The following questions, related to contractual issues arising from COVID-19, were posed during our fifteenth Construction Clinic, held in July 2020. Andy Hewitt’s responses have been summarised from the original. The entire webinar may be viewed on-demand on YouTube.

Question 1

Question: (Part 1 of 3) This question is in several parts. It is related to the FIDIC consultancy contract, which is the White Book, in terms of management of a consultant on his project. The first part of the question asks what is allowable and what is not.

[Note: this blog post on the Practical Law Construction Blog has more information on the White Book.]

Answer: The White Book is not one of the contracts that I deal with on a regular basis, so I had a quick look at it. There’s absolutely no definition of cost in the White Book. So, if it concerns a variation to the consultant’s services, redesigning something, designing variations, possibly being deployed on an extended period because the Contractor didn’t finish on time, you’ve got to look at the nature of what he’s claiming additional payment for.

Should that be cost as defined in FIDIC, i.e., cost actually incurred, or should it be something that should be fairly paid, given his overheads or at least profit, if he has been prevented from deploying his staff onto another project and has a loss of profit on the other ones? There are lots of things to consider here.

Question 2

Question: (Part 2 of 3): Can I refer to the Delay and Disruption Protocol as the contract requires the Consultant to abide by international practices and standards?

Answer: You can possibly refer to it for some principles, but the Society of Construction Law Delay and Disruption Protocol is designed to give guidance on Contractor matters – Extensions of Time, the costs that Contractors can claim. It’s not really designed for using consultancy agreements.

Question 3

Question: (Part 3 of 3) Please advise on the entitlement due to the consultant in terms of cost.

Answer: Again, the consultancy agreement does not refer to cost, so that’s not a basis of how to evaluate additional or changed services. If, for example, the consultant is a designer and had to do some extra work, that would be a variation to his services.

If the consultancy agreement has been set up correctly, there should be a mechanism within that contract to evaluate for additional work. This is where the White Book leaves an awful lot to the discretion of the person or people who are creating the contracts and drafting the contract.

It’s very difficult to answer the question without knowing some specifics of the costs – for example, were there additional services due to variations, or was it a time-related matter due to a delay from the Client? In any case, I hope I’ve given you some principles to think about.

It’s possible the question is actually, “Will the time impact of an extension to the completion date of the project be necessary to demonstrate at this stage of the claim?

In this case, I presume we’re not talking about an extension to the consultant’s lump sum services because the consultant was delayed finalizing the design because, for example, the Employer wanted changes which meant a lot of the design work had to be redone, causing the consultant to need a longer period to finalize the design.

Or, if we’re talking about time-related services during the construction phase, such as maybe a cost consultant or the Engineer, which would be related to the Contractor’s Extension of Time. For example, on a 24-month contract, the Contractor is delayed by six months. Therefore, the Engineer needs to be deployed for an additional six months to administer the contract. The consultant’s entitlement would not be linked to the Extension of Time to which the Contractor is entitled. If there’s a six-month delay, maybe the contractor is only entitled to a four-month Extension of Time leaving a two-month delay caused by the Contractor. The Engineer, cost consultant, etc. are required to provide service for the full duration of the works, so they would be entitled to payment for their service.

Again, this is difficult to answer without more information, but I hope I’ve given you some things to think about when you are trying to pay or evaluate additional payment for your consultants on your project.

The questions covered in this blog were answered by ICCP Executive Officer and Fellow, Andy Hewitt

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