26 Article 63 of IR states:
“Contractors’ entitlements shall be paid according to the works performed after

deducting penalties and other deductions in accordance with the contracting terms. The
period of payment shall not exceed thirty days from the date of approval of the payment
order or the cheque by the financial controller.”
3.27 This Article is the cause of much grievance in the public works sector of the construction industry in
Saudi Arabia, as the financial controller is no defined in such contracts and more importantly, the
financial controller’s approval and payment by the Ministry of Finance or PIF is not directly linked to
the date of the Engineer’s Interim and Final Payment Certificates. However, it is arguable that it is
implied in the Contract between the Contractor and the PIF, as it is difficult to see how the Contract
which states that payment is periodical can function as intended, if there is no link.
3.28 For a term of Contract to be implied, two essential ingredients must be satisfied, namely it must be
‘necessary’ to make the Contract work as per the Parties contractual intent and also must be
‘reasonable’. HKA is of the opinion that both criteria are satisfied and that it should be an implied
term but notes that this is a purely legal matter under Saudi Arabian Law.
3.29 Article 84 of the IR refers to the maximum penalty of 10% that a Contractor engaged in Public Works
Contracts shall suffer, in the event that it delays the project. It also sets out the mechanism for the
calculation of the penalty based on the average cost of the project by dividing the value of the
Contract by its period and applying particular percentages for delay periods the sum of which shall
not exceed 10% of the contract value.
3.30 Article 90 of the IR states:
“If a contract is extended, the contractor shall be relieved from the supervision costs
during the extension period.”
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“Extension of the contract and relief of the contractor from the penalty shall not be
considered in cases specified under Article 51 of the Law, except after the preliminary
hand-over of works or delivery of items in supply contracts.”
3.32 This Article of the IR is harsh in the extreme, particularly in circumstances of Employer payment
default as noted in article 51 of the GTPL.
“The contractor from whom works are withdrawn shall bear all resulting differences in
cost, in case the works are executed at his expense.”
3.34 Article 152 of the IR states in relation to Contractor’s compensation claims as follows:
“Firstly: Conditions for Review of Compensation Claims:
(1) The Committee shall have jurisdiction to review compensation claims submitted in
accordance with the contracts concluded under the Government Tender and
Procurement Law and these Regulations.
(2) A claim for compensation may not be reviewed except after the execution of the
contract and the final hand-over of the works.
(3) The compensation claim shall be submitted first to the contracting Authority. If the
claimant is not satisfied with the decision of the Authority or sixty days have lapsed
from the date of submission of the claim to the Authority, accompanied by complete
supporting documents, without deciding on it, said claim.” [Emphasis Added]
3.35 Thus, in order to endeavour to receive compensation for Employer default or breach of contract via
the Committee of Review, the Contractor is first obligated to execute the Contract and hand-over the
Works. This is an extremely harsh condition particularly in circumstances of persistent payment
default / breach of contract by the Employer.
3.36 The above-noted Articles resonate with Articles 39, 51, 52, 54 & 77 of GTPL, on which the
Contractor should base its EOT and Additional Cost Claim.
ANALYSIS OF MAIN CONTRACT PARTICULARS

3.37 The contents of the main contract document are as follows:
Article No. Description

Main Contract Document
1 Purpose of the Contract
2 Contract Documents
3 Period for Implementing the Works
4 Warranty Period and Works Maintenance
5 Contract Price
6 Payment
7 Ethics and Anti-Bribery Provision (Description left blank in original)
8 Contract Scheme
Table 7: Contents and Articles of Main Contract Document
3.38 Article 6 Payment Sub-paragraph 6.2 of the states:
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“The employer shall abide by paying the contract value in the way and the times
specified in the general conditions against implementing and completing the works of
the contract by the contractor.” [Emphasis Added]
ANALYSIS OF KEY PROVISIONS OF SPECIAL CONDITIONS OF CONTRACT

3.39 While the contract is split into two packages, the same Terms and Conditions of Contract apply to
both.
Payment Terms
3.40 The General Terms and Conditions of Contract have been amended by the Special Terms as
follows:
19
Paragraph 47 of the Special Conditions of Contract states that: “Article No. 50-2 in the general
conditions to be rephrased as follows:
The amounts due to the contractor shall be released according to what has been
achieved and accepted in (100%) and as the invoices approved by the engineer or by
the project supervising authority and periodically, with at least one invoice every
month.”]
3.41 It is noted that the special conditions require payments to be made periodically, with one at least
every month and to be paid ‘as the invoices approved by the engineer’. The reference to “or”
approved by the supervising authority is an alternative but does not take precedence over the first
part of the sentence.
Claims
3.42 Article 52 “Optional Terms” of the Special Conditions state that:
“The contractor acknowledges that the employer has right to complete the entire works
or part of them or not to implement any of the optional terms referred to in the BOQs
without right to the contractor to go back to the employer for any claim for any disputes
about payment of the prices introduced by him against what is actually implemented
according to the instructions of the employer. The contractor has to consider those
terms when preparing and introducing the time schedule required for execution of the
works. The contractor’s claim by the employer to implement any of the works does not
include any justification for extending the time of implementation or any relief from any
of the contractual conditions and commitments. The contractor also shall take approval
from the employer to implement or not in the suitable time which does not incur any
violation of the dates required for execution. Also, arranging among those terms etc. of
the works within the scope of works is required.”
3.43 Thus, when considering the value of the Works under the GTPL, the Contractor must have regard to
the above-noted Article 52.
3.44 Claims for compensation are dealt with by way of initial submission to the Contracting Authority for
decision. If the Contractor is not satisfied with the Authorities decision or if sixty days have elapsed
20
since the submission of the claim to the Authority without deciding on it, the Contractor may refer
the matter to the Committee of Advisors to the Minister for adjudication.
3.45 However, under the IR Article 152, the Contractor is obligated to complete the Works and hand-over
same to the Employer prior to making any referral to the Committee of Advisors.
3.46 It should also be noted that, the Committee may not review a claim if the person concerned has an
existing claim relating to the subject matter of the case before a judicial or administrative authority or
before an arbitration tribunal for the purpose of deciding it. The Committee may also not review final
judgments regarding claims.
19
Reference should be 50 (b) as per the PWC – GCC.
20
Complete with supporting documents.
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ANALYSIS OF KEY PROVISIONS OF GENERAL CONDITIONS OF CONTRACT
3.47 The General Terms and Conditions of Contract are the Public Works Conditions (“PWC”), which
have been amended by reference to an Annex included in the Contract.
Payment Terms
3.48 Article 6 “Payment” of Section One21 of the PWC states that:
“The Work Owner shall pay the contract value in the method and at times specified in
the General Conditions of contract against the Contractor’s performance and
completion of works mentioned.”
3.49 Article 50(b)22 23 “Payment; Preliminary and Final Handover; and Guarantee Period.” of Section
24
Two of the PWC states that:
“The Contractor's dues shall be paid according to the actual work completed and
according to the progress payment approved by the Consultant or the technical body
supervising the project. Such progress payment shall be paid periodically at a rate of at
least one progress payment every month.”
3.50 Article 59 “The Work Owner’s Default” of Section Two of the PWC states:
“The Work Owner shall execute the contract conditions in good faith, and pay to the
Contractor its due instalments without delay.
If the Work Owner breaches any of the contract conditions or fails to pay in due date,
the Contractor shall be entitled to claim compensation for losses resulting from this
default or breach. However, the Contractor may not suspend the work for any delay of
payment on the Work Owner’s part because of any fault attributable to the Contractor.”
Claims and Delay Penalties

