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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A Case Against Abbreviations and Acronyms

I have one simple piece of advice about using abbreviations and acronyms in claims, responses, contractual letters, reports, or in fact, any important communications on your project: Don't use them. At all. Ever! Let’s consider a real-life example of why this is so important. In my work as a consultant, I was recently appointed to prepare claims on behalf of the Contractor for an Extension of Time and additional payment on a large project. I began with an examination of the project records for evidence of what happened and to select certain documents to include in the claims as substantiation of the facts. I quickly realised I had a problem - the letters, meeting minutes, progress reports, etc. were difficult to understand, largely because they contained a number of abbreviations and acronyms. It was as if the documents were written in code. Responses to our requests for information from the Contractor were confusing for the same reason. Maybe the Contractor was encouraged to do this…

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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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