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CHAPTER

1. A Contract for the Construction of a Bridge at Addis Ababa was signed between the Employer and the
Contractor on September 19,2007 with the following facts:

Project Cost = 8,400,00 Birr


Site Hand Over date =Oct. 13,2007
Mobilization =7 Days
Completion Time = 6 Months
Liquidated damage = 1 / 100 per delay of Calendar day
Limit of Liquidated Damage = 10 % of the Project Cost
Interest on Delayed Payments = 11 % per annum comp. semi annually
Retention = 10 % of the executed work
During construction phase the following variation orders(VOs) and change orders(COs) has been given:

VO1: During the excavation of Abutment 1, the soil was found to be weak and a variation order i.e additional work is given for a
masonry wall and rock fill up to the design level. This activity takes 29 working days and the contractor executes the excavation of
Abutment 2 which amounts 200,000.

VO2:the soil besides the Abutment was found unstable and the consultant orders to excavate and cart it away.
VO3: the masonry construction for the Abutment was omitted.

ChO.1(Extra Works): A change order was given for the abutments from stone Masonry to Reinforced Concrete works.

The work is suspended by the the consultant for 16 Cal. Days for considering new design change.

The actual progress of the work on 25th June 2008 is 75%.

The characterstics of the VOs and Ch.O1 are indicated in the table below:
Description Variation Amounts Change order

Additions Excess in Omission


Quantities

Variation Order 1 110,000 - - -

Variation Order 1 80,000

Variation Order 1 500,000

Change Order 1 4,600,000

The following payment certificates are paid to the contractor as given in the table below:

Payment Certificate Amount Approved Delay in Months Work executed Remark


Nos. amount during
Payment Delay

P.C.N. 02 500,000 3 Months 85,000


P.C.N. 05 325,000 4 Months 300,000

The causes of delay in above situations


1. The employer and/or the engineer
In the above situations we can observe different variations orders by the employer or engineer. These variations resulted in delays which
are calculated under delay analysis calculation. Clause 8.49(a).

A change order was given for the abutments from stone Masonry to Reinforced Concrete works

2. Suspension by the contractor: The work is suspended by the the consultant for 16 Cal. Days for considering new design change.

As a delay analyst we can calculate the justified delay and we can distinguish who takes the liability.
The fore the employer will be subjected to pay the contractor in terms of (1) extension of time and/or (2) payment

a) Justified delay of the project:


Time delay justifications are worked out as tabulated below;
No Description of Computations Justified
Claims Delay
1. Due to Variation VO1+VO2 -VO3= 17 Cal.
orders of Days.
VO1( Additions), Additions + Excess in quantities - Omissions = 110,000 + 80,000
VO2(Excess in 500,000 = -310,000
quantities) and
VO3(Omissions) Delay justified = (-310,000 / 8,400,000) *180= -7 Cal. days.

But, during the excavation of Abutment 1, the soil was found to be weak and a variation
order i.e additional work is given for a masonry wall and rock fill up to the design level.
This activity takes 29 working days and the contractor executes the excavation of
Abutment 2 which amounts
200,000 which saves (200,000 / 8,400,000) *180= 5 Cal. days.

Therefore, delay to be justified should be = 29 5 +(-7) = 17 Cal. Days.

2. Design change for Completion time as per contract 115 Cal.


the Abutments from days.
stone Masonry to = (Component Cost / Contract price) * contract time
Reinforced Concrete
Works = (4,600,000 / 8,400,000) *180= 99 Cal. days.

In addition, the work is suspended by the consultant for 16 Cal. Days for considering new
design change. Therefore, delay to be justified should be
= 99+16=115 Cal. days.

The total justified delay is then, 17+115=132 Cal. Days

In this condition according to clause 8.4, the contractor will be entitled to extension of time. The
contractor has the right to claim for 132 cal. days justified delays.
According to clause 8.4, the Contractor shall be entitled to an extension of the Time for Completion if and to the extent that
completion for the purposes of Taking-Over of the Works and Sections is or will be delayed by any of the following causes:
(a) a Variation (unless an adjustment to the Time for Completion has been agreed under Variation Procedure or other substantial
change in the quantity of an item of work included in the Contract,
(b) a cause of delay giving an entitlement to extension of time under a Sub-Clause

According to clause 20.1, the contractor can also claim for additional cost for the justified delays caused by the employer or the
engineer.

b) The Liquidated Damages entitlement of the Employer


The liquidated damage will be applicable for unjustified delays,

According to clause 8.7, If the Contractor fails to comply with Time for Completion, the Contractor shall subject to pay delay
damages to the Employer for this default.
These delay damages shall be the sum stated in the Contract Data, which shall be paid for every day which shall elapse between the
relevant Time for Completion and the date stated in the Taking-Over Certificate. However, the total amount due under this Sub-Clause
shall not exceed the maximum amount of delay damages (if any) stated in the Contract Data.

Unjustified delay = Total delay - Justified delay

Total delay of the project:


Contract Date = September 19, 2007.

Site Hand over Date = Oct. 13, 2007 = Commencement Date

Mobilization Time = 7 Cal. days.


Starting Date = Commencement Date + Mobilization Time.

= Oct. 13, 2007 + 7 Cal. days.

= Oct. 20, 2007.

Contract Time = 6 Months = 30(6) =180 Cal. days.

Completion Date as per the contract = Starting Date + Contract Time.

= Oct 20, 2007 + 180 Cal. days.

= April 20, 2007

75 % Actual Progress of the Work for Completion = June 25, 2008.

Total delay of the project = 75 % Actual Progress of the Work for Completion - Completion Date as per the contract.

= June 25, 2008- April 20, 2007

= 455 Cal. days.

Therefore; the total delay of the project was 455 Cal. days.

Unjustified delay = Total delay - Justified delay

=455-132= 323 Cal days

Therefore; the delay to be considered for this part is 323 Cal. days.

Therefore, the employer can claim for 323 calendar days unjustified delays of cost 840,000 birr.
Liquidated damage = 1/ 1000 per unjustified delay of that part of the contract price.
Unjustified delay = 323 Cal. days.

The part of the contract price included in the unjustified delay is:

= (323 / 180) * 8,400,000.00

= 15,073,333.33

Liquidated damage = (1/ 1000) * 323 * 15,073,333.33

= 4,868,686.67

Limit of liquidated damage = 10% (8,400,000.00)

=840,000<4,868,686.67

Therefore, the liquidated damage of the project is Birr 840,000.

c) Payments delay compensations

According to clause 14.8, If the Contractor does not receive payment in accordance with Sub-Clause 14.7 [ Payment], the
Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. This
period shall be deemed to commence on the date for payment.

Amount of delayed payment certificate and delayed days:

P.C.N. 02 = Birr 500,000 and delayed for 3 Months=90 Cal. days.

P.C.N. 05 = Birr 325,000 and delayed for 4 Months=120 Cal. days.


Payments Delay compensation for P.C.N. 02 is computed as:

Payments Delay compensation for P.C.N. 05 is computed as:

= 325,000 * (120 / 365) * (11 / 100) = 11753.43. The total

Payments Delay compensation = 13,561.64 + 11753.43

= 25315.07

Therefore, the total Payments Delay compensation = Birr 25315.07


ADAMA PROCUREMENT AND CONTRACT
UNIVERSITY MGMT