Construction Research Congress 2018 207

Detriments of Meddling with the Engineer’s Claims-Related Contract

Administration Roles

Mohamed-Asem Abdul-Malak1 and Layal Naeem2

1
Professor of Construction Engineering and Management, Faculty of Engineering and
Architecture, Dept. of Civil and Environmental Engineering, American Univ. of
Beirut, P.O. Box 11-0236, Riad El-Solh, Beirut, Lebanon 1107 2020. E-mail:
mamalak@aub.edu.lb
2
Former Graduate Student, Engineering Management Program, Faculty of
Engineering and Architecture, American Univ. of Beirut, P.O. Box 11-0236, Riad
El-Solh, Beirut, Lebanon 1107 2020. E-mail: lgn00@mail.aub.edu

Abstract

The contract administration roles that are expected to be fulfilled by the

“Engineer” on behalf of the owner are found to be explicitly stated in, or inferred
from, the provisions prescribed under the construction contract. It is well recognized
that projects’ owners are at liberty to formulate their own templates of construction
contract conditions. When basing the formulation of such templates on standard
general conditions, owners commonly opt to amend these in such ways that address
their own peculiar needs and interests. This paper aims at tackling this exact meddling
with established practices, particularly in respect of the engineer’s authority and roles
exercised in administering construction claims. To this end, the paper discusses the
means for effecting changes or exercising influences that can lead to limiting the
engineer’s authority. As such, it identifies the varying levels authority within, or
under, which the Engineer may end up acting when exercising its roles. Four classes
have been identified or argued for, which reflect impartial, challenged, limited, and
transferred authority levels. Lessons learned from a fully-documented claim case
study are then used for the purpose of highlighting how the identified authority
classes may coexist in reality. The visitation of the case’s facts revealed practices that
were judged to have led to the diffusion of the engineer’s authority in regard to the
administration of raised claims. The paper concludes by illustrating the impasse,
experienced in the examined case study, which resulted from a combination of
limitations and influences that affected the engineer’s authority along the
claim/dispute tracking and administration timeline.

INTRODUCTION

Project management is referred to as a process requiring that projects be seen

as sub-divided into separate tasks, with each being made the responsibility of a
separate team, while the role of the project organization is stated to be that of
coordination and integration of the separate teams into an effective structure (Bennett
1983). To this end, the commitment and support of a parent organization is indicated
as being a vital requirement to achieving project success (Munns and Bjeirmi 1996).
For construction projects, it has since long been established that contracts play a

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major role in the implementation of projects. These communicate the procedures to

be adopted in executing projects and spell out the rights, duties, responsibilities,
obligations, and liabilities of the contracting parties (O’Reilly 1966). In addition, their
pivotal role is stated to have important implications as to the likelihood and degree of
project success, in terms of cost, time, and quality, as well as the satisfaction of the
contracting parties (O’Reilly 1966). Consequently, it is emphasized that the contract
conditions, whether standard or not, need to be viewed by both the project owner and
the contractor as a source of project risk that needs to be assessed (O’Reilly 1966).
The use of standard contract forms is said to help (a) reduce the inefficiencies
associated with the repeated drafting and reviewing of contracts and (b) facilitate a
greater sense of partnership between contractors and owners (Jergeas and Hartman
1994). Moreover, being drafted by experts beforehand and away from the heat of the
particular project, their use is reported to reflect a fair allocation of risks between the
contracting parties (Kwakye 2000). Of the several available standard contract forms,
those by the International Federation of Consulting Engineers (better known for its
abbreviation in French as FIDIC) are widely used in many areas around the globe,
particularly for international construction projects (Meopham 1986). The complex
nature of such projects dictates the use of carefully written contracts in order to
address their legal, financial, and technical aspects (Clough 1986). Bubshait and
Almohawlis (1994) reported that main advantages may be materialized when using
the same standardized conditions over a long period of time. These include the
potential for improvement and the increased familiarity of the contracting parties with
the contract provisions that are of major concern. In relation to promoting project
success, eleven relevant attributes are as such indicated, including clarity,
conciseness, completeness, internal consistency, long-term consistency, practicality,
and fairness, as well as the effects on quality, cost, schedule, and safety (Bubshait and
Almohawlis 1994).
The administration of the construction contract is performed pursuant to the
requirements stipulated under the adopted contract conditions. Normally, a dual
handling of such a process is to take place: by the contractor, on the one side, and by
the owner or an entity appointed by him and acting on his behalf (referred to as the
“Engineer”), on the other side. While it is customary for the architect/engineer (A/E)
design consultant to be the entity appointed by the owner to act as the “Engineer”, it
is increasingly seen nowadays that a project management firm (PM) may instead be
asked to fill in for that role. High-level reasons have been explored and offered in
support of the assignment of the title of the “Engineer” to either of the A/E and the
PM (Abdul-Malak et al. 2013).