3.51 Article 3 “Contract Term” states:
“3.1 The Contractor undertakes to perform and complete all the works specified in the
contract within a certain period (the contract term shall be written in days, in both
numbers and words) including the time of mobilization. This period shall take effect on
the date of handover of the work site to the Contractor, pursuant to written minutes
signed by the Engineer and the Contractor.
3.2 If the Contractor fails to perform the works within the period mentioned in the
previous paragraph, it shall be subject to the delay penalty provided for in Article (39) of
the General Conditions of the Contract in addition to the costs and remunerations of the
Supervisor stipulated in Article (40) hereof.”
“If the Contractor delays the work completion and fails to fully hand it over at the
specified dates, and if the Work Owner sees no reasons to withdraw the work from it,
the Contractor shall pay a fine for the delay period for the completion of work after the
date specified for the handover. This delay fine shall be computed on the basis of the
average daily cost of the project, by dividing the contract price by its period according
to the following:
21
Contract Basic Document.
22
Article 47 of the SCC supersedes Article 50(b) of GCC by means of minor re-phasing.
23
Annex 1 amends Article 50 of PWC by stating that: “Article No. (50) shall be adjusted to agree with the rules stated in article No.
(Thirty-eight) in the system and articles (sixty-two, sixty-three and sixty-six) in the panel. Also, item No.1 in the decision of the council
of ministers No.(23) on 17/1/1428AH.”
24
General Conditions.
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(a) A fine on the first part of the delay period equal to one fourth of the average daily
cost for each day of delay, until the longer period of the two periods reaches fifteen
days or five percent (5%) of the contract period.
(b) A fine on the second part of the delay period equal to half of the average daily cost
for each day of delay, until the longer period of the two periods reaches thirty days or
ten percent (10%) of the contract period.
(c) A fine on the third part of the delay period that is equal to the average daily cost for
each day of delay following the longer of the two periods stated in Paragraph (b).
The total of fines imposed may not exceed ten percent (10%) of the contract value. If
the Work Owner is of the opinion that the delayed part of the work will not preclude full
use of the work, at the date of its completion, and will not interfere with the use of any
other benefit, or negatively affect the completed part of the work, then the total fine
shall not exceed ten percent (10%) of the price of the delayed works.”
3.53 Article 3625 “Extension of Work Completion Period” of Section Two of the PWC states:
“The contract period shall be extended pursuant to Article Nine of the Law of
Government Procurement and Execution of Projects and Works.”
3.54 Notification of contractual claims is an important condition that the Contractor is obligated to adhere
to. Article 44 of Section Two of the PWC, Second paragraph states:
“Second - Claims: The Contractor shall send the Engineer a monthly statement giving,
in detail, full information on all claims with respect to the additional expenses to which
the Contractor decides it has a right as well as all excess and additional works ordered
by the Engineer within its power and executed by the Contractor during the preceding
month. Any claim related to the payment of the value of such work shall not be
considered, unless it is included in the information referred to earlier and included in the
monthly statement mentioned above.” [Emphasis Added]
3.55 In relation to Claims, Article 59 “The Work Owner Default” of Section Two of PWC states:
“…The Contractor shall be deemed as waiving any compensation not claimed within
thirty days from the incidence for which it claims compensation.”
Dispute Resolution
3.56 Article 57 “Settlement of Disputes” of Section Two of the PWC states:
“Any dispute which may arise from the implementation of this contract and not amicably
settled by the two parties, shall be referred to the Board of Grievances to issue a final
decision thereon.”
3.57 Thus, in the context of the Contractor’s claims, it is obligated in the first instance to submit these to
the Employer for decision / amicable settlement and if the latter is not possible, the Contractor may
refer the matter to the Saudi Courts, namely the Board of Grievances for a final decision.
25
Annex 1 amends Article 36 of the PWC by stating that: “Article No.36 shall be adjusted so that it states that extending the contracts
and relief from the penalties shall be based on the rules of articles (fifty-one and fifty-two) of the system and also the rules stated in
(chapter fourteen) in the implementation panel of the system.”
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4 THE CONTRACTOR’S PROGRAMMES AND PROGRESS
SHOP DRAWINGS
4.1 HKA notes that the Contractor’s shop drawings for Package 1 are almost one hundred percent
complete as noted in the Table 8 below:
Table 8: Package 1 Shop Drawings Status
4.2 Package 2 shop drawings are as noted in Table 9 below

Codes
Description Total Drawings TOTAL SUBMITTED Under
A B C D E
Review
ARCHITECTURE 5710 6159 18 5187 722 3 229 0
STRUCTURAL 5408 5710 5423 49 227 11 0
ELECTRICAL 7733 7355 6024 886 5 440 24
MECHANICAL 4943 5336 94 4694 537 1 10 34
BUILDERS WORK 714 741 693 30 18 0
GEOTHECNICAL 31 55 1 30 24 0
LANDSCAPE 151 214 61 99 27 27 0
TUNNEL 5 5 4 1 0
TOTAL 24695 25575 178 22150 2251 306 690 58
Table 9: Package 2 Shop Drawing Status
4.3 Thus, overall the shop drawings are not a cause of concern.
MATERIAL APPROVALS
4.4 Similarly, the Contractor’s material approvals are very well advanced with 87% of submittals made
having been approved by the Engineer and 76% approved out of the total materials approvals
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required. Given that there is so much delay regarding interim payment, the material approvals
process has progressed well.
4.5 Table 10 and Table 11 below show the material approvals status on Package 1 works whereas
Table 12 below shows the status of the Contractor’s material approvals for Packages 2:
Table 10: Package 1 Material Long Lead Approvals
Table 11: Package 1 Material Short Lead Approvals
Table 12: Package 2 – Material Approval Status
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CONSTRUCTION WORK PROGRESS
4.6 The construction work progress is as follows:
a) Package 1: 55.95% based on February 2018 Progress Report.
b) Package 2: 38.95%26 based on February 2018 Progress Report.
4.7 The above-noted figures are not surprising given the scale and duration of the Employer’s progress
payment delays.
4.8 Based on the revised project completion date for Package 1 (i.e., 21 March 2017), the Project should
in theory have been 100% complete, however, the Contractor has actually only achieved progress of
55.95% as of the end of February 2018. It is clear that the Project is in major delay.
4.9 Similarly, based on the completion date for Package 2 (i.e., 9 December 2016), the Project should in
theory have been 100% complete however, the Contractor has only achieve progress of 38.95% as
of the end of February 2018. It is clear that this element of the Project is also in major delay.
26
This excludes the car parking building which is on hold
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5 INITIAL IDENTIFICATION OF DELAY EVENTS
HKA’S HIGH LEVEL REVIEW SUMMARY
5.1 Based on its initial review of these events, HKA considers that the Contractor’s delay events have
contractual merit worthy of further investigation, to form the basis of a contractual claim against the
Employer for EOT and additional costs.
5.2 HKA recommends that a full and complete investigation is carried out in terms of the Contract
Documents and other Project records to establish cause and effect.
5.3 From the delay analysis, the period of compensable delay can be identified for the purposes of
preparing the Contractor’s prolongation cost claim.
5.4 The undernoted tables identify the key delay events that have arisen and which will form the basis of
the EOT and additional Cost claim:
Delay Events - Phase 1 Package 1

Serial No. Description of Delay Event
1 Delay due to black water system changes
2 Delay due to storm drainage system changes
3 Delay due to grey water system changes
4 Delay due to water supply system changes
5 Delay due to lack of agreement with SEC
6 Delay due to change in chillers supplier
7 Delay due to change CMS location
8 Delay due to civil defense building on site
9 Delay due to change in CCTV
10 Delay due to coordination with SEC for cable entry in each substation
11 Delay due to external TSE network
12 Delay due to change in HV ladders
13 Delays due to change in MRMU type and location
14 Delays due to lack of payment of IPC's
Table 13: Initial Identification of Package 1 Delay Events
Delay Events - Phase 1 Package 2

