Articles

Adjudication – A Practitioner’s Point Of View

There exists a large group of companies who are willing to work at an incredibly fast pace for razor thin margin, fund and carry out work for very long periods of time before receiving payment, often to unrealistic performance standard and who readily accept late payment (or at times no payment) for their efforts. No – this is not a fiction nor are these companies charitable organisations. These companies are none other than the many contractors, sub-contractors, trade contractors, labour-only subcontractors, suppliers and professional consultancies in the construction industry! At its simplest, the development and construction of any building, facilities or infrastructure require the collaboration of three main groups of core players. These core groups of players are the owners (government, developers, clients), the designers (those under professional engagements such as architects, engineers, surveyors) and the contractors (main contractors, sub-contractors, trade contractors, labour-only subcontractors). The owner would provide the land and funding, the designer is to produce the design and the contractor will translate the design from paper into the physical build environment. Seeking resolution from the courts or arbitration is expensive, time consuming, disruptive to the parties business operations, and subject always to an uncertain outcome Depending on the chosen project delivery system, the players enter into contract with each other. This contractual relationship is often referred to as the contractual chain. The reality is that the construction industry is not a level playing field and the players at the top of the contractual chain often imposed various onerous conditions upon the players down the chain. By virtue of their stronger bargaining strength, contractual terms are commonly drafted to favour...

What Is The Implication of A Notice Being A Condition In PAM 2006?

By John Wong BSc(Hons), LLB(Hons), ACIArb, MISM, Reg. QS INTRODUCTION It is an undeniable fact that construction projects are often fraught with events that delay the completion of the projects thus causing the contractual completion dates to lapse. The delays could either be caused by the Employer or Contractor or by a neutral event such as force majeure. It is a common practice that such contracts incorporate provisions for liquidated damages for the period in which the construction works remain incomplete due to delays by the Contractor for which he may not be excused so that there is a date from which such damages can run. In the event of delays to the works being caused by the Employer, provisions to extend the time for completion date are drafted into the contracts to preserve the Employer‟s right to levy liquidated damages. In the absence of any such extension of time provisions, the date for completion could not be extended in the event of the Employer‟s delay and as such there would not be a date from which liquidated damages could run, thus setting time at large. PAM 2006 was launched in early April 2007. The question that arises is whether PAM 2006 adequately preserves the Employer‟s right to impose liquidated damages. PAM 2006-CLAUSE 23 PAM 2006 standard form of building contract contains provisions that empower the Architect to extend the Date of Completion for delays to the completion of the Works. Without such provisions, the Architect would have no power to extend time for completion thus exposing the time for completion to become at large. PAM 2006 provides for...

Claims Manual for Contractors

By John Wong BSc(Hons) LLB(Hons) ACIArb, MISM, Registered Quantity Surveyor Keywords: records, site office, good practice, claims, extension of time and loss and expense Abstract Delay in projects is a common occurrence. Contractors, either in the capacity as a sub- contractor or main contractor, are often faced with consequences of delay including incurring additional loss and expense, and liability for liquidated damages. Despite the contractors having valid claims for extension of time and loss and expense, their claims may simply fail on the ground of lack of substantiation in the form of records. This would have a detrimental effect on the contractors’ cash flow which would thus be reflected in the progress of work. This article seeks to examine such perennial problem and to offer a practical claims manual that would help to protect the profitability of a project. Introduction Throughout my career, I have been visiting many contractors’ site offices for the purpose of preparing claims. Having studied the correspondence and records, I often advise contractors that they have a principle right to additional claims. However, it is unfortunate that when I proceeded to ask for records to substantiate their claims, the answer which I received was that there was little or no records. It is apparent that there is still a lack of awareness as to how effective records on site can play an important role in determining the profitability of a project. It is often seen in the construction industry that when the project runs smoothly, less attention is paid to the proper records of records and information in a contractor’s site office. However, when a...

How Much Are Your Records Worth?

By Rodney Martin BSc LLB(Hons) MSc MRICS FCIArb FQSi Contractors are often placed in the position of having to prepare claims for extensions of time and loss and expense which are then assessed by a third party on behalf of the Owner or Employer. Assessing entitlement to extensions of time usually requires access to a massive amount of data on the average construction project and experience shows that there are usually not enough factual records to establish the entitlement being claimed. Apart from scarcity of records, the key management tool available to assess the impact of delays, the project schedule, is also frequently neglected for one reason or another or worse, it is abused to give a fictitious presentation of progress month on month going unchallenged by the other side. Under such circumstances where there is a dearth of necessary information the parties tend more often than not to rely on their perceptions of what caused the critical delay or delays to the project when assessing extension of time claims under the Contract. Such were the circumstances in the now much written about case of Mirant Asia-Pacific Construction v Ove Arup. The dispute revolved around which delays were on the critical path – a very common conundrum. In this particular case, delays caused by the defective foundations of a power plant were deemed by all and sundry to be the obvious source of the critical delay. This resulted in a significant eight figure compensation amount being claimed by Mirant from Ove Arup for breach of contract and negligence. Now the foundations may have actually been defective and the consequence...

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