PROBLEM STATEMENT
Regardless of the entity assigned to fulfill the Engineer’s role, the
effectiveness of the contract administration process, as handled by any such entity, is
likely to be influenced by the level of authority assigned or afforded by the owner to
the Engineer through the relevant construction contract provisions. Therefore, it is
vital that owners’ contract drafting practitioners be wary of the impacts of
haphazardly meddling with the Engineer’s authority/role assignment so as not to
cause detriments to the contract administration process.

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SCOPE AND METHODOLOGY

The scope of this paper is to highlight the limitations, constraints, and
influences that may be imposed on the Engineer’s authority, particularly in relation to
exercising claim-administration roles. The methodology followed in this work
involved (1) identifying the set of standard authorities/roles assigned to the Engineer
under the widely-used construction contract conditions by the FIDIC, (2)
investigating the means for effecting changes or influences to such inherently-
balanced authorities/roles, (3) deducing various classes of corresponding authority
levels, (4) using a fully-documented claim case study to highlight how the identified
authority classes may coexist in reality, and (5) concluding with a conceptualization
of the framework within which the interplay among the case’s authority classes has
taken place.

ENGINEER’S PRESCRIBED AUTHORITY

As stated above, standard conditions of contract are generally viewed as
reflecting a balanced approach in assigning the responsibilities, obligations, rights,
liabilities, and duties of the parties to the contract. Similarly, such conditions clearly
stipulate the authority and roles entrusted with the Engineer for assisting in the
administration of the construction contract. The selection and appointment of the
Engineer are for the project owners to decide on. As such, the roles requested of the
Engineer end up being crafted in such ways that preserve the degree of control
desired to be retained by owners over the contract administration process. Critical to
such a process are those roles the Engineer normally plays in respect of responding to
claims made by contractors and tracking and administering their evolution. The
standard conditions by the FIDIC, used widely on international projects and endorsed
by the World Bank, were examined to infer on the Engineer’s authority and roles
assigned therein (FIDIC 1999). Table 1 summarizes the attributes of the prescribed
authority, as directly adopted from the text included under the relevant general
conditions sub-clause (Sub-Clause 3.1). It also lists the clarifications offered under
the “guide” version, which are aimed for developing a proper understanding of the
stipulated terms. A number of observations can be withdrawn as follows:

• Although the Engineer is deemed to act for the employer (referred to

as the “owner” under other standard conditions), the Engineer does not
represent the Employer for all purposes;
• The Engineer is not authorized to amend the contract or to relieve
either party of any obligations or responsibilities, with the exception of
instructing a variation involving omission of any work;
• Constraints on the Engineer’s authority may be imposed by the
employer, and these are to be listed in the particular conditions;
• The Engineer’s role, in exercising any specified or implied authority,
is not stated to be that of a wholly impartial intermediary, unless
otherwise specified in the particular conditions; and
• The Engineer, when exercising a constrained authority, is not required
to disclose evidence to the contractor as to the prior approval needed
from the employer.