Serial
Description of Delay Event
No.
1 Delay in making advance payment
2 Delay in interface between Package 1 and Package 2 due to Package 1
3 Delay due to non-approval of MV switchgear / MRMU
4 Delay to kitchen re-design due to non-approval by Civil Defense
5 Delay in notice to proceed with optional building
6 Delay to blockwork due to delay in shop drawing approvals
7 Delay to GRP and Aluminum due to delay in material approvals
8 Delay to mechanical works due to missing data
9 Delay to mechanical works due to conflicts in data
10 Delay to electrical works due to missing data
11 Delay to fire alarm installation due to delay in material approvals
12 Delay due to change in schedule of air handling units
13 Delays due to lack of payment of IPC's
Table 14: Initial Identification of Package 2 Delay Events
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PAYMENT DELAYS
Introduction
5.5 As this is such a significant delay event, HKA has carried out an initial analysis the Employer’s
payment delays.
5.6 The Contractor’s cash flow is mainly derived from payments made by the Employer for work properly
executed on site and certified by the Engineer. Cash flow is incredibly important to the Contractor
and to its ability to manage the project in accordance with its contractual intent.
5.7 Payment delays have been a major feature of the project to date and have caused great difficulties
for the Contractor in endeavouring to comply with its contractual obligations to the Employer. The
contractual section of this Advice Note deals with the breach of the Employer’s contractual obligation
to pay the Contractor monthly.
Review
5.8 Of the 32 IPCs issued between January 2015 and October 2017, the Employer was late (in delay) to
honour payments for 15 IPCs for Package 1 and 16 IPCs for Package 2, the charts below shows the
split between on time payments and late / non-payments to Contractor during 2016 and 2017 noting
that the non-payment of certified works commenced in May 2016 on Package 1 and in August on
Package 2.
Payment Status 2016 - Phase 1, Package 1

On Time Payments 2016 Late Payments 2016
50% 50%
Figure 1: Pie chart showing ratio of on-time to late payment of IPCs – Phase 1 2016

0%
100%
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Payment Status 2016 - Phase1, Package 2
42%
58%

0%
100%
5.9 The Employer’s late or more precisely no-payment of IPCs, has left the Contractor with the burden of
trying to fund the Project. This has resulted in the Contractor incurring unexpected additional
financial charges, has directly impacted the Contractor’s ability to resource the projects (labour, plant
and materials), and has prevented the Contractor from achieving the planned sequence of work and
ultimately the Completion Dates for each Site and the Project Completion Date. The Contractor’s
cash-flow problems were compounded by the non-payment of so many IPA’s.
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ANALYSIS OF INTERIM PAYMENT ON PHASE 1 PACKAGE 1 UP TO 26/03/2018
Invoice No. Invoice Date Invoice Amount Invoice Status Days Delay
13.00 Jan-16 100,715,903.54 13/06/2016 0
14.00 Feb-16 16,627,219.34 16/05/2016 0
15.00 Mar-16 120,373,879.92 17/07/2016 0
14.00 Apr-16 80,269,511.05 3/8/2016 0
16.00 May-16 40,429,052.99 UNPAID 1 year, 9 months, 3 weeks, 5 days
17.00 Jun-16 16,526,113.68 13/11/2016 0
18.00 Jul-16 32,222,310.27 13/11/2016 0
19.00 Aug-16 44,423,951.02 UNPAID 1 year, 6 months, 3 weeks, 5 days
20.00 Sep-16 17,939,572.76 UNPAID 1 year, 5 months, 3 weeks, 5 days
21.00 Oct-16 136,405,932.05 UNPAID 1 year, 4 months, 3 weeks, 5 days
22.00 Nov-16 75,344,402.76 UNPAID 1 year, 3 months, 3 weeks, 5 days
23.00 Dec-16 71,473,713.17 UNPAID 1 year, 2 months, 3 weeks, 5 days
24.00 Jan-17 70,929,349.08 UNPAID 1 year, 1 month, 3 weeks, 5 days
25.00 Feb-17 18,114,688.62 UNPAID 1 year, 3 weeks, 5 days
26.00 Mar-17 32,428,675.59 UNPAID 11 months, 3 weeks, 5 days
27.00 Apr-17 14,863,476.04 UNPAID 10 months, 3 weeks, 5 days
28.00 May-17 9,241,211.78 UNPAID 9 months, 3 weeks, 5 days
29.00 Jun-17 9,370,360.63 UNPAID 8 months, 3 weeks, 5 days
30.00 Jul-17 14,081,926.68 UNPAID 7 months, 3 weeks, 5 days
31.00 Aug-17 13,987,893.38 UNPAID 6 months, 3 weeks, 5 days
32.00 Sep-17 19,161,959.92 UNPAID 5 months, 3 weeks, 5 days
33.00 Oct-17 35,543,252.88 UNPAID 4 months, 3 weeks, 5 days
UNPAID Cumulative 623,739,419.35
Table 15: Table showing late payments and overdue durations on Phase 1 – Package 1
5.10 It is noted from the above table that the average delay in payment is 11 months 3 weeks and 5 days.
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ANALYSIS OF INTERIM PAYMENT ON PHASE 1 PACKAGE 2 UP TO 26/03/2018
Invoice No. Invoice Date Invoice Amount Invoice Status Days Delay
11.00 Jan-16 31,351,174.42 3/4/2016 0
12.00 Feb-16 21,375,682.97 3/4/2016 0
13.00 Mar-16 21,733,396.03 3/4/2016 0
14.00 Apr-16 34,133,339.94 3/4/2016 0
15.00 May-16 23,926,232.38 3/4/2016 0
14.00 Jun-16 17,474,318.26 3/4/2016 0
16.00 Jul-16 32,138,723.76 3/4/2016 0
17.00 Aug-16 21,376,042.77 UNPAID 1 year, 6 months, 3 weeks, 5 days
18.00 Sep-16 28,373,813.62 UNPAID 1 year, 5 months, 3 weeks, 5 days
19.00 Oct-16 27,813,990.51 UNPAID 1 year, 4 months, 3 weeks, 5 days
20.00 Nov-16 21,785,530.76 UNPAID 1 year, 3 months, 3 weeks, 5 days
21.00 Dec-16 18,799,366.92 UNPAID 1 year, 2 months, 3 weeks, 5 days
22.00 Jan-17 26,115,801.64 UNPAID 1 year, 1 month, 3 weeks, 5 days
23.00 Feb-17 17,415,522.70 UNPAID 1 year, 3 weeks, 5 days
24.00 Mar-17 31,278,915.70 UNPAID 11 months, 3 weeks, 5 days
25.00 Apr-17 27,134,210.24 UNPAID 10 months, 3 weeks, 5 days
26.00 May-17 25,988,984.82 UNPAID 9 months, 3 weeks, 5 days
27.00 Jun-17 21,151,913.37 UNPAID 8 months, 3 weeks, 5 days
28.00 Jul-17 15,232,032.31 UNPAID 7 months, 3 weeks, 5 days
29.00 Aug-17 25,131,697.70 UNPAID 6 months, 3 weeks, 5 days
30.00 Sep-17 33,452,964.73 UNPAID 5 months, 3 weeks, 5 days
31.00 Oct-17 40,356,181.35 UNPAID 4 months, 3 weeks, 5 days
UNPAID Cumulative 381,406,969.14
Table 16: Table showing late payments and overdue durations on Phase 1 – Package 2
5.11 It is noted from the above table that the average delay in payment is 12 months 3 weeks and 5 days.
5.12 The above-noted tables demonstrate that The Contractor has been deprived of SAR
1,005,146,388.49 in cash-flow payment from the Employer and it is clear that this level of non-
payment is unsustainable and potentially disastrous for the Contractor.
5.13 The Contractor’s histogram and ‘S’ curve cumulative cash flow charts also demonstrate the status of
foreseen cash-flow versus actual.
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6 PACKAGE 1 - PROGRAMME & SCHEDULE ANALYSIS
INTRODUCTION
6.1 This section provides details of the relevant contractual provisions in relation to the baseline
programme, HKA’s principal observations arising from its review of the Contractor’s baseline
programme and the programme updates, and the suitable delay analysis methodology for the
project.
CONTRACTUAL PROVISIONS AND APPROVED PROGRAMMES

