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Clause 8 7 Delay Damages Understanding Clauses in FIDIC Conditions of Contract For EPC Turnkey Projects First Edition 1999 PDF
Clause 8 7 Delay Damages Understanding Clauses in FIDIC Conditions of Contract For EPC Turnkey Projects First Edition 1999 PDF
(For the purpose of understanding Delay Damages following Sub-Clauses have been mentioned)
The Contractor shall commence the design and execution of the Works as soon as is reasonably practicable after the
Commencement Date, and shall then proceed with the Works with due expedition and without delay.
In this event, or if the Employer gives notice to the Contractor that a programme fails (to the extent stated) to comply with
the Contract or to be consistent with actual progress and the Contractor's stated intentions, the Contractor shall submit a
revised programme to the Employer.
Submission of
Time
Programme by
the Contractor
to the Employer
< 7 Days
Employers
Notice to the
Contractor of
Commencement
Date
When determining each extension of time under, the Employer shall review previous determinations and may increase, but
shall not decrease, the total extension of time.
These delay damages shall be the only damages due from the Contractor for such default, other than in the event of
termination under Sub-Clause 15.2 [Termination by Employer] prior to completion of the Works. These damages shall not
relieve the Contractor from his obligation to complete the Works, or from any other duties, obligations or responsibilities
which he may have under the Contract.
Signing of < 42 Commencement Time for Completion Delay Damages Taking Over
Agreement Days Date
As per FIDIC, Delay Damages shall be paid for every day which elapse between the relevant Time for Completion and the date stated
in the Taking-Over Certificate.
Delay damages are applicable when pursuant to the clause 8.6 Rate of Progress the contractor adopts revised methods,
unless notified as otherwise by the employer when the actual progress is too slow to complete within the time for
completion and/or the progress has fallen (or will fall) behind the current programme. If these revised methods cause the
employer to incur additional costs, the delay damages shall be effective.
The amount of this pre-defined delay damages must represent a reasonable pre-estimate of the employers probable loss.
The particular Conditions should specify the daily sum, for the works and for each section, expressed either as an amount
or as a percentage.
Although the % of delay damages are specified in the guidance for particular conditions in FIDIC as mentioned above, it
is usually intended that the % delay damages to be calculated or estimated as the sum of:
The anticipated average cost to the employer of the extended period of the Engineers supervision, plus
The anticipated average benefit to the employer of the completed works, or an amount roughly equivalent to the
commercial cost of borrowing the accepted contract amount from a local bank.
Notes:
Delay damages are limitation to liability for delay.
Liability towards delay damages cease only after the taking over certificate is issued and not on passing test on
completion.
Delay damages are generally excluded from the insurance policy cover since willful act or negligence will not be in
policy cover.
Failure to comply with time for completion will lead to the entitlement of delay damages according to subclause 8
with exception of extension of time for completion.
If and when the contractor is prevented from carrying out the works or if the employer causes delay to the progress
with effect to time for completion, the contractor is entitled to claim for extension of time and is relieved from the
liability of delay damages.
Extension of time creates a win-win situation, through which the employer is protected against the loss of delay
damages and the contractor becomes released from liability for delay damages.
Pg. 4/5 Compiled by Divyanshu Dayal. dayal1005@gmail.com Portfolio-FIDIC
Understanding Clauses in FIDIC Conditions of Contract for EPC/ Turnkey Projects First Edition 1999
Delay damages do not fall under national legislation concerning penalties. By contrast they include a promise to pay a
certain amount of money for non compliance with a particular agreement only.
It is not appropriate to agree to milestones in combination with delay damages. FIDIC does not mention milestones
but sections. If sections have been determined within the particular conditions or in the appendix to tender, sectional
completion dates should be stated. If sections have different importance to the employer different delay damages rates
can be fixed. It can be seen that sections make the contract much more flexible and sometimes also more balanced.
Applied Clauses of the Delay Liquidated Damages for EPC Contracts (FIDIC or Mixed)
The delay liquidated damages and project delay liquidated damages payable pursuant to this clause represent an agreed
genuine pre-estimate of losses likely to be suffered by the employer in the event of delay to taking over of the works
beyond the time for completion and are not a penalty. The contractor shall not be entitled to withhold or set-off any
amounts due pursuant to this clause 8.7 for any reason whatsoever, including for the avoidance of doubt, where the
contractor wishes to dispute the quantum or validity of any such amounts.
Delay liquidated shall be 1% of the contract price per week subjected to maximum liability of 10% of the contract price.