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Table 1. 1999 FIDIC’s Prescribed Engineer’s Authority

Attribute Described Authority FIDIC Guide’s Clarifications

Extent of Duties The Employer shall appoint the The Engineer does not represent the Employer for
Engineer who shall carry out all purposes.
the duties assigned to him in
the Contract.
Amending The Engineer shall have no
Contract authority to amend the Contract
The Engineer is not authorized to amend the
Specified or The Engineer may exercise the Contract, but he is deemed to act for the Employer.
Implied authority attributable to the
Authority Engineer as specified in or
necessarily to be implied from
the Contract.
Stipulated If the Engineer is required to
Limitation of obtain the approval of the
Authority Employer before exercising a
specified authority, the If the Employer wishes to impose constraints on the
requirements shall be as stated Engineer’s authority, these constraints must be
in the Particular Conditions. listed in the Particular Conditions, so as to avoid
having to seek the Contractor’s agreement to
Condition on The Employer undertakes not further constraints
Further to impose further constraints on
Limitation of the Engineer’s authority, except
Authority as agreed with the Contractor.
Exercising Whenever the Engineer The Employer’s approval shall be in writing and
Authority exercises a specified authority shall not be unreasonably withheld or delayed.
for which the Employer’s
approval is required, then (for However, when the Contractor receives an
the purposes of the Contract) Engineer’s communication for which the
the Employer shall be deemed Employer’s prior approval was required, the
to have given approval. Contractor is not entitled to query whether it was
approved.
Engineer’s Except as otherwise stated in The role of the Engineer is thus not stated to be that
Capacity these Conditions, whenever of a wholly impartial intermediary, unless such a
carrying out duties or role is specified in the Particular Conditions.
exercising authority, specified
in or implied by the Contract,
the Engineer shall be deemed to
act for the Employer.
Authority to Except as otherwise stated in The main exception is the authority to instruct
Relieve these Conditions, the Engineer Variations, because they may include omission of
has no authority to relieve any work.
either Party of any duties,
obligations or responsibilities
under the Contract.

Further related terms were examined to highlight the characteristics of the

determination expected to be rendered by the Engineer (under Sub-Clause 3.5), as
called for by the requirements of other sub-clauses. That is, making such
determination is in fulfillment of the requirements of other sub-clauses, as these get
triggered via the on-going contract administration process. Table 2 provides a
summary of four attributes identified as characterizing this determination-related role.

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Table 2. 1999 FIDIC’s Prescribed Engineer’s Determination

Attributes Described Roles FIDIC Guide’s Clarifications

Consultation Whenever these conditions
provide that the Engineer shall
proceed in accordance with this
Sub-Clause 3.5 to agree or
determine any matter, the
Engineer shall consult with
each Party in an endeavor to
reach agreement.
Fair If agreement is not achieved,
Determination the Engineer shall then make a
fair determination in
accordance with the Contract,
taking due regard of all relevant
circumstances.
Notification The Engineer shall give notice
to both Parties of each
agreement or determination,
with supporting particulars.
Binding Each party shall give effect to
Agreement or each agreement or
Determination determination unless and until
revised under Clause 20.
The Engineer first consults with each Party,
separately and/or jointly, and endeavors to
achieve the agreement of both Parties.
If agreement of both Parties is not achieved within
a reasonable time, the Engineer shall then make a
“fair determination in accordance with the
Contract”.
Determinations shall be in writing, and shall not be
unreasonably withheld or delayed.
Unless otherwise agreed by both the Employer and
the Contractor, the Engineer shall not delegate the
authority to determine any matter in accordance
with sub-clause 3.5.
The Engineer’s determination is not required to be
made impartially, unless such a requirement is
stated in the Particular Conditions. However, he
should carry out this duty in a professional manner,
utilizing his “suitably qualified engineers and other
professionals”.
The Engineer is then required to notify both parties
of his determination, which is binding upon them
unless and until revised under the dispute resolution
procedures in Clause 20.

