Professional Documents
Culture Documents
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Design Stage
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Post Tender Stage
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To ensure completion of the project in line with intended cost, quality, time
and maintaining good relations between the parties as far as possible by
being objective at all times.
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• Offer
• Acceptance
• Intent
• Legality
• Capacity of Parties
• Possibility of Performance
• Certainty of Terms
• Consideration (In case of English Law)
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' Contract Administration I Contract Practice
• Risk Allocation
• Involvement of Engineer
• Value
• Complexity
• Design Responsibility
• Need for Variation
• Work Type
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Advantages of using a Standard Form of Contract against a Bespoke contract
• Contractors aware of the risks, hence likely to be more competitive
• There are many legal cases available for interpretation of the clauses. Hence post
contract disputes are likely to be less.
• Each party is well aware of their risks and obligations and hence more chance of
the.
• Changing the standard form of contract without good professional advice creates
many ambiguities in the contract.
e.g. If cost escalation clause is changed so as to disallow for any increase in
prices but no clarification is incorporated for the variations, then it would result is
many disputes.
• If provisions are altered in a Bespoke form of contract to align the contract
completely in favor of the client, there is even a possibility that in case of any
dispute, the court may even reframe the contract to make it more equitable or in
worst case may even void the contract.
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l~ontract ~dministration /Contract Practice 1!11
Choice of Form of Contract
FIDIC 99 - Type
FIDIC 87 I 95
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Key differences between FIDIC 87 and FIDIC 99
• The Engineer is specified to act for the Employer in FIDIC 99, not the impartial
role as envisaged in FIDIC 87.
• Instead of Engineer's Decision as in FIDIC 87, Dispute Adjudication Board is
included in the FIDIC 99.
• Termination for convenience clause is added for the Employers.
• Value Engineering Clause added in FIDIC 99
• Interest on Late Payment to be on bank discount rate plus 3% specified in
FIDIC 99. In FIDIC 87, this is not specifically mentioned.
• Provision for revising the rate if the quantities exceed by more than 10% in
FIDIC 99
• Delay by authorities included as the grounds for EOT in FIDIC 99.
• Variations permissible only until issuance of Taking Over Certificate in FIDIC
99.
• Provision for Engineer to seek proposal for the variation in FIDIC 99.
• Basis of cost fluctuation calculation provided in FIDIC 99
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• JCT
• NEC
• PPC 2000
• ICE
Insurances
Nominated Sub-Contractors
• Nominated
• Named
• Domestic
• Listed - 2 or 3
Risks vary slightly in each case
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Contract Administration /Contract Practice !&I
Key Features of a Partnering Contract
• A partnering charter signed by all the parties involved highlighting the spirit of
team work.
• Provision for KPis to measure project progress
• Non-adversarial nature of contract
• Provision of early warning signs and the mechanism for review of problems and
resolution of same
• Provision for Value Engineering
• Provision for incentives for the proposals that helps in reducing the cost.
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~>.Contract .Administration /Contract Practice leB
UAE Legal System (Based on Civil Law)
• Based on Civil Law
• Civil Code Article 870-898. (Civil Law No.2)
• Article 203-219 of Civil Procedure Law No.11 of 1992
• UAE Commercial Transaction Law No.18 Article 1-95(1993)
• Law no. 6 (1997) applicable for Govt. Contracts in Dubai
• Abu Dhabi Emirates Construction Law No.4 of 1983
Some of main features of UAE Civil law are :
• Provision for 10 years Decennial Liability
• Court has the power to review the compensation stated in contract if it does not
commensurate with the damages likely to be suffered.
• If prices not mentioned in the contract, a fair price to be paid
• Contract to be performed in Good Faith
• Termination of contract by performance I consent /court order
UAE Courts Hierarchy
• Court of First Instance- Court of Appeal - Court of Cassation
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Contrac~ Administration /Contract Practice 1!&11
Provisional Sum & PC Sum
• Vesting Certificate
• Insurance
• Bank Guarantee
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Claims
Extension of Time
• Extension of Time
• Time with Cost- Employer's delays
• Time Without Cost- Neutral Delays or Concurrent Delays by Employer and
Contractor
• Site Overheads
• HO Overheads . ~~~~==~
Hudson Formulae
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: . . ._ Constructive Acceleration
• Acceleration Claim
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Disruption Claim
This is basically a delay claim but delay may or may not affect the project
completion.
• Reduced Productivity
• Idle resources
• Demobilization IRe-mobilization
• Unproductive Overtime
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Contract Administration /Contract Practice f&
Suspension I Determination I Termination
• Clause 40
• Suspension 84 Days
• After that 28 days for omission I termination
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Ending the Contract
• By Performance
• By Agreement
• By Operation of Law } As per UAE Law
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Contract Practice /Contract Practice f!&1
Liquidated Damages vs. Penalty
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Definition of Practical Completion
It varies, but most acceptable definition is that when the works are substantially
completed so as to be fit for use for the intended purpose
Discharge
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Contract Administration /Contract Practice &Ill
Defects Liability Period
• Period stated in the Contract starts after Taking-Over of Works. (Generally 1 year)
• For Partial Completion- Separate Defects Liability Period
• However, Defects Liability Certificate is issued when last of Defects Liability Period
expires.
Letter of Intent
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Contra Proferentum Rule
An ambiguity in the document is construed in the way that it is least favorable to the
party who has drafted the document.
Concurrent Delays
Dominant Cause Theory
• Devlin Approach- Parties to bear their own loss
• Apportionment- Implication of each concurrent delay is allocated according to
relative efficacy of the delay.
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Contract Administration /Contract Practice fE!i1
Causes of Delays
• Conciliation- same as mediation, but a third party plays active role in putting
forward terms of settlement
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• Executive Tribunal I Mini Trial- Panel of senior persons from each party and
a neutral person. Parties make submission of legal cases.
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Condition of the Parties if the Contract was not Managed Efficiently
or the Risk were not Managed Effectively!!
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