by Dr Chandana Jayalath
Changes are inevitable in any construction therefore the parties are provided a flexibility to make changes to the work under a typical contract changes clause. However, the ability for owner requested changes, even if provided in the contract, are not without limitations, restrictions as well as consequences. …
Limit of changes that can be introduced under variation provisions!Read More »
by Dr. Chandana Jayalath*
The provisions of price adjustment on account of increase or decrease in costs of goods and services in construction contracts are practiced World over to have more realistic competitive bids and execution of contracts on just and equitable manner. Prices of materials, plant and labour are highly variable due to fluctuations in the currency market. Construction experts, therefore, thought it prudent to compute the cost of contracts on present price, keeping provisions of price adjustment for probable fluctuations. The Institute for Construction Training and Development (ICTAD) of Sri Lanka has undertaken among others, the standardization of “country specific” documents to regulate and streamline the administration of contracts. The Formula Method for Reimbursement of Price Fluctuation is one such initiative to offer a reasonable basis for calculating price adjustment for construction contracts. …
ICTAD Price fluctuation Formula; Clarifying The Context in Which It OperatesRead More »
By Suzannah Newboult
When a party is substituted for another party to contract and assumes the original party’s rights and/or obligations, it does so either by way of ‘novation’ or ‘assignment’. Party A contracts with Party B. Party C is substituted for Party B. The contract is now between Party A and Party C.
If the substitution has occurred by way of novation, then the original contract is effectively replaced by a new contract on the same terms as if the new party, (Party C in the example above) was party to the contract from the outset. …
Rebecca Evans, solicitor with Thomas Eggar LLP, reports on a case that offers good news for contractors in England.
A recent case, heard by Akenhead J in the Technology & Construction Court in London, has practical consequences for contractors: the effect of concurrent delay on an extension of time claim.
Walter Lily Company (WLC) was employed by DMW Developments Ltd (DMW) to construct a substantial house in the Boltons in London. DMW was the corporate vehicle for Mr and Mrs Mackay. The architects were Barrett Lloyd Davis Associates (BLDA). The work started in 2004 with the initial projected timeframe of 18-20 months. …
The effect of concurrent delay on an extension of time claimRead More »
There are two considerations when trying to win payment from an overseas client.
Firstly, ‘Can the contractor enforce a judgment or monetary award in the country where the client is based?’ And secondly, ‘Where are the overseas client’s chargeable assets?’ …
Contract Requirements
Max Abrahamson in his book Engineering Law and The ICE Contract wrote
” A party to a dispute, particularly if there is an arbitration will learn three lessons (often too late) the importance of records, the importance of records and the importance of records”. This quotation came to mind recently when I read the judgement in the case of Attorney General for the Falkland islands v Gordon Forbes construction (Falklands) Limited. A contract was let for the construction of the infrastructure of the East Stanley Housing Development in the Falkland Islands using the FIDIC 4th Editions conditions. These conditions, like most standard forms, provide a procedure which requires the contractor to follow in the event of him submitting a claim. …
RECORDS, RECORD, RECORDS – importance for contract claimRead More »
By Mohan Pillay
The inaugural Youth Olympic Games hosted by Singapore in August last year left a positive impression on Singapore’s young guests. The fanfare would have been much bigger had the Singapore Sports Hub been available for the event.
At an estimated cost of S$1.33 billion, the new Sports Hub will boast a 55,000-seater retractable roof stadium, a 6,000-capacity Indoor Aquatic Centre, a 3,000-capacity Multi-Purpose Arena and a Water Sports Centre. …
Projects & Pitfalls – Sports, Water, Energy & FIDICRead More »
By Mohan R Pillay
In a rare decision, the Singapore High Court in PT Perusahaan Gas Negara (“PGN”) v CRW Joint Operation (“CRW”) [2010] 4 SLR 672 refused to uphold an ICC arbitration award arising from a contract using the FIDIC Red Book 1999 Edition.
Disputes between the parties over variation orders and payment requests were referred to a Dispute Adjudication Board (DAB) by the contract. The parties accepted several of the DAB’s decisions, save one involving a disputed sum of over US$17 million.
The DAB decision was referred to arbitration and the Tribunal upheld it in its award. When CRW applied to register the arbitration award in a Singapore court, PGN sought to set it aside.
The Singapore High Court set aside the award on the basis that the arbitration tribunal exceeded its powers in rendering a final award in contravention of the parties’ agreement. The High Court interpreted the dispute resolution provisions in the FIDIC Red Book to mean that CRW was first required to refer the disputed DAB decision back to the DAB for review and confirmation, before involving arbitration.
Notably, the Court observed a possible gap in the 1999 FIDIC Red Book as it did not expressly allow a counter party’s failure to comply with a DAB decision to be referred directly to arbitration.
This is a rare instance of the Singapore High Court setting aside an arbitral award. It highlights the importance of parties understanding the clauses in their contract, especially how the reference to arbitration is to be properly invoked.
kluwerconstructionblog
No Increases Allowed
The term guaranteed maximum price when applied to a construction contract provides for the employer a nice feeling of security. He of she when entering into a contract of this nature is convinced that no matter what happens the final cost will not be above the maximum and there is a fair chance it could be lower. Any design changes which results from the specific instructions of the employer would understandably fall outside the guaranteed price. Guaranteed maximum price contracts have been with us for many years. IDC a Stratford on Avon construction company who pioneered design and construct contracts some twenty five or thirty years ago promoted their contracts as guaranteed maximum price. It is a good selling point which can be persuasive. …
GUARANTEED MAXIMUM PRICE CONSTRUCTION CONTRACT: FACT OR FICTION?Read More »
Interested in getting the latest best practice guidance on FIDIC contracts from the very people responsible for drafting and updating the contracts? How about getting tailored advice for the Middle East?
You’ve got one chance this year. Join us at FIDIC’s 4th Middle East Contract Users’ conference – and get a 20% saving courtesy of CMguide.org!
Taking place in February in Dubai, this year we have the pleasure of welcoming Samer Skaik, the founder of CMguide.org to our panel of 29 distinguished speakers. …
FIDIC’s Middle East Contract Users’ – less than a month away!Read More »
by Eric Teo
What are the rights of an employer in the event a nominated sub-contractor fails to deliver the standard or quality of material and workmanship that the employer had expected to receive? Common wisdom dictates that the employer would ordinarily seek recourse against the main contractor for the sub-contractor’s failure, but are there any alternatives? …
Bridging the contractual gap between an employer and a sub-contractorRead More »
Exclusion clauses in your terms and conditions could save your business, reports Thomas Eggar LLP senior associate Kim Teichmann. In Allen Fabrications Limited v ASD Limited the defendant avoided a £7m claim due to a term that limited its liability to £705. A large saving for such a little clause! …
