September 2, 2023
Drafting Acceleration Clauses 3
This is the third in a three-part series. The previous posts covered: Brainstorming to be carried out for drafting an acceleration clause Methodologies of achieving acceleration. Proving acceleration claim Standard acceleration clauses under FIDIC 1999, 2017 and NEC standard forms of contract Payment methodologies for acceleration.
August 25, 2023
Drafting Acceleration Clauses 2
This is the second in a three-part series. The previous post discussed the brainstorming by the Employer for formulating an Acceleration clause. This post shall discuss payment modalities and how standard contracts deal with acceleration. Payment methodologies for acceleration may be: Fixed lump sum payment (lump sum amount or percentage of contract value). This payment may be conditional on the completion of deliverables by the revised dates with and/or Liquidated Damages. Payment of reasonable costs. This may be less risky to the Contractor than the first method but places a greater obligation on the Contractor to maintain accurate records and prove additional costs.
August 17, 2023
Drafting Acceleration Clauses
This is the first in a three-part series on drafting acceleration clauses. This post will examine the considerations necessary before committing to an acceleration clause. I have been involved in a INR 2000 crore (US$250 million) Indian Public Sector EPC Project based on the FIDIC Silver Book 1999 (modified as usual by PCC - but not distorted), wherein we decided to include an Acceleration (Directed Acceleration) clause- a first in Indian Public Sector Construction Projects.
September 20, 2022
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…
August 23, 2022
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…