How to Administer the Contractor’s Programme

One of our blog followers asked for some advice on the administration of the Contractor’s programme. The questions raised relate to fairly frequently occurring situations, so this subject is definitely worthy of a blog post. I have reproduced the queries below and I will refer to the FIDIC forms of contract and terminology when providing my advice. Requested Advice: A summary of general principles which would avoid the Contractor submitting erroneous programme updates, for example, don’t be bullied by the Engineer into submitting a programme based on the original completion dates and which therefore absorbs the impacts of delay events (thus losing entitlement). So, let’s be clear what a programme update actually is. First, we must establish the Contractor’s programme, which is often referred to as the baseline programme. This programme should be the Contractor’s best estimate of the sequence and timing of how he intends to carry out the Works and should be based on the Contract at…

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Top 10 Tips for Effective Letter Writing

One of the things that I notice upon reviewing the records to prepare a claim, reviewing claims on behalf of the respondent, or reviewing the particulars put forward in a dispute, is the poor standard of letter writing. This ranges from “could have been better” right through to “I have no idea what this letter means”. If your letters fall into this category, you are not doing yourself or your company any favours and you could be doing considerable harm. This blog, therefore, contains my Top 10 Tips for effective letter writing. You are not writing the letter for your opposite number on the project. You are writing it as an accurate record to be relied upon in case a claim or dispute arises in the future. The letter must, therefore, be fully understood by someone who has no prior knowledge of the project or the matters in question. The letter should be a stand-alone document. In other words, a reader with no prior knowledge should be able to understand it without reference to any…

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Frustration Under English Law – Key issues in a global pandemic

The extraordinary circumstances that COVID-19 has forced us to adapt to are demonstrated by the fact that we are routinely looking at an area of law that has developed, primarily, as a result of world-changing events such as wartime shortages, the first Gulf War and the global financial crisis of 2008. How does Frustration operate? Frustration discharges both parties from all of their future obligations pursuant to the contract. It operates automatically. It requires no positive act by either party. It requires there to have been an “outside event or extraneous change of situation” which has arisen without blame of the person seeking to rely on it. The key is whether the situation makes the obligation pursuant to the contract impossible to perform, not simply more difficult, or even financially catastrophic for one of the parties. The circumstances that you must find yourself in have to be “radically different” from when the contract was concluded. The test has a high bar and…

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Are Contractors Playing with Fire? Construction Projects and “Uncertified Revenue”

Uncertified revenue is the value of work as assessed by a contractor which has been completed but not yet certified and paid by an employer. It typically could include the value of measured works, changes to the works and / or other claimed entitlements. Practices in the industry vary hugely. However, some contractors account for uncertified revenue on a basis which is – at best – optimistic and – at worst – wildly unrealistic. They may assume that the vast majority or even 100% of uncertified revenue will be realised when reporting internally and externally. This approach can pose serious risks. Following the collapse of Carillion in the UK in 2017 it was found that £294 million of the £729 million revenue reported in its accounts but which it would not actually receive concerned unapproved variations and other claims submitted to clients (i.e. uncertified revenue). Although there were many other failings, this unrealistic accounting of uncertified revenue was a major factor in…

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Contractors: Are your claims responded to correctly?

EC Harris’ (now Arcadis) Global Construction Disputes Report has, for many years, cited inadequately expressed claims as being one of the top five causes of disputes in the construction industry. Although the reports do not specifically mention it, I suspect that inadequate and unfair determinations should also be somewhere near the top of this list. This is because I frequently hear complaints that a claim has not been responded to either fairly or in a meaningful way. So, what is the problem? If we consider the FIDIC forms of contract as fairly typical of the widely-used forms of contract, we can see that the Engineer has the following obligations when responding to claims: Respond to the claim within 42 days - Sub-Clause 20.1 (Contractor’s Claims); In a case of rejection, respond with detailed comments - Sub-Clause 20.1 (Contractor’s Claims); Include sums that the Engineer considers to have been reasonably substantiated as being due in interim payment certificates - Sub-Clause…

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