CONSTRUCTION CLAIMS MANAGEMENT TRAINING

CASE STUDIES OF CONTRACTOR’S CLAIMS

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INSTRUCTION TO THE TRAINEES:

Conduct a detail assessment on the submissions of claims submitted in accordance
with the Contract, the prevailing law, and actual site condition

I. Relevant Clauses from the Conditions of Contract (PPA 2011);

Sub Clause 31.1 of the Conditions of Contract states:

“The public body shall, in due time and in conformity with the progress of the works, place
the site and access thereto at the disposal of the Contractor in accordance with the program
of the implementation of tasks referred to in these GCC. If possession of a part is not given
by the date stated in the approved work program, the public body will be deemed to have
delayed the start of the relevant activities; and this will be a compensation event.”

 Clause 44.1 of GCC which states as “If during the execution of the works the Contractor
encounters artificial obstructions or physical conditions which could not reasonably have
been foreseen by an experienced Contractor, and if the Contractor is of the opinion that
additional costs will be incurred and/or an extension of the period of implementation of the
tasks will be necessary as a result of this, he shall give notice to the Engineer in accordance
with GCC Clauses 69 and/or 73. The Contractor shall specify in such notice the artificial
obstructions and/or physical conditions, giving details of the anticipated effects thereof, the
measures he is taking or intends to take and the extent of the anticipated delay in or
interference with the execution of the works.”

 Clause 73.1 of GCC which states as “The Contractor may request an extension of the
Intended Completion Date if he is or will be delayed in completing the contract by any of
the following causes:
Exceptional weather conditions in the Federal Democratic Republic of Ethiopia;
Artificial obstructions or physical conditions which could not reasonably have
been foreseen by an experienced Contractor;
Compensation Event occurs or a change order for modification is issued which makes it
impossible for completion to be achieved by the Intended Completion Date;
Administrative orders affecting the date of completion other than those arising from the
Contractor's default;
Failure of the Public Body to fulfill his obligations under the Contract;
Any suspension of the works which is not due to the Contractor's default;
Force majeure;

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Any other causes referred to in these GCC which are not due to the Contractor's default.”
 Clause 74.1 of GCC which states as “The following shall be Compensation Events
allowing for time extension:
The Public Body does not give access to a part of the Site by the Site Possession Date stated
in the Contractor’s approved work program;
The Public Body modifies the Schedule of other Contractors in a way that affects the work
of the Contractor under the Contract;
The Engineer orders a delay or does not issue Drawings, Specifications, or instructions
required for execution of the Works on time;
The Engineer instructs the Contractor to uncover or to carry out additional tests upon work,
which is then found to have no Defects;
The Engineer unreasonably does not approve a subcontract to be let;
The Engineer gives an instruction for dealing with an unforeseen condition, caused by the
Public Body, or additional work required for safety or other reasons.
Other Contractors, public authorities, utilities, or the Public Body do not work within the
dates and other constraints stated in the Contract, and they cause delay;
The advance payment is delayed;
The Engineer unreasonably delays issuing Interim Payment Certificates;
Other Compensation Events described in the SCC or determined by the Public Body and
force majeure.”

 Clause 69.1 of GCC which states as “If under the Contract there are circumstances
which the Contractor considers entitle him to additional payment, the Contractor shall:
(a) if he intends to make any claim for additional payment, give to the Engineer notice of
his intention or make such claim within 15 days after the said circumstances become
known to the Contractor, stating the reason for his claim; and
Submit full and detailed particulars of his claim as soon as it is reasonably practicable, but
no later than 60 days after the date of such notice, unless otherwise agreed by the
Engineer. In case the Engineer agrees to another deadline than the said 60 days, the
agreed upon deadline will in any event, require that such particulars shall be submitted
no later than the date of submission of the draft final statement of account. The
Contractor shall thereafter promptly submit such further particulars as the Engineer
may reasonably require assessing the validity of the claim.”

Clause 73.2 of GCC “The Contractor shall, within 15 days of becoming aware that delay
may occur, notify the Engineer of his intention to make a request for extension of the
Intended Completion Date to which he may consider himself entitled, and shall, unless
otherwise agreed between the Contractor and the Engineer, within 21 days from the notification

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deliver to the Engineer full and detailed particulars of the request, in order that such request may
be investigated at the time.”

