The ICCP Conference is Back!

We are thrilled to announce the second ICCP conference: Construction Claims and Dispute Avoidance: How to Achieve Successful Outcomes. This event is specifically designed for professionals like you who work in the specialist field of construction claims. Whether you are a developer, contractor, consultant, or legal expert, this conference is tailored to address your needs and challenges. On the Agenda Based on attendee feedback following last year's inaugural conference, this year will include a full day of sessions on claims management and dispute avoidance. Join us and gain insights from top industry experts. You will leave armed with new knowledge to put yourself in the best position to settle at project level and avoid disputes. We will delve into critical topics such as: How can we establish effective contract administration processes for claims? How can we create robust strategies to avoid claim situations? If we do find ourselves in a claim situation, how do we compile and…

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Advice on Mark-Ups

Change management is crucial to projects proceeding smoothly. It depends on communication, recognition of entitlements as to principles, and evaluation of price adjustment. This article will examine mark-up agreements and their role in change management. Some costs, while undoubtedly arising, are hard to estimate. It could be Head Office overheads, change management costs, margins and profit, or savings share. These are often resolved by making contractual agreements through so-called mark-up clauses. Such clauses make change evaluation easier. The usual method is to relate the mark-up rate with the direct value of change. But this can be complicated. What kind of costs should be included? What should be done with de-scopes or time-extending changes? Examples of Marked-up Costs  Typical categories included in mark-up clauses include profits, head office overheads, site overheads, change management costs, contingencies for risk, and share of savings. Some contracts may add fixed…

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How Should Variations Be Priced When There Has Been an Adjustment to The Tender Price?

An ICCP member recently asked my opinion on how an adjustment to the Tender Price agreed upon during tender negotiations should be applied when pricing variations. This is a matter that often causes contention so I thought it would make a worthwhile blog subject. The following is a typical scenario: The Contractor submits a tender accompanied by a priced bill of quantities for the tender price. The Employer meets with the Contractor and negotiates a reduction, and the contract sum is agreed at a lesser figure than the tender price. The contract documents are prepared and include a bill of quantities which shows the final price in the bill of quantities agree with the contract sum. There is no clear record of the form of the price reduction that was negotiated. The problems start when variations occur that are to be measured and evaluated at the contract rates and prices. The Contractor argues that the rates and prices should be those shown in the bills of quantities and the…

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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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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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