6.2 Pursuant to sub-clause 8.1 of Particular Conditions of Contract, the Contractor is to provide a
Detailed Construction Programme to the Engineer within 28 days of accepting the bid.
6.3 The Contractor made various submissions of the Detailed Construction Programme from early
27
stages of the project but the first approval was only received on 8 April 2015, i.e. for ‘Detailed
28
Construction Schedule for Package-1’, which was submitted on 18 March 2015.
6.4 It is noted that the approval from Engineer was Code B (Conditional Approval). The approval was
subject to Contractor taking into consideration and incorporating the 15 No’s comments provided by
the Engineer in the approved programme.
6.5 Notwithstanding the above, on 11 October 2016,29 the Employer’s provided EOT for the project for
231 days, extending the completion date up to 21 March 2017.
6.6 On 24 October 2016,30 based on Employer’s approval of EOT, the Engineer requested the
Contractor to submit revised Detailed Construction Program in accordance to Sub-Clause 8.3 and
8.9 of Particular Conditions of Contract reflecting the completion date of 21 March 2017.
6.7 On 27 November 2016,31 the Contractor submitted ‘Revised Baseline Schedule for Package-1
Rev.01’ as requested by the Engineer.
6.8 On 6 December 2016, the Engineer provided approval for ‘Revised Baseline Schedule for Package-
1 Rev.01’ with ‘Code B – Approved as Noted’.32 The approval was subject to Contractor taking into
consideration and incorporating the 14 No. comments provided by the Engineer in the approved
programme.
6.9 The baseline programme and programme updates that incorporate these comments will need to be
prepared prior to utilising the programmes for delay analysis purposes.
6.10 The ‘Revised Baseline Schedule for Package-1 Rev.01’ that incorporates the comments from the
Engineer shall also be used as the final baseline programme.
6.11 It is important to note that the data date of the revised baseline programme was 30 October 2016,
and the Completion Date was indicated as 21 March 2017 as per the approved EOT. Therefore, no
further EOT shall be applicable for any delays that occurred from the period of 3 August 2014
(Notice to Proceed date) to 30 October 2016.
SUITABILITY OF THE BASELINE PROGRAMME FOR DELAY ANALYSIS

Structure
6.12 The Work Breakdown Structure (WBS) of the programme contains the following major elements:
i. Group 1 – Chiller Units
27
Engineer response to transmittal ref: SCH-G-0005-00 on 8 April 2015.
28
Contractor transmittal ref. SCH-G-0005-00 dated 18 March 2015.
29
Employer letter ref: 016-332 dated 11 October 2016.
30
Engineer letter ref: S14006-P1P1-DAR-FTCO-LET-1125 dated 24 October 2016.
31
Contractor transmittal ref. SCH-G-0008-01 dated 27 November 2015.
32
Engineer response to transmittal ref: SCH-G-0008-01 on 6 December 2016.
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a) Chiller Unit A
b) Chiller Unit B
ii. Group 2 – Underground Utilities Building
a) Grey water treatment plant
b) Treated grey water tank
c) Fire/Irrigation tank
d) Underground utilities building
iii. Group 3 – External Works
a) Site works
b) Network system
c) Electrical work
d) Roads
e) Landscape
f) Fountain
g) Pathway shed
h) Ablutions
i) Pump rooms
iv. Waste Transfer Station
v. Thermal energy storage tank
vi. External Items
a) TSE supply
b) Storm water box culvert
c) Connection of domestic water line to existing network
d) Connection of sewage line to existing network
vii. Metro Bridges
a) West (Left)
b) East (Right)
6.13 The figure below provides a summary level WBS of the baseline programme.
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Figure 5: Summary level WBS of the baseline programme Activities and Milestones
6.14 There are a total of 3,457 activities in the baseline programme which comprises of:
i. 47 Start Milestones
ii. 66 Finish Milestones
iii. 3,344 Task Dependent activities
6.15 The status of the activities are as set out below:
i. Activities completed – 1,606
ii. Activities in progress – 92
iii. Activities not started – 1,759
6.16 Based on the above, the critical delays to the project shall only be analysed for the activities in
progress and not started, i.e. 1,851 activities.
6.17 It is noted that there was 3925 activities in the previously approved baseline programme (Rev. 05).
Logic (Open ends, relationships and Lags)
6.18 Except for three activities, all the activities in the baseline programme have predecessors assigned
to them. Since two of these activities have actual date and the other activity starts on the data date
this is not an issue.
6.19 Similarly, only two activities have missing successors. Since one of these activities is the handover
activity and the other activity is indicated as cancelled, it is considered all the activities in the
programme have proper links/relationship.
6.20 A total of 13,003 relationship/logic links was used in the baseline programme. The table below
identifies the types of relationship used.
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Relationship type No. of Relationships %
Finish to Start (FS) 8,967 68.96%
Finish to Finish (FF) 2,509 19.30%
Start to Start (SS) 1,527 11.74%
Total 13,003 100.00%
Table 17: Relationships used in the baseline programme.
6.21 The most used relationships is FS relationship, which is a common practice.

6.22 The lags used in the baseline programme seem quite extensive, with 4,431 activities having
relationship with lags. The activities in the critical path will have to be assessed while carrying out the
delay analysis.
CRITICAL PATH
6.23 The figure below identifies the critical path of the baseline programme.
Figure 6: Critical path of baseline programme
6.24 As observed from the figure above, the driving activities of the critical path are:
i. Activity ID - DHP-PK1-PRO-1016 (Manufacture & Delivery – A Decorative Glass-fibre-
reinforced Concrete) – Related to Chiller Units
ii. Activity ID - DHP-PK1-FF-0700 (Installation & Fixation Of FIRE FGHTING Under ROAD
S7 { ST: 0+0 T 0+329} @ PKG2) - Related to Fire Fighting System; and
iii. Activity ID - DHP-PK1-SD-2768 (Excavation) – Related to Strom Water Box Culvert.
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6.25 In summary, the critical path of the baseline programme runs through:
 Group 1 – Chiller Plants A and B;
 Group 3 – External Works (Fire Fighting System, Telecom System, Medium Voltage
System, Roads, Landscape and Pathway Shed);
 Thermal Energy Storage Tanks;
 Storm Water Box Culvert; and
 Connection of Sewage Line to Existing Network.
PROGRESS UPDATES
6.26 Based on the information received from the Contractor, 16 programme updates were prepared and
submitted to the Engineer based on the revised baseline programme to date.
6.27 The table below identifies the programmes referred to above.
Loss/Gain
Elapsed Period
from
Programme Name Data Date since previous Finish Date Total Delay
Previous
update
Update
Revised Baseline Schedule
Prog. Upd. 30 Oct 16 30-Oct-16 35 18-Mar-17 -228 50
Revised Baseline Schedule Updates
Prog. Upd. 25 Nov 16 25-Nov-16 26 17-Apr-17 -258 -30
Prog. Upd. 25 Dec 16 25-Dec-16 30 14-May-17 -285 -27
Prog. Upd. 25 Jan 17 25-Jan-17 31 14-Jun-17 -316 -31
Prog. Upd. 21 Feb 17 21-Feb-17 27 16-Jul-17 -348 -32
Prog. Upd. 25 Mar 17 25-Mar-17 32 07-Sep-17 -401 -53
Prog. Upd. 25 Apr 17 25-Apr-17 31 10-Oct-17 -434 -33
Prog. Upd. 25 May 17 25-May-17 30 09-Nov-17 -464 -30
Prog. Upd. 25 Jun 17 25-Jun-17 31 10-Dec-17 -495 -31
Prog. Upd. 25 Jul 17 25-Jul-17 30 04-Jan-18 -520 -25
Prog. Upd. 25 Aug 17 25-Aug-17 31 05-Feb-18 -552 -32
Prog. Upd. 25 Sep 17 25-Sep-17 31 19-Mar-18 -594 -42
Prog. Upd. 25 Oct 17 25-Oct-17 30 18-Apr-18 -624 -30
Prog. Upd. 25 Nov 17 25-Nov-17 31 19-May-18 -655 -31
Prog. Upd. 25 Dec 17 25-Dec-17 30 23-Jun-18 -690 -35
Prog. Upd. 25 Jan 18 25-Jan-18 31 24-Jul-18 -721 -31
Prog. Upd. 25 Feb 18 25-Feb-18 31 28-Aug-18 -756 -35
Table 18: Programme updates based on the baseline programme.
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6.28 The finish dates shown in table above refers to the Project handover date in the programme
updates. The extension to these dates will mainly be relied upon to determine the prolongation cost
period during the delay analysis. If there are separate indirect resources (team) assigned to different
group of works (e.g. Group 1, 2 and 3), then delays to each of these works will need to be
established individually to ascertain the applicable prolongation cost.
6.29 Further details of the programme updates related to driving critical activities are provided in
Appendix D1 to this submission.
CRITICAL PATH DRIVING ACTIVITIES

6.30 The table below identifies the driving activities of the critical path in each of the programme updates.
The delays to these activities will need to be analysed in detail to identify the critical delays to the
project and Contractor’s entitlement for further EOT.
Critical Path Driving

