3
1. INTRODUCTION
1.1 We have been
instructed by Client Corporation to consider and advise on the formulation of
the EOT Claims that have been made in relation to the current delays to the (the
"Project"). We have therefore taken this to require a review of the formulation
of the claims as set out in the document entitled " Section Contractor's
Claim" submitted to the Engineer
on 1 (the "Claims
Document")
2 and to advise on the steps that can be taken to make
the claims more
robust and therefore
more persuasive with
the aim of encouraging the
Engineer/Employer to take a more
realistic and sensible
approach in
relation to Client's EOT claims.
1.2 The report has
been prepared having regard to the contents of the documentation kindly provided by Client and
which comprises, in the main,
(1) the General
Conditions of Contract (as
amended by the
Particular Conditions) and
(2) the Contractor's
Claims dated
1.3 In an effort to
assist in the reading and understanding of this report we have subdivided the
Section so as to follow the framework of the Claims Document. In relation to
each claim we
have commented on
the existing formulation
of the EOT
claims and have recommended measures to increase the
strength of claims.
1.4 Our instructions
are presently limited to a high level
review of the formulation of the EOT claims and in particular, we have not
been asked to advise specifically on the merits of the claims as
currently presented (which
would of course
require a much
more detailed analysis
of the basis upon which the claims are made and the supporting factual
evidence). Therefore, we have not considered the
factual detail of the claims made to date. We have, however, where
appropriate, indicated particular
areas of strength/weakness where further investigation or material may
be useful.
2. EXECUTIVE SUMMARY
2.1 It is evident
that many of the claims set out in the Claims Document have been reviewed by
the Engineer (and commented upon by the Employer) on a number of occasions.
2.2 It would appear
that in respect of at least some of the claims, the Engineer has rejected the
Contractor's position. It would also seem that the Employer is unwilling to
adopt a realistic and constructive approach to resolving the current disputes.
2.3 As a general
comment, in order to resolve this deadlock the key issue both in relation to Claim
1 (and to an extent) for Claim 2 is to establish that the decision to relocate
the rotor structure constitutes either a Variation or gives rise to an
entitlement to time/money under some other provision of the Contract. We would
therefore strongly recommend that the case
showing how the
decision to relocate
and the consequences
thereof can be attributed to the Employer/Engineer should
be made as strong as possible.
2.4 Consideration
will no doubt have been given to escalating the "open" issues by
giving a written notice of dispute under Clause 22. Even if it is decided that
this step is not yet Document undated
but assumed to be the "wrap up" notice of claim referenced in advice
of We have not seen the various letters
and other documents supplied by Client to the Engineer setting out the original
notification of its claims. Nevertheless, for the purposes of any revised
composite Claims Document, we believe the inclusion of the information we have
identified in this report is vital for the purposes of ensuring that such
claims are presented as persuasively as possible.
3 In this report,
references to contractual clauses will
be to clauses in the General Conditions as amended by the Particular Conditions
ie Sub-Clause as amended by appropriate, modeling the presentation of the
claims so as to match the requirements of the dispute provisions in the
Contract will add weight to the claims, and will send a signal to the
Employer and Engineer
of Client's dissatisfaction with
the status quo
and preparedness to advance claims along the formal route.
2.5 We have therefore
set out our comments on the Claims Document so as to allow the re-modeling of
the claims in the most compelling and persuasive way possible following the requirements
of the contract
in relation to
the information required
particularly in relation to
establishing the relevant ingredients for each head of claim. However, as noted
above, the key to successfully persuading the Engineer/Employer to adopt a more
realistic and constructive attitude
towards the claims
is to demonstrate
that the Employer
is responsible for the time/cost implications of the decision to
relocate the rotor structure and in the first instance we would suggest that
the focus of any revisions to the claims should be on this.
3. DISCUSSION
General
3.1 In the Claims
Document, the Site 1 claim ("Claim 1") and the Site 2 Structure claim
("Claim 2") are presented as "Variation" claims. These are
the two main heads of claim. Therefore the legal and contractual basis upon
which they are advanced is key to success in terms of persuading the
Engineer/Employer as to the merits of Client's claims. We would strongly
recommend that the Claims Document specifically identifies the relevant
contractual provisions forming
the basis of
the claim. In
this regard, the relevant part of Sub-Clause for
Variations) and such other clauses,
including the other subparagraphs of Sub-, may be
relevant.
