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LECTURE 2

LECTURE 2. MONITORING DELAY & DISRUPTION CLAIMS. LECTURE CONTENT. Contract Administration Pre-commencement Meeting Regular progress meetings Instructions and drawings issues Form of instructions Site instructions : verbal instruction Objection to A.I.

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LECTURE 2

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  1. LECTURE 2 • MONITORING DELAY & DISRUPTION CLAIMS

  2. LECTURE CONTENT • Contract Administration • Pre-commencement Meeting • Regular progress meetings • Instructions and drawings issues • Form of instructions • Site instructions : verbal instruction • Objection to A.I. • Can Employer himself issue instructions ? • Program and progress • Can contractor program to complete earlier ? • Can contractor claim prolongation costs & EOT if the Architect prevented him from completing earlier but not later than the Date for completion ? • Notice – records and particulars • Delays after the contract completion date • Minimising exposure to claims – prevention of claims

  3. CONTRACT ADMINISTRATION • Contracts - expressed or implied • duties or obligations • Establish formal / expressed • procedures • for various types of claims

  4. PRE-COMMENCEMENT MEETING DISCUSS: • The role & authority of each member of staff participating in the project • Where the contract provides for delegating powers to other persons, these powers should be clearly established • Status of the program, key dates for information, periods for approval, long delivery periods & special problems • Record of the levels/status of previous contractor's work • Requirements for named, nominated & selected domestic sub-contractors • Works / materials to be provided by the employer • Procedures for the interim valuation & payment • Procedures for measurement, records, notices, particulars to be provided & response • Procedures for monitoring the progress of works, photographs, video, progress records & program

  5. REGULAR PROGRESS MEETINGS • to suit specific objectives • to inform the Architect / Employer any problems which may arise to potential claims • to solve problems which may arise to claims & hence minimising claim • to record the outstanding 'request for information' • to identify responsibility for action • to record in the minutes what have been agreed • distribute minutes of the meeting to all the attendants

  6. INSTRUCTIONS AND DRAWINGS ISSUES • Regular meetings to determine when information is required to meet the program & prevent delay • Late issuance of information will lead to claims for delay and / or disruption • The architect should understand the contractor's program & make allowance for shop drawings, if applicable, obtaining quotations, ordering & delivery • The architect should not rely on the contractor's request for information • Revised drawings should clearly indicate changes & revisions so that contractor can give early notices

  7. INSTRUCTIONS EXPRESSLY EMPOWERED BY THE CONDITIONS OF CONTRACT • Clause 2 - The Main Contractor shall forthwith comply with all instructions issued to him by the Architect in regard to any matter in respect of which the Architect is expressly empowered by these conditions to issue instructions.

  8. INSTRUCTIONS INCLUDE • Discrepancies • Statutory Requirements • Errors in setting out • Opening up and testing • Work not in accordance with the contract • Exclusion of persons employed • Confirmed clerk of works directions • Variations • Provisional Sums • Defects • Postponement • War • Antiquities • Nominated Sub-contractors • Nominated Suppliers

  9. FORM OF INSTRUCTIONS • Most contracts do not require the instructions in particular forms • As far as it is issued by the authorised person under the contract, it is a valid instruction even if a drawing is issued to the contractor for construction without any covering letter. • Proper agreed procedure & consistency for the issue of instructions should be adopted so that effective ways of monitoring delay can be set up

  10. FORMS OF INSTRUCTIONS • Instructions in writing • Instructions issued orallyThe contractor is at risk if before the expiry of the period of 7 days from receipt by the Architect of his, the Contractor's, confirmation he carries out an oral instruction which has not been confirmed by the Architect.

  11. SITE INSTRUCTIONS : VERBAL INSTRUCTION • Sometimes design works are developing during the progress of the construction • Design & detailing are given on site verbally during site walk-around • Site instructions, especially verbal instructions, should be limited and used only in emergency • Verbal instructions should be better confirmed in writing by the Architect

  12. VERBAL INSTRUCTIONS IN HKSF - CASE 1 CLAUSE 2(3) 2. Confirmed by contractorwithin 7 days 4. Not dissented from in writing by the architect within 7 days 1. Oral instruction by the Architect 3. Receipt of contractor's confirmation 5. Effective from the expiration of the 7 days

  13. VERBAL INSTRUCTIONS IN HKSF - CASE 2 CLAUSE 2(3)(a) 2. Confirmed by the Architect within 7 days 3. Effective from date of the Architect's confirmation 1. Oral instruction by the Architect

  14. VERBAL INSTRUCTIONS IN HKSF - CASE 3 CLAUSE 2(3)(b) 4. Effective on the date on which it was issued 3. Confirmed by the Architect before the Final Certificate 1. Oral instruction by the Architect 2. Main contractor complied with the oral instruction

  15. EFFECT OF THE INSTRUCTIONS IN HKSF CLAUSE 2(1) 4. Employer may employ & pay other to give effect to such instruction & recover from the Main Contractor 2. Contractor receipt of notice to comply with the instruction 3. Contractor not yet complied within 7 days 1. Architect issued instruction