Programme Name Data Date Finish Date Total Delay Area Activity Description
Activity

Installtion & Fixation Of FIRE FGHTING Under
Prog. Upd. 30 Oct 16 30-Oct-16 18-Mar-17 -228 DHP-PK1-FF-0700 Group 3 - Fire Fighting System
ROAD S7 { ST: 0+0 T 0+329} @ PKG2
Updates
Prog. Upd. 25 Nov 16 25-Nov-16 17-Apr-17 -258 DHP-PK1-SD-2768 External Items - Strom Water Box CulvertExcavation
Manufacture & Delivery - Variable Refrigerant

Prog. Upd. 25 Dec 16 25-Dec-16 14-May-17 -285 DHP-PK1-PRO-1031 Group 1 - Chiller Unit A & B
Volume Air Conditioning Units
Prog. Upd. 25 Jan 17 25-Jan-17 14-Jun-17 -316 DHP-PK1-PRO-1031 Group 1 - Chiller Unit A & B
Prog. Upd. 21 Feb 17 21-Feb-17 16-Jul-17 -348 DHP-PK1-PRO-1031 Group 1 - Chiller Unit A & B
Prog. Upd. 25 Mar 17 25-Mar-17 07-Sep-17 -401 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Apr 17 25-Apr-17 10-Oct-17 -434 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 May 17 25-May-17 09-Nov-17 -464 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Jun 17 25-Jun-17 10-Dec-17 -495 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Jul 17 25-Jul-17 04-Jan-18 -520 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Aug 17 25-Aug-17 05-Feb-18 -552 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Sep 17 25-Sep-17 19-Mar-18 -594 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Oct 17 25-Oct-17 18-Apr-18 -624 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Nov 17 25-Nov-17 19-May-18 -655 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Dec 17 25-Dec-17 23-Jun-18 -690 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Jan 18 25-Jan-18 24-Jul-18 -721 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Prog. Upd. 25 Feb 18 25-Feb-18 28-Aug-18 -756 DHP-PK1-FF-0650 Group 3 - Fire Fighting System
ROAD P6 { ST: 0+0 T 0+181} @ PKG2
Figure 7: Driving activities of the critical path of the programme updates.
6.31 Based on the review of the baseline programme updates, the activities that drive the critical path of
the programmes are:
i. External Works – Excavation for Storm Water Box Culvert;
ii. Group 1 – Chiller Unit A & B (Manufacture & delivery – Variant Refrigerant Volume Air
Conditioning Units); and
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iii. Group 3 – Fire Fighting System (Installation & Fixation of Fire Fighting Under Road
P6 (ST:0+0 T 0+181) at Package 2).
6.32 The delays associated with these activities are 30 day, 90 days and 408 days respectively. The
delays related these activities especially the Fire Fighting System needs to be investigated in detail
to identify the Contractor’s entitlement for an EOT.
6.33 Apart from the delays to the critical activities indicated above, the impact of Change Orders will also
need to be considered to establish the overall critical delays to the project.
OTHER DETAILS OF BASELINE PROGRAMME UPDATES

Actual date beyond data date
6.34 The programmes updates with data date of 25 July 2017 to 25 October 2017 and 25 February 2018
also have activities with actual dates beyond the data date, i.e. 1 activity and 2 activities respectively.
This is a minor issue as the activities affected are limited but will need to be rectified prior to the
delay analysis.
Inconsistencies between Physical % and Duration % / Remaining Duration
6.35 It is noted that the percentage (%) complete type utilised for most of the activities in the programme
updates are ‘Physical %’ type.
6.36 There seem to be some inconsistencies in the ‘Duration %’ complete or ‘Remaining Duration’ in
programme updates as explained below.
6.37 For example, as observed from the figure below extracted from the programme update with data
date of 25 September 2017, the activities related to Grey Water System have Physical % complete
assigned to them but the Duration % complete or remaining duration were not updated.
Figure 8: Inconsistencies in the Duration % Complete of programme update.
6.38 The example for inconsistencies in remaining duration as described above is prevalent throughout
the programme updates.
6.39 The inconsistencies in the ‘Physical %’ complete and remaining durations for the activities as
explained above needs to be addressed in order for the delay analysis results to be reliable.
Increased remaining duration for activities in progress
6.40 The comparison of the programmes updates also indicate that the remaining duration for some of
the activities has been increased compared to the revised baseline programme. An example of this
are for activities DHP-PK1-CUB-0250 (Install 25 Ton Crane Supports, 3 Ton Monorail) and DHP-
PK1-CUA-0250 (Install 25 Ton Crane Supports, 3 Ton Monorail) as observed from the figure below
extracted from the programme update with data date of 25 December 2017.
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Figure 9: Increase in remaining duration of the activities.
6.41 The increase in duration for any activities in the programme updates will need to be justified; failing
which the remaining durations will need to be adjusted to reflect proper remaining duration.
SELECTION OF THE DELAY ANALYSIS METHODOLOGY

6.42 HKA has referred to Articles 51, 52 of the GTPL and Article 93 of the IR in its contractual analysis
section of this Advice Note and notes that the Articles in the GTPL are helpful while Article 93 of the
IR is unhelpful due to the fact that it requires the Contractor to hand-over the Works before it can
attain relief from penalties. However, HKA notes that the Employer has departed from the strictures
of Article 93 as it has already awarded the Contractor EOT of 231 days. Therefore, HKA proposes
the EOT to be claimed mainly for events related to additional works, suspension of works and lack of
funds noting the difficulties associated with Article 93 of the IR.
6.43 Article 94 of IR states:
“(a) A Government Authority, prior to requesting the approval of the Ministry of Finance
to extend the contract in cases specified in Article 51 of the Law, shall have a
specialized committee review the technical and legal aspects of the extension request
to determine the causes of delay and the periods due for each cause individually and
refer its report to the Bid Examination Committee.”[Emphasis added]
6.44 As Article 94 above requires the determination of the causes and period of each delay individually,
there are two methods of dynamic analysis that could be used for delay analysis purposes, i.e.
Impacted as Planned (IAP) and Time Impact Analysis (TIA).
6.45 The ‘Delay and Disruption Protocol’ published by the Society of Construction Law is a respected and
widely-accepted guideline in the preparation of delay analysis in the construction industry.
6.46 In February 2017, the Society of Construction Law published 2nd edition of the Delay and Disruption
Protocol, which defined Impacted As-Planned as follows:
“The impacted as-planned analysis method involves introducing delay event sub-
networks into a logic-linked baseline programme and its recalculation using CPM
programming software in order to determine the prospective impact these events have
on the predicted contract completion dates shown within the baseline programme.
Before embarking upon the analysis, the analyst needs to confirm that the sequences
and durations for the works shown in the programme are reasonable, realistic and
achievable and properly logically linked within the software, to deal with the risk that
the baseline programme contains fundamental flaws which cannot be overcome. In
general, this is thought to be the simplest and least expensive form of delay analysis,
but has material limitations, principally because it does not consider actual progress
and changes to the original planned intent. The product of this method of analysis is a
conclusion as to the likely effect of the modelled delay events on the baseline
programme. In limited circumstances this analysis may be deemed sufficient for
assessing EOT entitlement. Such circumstances include where the impacted as-
planned method is dictated by the terms of the contract and/or where the delay events
being considered occurs right at the outset of the works.”
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6.47 Similarly, Time Impact Analysis was defined as follows:
“The time impact analysis involves introducing delay event sub-networks into a logic-
linked baseline programme and recalculation of this updated programme using CPM
programming software in order to determine the prospective impact the delay event
would have on the then predicted completion dates. The baseline programme for each
analysis can be either a contemporaneous programme or a contemporaneously
updated baseline programme (i.e. an Updated Programme), the difference being the
revised contemporaneous programme may have logic changes / activity / resource
changes from the original baseline programme. In either case, the analyst needs to
verify that the baseline programme's historical components reflect the actual progress
of the works and its future sequences and durations for the works are reasonable,
realistic and achievable and properly logically linked within the software. Mitigation and
acceleration already incorporated into the updated baseline programme need to be
considered as these can conceal or distort the projected impact of the delay events.
The number of delay events being modelled has a significant impact on the complexity
and cost of deploying this method. The product of this method of analysis is a
conclusion as to the likely delay of the modelled delay events on the
programme/critical path that is most reflective of the contemporaneous position when
the delay events arose. This method usually does not capture the eventual actual
delay caused by the delay events as subsequent project progress is not considered.
This method is also described in the guidance to Core Principle 4 in the context of a
contemporaneous assessment of an EOT application.”
6.48 In the first instance, HKA proposes that a ‘stepped insertion’ Impacted As Planned methodology to
be utilised to assess the impact of 15 nos. of delays to the project. This method will be quite similar
to the method utilised by the Contractor in its previous EOT submissions, except that the delay event
‘fragnets’33 will be inserted chronologically in the baseline schedule and the resulting changes to the
project completion date recorded after each insertion.
6.49 Furthermore, since the Engineer did not have any specific objection to the methodology utilised in
the previous EOT submissions, there seems to be no reason to depart from this methodology for
now.
6.50 Notwithstanding the above, upon review of submission of EOT, the Engineer may still request for
other delay analysis methodology, especially TIA to be submitted citing that the IAP methodology is
purely theoretical and does not take into consideration the progress of the works.
6.51 In order to be prepared, HKA recommends that the issues in relation to the programme updates as
indicated in paragraphs 6.34 - 6.41 to be rectified in preparation of carrying out TIA.
SUMMARY AND RECOMMENDATIONS

