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Complex situation on additonal cost related to delays

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Complex situation on additonal cost related to delays

2 July 2010 5:09
Is it possible for the Engineer to deny additional cost for a period where the Contractor’s own delay is in concurrent with the delay due to non-payment of the Employer? The project Completion was extended due to the non-payment of the Employer. The Engineer says that the Contractors own delay started before the Emplyers default is in concurrent. It is unit price contract (Re-measured) under FIDIC 1987 ( Fourth Edition) Red Book
Last Edit: 10 years ago by . Reason: (NULL)
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Re: Complex situation on additonal cost related to delays

2 July 2010 5:14
The Contractor has performed the works for which the Employer has delayed the payments therefore the dispute has arisen. As a cosequence the Contractor has delayed the works. Irrespective of above, under Clause 67.1 of FIDIC 1987, in every case, the Contractor shall continue to proceed with the works with all due diligence, unless the Contract is already repudiated or terminated. Under the circumstances Engineer can deny the additional cost to Contractor. In addtion to this, the Contractor has not excercized his rights. Therefore he has taken calculated risk of continuing with the works. At the same time the Contractor is bound by Clause 67.1 of FIDIC as the Contract is based on FIDIC Model.
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30 Sep 2017

Re: Complex situation on additonal cost related to delays

2 July 2010 5:15
the contractor is bound at every ocasions to perform , the case would be clearer if Suspension Clauses are applied , whereby , the contractor can call for suspension if the employer withhold payments on non - claim grounds , i.e , the contractor is not in default. from the other side , however , in such the case when the contractor is truely in default , non - payment should be endorsed at the first place by suspension due to damages of a more than 20% delay in the overall of the contractual effective duration ,CM and or Engineer bear the responsibility to guide the situation at its very inception , because this directly affects the course of litigation or arbitration. To draw a solid line in which a case defferenciates wether to deny or not , the Engineer should study the progress at non - payment situation and the following periods, this is to strictly estimate wether the contractor is financing the project due to non - payment from the owners side, this could be established by means of cash flow analysis versus contractors cost at the non - payment event. Finally , the Engineer, though employed by the owner should not act as the Employers AGENT negatively , his role is to process a fair situation , and should by enforcing his SCOPE OF WORK issue an honest advise to the owner to mitigate consequences of ambiguity.
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