You are on page 1of 10

Against All Odds

TE&A's Special Edition Issue

by Clive Horridge
Against All Odds Page 2 of 12
by Clive Horridge

Not just a Phil Collins song-title depicting a


common scenario of dispair, it is the case
across the board, and in particular on large
construction projects in the public sector,
that contractors face a multitude of a wide
range of difficulties in the process of
executing a project.

Do we sympathise with their dilemma?


Well, to an extent the answer is often yes,
Clive Horridge despite that experienced contractors in the
MDBF, CMIHT, ACInstCES field have 'seen it all before' and are, to a
SENIOR CONTRACTS ADVISOR great extent, deemed to have made
provision in their tenders for the majority of
Clive Horridge has a career in Civil Engineering foreseeable hurdles that they may face.
spanning more than 46 years. Most of his
experience in the industry has been gained with But what is foreseeable? Construction
Corderoy on numerous major Motorway projects contracts cover a wide array of various
in the United Kingdom under the ICE 4th and 5th forms of contract, and notorious for its
Editions and the various CESSM Conditions of contractor-loaded balance of liability, the
Contract,and further experience on major FIDIC 'Silver Book', for EPC Turn-key
projects in the Middle East while with Parsons projects, provides little scope for
Group working in Romania and in Middle East. contractors to recover losses which are
Since joining Techno Engineering & Associates arguably the result of the 'assumed risk'
in 2006, Clive has, over the last 11 years, element, to be absorbed by the winning
become specifically involved with Dispute bidders.
Resolution procedures on Motorway, Road and
Rail Rehabilitation projects under the FIDIC Setting aside more run-of-the-mill technical
Conditions of Contract in its various forms. Over difficulties such construction contracts
the years, Clive has developed an in-depth invariably pose for EPCT contractors, a
knowledge of Construction Contract generally, growing trend in the industry on public
not only under the Forms of Contract above, but sector projects, is the effects of a 'master-
an understanding of working practice, servant' approach to what should be a
interpretation and of course, project specific partnership relationship under the contract.
application of contract.
Of course, these words won't be found in
As a seasoned “veteran” in the Construction the general conditions, nor elsewhere in
industry, he has played a significant part in the contract documents, and it would be
Contract Management for many years, founded foolish to think that they would, yet the
on “old school” principles and offering unbiased package of the contract documents as a
contractual guidance to Project Managers in whole would indicate that each party has a
both the role of the Engineer and the Contractor. role to play under an EPCT contract (as
Utilizing his professional experience, Clive has with others), and that role should embrace
contributed vital input into claim assessment the 'good faith' principles of civil law (or as
both in quantum and more specifically, liability may be appropriate under common law)
and contractual validity. As Senior Contracts and include open dialogue and reciprocal
Advisor, Clive will approach each of the cooperation between the parties, in order to
challenging and widely varied spectrum of tasks deliver the expectations of the parties, as
with an open-mind and impartiality, required to they had intended.
achieve Client expectations. Clive is an Expert
Witness who has given evidence on Quantum We all know that it's all smiles when a
matters in numerous ICC arbitrations and contract is awarded, and in the public
countless Dispute Adjudication procedures. sector a government department will be
One cause of post-contract demise is often an
employer's failure to grasp and reap the rewards
of the 'partnership' concept under the contract.
Against All Odds Page 4 of 12
by Clive Horridge

looking forward to its shiny new motorway, against the effects that implementing them
railway or hospital facility, and the may have on others.
contractor, and let's not forget its eager
share and stakeholders, will be looking Recently, faced with a scenario where a
forward to another five years or so of contractor had undertaken to finish a section
continuing work, extended business of work earlier than the contract had
opportunities, and a healthy financial return provided for, solely on the oral demands of a
for its efforts. high-ranking official, it soon became
apparent that there was no contractual
R e a l i t y, a n d C o n s t r u c t i o n N e w s ® provision that would reliably support the
headlines, are stark reminders that wavy contractor's financial claim, which stemmed
lines can soon replace the smiles, on many from the effects of bringing forward such a
such projects. complex delivery milestone.