3.2 If the claims are indeed "Variation"
claims (and in our view, we believe that a number of the current claims can be
put in the alternative i.e. they may be Variations but they may also
give rise to
the right to
an EOT other
than because they
are or may be
Variations) then they must be more closely linked in to Clause of the Contract
which deals with the right to an EOT (and costs) in relation to Variations and
adjustments.
3.3 For example,
as a starting point
a summary of
the contractual basis
of each claim should
be provided by
way of an
introduction. This would be followed
by a more detailed
chronology with detailed
cross-referencing to relevant
documents showing how the various
ingredients required to allow a claim are present. This would include a short
executive summary of the relevant provisions of the contract giving rise to the
entitlement followed by
relevant details showing
how the entitlement
arises. This would include
in relation to
Claim 1: (1)
details of the
relevant part of
the original Employer's
Requirements in relation to the location of the structure; (2) the Contractor's
response (i.e. showing the location within the Site 3 foot print) (3) the
acceptance of the Contractor's proposal; and (4) the subsequent instruction
varying the position of the structure. See also specific comments below.
Claim 1 – Site 1
Relocation of Site 1
Outside of the Site 4 Footprint
3.4 Some reference is
already made in the Claims Document to points (a) to (d) outlined above, but
at present it
is not entirely
clear why it
is suggested that
Claim 1 is a "Variation"
in the sense required by Sub-Clause We therefore suggest that the formulation of
this part of
the claim make
clear whether this
is a Variation
under
Sub-Clauses or
an Engineer's Instructed Variation under Sub-Clause should
also be made to the document(s) in which the instruction was contained.
3.5 We would also
suggest that claims be included (if appropriate) under Sub-Clause and
Sub-Clause We suggest this because it would appear that part of the reason for
the change in location was the manner in which the seismic data was interpreted
and the potential applicability of relevant building regulations.
Delayed Access at New Location (Investigations)
3.6 The contractual
basis of the claim should be set out in detail as there appears to be a number
of different potential bases for this claim to be identified. These bases
include a lack of access to the Site () and delays due to Employers acts, i.e. re-occupation
(Sub-
3.7 It may also be
that there is some duplication with the Claim outlined in paragraph 3.1.1, as
this claim is said to arise from the same Variation and, therefore, care should
be taken to separate out its various elements.
Diversion of Utilities
3.8 Again this claim
is said to incorporate elements of the preceding claim in relation to delayed
access. As such, care should be taken to try to separate its various elements and
to identify the specific contractual basis (or alternative basis) of each
element of the claims. In relation to this, we comment as follows in relation
to each part of this claim:
• Incorrect location
of sewer from building
3.9 It appears that
the main issue here is errors on the Employer's indicative drawings. Consideration
is therefore needed as to the potential relevance of Sub-, which deals with
errors in the Employers documents.
• Delay by Employer
in construction of Branch No.
3.10 There is quite a
detailed factual background to this claim. There is also reference to the Employer
using Client's subcontractors. There are various provisions of the Contract that
give rise to EOT/cost entitlements, which may be relevant here. We suggest that
further consideration be given to these further provisions, e.g. Sub- (EOT for
delay due to Employer or its personnel).
•
Delays to works due to
3.11 We would
suggest that specific
reference be made
here to delay/cost
entitlement under Sub- which refers to antiquities.
•
Diversion of crossing the Site 1
3.12 This claim is
said to be based on the Variation relating to the rotor structure
re-positioning. Consideration
should be given
to putting this
claim in the
alternative or at
least establishing a much
clearer relationship between
the Variation and/or
what are described in the claim
as the "Employer's responsibility" and the matters complained of. It
would also be helpful to provide an explanation as to why the Engineer is wrong
in suggesting that the matters contained in the diversion of utilities claim do
not form part of the Contractor's scope of works.
•
Utilities at new Site 1 Location.
3.13 The same
comments as set out in relation to above apply. These two claims seem to be
very similar and should be combined.
Additional Works for
Relocated Site 1
3.14 This claim is
self explanatory. It is difficult to see how the Engineer can deny the
claim assuming he accepts the relocation
of the structure is a Variation.
