Contract Administration

Construction Law, Contract Administration, Project Management

The Suspension That Never Ends: The 84-Day Clock and the Choice at the End of It

By Dr Samer Skaik

Suspension is the most under-used and most abused provision in the FIDIC time clauses, and it manages to be both at once for the same reason: it looks like a neutral administrative step and it is not.

The power itself is broad. The Engineer may instruct the Contractor to suspend progress of part or all of the Works, and under the 1999 wording is not obliged to give a reason. The Contractor must then protect, store and secure whatever has been suspended. In exchange, where the suspension is not attributable to the Contractor, it is entitled to an extension of time and to its Cost, with the 2017 edition treating the profit element more generously than its predecessor.

That is the clause. What makes it interesting is what happens when a suspension stops being an event and becomes a condition.

The suspension that is really a funding problem

Let me start with the misuse, because it is common enough to be worth naming.

An Employer runs into a funding difficulty. The money is delayed, or the approval for the next tranche has not come through, or a decision above the project’s pay grade has quietly been deferred. Rather than say this, the project instructs a suspension. On paper it is an ordinary exercise of a contractual power. In substance it is an Employer using a mechanism designed for technical and safety circumstances to manage its own cash flow.

I understand why it happens. A suspension instruction is administratively easy and it buys time without anyone having to admit anything. But it is expensive in ways that are not visible on the day it is issued. The Contractor’s entitlement to time and Cost begins accruing immediately. Idle plant, retained staff, standing subcontractors and demobilisation and remobilisation costs accumulate against an Employer that has, by its own instruction, accepted responsibility for them. And a suspension issued for reasons the Employer would prefer not to state tends to be issued without any assessment of how long it will last, which is how the 84-day problem arrives.

The related pathology is the suspension nobody instructs. Access is not given, information does not arrive, the site simply stops. There is no instruction, so the suspension machinery never engages and the Contractor has to claim under other heads with weaker mechanics. If you are a Contractor sitting on a de facto stoppage, one of the more useful things you can do is write and ask whether an instruction under the suspension clause is intended. The answer, either way, improves your position.

The 84-day election

This is the part of the clause that most project teams have never had to use and should nonetheless understand, because the options narrow sharply once it engages.

Where a suspension has continued for more than 84 days, the Contractor may request the Engineer’s permission to proceed. If permission does not come within 28 days of that request, the Contractor has a choice that depends on what was suspended.

If the suspension affects only part of the Works, the Contractor may treat that part as an omission under the variation machinery. If it affects the whole of the Works, the Contractor may give notice of termination under the Contractor’s termination provisions.

Both of those are serious steps with permanent consequences, and there are two traps worth flagging.

The first is the partial suspension route. Treating suspended work as an omission removes it from the contract, and an omission cannot be used to take work away from one contractor and give it to another. If the Employer’s intention is to have the suspended work performed by somebody else once funding arrives, the parties are heading for an argument about whether the omission was legitimate at all. Contractors should think carefully before electing this route on work they actually want to perform, because the entitlement that follows is the value of the omitted work, not the profit they hoped to earn on it.

The second is the timing itself. The 84 days run from the suspension, but on projects where suspension is instructed in stages, extended, partially lifted and reinstated, working out when the clock started is not always simple. I have seen more than one Contractor discover that the election it thought it was preserving had become impossible to evidence because the suspension history was never properly recorded. Diarise the date on the day the instruction arrives.

Partial suspension and the problem of the moving front

Most writing on this subject assumes a suspension of the whole works. In practice partial suspension is far more common and considerably harder to administer.

A single area is suspended pending a design resolution, or a utility diversion, or a permit. The rest of the site continues. On paper the Contractor is entitled to time and Cost only in respect of the affected part, and the Employer’s exposure looks modest.

The reality is messier, because construction sequences are not modular. Suspending one area displaces the crews that were meant to work there, disturbs the planned flow of following trades, and forces resequencing across areas that were never suspended at all. The resulting loss looks like disruption rather than standing time, and it is correspondingly harder to prove and easier to resist.

Two practical consequences follow. Contractors should resist the instinct to treat a partial suspension as a minor event with a small claim attached; the knock-on effects need to be identified and recorded at the time, not inferred from a productivity shortfall eighteen months later. And Employers should understand that a partial suspension is not a cheap way of deferring a decision. It is frequently the most expensive form of delay per week of works actually stopped, precisely because the consequences spread beyond the suspended area.

Resumption, and the deterioration nobody costed

The end of a suspension is treated as an administrative formality far more often than it should be.