The Engineer’s determination that is of concern to the work presented in this

paper is generally associated with deciding on the contractor’s eligibility and
entitlements for extra time and/or compensation under the contract. In that regard, it
can be noted that the process required to be followed by the Engineer incorporates
three major pillars of: (a) performing consultation, (b) making determination, and (c)
notifying determination. As such, it can be readily understood that the Engineer is
expected to first play a facilitation role in attempting to achieve agreement of both
parties, through separately and/or jointly “consulting” with them. Failure to achieve
such desired agreement within a reasonable time has the effect of causing the
Engineer to then make a “fair” determination, in a “professional” manner and
utilizing “qualified” staff. While Clause 20 calls for such determination to be made
within 42 days from the date of receipt of a claim’s particulars, this determination is
stated as being “not required to be made impartially”. Yet, once notified in “writing”
to both parties, it shall subsequently be “binding” upon them unless and until revised
under the dispute resolution procedures, as also provided under Clause 20.

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ME EDDLING WITH W ENG GINEER’S ROLES R

In this section, fourr major ded ductions are made or arggued for, shhowing how
the meddling with
w the Eng gineer’s auth hority is likeely to be effe
fected by thee Employer.
Thee deduced authority
a levvels, along with the diirection withh which thee degree off
authhority medd dling increasses, are synth hesized in F Figure 1. Thhe first majoor deduction
thatt can be mad de from the above-exam mined Engineeer’s authoriity and role stipulations
is that
t the possibility still exists that the Engineeer can be reequired to eexercise his
authhorities and roles while observing “impartiality
“ y”. While thiis property uused to be a
requirement un nder the earrlier edition of the FID DIC conditioons, it remaains clearly
allo
owed under the t current edition,
e throuugh stating itt in the partiicular condittions.
When thet observan nce of impaartiality endss up being nnot stipulateed (or even
unddesired) by the
t employer, it then becomes evideent that the Engineer, inn exercising
his specified orr implied au uthorities, is deemed to aact for the eemployer. Inn fact, under
the FIDIC conditions, the Engineer is found to b e the entity referred to first, when
deffining those considered being
b part of
o the emplo yer’s personnnel under thhe contract.
Succh a status raaises the posssibility of the Engineerr’s actions too be indirecttly affected,
andd merely chaallenged, by thet influencees exercisedd by the employer’s ownn staff.
Anotherr obvious deeduction as to the how it is possibble for the eemployer to
med ddle with the Engineer’ss authority iss to directly impart influuence on thee Engineer’s
actiions by req quiring the prior appro oval of the Employer to be obtaiined before
exeercising such h a specified
d authority. Again,
A suchh constraints, which havve the effect
of limiting
l the Engineer’s authority, area made knnown to the contractor tthrough the
incoorporation of
o their relateed requiremeents in the coontract’s parrticular condditions.
Finally, it unmistakkably follow ws that the em mployer mayy take the liimitation off
the Engineer’s authority to o a higher— —and rather bbelligerent— —level. This is by fully
tran
nsferring to himself an authority th hat is otherrwise expectted of the E Engineer to
exeercise underr standard conditions.
c Such an appproach affoords the em mployer the
bennefit of allowwing needed d contract ad dministrationn actions annd determinaations to be
who olly formulaated through h his own offfice. The traansfer of auuthority can occur, with
or without a stipulation
s inndicating whether
w suchh determinattions, whenn made and
connveyed by th he employer, are to be ren ndered in coonsultation w with the Engiineer.