6.52 The data date of the revised baseline programme was 30 October 2016, and the Completion Date
was indicated as 21 March 2017 as per the approved EOT. Therefore, no further EOT shall be
applicable for any delays that occurred from the period of 3 August 2014 (Notice to Proceed date) to
30 October 2016.
6.53 The delays/delay events affecting the Time for Completion shall therefore only be considered from
30 October 2016 onwards.
6.54 In HKA’s opinion, the revised baseline programme is robust enough to be used for delay analysis.
However, the 14 Nos. of comments provided by the Engineer in the approved programme will need
to be incorporated in the revised baseline programme prior to using it for delay analysis purposes.
6.55 Apart from the 15 nos. of delay events identified in the previous EOT submissions, based on the
review of the updated baseline programmes, the critical delays driving the overall completion date of
33
Refers to sub-programmes for complex activities.
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the project are related to:
i. External Works – Excavation for Storm Water Box Culvert;
ii. Group 1 – Chiller Unit A & B (Manufacture & delivery – Variant Refrigerant Volume Air
Conditioning Units); and
iii. Group 3 – Fire Fighting System (Installation & Fixation of Fire Fighting Under Road P6
(ST:0+0 T 0+181) at Package 2).
6.56 The delays to these activities will need to be analysed in detail to identify the causes for delays as
the Engineer is likely to request full substantiation for the same.
6.57 Notwithstanding the above, in the events that the Engineer requests for different delay analysis
method, i.e. TIA, to ensure that the Contractor is prepared to carry out the same, the baseline
programme updates requires some remedial works prior to be used for delay analysis purposes as
summarised below:
i. Addressing the inconsistencies in the ‘Duration %’ complete or ‘Remaining Duration’
compared to the ‘Physical %’ complete;
ii. Removal of actual dates beyond the data date wrongly indicated for some of the activities
and assigning correct dates to these activities; and
iii. Verify the reasons for some of the activities having remaining duration more than the
revised baseline programme, failing which the remaining durations needs to be adjusted to
reflect proper remaining duration.
6.58 HKA proposes to utilise Impacted as Planned (IAP) delay analysis methodology to assess the delays
affecting Package 1 by making a consolidated submission including the 15 nos. of delay events
previously considered and by further analysing the delays affecting the programme updates as
indicated in section 6.55 of this submission.
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7 PACKAGE 2 - PROGRAMME & SCHEDULE ANALYSIS
CONTRACTUAL PROVISIONS AND APPROVED PROGRAMMES
7.1 Pursuant to sub-clause 8.1 of Particular Conditions of Contract, the Contractor is to provide a
Detailed Construction Programme to the Engineer within 28 days of accepting the bid.
7.2 The Contractor made various submissions of the Detailed Construction Programme from early
stages of the project but the first approval was only received on 1 July 2015,34 i.e. for ‘Detailed
Construction Schedule – Revised Baseline’, which was submitted on 27 June 2015.35
7.3 It is noted that the approval from Engineer was ‘Approved as Noted’. The approval was subject to
Contractor taking into consideration and incorporating the 16 Nos. of comments provided by the
Engineer in the approved programme.
7.4 The baseline programme and programme updates that incorporates these comments will need to be
prepared prior to utilising the programmes for delay analysis purposes.
SUITABILITY OF THE BASELINE PROGRAMME FOR THE DELAY ANALYSIS
Structure
7.5 The Work Breakdown Structure (WBS) of the programme contains the following major elements:
i. Tower – T10B-C1
ii. Tower – T10B-C2
iii. Tower – T7-C3
iv. Tower – T1A.1-B10
v. Tower – T1A.2-B11
vi. Tower – T2A.2-B12
vii. Tower – T10 A – B4
viii. Tower – T11B – B3
ix. Underground Parking – PB – B9
7.6 Further major breakdown (WBS) i.e. sub-structure and superstructure works are provided for each of
the building above.
7.7 The figure below provides a summary level WBS of the baseline programme.
34
Engineer response to transmittal ref: SCH-G-0006-00 on 1 July 2015.
35
Contractor transmittal ref. SCH-G-0006-00 dated 27 June 2015.
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Figure 10: Summary level WBS of the baseline programme.
Activities and Milestones
7.8 There are a total of 18300 activities in the baseline programme which comprises of:
i. 3 Start Milestones
ii. 29 Finish Milestones
iii. 18,267 Task Dependent activities
iv. 1 WBS Summary
Logic (Open ends, relationships and Lags)
7.9 Except for two activities, all the activities in the baseline programme have predecessors assigned to
them. Since these activities starts on the data date of the programme this is not an issue.
7.10 Similarly, only two activities have missing successors. Since one of these activities is the handover
activity and the other a WBS Summary activity, it is considered all the activities in the programme
have proper links/relationship.
7.11 A total of 13,003 relationship/logic links was used in the baseline programme. The table below
identifies the types of relationship used.
Relationship type No. of Relationship %
Finish to Start (FS) 23,045 54.00%
Finish to Finish (FF) 12,535 29.00%
Start to Start (SS) 6,781 16.00%
Start to Finish (SF) 4 0.01%
Total 42,365 100.00%
Table 19: Relationships used in the baseline programme.
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7.12 The most used relationships is FS relationship, which is a common practice.
7.13 The lags used in the baseline programme seems quite extensive, with 16,644 activities having
relationship with lags. The activities in the critical path with lag will have to be assessed in further
detail while carrying out the delay analysis.
CRITICAL PATH
7.14 The figure below identifies the critical path of the baseline programme.
Figure 11: Critical path of baseline programme
7.15 The driving activities of the critical path are:

i. Activity ID - A307899 (Excavation for Structure Until Level -3.0) – Related to Tower
T11B-B3
ii. Activity ID - DHP2-GR-A94220 (Submittal & Approval of Ready Mix Concrete) – Related
to Material Submittal & Approval.
7.16 In summary, the critical path of the baseline programme runs through each of the nine major building
works in this Package.
PROGRESS UPDATES
7.17 Based on the information received from the Contractor, 16 programme updates were prepared and
submitted to the Engineer based on the revised baseline programme to date.
7.18 The table below identifies the programmes referred to above.
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Elapsed Loss/Gain
Period since from
Programme Name Data Date Finish Date Total Delay
previous Previous
update Update
Baseline Schedule
Baseline Prog 10-Dec-14 N/A 08-Dec-16 0 0
Baseline Schedule Updates
Prog. Upd. 25 May 15 25-May-15 166 08-Dec-16 0 0
Prog. Upd. 25 Aug 15 25-Aug-15 92 13-Feb-17 -67 -67
Prog. Upd. 23 May 16 23-May-16 88 16-Nov-17 -343 -93
Prog. Upd. 4 Aug 16 04-Aug-16 73 24-Jan-18 -412 -69
Prog. Upd. 25 Jul 17 25-Jul-17 155 14-Jan-19 -767 -156
Prog. Upd. 25 Oct 17 25-Oct-17 92 10-Apr-19 -853 -86
Prog. Upd. 25 Dec 17 25-Dec-17 61 15-Jun-19 -919 -66
Prog. Upd. 25 Feb 18 25-Feb-18 62 13-Jul-19 -947 -28
Table 20: Programme updates based on the baseline programme.
7.19 The finish dates shown in table above refers to the Project handover date in the programme
updates. The extension to these dates will mainly be relied upon to determine the prolongation cost
period during the delay analysis. However, based on HKA’s discussion with the project personnel, it
appears that each of the building works has its own indirect resources. Therefore, to accurately
identify the prolongation cost, the delays to each of these buildings will need to be established
individually.
7.20 Further details of the programme updates related to driving critical activities are provided in
Appendix D1 to this submission.
CRITICAL PATH DRIVING ACTIVITIES