Both editions provide for a joint examination on resumption, and give the Contractor entitlement in respect of deterioration, defect or loss occurring during the suspension period. On a long suspension in a demanding climate this is not a small item. Concrete cures unattended. Steel corrodes. Temporary works degrade. Materials stored on site are stolen or spoil. Formwork warps.

The practical difficulty is proof. A joint examination that both parties actually attend, with a photographic record and an agreed schedule of condition, converts a contentious claim into an administrative one. A resumption where the Contractor simply restarts and raises the deterioration six months later will be met, entirely predictably, with the argument that the damage happened afterwards and through poor care.

My standard advice to both sides is the same and it is unusually cheap: do the joint examination properly, produce a signed record, and disagree in writing about the items you cannot agree. Twenty pages of agreed condition at resumption saves a great deal of argument later.

What each party should be doing

For an Employer, the discipline is mostly about honesty at the point of instruction. If you are suspending, know why, form a view on duration, and write both down internally. If what you actually have is a funding problem, recognise that suspension does not solve it — it converts a payment delay into an accruing entitlement plus a delay to the asset, which is a worse position, not a better one. And watch the 84-day date at least as carefully as the Contractor does, because the elections that become available at the end of it are not in your gift.

For a Contractor, the discipline is record-keeping from day one of the suspension rather than day one of the claim. Standing resources should be logged daily, not reconstructed. Mitigation should be visible: plant released, staff redeployed, subcontractors stood down where it was reasonable to do so. A suspension claim built on daily records with visible mitigation is one of the more straightforward claims to make good. One built on an invoice total and an assertion is one of the hardest.

And on both sides, remember that a suspension is one of the very few events in a construction contract where liability is essentially established by the instruction itself. Everything that follows is about quantum and duration. That is an unusual luxury in this field, and it is worth not wasting it through poor administration.


Related reading: Termination under FIDIC: Clauses 15 and 16, Variations Under FIDIC Clause 13, and FIDIC Payment Provisions.

Contract Administration, Dispute Boards, Project Management

The Board You Keep or the Board You Call: A Choice Made Long Before Anyone Argues

By Dr Samer Skaik

There is a box in the contract data of every works contract that gets filled in by someone who will never have to live with the consequences.

It is usually completed late in the tender preparation, often by a procurement officer working through a template under time pressure, sometimes by copying whatever was in the last one. It determines whether the project will have a dispute board sitting alongside it from the beginning, or whether one will be assembled at some future moment when things have gone wrong.

I have asked a number of public officials who made that decision on their project. In most cases the honest answer is that nobody made it. It was inherited. …

Construction Law, Contract Administration, Project Management

Telling a Contractor to Speed Up: The Instruction Employers Keep Getting Wrong

By Dr Samer Skaik

A project falls behind. The Employer becomes anxious. Somebody suggests that the Engineer should instruct the Contractor to accelerate, and a letter goes out.

What happens next depends entirely on a distinction that is rarely drawn at the time the letter is written, and the cost of getting it wrong runs in both directions. I have seen Employers believe they had purchased acceleration when they had bought nothing at all, and I have seen Contractors treat a routine progress instruction as a blank cheque and spend accordingly.

The provision at the centre of this is Sub-Clause 8.6 in the 1999 editions, renumbered 8.7 in 2017. It is worth being precise about what it does, because it is almost the opposite of what people assume. …

Construction Law, Contract Administration, Dispute Boards, Project Management

What Does a Dispute Board Actually Cost? A Straight Answer for Public Employers

By Dr Samer Skaik

Of all the questions I get asked by public sector clients, this is the one that arrives most often by private message rather than in the meeting.

People are slightly embarrassed to ask it. There is a sense that enquiring about the cost of a dispute mechanism is somehow unserious, or that it reveals you have not read something you should have read. So the question gets asked quietly, usually after the formal session has ended, and it is almost always phrased the same way: what does one of these actually cost us?

It is an entirely reasonable question and I wish more people asked it earlier and out loud. A project manager who cannot answer it cannot get the budget line approved, and a budget line that is not approved is one of the most common reasons a board never gets appointed at all. So let me try to answer it plainly. …

Construction Law, Contract Administration, Dispute Boards, Project Management

When the Banks moved onto FIDIC 2017: What Public Employers Inherited With the New Contract

By Dr Samer Skaik

A few years ago I sat in a workshop with the contract management team of a national roads agency. They were good at their jobs. Several of them had been administering donor-funded works contracts for well over a decade, and between them they had probably handled more claims than some law firms see in a generation.

