What’s the Difference Between a Claim Submitted to an Engineer and One Submitted to Arbitration?

I was recently asked if there are differences between claims submitted to the Engineer and those submitted for arbitration. My response was, “Yes, there frequently is, but there shouldn’t be.” Here is a very frequent scenario related to claims that explains why that is. The Contractor considers that he has a justifiable claim for either a significant amount of money or an extension of time which will negate delay damages. He delegates the claim preparation without determining whether the person has adequate qualifications or experience to prepare a claim to a suitable standard. The person given the responsibility does his/her best, but lacking the necessary experience and skills, the claim is not prepared to a good standard. The Engineer rejects the claim because: he can’t understand it it does not contain adequate information it is not substantiated, or it just does not prove that the claim is justifiable. Even an impartial Engineer would be correct to do so and a defensive…

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Is the Contractor Entitled to Claim for Additional Preliminaries for Variations?

Variations and whether the Contractor has entitlement to payment for additional preliminaries arising out of variations are both topics of interest to many. The short answer is: it depends. The preliminary section of the bills of quantities is where the Contractor is given the opportunity to price for his project overheads and running costs. These will include mobilisation and demobilisation; time-related costs for management, administration and non-productive labour; time-related costs for plant, equipment offices and temporary buildings; contractual costs; etc. Provided that there is no delay to the project and there is no significant increase in the amount of work, such costs will remain fixed. If a variation is instructed, the Contractor’s payment for the additional or changed work will be picked up in the remeasurement in the case of remeasurable contracts or measured and evaluated separately in the case of lump sum contracts. The contract rates and prices will include overheads…

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Why do Your Final Accounts Become Disputes?

My consultancy practice was asked to advise on a dispute of some US$250M. This sum included variations, prolongation costs, acceleration costs, disruption costs, and delay penalties. The dispute emerged when the Contractor submitted his final account, which reminded me of the fact that a large proportion of disputes occur when the project is either nearing completion or when it has been completed. Here is my list of reasons why this is the case. As usual, I have adopted the FIDIC definitions for the participants in the contract, but this advice applies to all forms of contract. Contractors do not submit notices of claim and/or early warnings, thus preventing the Employer or Engineer from taking mitigating action or from making financial provisions. Contractors do not give notice when they consider that an instruction constitutes a variation that gives entitlement to additional payment, thus preventing the Employer or Engineer from reversing the instruction or making financial…

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FIDIC 2017 Editions and Claims

While you may have not had the opportunity to examine the 2017 editions of the FIDIC contracts, because you have not yet come across any projects that are using them, this situation will gradually change. Before too long, we will need to know what has changed and how it has changed. Therefore, I thought that it would be worthwhile to highlight the changes from a claims point of view. Sub-Clause 2.5 (Employer’s Claims) has been deleted in the 2017 editions and Employer’s claims are now dealt with together with Contractor’s claims under Sub-Clauses 20.1 (Claims) and 20.2 (Claims For Payment and/or EOT). The Employer is now obliged to give notice of claim no later than 28 days after the event or circumstances giving rise to the claim. This has now become a condition precedent to entitlement for both Parties. If the Engineer considers that a notice of claim was not given within the stipulated 28 days, he/she is obliged to give a notice of such within 14 days of receipt of the notice of…

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Q&A: Entitlements Under the FIDIC White Book

The following questions, related to contractual issues arising from COVID-19, were posed during our fifteenth Construction Clinic, held in July 2020. Andy Hewitt's responses have been summarised from the original. The entire webinar may be viewed on-demand on YouTube. Question 1 Question: (Part 1 of 3) This question is in several parts. It is related to the FIDIC consultancy contract, which is the White Book, in terms of management of a consultant on his project. The first part of the question asks what is allowable and what is not. [Note: this blog post on the Practical Law Construction Blog has more information on the White Book.] Answer: The White Book is not one of the contracts that I deal with on a regular basis, so I had a quick look at it. There's absolutely no definition of cost in the White Book. So, if it concerns a variation to the consultant’s services, redesigning something, designing variations, possibly being deployed on an extended period because the Contractor didn't…

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