7.21 The table below identifies the driving activities of the critical path in the programme updates. The
delays to these activities will need to be analysed in detail to identify the critical delays to the project
and Contractor’s entitlement for an EOT.
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Critical Path Driving
Programme Name Data Date Finish Date Total Delay Area/Building Activity Description
Activity
Baseline Schedule
A307899 Tower - T11B-B3 Excavation for Structure Until Level -3.0

Baseline Prog 10-Dec-14 08-Dec-16 0
DHP2-GR-A94220 Material Submittal & Approval SUBMITTAL & APPROVAL OF READY MIX CONCRETE
Baseline Schedule Updates
Prog. Upd. 25 May 15 25-May-15 08-Dec-16 0 A307919 Tower - T11B-B3 Excavation for Structure Until Foundation Level
Prog. Upd. 25 Aug 15 25-Aug-15 13-Feb-17 -67 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Nov 15 26-Nov-15 11-May-17 -154 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Feb 16 25-Feb-16 15-Aug-17 -250 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 23 May 16 23-May-16 16-Nov-17 -343 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 4 Aug 16 04-Aug-16 24-Jan-18 -412 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Nov 16 25-Nov-16 12-May-18 -520 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 20 Feb 17 20-Feb-17 11-Aug-18 -611 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Jul 17 25-Jul-17 14-Jan-19 -767 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Oct 17 25-Oct-17 10-Apr-19 -853 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Dec 17 25-Dec-17 15-Jun-19 -919 DH2-PB-10 Underground Parking-PB-B9 EXCAVATION UNTILL FOUNDATION LEVEL
Prog. Upd. 25 Feb 18 25-Feb-18 13-Jul-19 -947 DHP2-GR-A94940 Tower-T10B-C1 SUBMITTAL & APPROVAL OF ABLUTIONS
Figure 12: Driving activities of the critical path of the programme updates.
7.22 Based on the review of the baseline programme updates, the activities that drives the critical path of
the programmes are:
i. Tower - T11B-B3 – Excavation for Structure Until Foundation Level;
ii. Underground Parking-PB-B9 – Excavation until Foundation Level; and
iii. Tower - T10B-C1 – Submittal and Approval of Ablutions.
7.23 The delays associated with Underground Parking-PB-B9 is 919 days and the delays associated with
Tower-T10B-C1 is 28 days. The delays related these activities, especially the Underground Parking-
PB-B9 – Excavation until Foundation Level’ needs to be investigated in detail to identify the
Contractor’s entitlement for an EOT.
7.24 Apart from the delays to the critical activities indicated above, the impact of Change Orders will also
need to be considered to establish the overall critical delays to the project.
OTHER DETAILS OF THE BASELINE PROGRAMME UPDATES

Actual date beyond data date
7.25 The programmes updates with data date of 4 August 2016, 25 July 2017 and 25 February 2018 have
activities with actual dates beyond the data date, i.e. 28, 7 and 18 activities respectively. This will
need to be rectified prior to the delay analysis.
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Activities without successors
7.26 Programme update with date of 25 May 2015, have 571 activities without successors. The figure
below is an extract from the programme that indicates some of the activities without successors.
Figure 13: Activities without successors in programme update with data date of 25 May 2015.
7.27 These activities will need to be assigned with proper successors prior to utilising it for delay analysis
purposes. It is also noted that this is first programme update available for this Package.
Inconsistencies between Physical % and Duration % / Remaining Duration
7.28 It is noted that the percentage (%) complete type utilised for most of the activities in the programme
updates are ‘Physical %’ type.
7.29 There seem to be some inconsistencies in the ‘Duration %’ complete or ‘Remaining Duration’ in
programme updates as explained below.
7.30 For example, as observed from the figure below extracted from the programme update with data
date of 25 November 2016, the activities related to Masonry Works for Tower T10B-C1 have
Physical % complete assigned as 90% to them but the remaining duration were not updated.
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Figure 14: Inconsistencies in the Duration % Complete of programme update.
7.31 The example for inconsistencies in remaining duration as described above is prevalent throughout
the programme updates.
7.32 The inconsistencies in the ‘Physical %’ complete and remaining durations for the activities as
explained above needs to be addressed in order for the delay analysis results to be reliable.
SELECTION OF THE DELAY ANALYSIS METHODOLOGY

7.33 In the first instance, HKA proposes that a ‘stepped insertion’ Impacted As Planned methodology to
be utilised to assess the impact of 14 nos. of delays to the project. This method will be quite similar
to the method utilised by the Contractor in its previous EOT submissions, except that the delay event
‘fragnets’ will be inserted chronologically in the baseline schedule and the resulting changes to the
project completion date recorded after each insertion.
7.34 Furthermore, since the Engineer did not have any specific objection to the methodology utilised in
the previous EOT submissions, there is no need to change the methodology for now.
7.35 Notwithstanding the above, upon review of submission of EOT, the Engineer may still request for
other delay analysis methodology, especially TIA to be submitted citing that the IAP methodology is
purely theoretical and does not take into consideration the progress of the works.
7.36 In order to be prepared, HKA recommends that the issues in relation to the programme updates to
be rectified in preparation of carrying out TIA.
SUMMARY & RECOMMENDATIONS

7.37 In HKA’s opinion, the baseline programme is robust enough to be used for delay analysis. However,
the 16 Nos. of comments provided by the Engineer in the approved programme will need to be
incorporated in the baseline programme prior to using it for delay analysis purposes.
7.38 Apart from the 14 nos. of delay events identified in the previous EOT submissions, based on the
review of the updated baseline programmes, the critical delays driving the overall completion date of
the project are related to:
i. Underground Parking-PB-B9 – Excavation until Foundation Level; and
ii. Tower-T10B-C1 – Submittal and Approval of Ablutions.
7.39 The delays to these activities will need to be analysed in details to identify the causes for delays as
the Engineer is likely to request for substantiation for the same.
7.40 Notwithstanding the above, in the events that the Engineer requests for different delay analysis
method, i.e. TIA, to ensure that the Contractor is prepared to carry out the same, the baseline
programme updates requires some remedial works prior to be used for delay analysis purposes as
AL FOUZAN
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summarised below:
i. Addressing the inconsistencies in the ‘Duration %’ complete or ‘Remaining Duration’
compared to the ‘Physical %’ complete;
ii. Removal of actual dates beyond the data date wrongly indicated for some of the
activities and assigning correct dates to these activities; and
iii. Assigning successors to activities without successors in programme update of 25
May 2015.
7.41 HKA proposes to utilise Impacted as Planned (IAP) delay analysis methodology to assess the delays
affecting Package 2 by making a consolidated submission including the 14 nos. of delay events
previously considered and by further analysing the delays affecting the programme updates.
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8 ADDITIONAL COST AND / OR LOSSES
INTRODUCTION
8.1 The Contractor may be entitled to additional payment in accordance with the provisions of Articles 54
and 77 of the GTPL, Article 152 of IR and Articles 36, 50, 59 of the GCC.
FINANCIAL RECORDS NECESSARY TO COST PROLONGATION