Figurre 1. Deduceed Engineerr’s levels of aauthority

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CASE STUDY
The objectives of this section are twofold. Firstly, it aims at testing the
possibility of the deduced levels of authorities to actually coexist in practice.
Secondly, it presents a conceptualization of the organizational factors that have a
bearing on facilitating the meddling with the Engineer’s authority on projects. In
serving these purposes, the full record pertaining to a recent construction dispute case
related to a major residential-towers complex was examined. This large-scale project
was recently developed in one of the construction-vibrant countries of the Middle
East and North Africa (MENA) region. Both the Engineer and the general contractor
on the project were reputable local firms, with considerable experience in the locality
of the project. The examination involved a thorough review of the contract conditions
template adopted by the project owner, a real-estate firm recognized as being a
regional leader in the development of mega-sized projects. In addition, the review
included the hundreds of correspondence made available as part of the case
arbitration proceedings, a process that was required under the contract to be
conducted in accordance with the applicable rules and regulations of the International
Chamber of Commerce. Relevant observations related to the Engineer’s authority
being constrained or meddled with can be withdrawn as follows:
• Transferred Authority. The owner assigned for himself the responsibility
for granting extensions of time and notifying both the contractor and the
Engineer of what may in his opinion be reasonable. The granting of any
such extension is stated to follow due consultation with the Engineer and
contractor. Similarly, among several other instances, the owner carried the
responsibility to direct the contractor to vary the work.
• Limited Authority. The owner has retained two additional entities: an
American-based project management firm, which was later replaced by a
Turkish-based one, and a British-based cost/claim consulting firm. Both
entities played certain roles related to claim administration, among other
roles related to other aspects of contract administration. While the project
management firm was mentioned in the construction contract as a
participant to whom communication can be addressed, the other entity
operated more in a backstage mode. No descriptions of the split in roles
between the Engineer, on one side, and the project manager, on the other,
were made. That is, the construction contract terms made reference to the
Engineer only (or the owner in the case of a transferred authority), when
describing actions to be taken on behalf of the owner. The limitation of the
Engineer’s authority can be observed from the actions exercised by each
(engineer or project manager) vis-à-vis matters such as those related to
time-schedule reviews, variation valuations, etc. In general, the Engineer
can be said to have operated in a mail-man capacity on such subjects.
• Diffused Authority. Interesting circumstances seem to have prevailed, in
which the Engineer’s authority can be viewed to have been intentionally
diffused. This was in connection with the administration of contractor-
submitted claims. To this effect, while the contractor was directed to
submit additional-payment claims to the Engineer pursuant to a time-bar
requirement, there was no stipulation as to the entity responsible for

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responding to the contractor’s submission. The ramification of such a

condition led to an impasse status for the claim. That is, at the core of the
dispute was the fact that the project manager had rejected the contractor’s
claim for additional payment on the basis of eligibility (and did not
comment on the quantum side of it). The contractor considered this written
communication by the project manager as sufficient grounds for raising
the claim as a dispute to the amicable-settlement stage. The contractor’s
action was faced with an outright objection by the owner, on the basis that
raising any matter for amicable settlement requires an opinion, in respect
thereof, to have been communicated to the contractor either by the owner
or by the Engineer, as per the stipulations of the dispute resolution clause.
Despite the fact that the letterhead communication by the project manager
included the logos of both the owner and project manager firms, the owner
was of the opinion that the communique did not qualify as an opinion
made on his behalf or that of the Engineer.
• Challenged Authority. The best example of the observed Engineer’s
challenged authority is in the fact that the Engineer’s response was issued
several months from the date of receiving the contractor’s submitted
claim. This was despite the lack of an express stipulation under the
contract as to the participant directly responsible for responding, as
already stated above. It is worth mentioning that it is evident from the
case’s records that the Engineer’s then-overdue response was in reaction
to immense pressure exerted by the contractor. This included written
communications issued by the contractor hinting to the possibility of filing
a lawsuit against the Engineer under tort law. In this regard, the contractor
argued in view of the foreseeable financial harm that was being caused to
the contractor due to the achieved deadlock, which was hindering the
progression of the claim in accordance with the stipulated dispute
resolution mechanism. The contractor further argued that the Engineer was
at the receiving end of the submitted claim, and, as such, he owed him
some form of feedback in accordance with established professional
practices and norms.
• Impartial Authority. The contract was found to include no language
describing whether the Engineer was expected to act as an impartial
intermediary. However, the inferred Engineer’s constraints, discussed
above, seem to support the deduction that the Engineer’s actions were not
required to be made impartially.
Figure 2 summarizes the project’s organizational parameters. These are
believed to have played a critical role in the Engineer’s authority having been
transferred, limited, diffused and/or challenged. In connection with the first three
authority classes, the Engineer’s roles, which would have otherwise been the
responsibility of the Engineer, were channeled to the owner’s own staff or employed
entities. This role channeling by the owner was carried out through incorporating the
owner’s adopted authority constraints in the contract conditions. On the other hand,
the fourth authority class seems to have prevailed when, and if, the Engineer opted to

