In this blog post, Steering Committee member, Mark Watson, answers a variety of questions related to FIDIC 1999 Red Book. These questions are excerpted from our tenth Construction Clinic session, which took place in June 2020. The entire webinar may be viewed on-demand on YouTube.

Question 1

Question: When it comes to Notice provisions and Time barring, we set the following scenario:

– FIDIC Red Book 1999
– Commencement date stated in Contract data as 11 May 2020
– No Letter of Acceptance
– Contract signed 22 May 2020
– Event started 3 May 2020

In instances where events happened before Contract Finalisation as above, do you set the ‘became aware’ date as the Commencement date, Contract signing, or actual date when the event happened pre-Contract?

Answer: The important dates are the Commencement Date [Sub-clause 8.1 (Commencement of Works)] and the Time for Completion date [Sub-clause 8.2 (Time for Completion)]. The reason for this is that an Extension of Time for Completion [SC 8.4 (Extension of Time for Completion)] is calculated from the Commencement Date. In this circumstance, the event, even though it started 3 May 2020, would only be considered from 11 May 2020.

I would caution against using words that are not defined under the Contract, and for that reason, I will steer clear of using ‘became aware date’. I would record the Commencement Date and include a Delay Work Breakdown Structure (WBS) to record the delays. Similarly, I would include a Contract Data WBS and record contract signature date, however, this contract signature date should not be used to drive the critical path of the Works.

Question 2

Question: In this scenario, we’re using a FIDIC Red Book 1999 contract executed in the DRC, due to start site establishment on 20 June 2020. The Employer initiated a compulsory 2-week self-quarantine on-site for all personnel coming onto site. Under which Sub-clause can the Contractor possibly claim costs?

Answer: A two-week delay to site establishment may not delay the works. The reason for this is that the Contractor can complete his health and safety plans, method statements, and 8.3 programme before work can commence on a remote site. These and other mitigation actions should be considered before we rush to submit a claim for costs.

However, if your analysis establishes that the Contractor is entitled to an extension of time and additional payment, then I would raise such claim under Sub-clause 8.6 (Rate of Progress), because the quarantine may affect the Contractor’s ability to complete its work within the time for completion.

Alternatively, the two-week quarantine could be considered Suspension of Work under Sub-clause 8.8 (Suspension of Work, Consequences and Resumption of Work) and I would raise an extension of time and additional payment claim under Sub-clause 8.9 (Consequences of Suspension).

Question 3

Question: Under a FIDIC 1999 Red Book contract, the Employer delayed Contractor interim payments, and extension of time for the period of delay granted, my questions are:

  1. Does the Contractor need to issue a Notice for a prolongation cost claim under Sub-clause 20.1 (Contractor’s Claim) after he become aware of this event as prescribed in the Sub-clause? And if he fails to do so in the 28 days does that contractually affect the Contractor’s later entitlement? and
  2. What is the best time to submit a prolongation claim? Is it in the middle of the extension of time? Or should it be at the end of the project for the total prolongation cost? Or is it better to be in monthly intervals?

Answer: Before I proceed to answer your two questions, I believe it necessary to first unpack the scenario. The first part of your scenario relates to payment under Sub-clause 14.7(a) to (c) (Payment). In this circumstance, the remedy sits under Sub-clause 14.8 (Delayed Payment) and the Contractor shall be entitled to receive financing charges compounded monthly on the unpaid amount during the period of delay. The Contractor shall be entitled to this payment without formal Notice or certification.

The second part of your scenario relates to an extension of time for the period of delay granted. I am assuming that an extension of time for completion claim was raised under Sub-clause 8.4 (e) (Extension of Time for Completion) and relates to any delay, impediment or prevention caused by or attributable to the Employer.

Turning to your questions:

Question 1: The contractor’s remedy under Sub-clause 14.8 is separate from its remedy to claim for an extension of time and additional payment under Sub-clause 20.1. Under common law jurisdictions, the Contractor may be time-barred, whereas under civil law jurisdictions, a different approach may be adopted.

Question 2: The best time to submit a claim for prolongation is under those requirements set out under the contract. i.e. Sub-clause 20.1 and any amendments provided under the particular conditions of contract. To the extent that the claim has a continuing effect, the Contractor is to provide its interim claims at monthly intervals.

The questions covered in this blog were answered by ICCP Steering Committee member, Mark Watson

If you would like to learn more about claims, check out our training partner, Claims Class.

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