One cause of post-contract demise is often “What Claim?” was the employer's position.
an employer's failure to grasp and reap the Its view was that the contractor had, on its
rewards of the 'partnership' concept under own volition, started the section earlier and
the contract. It's not surprising really, those had finished it earlier, the work had been the
in charge of the public purse are often same… and to cap it all, there was no such
powerful department heads, answering instruction under the contract to bring the
directly to a high ranking official, so it is section forward and there was no addendum
understandable that their attitude towards to the contract or written supplementary
the project and the contractor often mirrors agreement to that effect.
their attitude to those that serve under
them, which unfortunately is very likely to be In reality, and on the oral demands of its
a master-servant approach, which is all too employer, the EPCT contractor had indeed
familiar to us in the construction industry. started earlier, so much so that there was no
time to prepare adequate design. This
Project goals are usually well defined for aspect alone, plus the implementation of all
both parties, under the terms of a contract. A manner of delay mitigation measures (and
well-crafted contract will define sectional the disruption that such measures often
completions, delivery milestones, creates), together with dealing with change
constraints and the like, and payment terms orders and a host of other employer delays,
which reflect the same, and thus maintain as well as those usually considered to be
an ordered programme and cash-flow, as contractor liability had the change not
anticipated by both contractor and occurred, resulted in a construction delivery
employer alike. cost that well exceeded the contractor's
predictions, by almost 100%.
But what of other employer goals, those
which are not addressed by contract and So where was the dividing line between
tend to fester behind the scenes, party liability, originally governed by the
manifesting themselves at inopportune 'single point of responsibility' that the EPCT
times through the course of a project? Their contract principles provide, under these
mere mention may raise some eyebrows, changed circumstances?
yet those who have faced them in the real
world, will likely recognise them and be The employer's view was that there had
nodding their heads at this juncture, been no instruction issued under the
knowing very much first-hand that they can, contract, so the measures taken were
and do arise, and can have devastating considered to be at the contractor's
effects on a project. discretion. Does the contractor have a claim,
where the circumstances were such that the
Ambition can be cruel and those in power significant increased costs expended were
have a duty to balance their ambitions indeed attributable to actions at the
Seek the services of a good technical, contractual
and legally adept construction claim consultant,
who will provide experienced counsel and the
added support of sound and reliable legal advice.
Against All Odds Page 6 of 12
by Clive Horridge

discretion of the contractor when working to anticipated], in itself does not instruct the
a revised construction schedule? In the Contractor pursuant to [the Employer
employer's view, and as determined by the Instructions Sub-Clause] to:
employer under the contract, the answer
was no. (a) Start [the relevant section] of the
Works (and other related parts of the
Consequently, a Dispute Adjudication Works) on [Date #1] compared with the
Board (DAB) decision was sought under access date under the Contract of [Date
the dispute resolution procedures of the #2];
contract, and in the circumstances, the
complex Statement of Claim which we (b) Achieve an earlier Due Date for
prepared included a cascade approach, Completion for [the relevant section] of the
commencing with argumentation of Works (and other related parts of the
entitlement under the change Works) of [Date #3] compared with the Due
order/variation clause of the contract, and Date for Completion under the Contract of
further cascaded through the wide range of [Date #4].
the various legal arguments which were Instructed Variation [releasing to the
considered appropriate in support of such a Contractor access to and possession of
case. part of the Site at an earlier date than
anticipated] together with subsequent
The three member DAB's unanimous further instructions comprised a
decision has been recently received, and requirement for an earlier start and
therein the DAB provided the parties with completion of [the relevant section].”
an extensive and excellently reasoned
decision, which although well balanced in The DAB's Decision that the merits of the
its address of the decisions sought by both case centred on the conclusion that “the
parties, the decision supported the DAB decides the Contractor has an
contractor's entitlement, predominantly entitlement to additional payment which
under the civil law principle of 'acting arises out of the [applicable law]” and that
without mandate'. the Variation releasing to the Contractor
access to and possession of part of the Site
In further detail, yet to maintain anonymity at an earlier date than anticipated, was in
[…] inserts are used, the DAB Decisions itself, not an instruction to start and finish
within its Bifurcated Decision on Liability, the relevant section of the Works sooner,
concluded the principle that “the DAB means that a Variation [and its respective
decides the Contractor has an entitlement Sub-Clause] could not be the basis for
to additional payment which arises [under evaluation of the work carried out.
the applicable] Law”, yet clarified that “the
DAB decides that the Employer has never However, the reasoning applied by the
instructed the Contractor pursuant to the DAB is such that the civil law principle of
Contract provisions to accelerate progress 'acting without mandate' is applicable, and
in [the relevant section] of the Works (and consequently that “the aforementioned
other related parts of the Works) […]. instruction together with subsequent
However, the DAB decides that the further instructions comprised a
Contractor was required by the Employer to requirement for an earlier start of [the
accelerate the work of [the relevant relevant section]” and that “the
section]”. aforementioned instruction together with
subsequent further instructions comprised
Importantly, a distinction was made clear, a requirement for earlier completion of [the
whereby “the DAB decides that the relevant section] of the Works clarified to be
Employer's Instructed Variation [releasing [Date #3] subsequent to the above
to the Contractor access to and possession instruction. The DAB understands the date
of part of the Site at an earlier date than of [Date #3] to be the start of commercial
This DAB decision should be taken as a warning
to employers not to use and abuse your
counterpart partners in construction projects, as
there is no hiding behind a perceived lack of
provisions under respective contracts, and to do
so, liability may be decided against an employer.
Against All Odds Page 8 of 12
by Clive Horridge

