How to Ensure Engineers’ Responses and Instructions Do Not Result in Expensive Claims

A request was made by one of our blog followers to examine the Engineer’s duty to provide instructions and responses within a reasonable time. In my experience, failure of the Engineer to comply with such obligations often gives rise to claims, so this is definitely worth a blog post. This example uses the 1999 FIDIC Red Book, although other forms of contract contain similar provisions. Sub-Clause 1.3 (Communications) states that ‘Approvals, certificates, consents, and determinations shall not be unreasonably withheld or delayed’ which immediately begs the question: what constitutes unreasonable delay? The contract itself provides guidance in many circumstances. For example, Sub-Clause 14.6 (Issue of Interim Payment Certificates) provides that payment certificates shall be issued within 28 days of the Contractor’s Statement being received and 10.1 (Taking Over of the Works and Sections) obliges the Engineer to either issue the Taking Over Certificate or reject the Contractor’s…

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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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Do Project Consultants Understand their Obligations with Regard to Claims?

I recently presented a training course on claims and FIDIC and quite surprisingly, almost all attendees were from contractors or subcontractors. Does this mean that those appointed to act as ‘the Engineer’ under FIDIC or other consultants appointed to administer contracts consider that they already understand this subject fully, or are Engineers just not interested in dealing with claims properly? My own personal experience, which was supported by those attending the course, suggests that there are major problems with the way that Engineers deal with claims and in the majority of cases Engineers simply do not comply with their contractual obligations. The FIDIC contracts provide the following obligations on the Engineer: The Engineer shall respond to a claim within 42 days (Sub-Clause 20.1). This hardly ever happens. In the case of rejection, the Engineer shall respond with detailed comments (Sub-Clause 20.1). The Engineer often fails to provide any meaningful comments as to his…

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Determinations, Rocks and Hard Places

Most form of contract oblige the consultant responsible for determining the contractor’s claims (the Architect, Engineer or Contract Administrator), to make a fair and reasonable award or decision in accordance with the contract. I question that I often get asked by those acting in such positions is “What should we do when the client puts us under pressure to issue an unfair or unreasonable determinations?” When determining claims, the consultant is between a rock and a hard place. If too little is awarded, the situation is likely to be elevated to a dispute by the Contractor, which could cost both parties considerable time and money and if too much is awarded, then the client will not be happy. If we bear in mind that the client pays the consultant’s fees, it is very probable that the consultant will feel under pressure to favour the client in such situations. My answer to such questions is always the same. It should firstly go without saying that the determination should actually be…

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Procedure for the Review of Claims

A question I often get asked is “how should the engineer (or other party responsible for responding to a claim) ensure that he is being fair to both parties when making a decision or determination?” In my experience, claim submissions range from totally inadequately expressed claims to very well-presented documents but on balance, I have to say that the majority tend to be in the former category. Over the years, in situations where I am responsible for producing a response, I have developed the following procedure for dealing with claims of all shapes and sizes. Undertake an initial review of the claim; Advise the claimant of any shortcomings, which prevent the reviewer from reaching a determination. This could be through formal queries or requests for additional information. If the claim is totally inadequately expressed, it may be appropriate to reject the claim at this stage on the basis that entitlement is not proved. In such a case, it would also be proactive to set out what…

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