  16. ARCHITECT'S OR ENGINEER'S RIGHT TO ISSUE INSTRUCTIONS • It is the function and right of the contractor to carry out his building operations as he thinks fit. The architect has no power to tell a contractor how to do the work, or in what sequence. • The architect has no authority to vary or to waive the conditions of the contract nor to vary the whole nature of the works. • The architect cannot omit work in order to have it carried out by another contractor • The architect cannot nominate a sub-contractor or supplier except in accordance with the provisions of clauses 27 and 28

  17. OBJECTION TO A. I. • Clause 2 (2) - The Main Contractor may request the Architect to specify in writing the provision of these Conditions which empowers the issue of the said instruction.Clause 35(2)-Immediate arbitration upon the dispute. However, if the contractor fails to comply without any reasons or objection, the Employer may employ others to give effect to the instruction and recover the cost from the Contractor.If the failure to comply causes delay, there is a liability in liquidated damages.Failure to comply with an instruction may be an element of failure to proceed regularly and diligently with the Works (Clause 25(1)(b)) giving rises to a right on the part of the Employer to determine the Contractor's employment.

  18. CAN AN EMPLOYER PERSONALLY ORDER INSTRUCTIONS ? • The Contract makes no provision for any order by the Employer himself. It is thought that such an order would amount only to an offer by the Employer to enter into a separate contract for the work in question, which offer the Contractor need not accept. • If the Contractor does accept the offer, it is prudent to confirm it in writing both to the Employer and to the Architect. The parties may find it convenient to agree that the order shall be treated as if it were an instruction under the appropriate clause.

  19. INSTRUCTIONS AND VARIATION Instructions Variation e.g. Clause e.g. Clause 4 (1)e.g. Clause 6 (5) 33(1) (b), (d) (maybe) The terms 'instructions' & 'variation' are not the same in many cases

  20. PROGRAM AND PROGRESS • If a program forms part of the contract document, the failure to follow it in every detail may be a breach of the contract • However, a master program is normally required to be submitted during tender to identify the major activities against the time scale of the contract period • During construction, any significant departures from it should be monitored • Delays to critical / non critical path activities should be clearly identified • The programs should be revised from time to time if any delay occurs

  21. CONTRACTOR PROGRAMMED TO COMPLETE EARLIER • The contractor is allowed to do so as Clause 21 of the Conditions of Contract requires him to "complete the same on or before the Date for Completion" • Must the Architect issue details in time to allow the contractor to complete earlier ? • No, the Architect has no duty to supply details to the contractor so as to allow him to complete earlier. However, the Architect cannot prevent the contractor from completing earlier.

  22. CAN HE CLAIM PROLONGATION COSTS & EOT IF THE ARCHITECT DELAYS HIS EARLIER PROGRAM ? • Claiming & granting EOT is not required if the Date of Completion is still on or before the Date for Completion. • In Building Contracts by Keating, he explained that if the Architect prevents the contractor to complete the works by an earlier date but not later than the Date for Completion, the contractor: • may recover direct loss and / or expense on the grounds of disruption • cannot recover prolongation costs

  23. NOTICE – RECORDS AND PARTICULARS • Failure of claim is usually due to • lack of notice • incomplete records • Sometimes notices are condition precedent (refer to lecture 1) to claim • In such case, make sure each & every member of staff are aware of this & their corresponding roles & responsibilities • All notices should be clearly set out, identifying relevant contractual provisions for the claims • Records of that particular events / grounds should be made & kept for future assessment & justification

  24. RECORDS TO BE KEPT • Working sequence • Drawing register • Site diaries • Minutes of meetings • Cost & value of work executed (project & whole company) • Allowance for overhead & profit in the tender • Head office overheads • Profit made by the company • Master / detailed program • Adverse weather conditions • Progress schedule • Resources schedule • Cash flow • Plant output • Plant idling time • Productivity • Overtime • Progress photos

  25. DELAYS AFTER THE CONTRACT COMPLETION DATE • Delay by the Employer or the Architect after the contract completion date (or if any, the extended completion date) has passed would probably make the completion date at large, i.e. complete the works within a reasonable time • If such delay is inevitable, close monitoring and detailed records of the causes of delay should be made.

  26. MINIMISING EXPOSURE TO CLAIMS – PREVENTION • Harsh forms of contract shifting all the risks to the contractor may also increase the contract price • Stringent notice of claims provisions and complicated requirements of claims may increase the contract price & lead to conflict throughout the contract • To minimize the claims, the Employer & the Architect should not cause delay by matters within their control

  27. MINIMISING EXPOSURE TO CLAIMS – PREVENTION • Where claims really occur, close monitoring & detail records should be made • Delay (concurrent) or disruption which are partly responsible by the Contractor should be identified & recorded • Usually, claims are due to faults by all parties to a certain extent & putting all the blame on one party is not a fair approach • Education & training in claims management & attitude to claims are essential

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