8.2 HKA is not privy to nor has been issued with the Contractor’s cost data. HKA reasonably presumes
that the Contractor possess detailed information in its accounts department that is supported by
purchase order, payroll / wages and other documentation that can be collated and put in a format
suitable for the preparation of a prolongation cost claim.
8.3 From the delay analysis HKA will identify the compensable periods of delay and calculate the
Contractor’s actual costs during these periods.
FINANCIAL AND OTHER RECORDS NECESSARY TO COST DISRUPTION

8.4 HKA needs to undertake a detailed review of all the Contractor’s contemporaneous site records to
determine if in fact these records are sufficient to support a disruption claim to the level required.
8.5 HKA’s initially view based on the information received from the Contractor is that it has not
maintained the necessary level of detail required for undertaking such a disruption claim.
Furthermore, from the manpower resource histogram that the Contractor has prepared for Package
1, HKA notes that the planned man-hours up to end of February 2018 are greater 36 than the actual
man-hours employed in the Works. While this does not mean that there is no valid disruption claim, it
demonstrates that overall the Contractor is not at an overall loss as regards man-hours employed in
the Works.
HKA’S REVIEW OF PAYMENTS RECEIVED FROM THE EMPLOYER

8.6 During the course of the Project, the Contractor has submitted its payment invoices for the executed
works under the Contract on a monthly basis as per the requirements of the contract, in order to
obtain approvals from the Engineer, and issue invoices for payment to the Employer based on the
IPCs.
8.7 IPCs were issued, consistent with the obligations on the Employer to “execute the contract
conditions in good faith, and pay to the Contractor its due instalments without delay” as stipulated in
Article 59 (GCC), the Contractor reasonably expected to receive interim payments from the
Employer of at least one payment per month, as stated in Article 50 (GCC).
8.8 However, in numerous cases (on both packages) these payments were not processed timeously by
the Employer, as a result, the Contractor has incurred additional costs (i.e. financial charges) to
finance the Project for the remaining work. The Contractor has identified this issue in various
correspondences and in its EOT claims.
8.9 HKA’s position is that financial charges are a valid head of cost since they form part of the additional
costs incurred, and therefore should be pursued with the Employer.
CONTRACTUAL ENTITLEMENT
8.10 It is incumbent upon the Employer to provide the interim payments to Contractor in a timely manner,
so as not to affect the progress of works.
8.11 Such a requirement is one of the Employer’s most fundamental obligations in the Contract. Article
36
Total of 1.55 million planned man-hours versus 1.42 million actual man-hours.
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59 (GCC), states and requires:
“The Work Owner shall execute the contract conditions in good faith, and pay to the
Contractor its due installments without delay” [Emphasis added]
8.12 The Contractor is reasonably expected to receive Interim Payments from the Employer within 30
days as stipulated in Article 50 (GCC), a translated extract from the Article states:
The Contractor's dues shall be paid according to the actual work completed and
according to the progress payment approved by the Consultant or the technical body
supervising the project. Such progress payment shall be paid periodically at a rate of at
least one progress payment every month.” [Emphasis added]
8.13 HKA notes that the Employer has failed to comply with the “period of payment” specified in the
Contract. Therefore, the Contractor is entitled to seek recovery for any additional finance charges
incurred as a result of the above matter, in accordance with Article 59 (GCC) as state:
“If the Work Owner breaches any of the contract conditions or fails to pay in due date,
the Contractor shall be entitled to claim compensation for losses resulting from this
default or reach...”
8.14 Furthermore, HKA notes that these delays were outwith its control. Therefore, it is entitled to seek
recovery of the delay incurred in accordance with Article 36 (GCC) and supplemented by Article 51
(GTPL) which stipulates:
“A contract shall be extended, and the penalty shall be waived by agreement of the
contracting Government Authority and the Ministry of Finance, if the delay is due to
unforeseen circumstances or for reasons beyond the contractor’s control, provided that
the period of delay is proportional to these reasons.” [Emphasis Added]
8.15 HKA notes that in the event, through no fault of the Contractor, the Employer has failed to provide
payment within period specified in the Contract resulting in the Contractor suffered delays and
disruptions to the performance of its works.
8.16 It is noted that while there is no express link between the Engineer’s Certificate and the Employer’s
due date for payment once approved by the technical comptroller, it is arguable that it is an implied
condition of contract that payment shall be made within 30 days of the date of the Engineer’s IPC as
otherwise the Contract could not function as intended37. However, in saying that, this matter is
subject to the Law of Saudi Arabia incorporating Shariah and it is outwith the Consultant’s sphere
remit as to how Shariah might deal with this issue.
8.17 If the Contractor believes that it requires a correct legal interpretation under Saudi Arabian Law then
HKA suggests that it seek legal advice from a suitably qualified and experienced legal practitioner.
CONCLUSION
8.18 HKA’s advice is that the Contractor should pursue the matter with the Authorities by way of formal
claim submission followed up by discussions to endeavour to arrive at an acceptable negotiated
settlement.
37
i.e. With at least one payment being made monthly by the Employer.
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9 APPENDICES
SCHEDULE OF APPENDICES
APPENDIX DESCRIPTION
D1 Details of the driving activities in the programme updates
______________________________________________________________________________________
End of Advice Note

______________________________________________________________________________________
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Dar Al Hijra (Madina Haj City) Madina Phase 1

INITIAL REVIEW AND STRATEGY

Name Designation Signature Date

Brian O’Connor Director

Peer Review: Tim Whealy Partner

STAGE 1 ADVICE NOTE

FOR AL FOUZAN TRADING & GENERAL CONSTRUCTION

Contractor Al Fouzan Trading & General Construction Company Limited

EOT Extension of Time

GCC General Conditions of Contract

GTPL Government Tenders and Procurement Law

IPA Interim Payment Application

IPC Interim Payment Certificate

PIF Public Investment Fund

PWC Public Works Contract, Kingdom of Saudia Arabia

SCC Special Conditions of Contract

(a) The extensive delays in receipt of payment from the Employer;

PREVIOUS CLAIMS AND AWARDS

HKA’S FINDINGS - STRENGTHS

HKA’S FINDINGS - WEAKNESSES

STRATEGIC ADVICE – HKA RECOMMENDED STRATEGY

DAR AL HIJRA PROJECT - MEDINAH - PACKAGE 1

Employer: PIF / Saudi Company for Real Estate Development

Employer: PIF / Saudi Company for Real Estate Development

GOVERNMENT TENDERS AND PROCUREMENT LAW

Table 5: Relevant GTPL Chapters Descriptions and Article References

3.14 Article 39 states:

“The contractor’s entitlements shall be paid instalments according to the works

(b) If a contractor delays commencement of the work, procrastinates in its execution

“Contractors and government authorities shall execute their contracts in

IMPLEMENTING REGULATIONS OF GTPL

Table 6: IR Chapter Descriptions and Article References

3.26 Article 63 of IR states:

“Contractors’ entitlements shall be paid according to the works performed after

“Firstly: Conditions for Review of Compensation Claims:

ANALYSIS OF MAIN CONTRACT PARTICULARS

Article No. Description

Table 7: Contents and Articles of Main Contract Document

3.38 Article 6 Payment Sub-paragraph 6.2 of the states:

ANALYSIS OF KEY PROVISIONS OF SPECIAL CONDITIONS OF CONTRACT

Claims and Delay Penalties

3.52 Article 39 states:

Table 8: Package 1 Shop Drawings Status

4.2 Package 2 shop drawings are as noted in Table 9 below

Table 10: Package 1 Material Long Lead Approvals

Table 11: Package 1 Material Short Lead Approvals

Table 12: Package 2 – Material Approval Status

Delay Events - Phase 1 Package 1

Delay Events - Phase 1 Package 2

Payment Status 2016 - Phase 1, Package 1

Payment Status 2017 - Phase 1, Package 2

Payment Status 2017 - Phase 1, Package 2

CONTRACTUAL PROVISIONS AND APPROVED PROGRAMMES

SUITABILITY OF THE BASELINE PROGRAMME FOR DELAY ANALYSIS

Finish to Start (FS) 8,967 68.96%

Finish to Finish (FF) 2,509 19.30%

Start to Start (SS) 1,527 11.74%

Total 13,003 100.00%

Table 17: Relationships used in the baseline programme.

6.21 The most used relationships is FS relationship, which is a common practice.

Figure 6: Critical path of baseline programme

Revised Baseline Schedule