operations of the [the relevant section]”, agreed. Similarly, any reduction to the
and that “the aforementioned instruction periods for the design and procurement
together with subsequent further may also have time and cost
instructions comprised a requirement to consequences. Execution and
accelerate progress in [the relevant procurement strategies upon which a
section] of the Works (but not other parts of Contract Price was based risk to be
the related Works) up to completion and knocked off balance with costs
the Employer's Taking Over of the same on consequences.
[Date #5]”. Likewise, in the event of acceleration and
the unilateral demand of one Party for
Therefore, and on the foregoing reasoning, completion by some immutable date, in the
the DAB decided that “as a consequence DAB's view, fundamentally alters the risk
of the instruction [releasing to the allocation set out in the Contract.
Contractor access to and possession of
part of the Site at an earlier date than Notably, in this instance, the Parties could
anticipated] (and subsequent further not agree there was a contractual remedy.
instructions received from the Employer It therefore follows that in those
over the period of construction of the circumstances, absent an agreed price for
section) the Employer had assumed that change and absent a contractual
liability for the consequences of the remedy, a contractor would be entitled to
Contractor giving effect to such recover payment of what it constructed
instructions”. under the law”.

As a consequence of such Employer The parties had agreed that the DAB would
l i a b i l i t y, “ T h e D A B c o n s i d e r s t h e bifurcate its decision, whereby in the event
Contractor entitled a receive that employer liability was found, the
reimbursement of costs excluding profit as parties would have an agreed period within
a remedy at law, such costs to be which to negotiate a financial settlement.
consistent with the local market prices at Failing which, the DAB will proceed to
the time of execution. Such costs to be decide the quantum stemming from the
demonstrated as resulting from the alleged bifurcated decision on liability.
causes” and that “The DAB considers the
Contractor entitled to receive financing The moral of this story for employers is
charges on any amounts due, pursuant to, don't attempt to use and abuse your
and calculated in accordance with, [the counterpart partners in construction
Delayed Payment Sub-Clause]”. projects, because there's no hiding behind
a perceived lack of provisions under your
The above decisions of the DAB all stem respective contracts, and to do so would be
from the DAB's reasoning that: at your risk.

“In the DAB's experience, the requirement And for contractors, when your claim
to commence and complete work at an appears to be against all odds, as it was in
earlier stage in an EPC style contract is this case, another song-title comes to
likely to have had an effect (significant or mind, Peter Gabriel's “Don't Give Up”.
otherwise) upon the cost of performance. Seek the services of a good technical,
The nature of EPC contracting is such that contractual and legally adept construction
time is allocated for design followed by claim consultant, who will provide
procurement, before any physical experienced counsel and the added
construction work can commence. The support of sound and reliable legal advice.
repositioning of a work or Section within a The law prevails in any event, and good
contractor's programme may have time advocacy can win through, as we have
and costs consequences and affect the proved to be the case, on this and a
basis upon which the Contract Price was multitude of occasions.
When contractor's claims appear to be against
all odds as in this case, “don't give up”, the law
prevails in any event, and good advocacy can
win through, as we have proved to be the case
on this and a multitude of other occasions.
Bucharest/Romania

1 November 2017