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exercise the relevant specified or implied authority, as in the case of the example
given above.

In-House
Employer’s
Representative PM QS/CC TC
Team

Roles Channeled

Employer

PM: Project Manager

QS: Quantity Surveyor
CC: Cost Consultant THE ENGINEER
TC: Technical Controller

Architect/Engineer

+ Roles Added Roles Deducted −

Transferred Authority

Limited Authority

Diffused Authority

Challenged Authority

Contractor

Contractual Relationship
Typically Required Consultation
Employer’s Internal Coordination
Employer’s Induced Consultation
Contractual Correspondence

Figure 2. Case’s organizational parameters and associated

Engineer’s authority meddling

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CONCLUDING REMARKS
The work presented in this paper focused on the possible detriments
associated with effecting deviations to the authorities and roles that are customary to
be handled by the Engineer under standard conditions of contract. The paper does not
argue against the owner exercising the discretion to play a more active role in
administrating the construction contract, particularly in relation to contractor-raised
claims and disputes. Rather, it acts as an eye-opener to all participants that may end
up being assigned to take part in this process. That is, it highlights the need to have
the assigned roles properly streamlined in order to avoid encountering confusions or
deadlocks with how claims may progress along the resolution mechanism’s timeline.
Furthermore, the presented findings serve to raise awareness on the part of the
contractor as to the critical need of conducting a thorough review of the owner’s
drafted contract conditions at the tendering stage. As such, the early detection of
possible ambiguities in the authorities and roles stipulated to be performed by the
Engineer and other participants employed by the owner can present an opportunity to
have them clarified and possibly revisited prior to the signature of the construction
contract.

REFERENCES
Abdul-Malak, M. A., Srour, I., and Naeem, L. (2013). Fulfillment of the Engineer’s
role under the construction contract. New Developments in Structural
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Bennett, John. (1983). Project management in construction. Construction
Management and Economics, 1, 183-197.
Bubshait, A. and Almohawlis, S. (1994). Evaluating the general conditions of a
construction contract. International Journal of Project Management, 12 (3),
133-136.
Clough, R. (1986). Construction Contracting, 5th Ed., John Wiley, USA.
FIDIC (International Federation for Consulting Engineers). (1999). Conditions of
Contract for Construction, 1st Ed., Thomas Telford Ltd, Geneva.
Jergeas, G. and Hartman, F.T. (1994). Contractors’ construction claim avoidance.
Journal of Construction Engineering and Management, 120(3), 553–560.
Kwakye, A. A. (2000). Construction Project Administration in Practice, Wesley
Longman Ltd, London.
Meopham, B. (1986). The FIDIC Conditions of Contract: A Commercial Manual,
Waterlow Publications, London.
Munns, A. K., and Bjeirmi, B. F. (1996). The role of project management in
achieving project success.” International Journal of Project Management,
14(2), 81-87.
O’Reilly, M. (1966). Civil Engineering Construction Contracts, Thomas Telford
Publishing Ltd., London.

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