Construction Management Guide

By Dr. Chandana Jayalath

Any standard form of contract is a generic product applicable under ‘typical’ circumstances subject to amendments in the Particular Application section in order to cater locally specific project requirements where necessary. Importantly, the Contractors therefore recognize the differences and know how to act upon those amendments in the contract. All in all, everyone ‘knows the deal’ if presented with a standard form. The other significant advantage is that the wording of many standard forms has been subject to interpretation over the years by courts. But at least with standard forms both employers and contractors know roughly where they are standing. There are always those who wish to go down the bespoke route but even in bespoke contracts there are vast chunks of texts copied straightway from standard forms. Even though on most occasions what the standard form gives with one hand the amendments take back with the other. [Read more…]

By Dr. Chandana Jayalath

It is common practice that time extension claim comes before the claim on prolongation costs. Once an extension of time has been granted, the evaluation of the additional prolongation costs is often related to the period between the contract completion date and the extended completion date. Prolongation cost is also calculated on time related preliminaries. The author contends that this line of thinking is illogical. [Read more…]

By Dr. Chandana Jayalath

Majority of construction contracts in the Gulf region maintain the principle features of the FIDIC forms of contract, yet there are many subtle changes from the FIDIC forms of contract. These changes will eventually imbalance the even risk allocation between the parties. Many contracts drafted in one sided language biased towards the clients are a result of cut and paste exercise, for instance, sometimes; there is no provision for price escalation and variations exceeding 10 or 15 per cent. The message to contractors entering into contracts on the basis of these forms is to review them very carefully without being fooled into thinking they are simply the FIDIC versions. [Read more…]

Contractor’s Claim for increased cost of material due to unforeseen conditions resulting major revisions can be admissible under clauses 12.2, 6.3, 40.1, 51.1 and 6.4 (FIDIC 4th Edition)

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By Saeed Alabbar

In the early decades of the 20th century, construction was extremely sustainable due to the lack of availability of centralised electricity and water supply, and the use of only local building materials. However, as the UAE entered the 21st century, globalisation bought with it many ideas and design concepts from the West. [Read more…]

By MARTIN PRESTON
The UAE Civil Code governs construction (and other) contracts entered into in the UAE. As such, unlike in a common law system where, subject to certain statutory exceptions, the parties are free to agree to the content of their contract, the UAE Civil Code imports a number of requirements into construction contracts. These are mainly to be found between Articles 872 and 896. Some of the main provisions affecting construction contracts are:• Decennial liability: Article 880 of the Civil Code imposes a 10-year liability on contractors and consultants in relation to structural defects. This liability can neither be contracted out (of Article 882) nor does it appear that specific decennial liability insurance is available to cover off this risk as is the case in certain other jurisdictions with decennial liability (for example, France). However, the scope of decennial liability is limited to serious structural defects likely to result in the collapse of the building or structure rather than all defects to the works.• Liquidated damages/penalties: Either party to a contract may challenge the liquidated damages contained within a contract if the actual loss suffered is more or less than the liquidated damages (Article 390). This differs from the position under most common law jurisdictions where the enforceability of liquidated damages is determined by whether the damages were a genuine pre-estimate of loss at the date the contract was entered into. As is the case in most common law jurisdictions, however, it is rare that the courts will open up the liquidated damages agreed by the parties in their contract.

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1. The Readers of this journal must be very familiar with the phase “pay when paid”. From time to time, it has been raised by main contractors as a defence for not paying its sub-contractors. A classic “pay when paid” clause is found in clause 11(b) of the Standard Form of Sub-Contract for use when the sub-contractor is nominated under the Standard Form of Building Contract drawn up by The Hong Kong Institute of Architects, The Royal Institution of Chartered Surveyors (Hong Kong Branch) and The Society of Builders, Hong Kong (commonly known as the “Green Form”). [Read more…]

By Dr. Chandana Jayalath

A contractor’s overheads are normally covered by the income of the business as a whole and, where the completion of one contract is delayed, the contractor may claim to have suffered a loss arising from the diminution of the income from the contract and hence, the turnover of the business; but the general running costs of his business continue to be expended. Were it not for the delay, the contractor’s workforce would have had the opportunity of being employed on another contract, with the result that it would have contributed towards the overhead costs during the overrun period. Also, if he can show that the staff, who would otherwise have been gainfully employed, had to devote time to dealing with the disruption or delay, he may have a claim for that too. [Read more…]

By Dr. Chandana Jayalath

Whenever variations are ordered that omit work, and particularly if such omissions are substantial in nature, contractors often argue that they should be entitled to claim the loss of profit that they would have earned on such works. [Read more…]

By Dr. Chandana Jayalath

Termination occurs when the employer instructs a contractor to permanently stop the performance of work and leave the site. Construction contracts specify each party’s rights, obligations, and remedies for termination. Termination on construction projects often results in claims and disputes; therefore, the decision to proceed with this option should not be taken lightly. [Read more…]