Construction Management Guide

By David Johnston

Project finance loans are provided against project cash flows, rather than the assets of the project company. Any risk to the project cash flows endangers the lender’s ability to recover the debt capital. The lender, therefore, needs to ensure that the terms of the project documents are satisfactory and will both facilitate and protect the project’s ability to generate the necessary revenue to satisfy the loan repayments, particularly where – as happens all too often – the project runs into difficulties. As part of this, the lender will seek to ensure that the risk allocation between the project company and any third parties is acceptable and, therefore, that the project is considered bankable.

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By Katie Liszka

JORDAN is highly dependent on imported energy in the form of natural gas and fuel oil. In 2011, 97 per cent of its energy was imported. The kingdom has also suffered as a result of problems with the supply of gas from Egypt. In addition to its dependency on imported energy, Jordan also projects a high growth in energy demand. Hence, the country has set itself ambitious targets in relation to the introduction of renewables into its energy mix, which will account for at least 10 per cent of the total supply by 2020. There are also a number of individual targets, such as approximately 1,200 MW (megawatts) for wind power and 600 MW for solar.

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By David Johnston

DELAYS on engineering and construction projects are almost inevitable; the more complex the project, the more likely the prospect of delay, and the more chance of two or more delays occurring at or around the same time.

Where the contractor is culpable for the delay, for example, rectifying its own defective workmanship, it is usually not entitled to an extension of time. However, where an employer-caused delay occurs concurrently with the contractor’s culpable delay – for example, where the employer has instructed a variation, and assuming that each of these events is of approximately equal significance – is the contractor now entitled to an extension of time?

Various legal jurisdictions have struggled with this question and come to different positions. Some of these positions are set out in this article, as are some suggestions as to how this debate should inform approaches taken by employers to concurrent delay on construction projects in the GCC.
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By Heba Osman
A common scenario: the Employer is not happy with the Contractor’s performance, whether because of failure to perform the works in the manner provided for in the Contract or because of some other breach of the Contract. The Employer picks up the Contract, which – in the UAE – is usually some modified FIDIC standard form, in search of the termination provision. Most such termination provisions require the Employer to send the Contractor a notice to correct the failure or the breach within a specified period. If the Contractor fails to correct the breach, then the Employer becomes entitled to terminate the Contract. The Employer, feeling confident of its legal position, sends the termination notice. The Employer is satisfied that it has correctly terminated the contract.
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By Martin Preston

TYPICALLY, the contract price under a construction contract will either be a lump sum or cost reimbursable.

Under a lump sum contract, the contractor is required to provide a fixed price for carrying out and completing the scope of work. The risk that the cost of completing the works is more than the lump sum price sits with the contractor, who will only be entitled to be paid more than the lump sum price if the employer varies the scope of the works or delays or obstructs the contractor in carrying out the works. [Read more…]

By David Johnston

ONE of the issues that most vexes construction lawyers is that of the standard of care the contractor owes to the employer, that is the degree of skill and caution which the contractor must exercise under the building contract.

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Regardless of how a project team gets assigned, the project manager needs to make sure that the team members have the right skills to complete their assigned tasks. In fact, if the team members do not have all the right skills and the project manager cannot help them acquire the skills, the project would appear to be at risk.
This does not always mean sending a person to class. There are many other learning events that can help, including:
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To help you make the most of their suite of contracts, FIDIC is returning to the Americas for the 2nd FIDIC Americas Contract Users’ conference – the region’s only event that’s officially endorsed by the association. [Read more…]

Have you ever been asked how far along you were on a project? Of course you have. If you do not have a valid schedule, or if you are not keeping the schedule up-to-date, you know that your answer is pretty much a guess. If you have a good schedule and you are keeping it up-to-date, you should have a sense for how much work is remaining and what the projected end-date is. But are you 50% complete? Or 90% complete? It is not always easy to know.

Earned value metrics were established to remove the guess work from determining where you are at in relation to a baseline. Using it allows a project manager to know precisely how far along he is, how much work is remaining, what the expected cost will be, and all sorts of other interesting information. [Read more…]