About an hour in, one of the senior engineers said something that stopped the room. He said: we have been running this contract the way we ran the last four, and I am starting to think it is not the same contract.

He was right. It was not. …

Construction Law, Contract Administration, Dispute Boards, Project Management

The Programme Nobody Agreed To: Sub-Clause 8.3 and What Silence Actually Means

By Dr Samer Skaik

Ask three people on a FIDIC project what status the programme has, and you will usually get three answers.

The planner thinks it is a management tool. The contractor’s commercial manager thinks it is the baseline against which every delay claim will eventually be measured. And the Engineer, if pressed, will often say that it was never approved, which is a curious thing to say about a document the whole project has been working to for two years.

All three are partly right, and the confusion is not their fault. Sub-Clause 8.3 is one of the shortest provisions in the contract carrying one of the heaviest practical loads, and it does not answer the question everyone actually wants answered: is this thing binding? …

Construction Law, Contract Administration, Dispute Boards, Project Management

The First Four Weeks: How Public Infrastructure Employers Set a Project Up to Avoid Disputes

 

By Dr Samer Skaik

The call usually comes about eighteen months in.

Someone from an implementing agency, often a project manager who has inherited the file from a predecessor, explains that things have gone badly wrong. The ground turned out differently from the investigation report. The utility diversions never happened. The contractor has submitted a claim with a number in it large enough that it has now been seen by people several floors above the project office. And somewhere in the conversation comes the question I have learned to brace for: we think the contract requires us to have a dispute board — how quickly can one be set up? …

Construction Law, Contract Administration

Risk Allocation Under FIDIC: Employer’s Risks versus Contractor’s Risks in Clause 17

Every FIDIC contract is, at its core, a risk allocation instrument dressed up in construction terminology. Clause 17 is where that allocation is made explicit, dividing the universe of things that can go wrong on a project into two camps: risks the Contractor bears because it priced them, insured them, or is simply best placed to manage them, and risks the Employer bears because no reasonable contractor could have priced or controlled them. Getting this distinction wrong at tender stage, or misapplying it during the works, is one of the most common sources of disputes on international projects.

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Construction Law, Contract Administration, Dispute Boards, Project Management

Parties’ Strategies for Selecting High-Performance Dispute Boards

In construction projects, the effectiveness of a Dispute Adjudicaiton Board (DB)—or Dispute Avoidance & Adjudication Board (DAAB)—is often determined long before the first project site meeting takes place. The process of appointing board members is a critical phase, acting as the foundation for how effectively a project will manage disagreements and maintain progress.

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Construction Law, Contract Administration, Dispute Boards, Project Management

How to nominate a dispute board member (DAAB) under FIDIC contracts?

Disputes are almost a given in international construction projects. That’s why the FIDIC contracts include a smart system for resolving them quickly and fairly through Dispute Avoidance/Adjudication Boards, or DAABs. One of the most talked-about resources in this area is the FIDIC President’s List of Approved Dispute Adjudicators — basically a go-to directory of well-respected experts.

If you’re an employer, contractor, engineer, or legal advisor working on FIDIC-based projects, knowing how this list works — and how flexible the appointment process really is — can save you a lot of time, money, and headaches. In this guide, we’ll walk you through the key points in plain language. …

Construction Law, Contract Administration, Dispute Boards

DAAB Jurisdiction under FIDIC 2017: The Distinction from Admissibility

The FIDIC 2017 suite of contracts (Red, Yellow, and Silver Books) introduced the Dispute Avoidance/Adjudication Board (DAAB) as a key improvement in dispute resolution. This post explains how DAAB jurisdiction is established, how the DAAB makes decisions on jurisdiction and admissibility, and the important difference between these two concepts. Special focus is given to time-barred claims under Sub-Clause 20.2, based on the FIDIC 2017 General Conditions, the DAAB Procedural Rules, and relevant legal commentary. …

Construction Law, Contract Administration

Termination under FIDIC: For Cause and For Convenience under Clauses 15 and 16 (1999 vs 2017)

Termination is the most drastic remedy available under any construction contract, and the FIDIC forms are no exception. Bringing a contract to a premature end exposes both parties to substantial financial consequences, demobilisation costs, claims for loss of profit, and frequently protracted disputes over whether the termination was lawful in the first place. The FIDIC suite addresses termination through two parallel regimes — Clause 15, which governs termination by the Employer, and Clause 16, which governs suspension and termination by the Contractor. A wrongful termination can convert the terminating party from an aggrieved innocent into a repudiating defendant overnight, so the procedural discipline these clauses demand is not optional ceremony but the very thing that determines who wins.

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