Case Study, EOT and Financial Claims

I. Contractor’s Statement of Case

Heads of Claims

Delay causes affecting project progress (walk way)

1. Delay due to RoW obstruction

2. Delay provision of utility design
3. Cement shortage

1. Delay due to RoW Obstruction

In this head of claim the Contractor mentioned the existence of RoW obstructions in seven
road segments (R1, R2, R4, R5, R6, R7 and R8) which affects the execution of walk way &
utility works and further stated that the Employer was not able to provide required
possession of the site which was repeatedly requested by him and advised by the
Engineer as per Sub Clauses 31.1, 44.4, 73.1(b) and 74.1(a) of the General Conditions of
Contract.

In addition, the Contractor stated that the Employer have promised to resolve the RoW
obstruction problem within short time, before October 7, 2020 and also instructed the
Contractor to submit revised work schedule. However, though the Contractor has
submitted the revised work program as per the instruction, removal of the obstruction
was not resolved. The Contractor has referred its notification letter Ref. No.
BAC4/390/20 dated October 19, 2020 and Ref. No. /BAC4/404/20 dated December 18,
2020 for the delay of walkway and utility works due to RoW problems in most road
segments (R1, R2, R4, R5, R6, R7 and R8) as per the Contract.

Sub Clause 31.1 of the Conditions of Contract states:

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“The public body shall, in due time and in conformity with the progress of the works, place
the site and access thereto at the disposal of the Contractor in accordance with the program
of the implementation of tasks referred to in these GCC. If possession of a part is not given
by the date stated in the approved work program, the public body will be deemed to have
delayed the start of the relevant activities; and this will be a compensation event.”

2. Delay provision of utility design

The Contractor stated that TR and DP of EEU works were provided lately and
consequently the internal connections works are delayed and as the works can be
executed concurrently with other remaining works, no separate additional time is
considered.

3. Cement shortage

In regards, the Contractor stated that cement shortage has been encountered during
November and December which is affected the execution of cement related activities. In
addition, the Contractor mentioned that he has been proceeding the execution of the
work with available cement at stock and by purchasing from local market. The Contactor
also stated that, after his notification to the cement factories, only less than 25% of the
demand could be obtained compared to the planned work and he has referred his
notification letter Ref. No. /BAC4/403/20 dated December 16, 2020.

The Contractor also mentioned that cement shortage has affected the construction of
utility manholes, internal connections (EEU and Tele), internal and external drainage and
retaining wall, as a result 80 manholes for Tele, 127 manholes for EEU, drainage manhole
extension, edge curbstone and retaining wall construction are still remaining.
Consequently, backfilling and finalization of utility works and subsequent works for
walkway construction couldn’t process.

Thus, by mentioning that the cumulative effect on the overall walkway construction is
due to RoW obstruction problem and cement shortage, the Contractor determined the
additional time needed for walkway as follows.

The Contractor determined the affected walk way length and calculated the percentage
of suspended walkway section (34.54%). Hence, by mentioning the execution of the walk
way construction and utility works for all road segments was planned to be completed

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within 190 days according to the work schedule submitted through letter Ref. No.
/BAC4/0151/20 dated April 8, 2019, the Contractor computed the time required to
execute the same by multiplying with 34.54% and requested 67 calendar days of
extension of time due to RoW obstruction and cement shortage for the encountered
slippage.

Associated Financial Claim

In this prolongation claim, the Contractor has stated that he has incurred indirect
financial losses on the assigned key resources on the project throughout the prolongation
period and exposed to extra overhead losses during suspension and delay.

Moreover, it is mentioned that ground for the additional cost claim is as per sub-clauses
44 and 69 of GCC for which intent has been submitted and the claim is focused on
overhead cost due to the prolongation even though there are additional indirect costs due
to interruption of on ongoing activities.

Accordingly, the Contractor has computed daily overhead cost by considering 15% of the
contract amount as head office and project overhead cost and come up with an OH cost
of 88,812.94 Birr per day. Thus, in relation to the requested EoT Claim No. 00 (67 calendar
days), the Contractor has claimed a total of ETB 5,950,466.98

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