Supporting Utility
3.15 We repeat the
comments set out above in relation to the additional piles. Moreover, can we
respond to the Engineer's suggestion that Contractor should have undertaken its
own investigations prior to design stage? It is not clear whether the
Contractor was able to undertake these
investigations or even needed to if the original location of the structure had
been agreed. What
would have been
the purpose of
such prior investigation – if
there is no purpose we ought to say that it would simply have been a waste of
time and costs.
Claim 2 – Site 2
Structure
3.16 The introduction to Claim
2 in the
Claims Document suggests
that there is a relationship
between the decision to relocate the structure (i.e. Claim 1) and this claim.
We note that there is a brief reference to this in the conclusion section to the first claim and the entirety
of the second
claim is concerned
with it but
can the details
of the connection be made more
explicit? It may simply be that the claim described as the relocation of structure
outside the Site 4 footprint below should be put first in the section with a
more detailed explanation of how it is linked to Claim 1.
Delayed Access to
Works
3.17 Please see
general comments in relation to Claim 1 as outlined above. The key issue here once
again is to
establish contractual entitlement.
Claim 2 is
described as a Variation
claim and therefore
the details of
the various contractual
and factual ingredients as
to how Client
say that this
was a Variation
and how it
gives rise to entitlement should be set out at the
beginning. At the moment the contractual basis of the claim for a Variation is
unclear.
3.18 In addition
to the claim
that this is
a Variation, consideration
should be given
to alternative claims based on failure to give site access (Sub-Clause ).
Relocation of Structure
Outside of the Site 4 Footprint
3.19 See above
general comments in relation to the delayed access claim set out above. As previously
explained, we suggest that a more detailed explanation be given as to why this
is a Variation including details of how the decision regarding retaining rather
than demolishing the structure can be linked to an instruction from the
Engineer.
Poor Condition of
Existing Site 4
3.20 This is
potentially a key claim given its potential time/money impact and is
inextricably linked with the "partial demolition" claim below (which
is therefore also dealt with here). Also
the narrative description of this claim in the Claims Document suggests that
the issue between the parties is as much to do with how and when a decision was
required as to dealing
with the problem
of the columns
(and in particular
how the partial demolition option came to be adopted)
as the costs/delays of the works associated with resolving the problem.
3.21 Whilst the
narrative description setting out the correspondence between the parties and
the position adopted by the Employer/Engineer at various points in the last years
is helpful, the claim should commence with a detailed explanation as to why contractually the
poor state of the columns
is the Employers
responsibility – for example much more should be made to the
failure to provide site access etc. and the
Engineers/Employers obligations relevant to this issue under
the Contract.
3.22 Also this
element of the claim appears to give rise to other claims. For example, given the references to seismic codes consideration
should be given to the applicability of Sub-Clause. Also was any pre-contract
data in relation to the supplied by the Employer?
Engineer / Employer
decision on Partial
4. NEXT STEPS
4.1 We would suggest
that serious consideration be given to revising the claims so that each claim or
element of the
claim commences with
a detailed description
of the relevant contractual provisions and how Client's
entitlement to an EOT (and if appropriate money) arises.
4.2 Sub-Clause sets
out a detailed
regime for the
Contractor to bring
claims for time/money and in
particular requires amongst other things that the Contractor presents a "fully
detailed claim" as that is defined in the amendment to this clause by the
Particular Conditions. Sub-paragraph require a description of the
contractual and legal basis of the claims, and the consequences of the events
relied upon. We would suggest that an
expansion of the details of the claims in relation to these particular matters will
be of considerable value in increasing the strength of the claims and
persuading the Engineer/Employer of their merits.
4.3 Even if the
Engineer/Employer remain un-persuaded, the revisions will also make easier the
task of assessing the strength/weakness
of the claims and modifying them into a format whereby the dispute can be
escalated to the next stage of dispute resolution under the Contract
namely a notice
under Sub- to the
Engineer requiring his determination, and thereafter (if
appropriate) arbitration.
4.4 The
arbitration provision (see provides for arbitration under the ICC rules.
The Sub-Clause also provides for the appointment of a sole arbitrator to hear
the claims and that the arbitration shall be conducted in. Accordingly,
if the matter
proceeds to arbitration,
an independent individual (who will almost certainly not be) will review
the claims and can (under the Contract) review and open up the Engineer's
decisions. It is therefore well worth ensuring that the claims are as strongly
presented during the course of the project as is possible.
