September 2013 Q&A

My comments are given in red below.
From the following Questions, you will observe

that FIDIC 1999 is now being increasingly used and the many difficulties that
contract administrators have to face due to its numerous shortcomings (all of these
and many more, are discussed in detail during the advanced class. Last advanced
class in 2013 starts on 13th December) :From: QS4 at QAT Site [mailto:qs4-qat@sixco.ae]
Sent: Thursday, October 31, 2013 6:59 PM
To: sam99@eim.ae
Subject: RATE BECOMES INAPPLICABLE at SIX INSTANCES
Greetings Professor,
During your lecture in Qatar you stated that the RATE becomes
inapplicable/inappropriate in 6 instances.
I kindly request you to elaborate these instances.
Too vast a topic for this short Q&A forum. The 6 reasons that we discussed, with
examples, during SCA class (which is expanded to further reasons and examples
during the advanced course) in brief are :1.
2.
3.
4.
5.
6.
Work being executed under different circumstances.

Economies of Scale. (larger quantities attracting lower rates and vice versa)
Fixed costs being in the work items instead of being in the prelims.
Lack of provision in BOQ to price errors, in a lump sum contract.
Instruction to carry out a variation which is neither necessary nor appropriate.
Existing rate being an average rate for multiple circumstances.
During the advanced class we discuss other reasons including the opportunity
left in (probably inadvertently) in FIDIC 1999 for contractors to claim varied rates
even in re-measurement contracts where the BOQ quantity differs from the
quantity of actual work shown in the drawings, which was not the case when we
were using FIDIC 1987 ! This would give rise to many disputes in the future.
(Next advanced class starts on 13th December 2013).
Regards,
Prof. Sam.
Prof. Indrawansa Samaratunga PhD, DSc
FRICS, FAIQS, FIQSSL, FCIArb, FCIOB, FCMI, FASI, FBEng
Chartered Surveyor, Chartered QS, Chartered Manager, Chartered Builder
Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Expert - Dubai International Arbitration Centre, UAE
Middle East Representative - Australian Inst. of Qty. Surveyors
PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Regards,
A.Akram, Technical Member, IQSSL
MEP Quantity Surveyor
----- Original Message ----From: Muhammad Irfan Yusuf
To: Sam <sam99@eim.ae>

Date: Thu, 29 Aug 2013 13:53:57 +0500
Subject: Consultant contractual position
Dr Sam
We are client/owner having contract FIDIC 87 4th edition. We have terminated

main contractor due to dispute in Oct 2012 at 30% completed project (structure
only). We terminated consultant in June 2013 due to very poor performance and
lot of quality issues on site. We have sent a list of defects to consultant and cc to
contractor in March 2013. Both were ready to do the rectification work as per
very cheap/substandard methods/materials which we rejected. Defect liability
time is up to Oct 2013. Defect liability snagging/ de snagging were included in
consultancy contract. Still we have hold some part of consultant fee. Now we
have new consultant & contractor on site and restarted the project. I want to
send new method statement of a expert from well known construction chemical
company for remedial works to the contractor. My question is what is the position
of previous consultant? should i keep the old consultant in the loop or involve the
new consultant. Can I ignore both the consultants and directly write to contractor
for remedial works.
At the moment all parties are silent but case may be lead to arbitration in near
future.
It is advisable to consult a construction lawyer fully conversant with UAE law,
because termination without both parties consent or without a court order is
against the UAE laws and therefore (and especially if the matter would proceed
to arbitration) you need to get the right legal advice. FIDIC termination provisions
are not in line with the UAE laws. It is a vast subject and cannot be addressed in
this short Q&A forum. We deal with terminations in detail and in relation to UAE
laws during the Advanced Class. Next advanced class starts on 13th December
2013. Your company would be able to benefit if you and other Contract
Administrators would attend it.
Regards,
Prof. Sam.

Please help!
Regards
Irfan
----- Original Message ----From: Cecilia Daza
To: "sam99@eim.ae" <sam99@eim.ae>
Date: Sun, 22 Sep 2013 20:39:04 -0700 (PDT)
Subject: Re: Final Call - SCA class starting next Friday
Dear Dr. Sam,
This is in regards to our on-going project, there are some items which was not considered on
BOQ but mentioned in the drawing.
Those items are considered as new rate, in Part1- General Items we have a Supervision and
Labour paid in sum.
The Contractor is submitting their new rate adding a certain percentage for "Supervision".
Their argument on this issue - "the items are addition to the Contract".
My question is "This supervision cost will be covered by their Overhead and Profit, am I
correct?"
Since the work is shown in the drawings (though missing from the BOQ), it forms part of the
original scope of work, and therefore the Contractor is deemed to have allowed within the
General Items, the total cost of Supervision required to complete the full original scope of
work. Consequently the Contractors submission would not be successful. (If the contract is
FIDIC 4th edition or similar and of re-measurement type, there is provision under Sub-Clause
60.1 to value the work done, even though it may be missing from the BOQ. But if the
contract is FIDIC 1999, there is s difficulty because all work i.e. original scope of work and
variations has to be valued under Sub-Clause 12.3, which does not have a provision to
value items missing from the BOQ but shown in the drawings. This is another significant
shortcoming among many shortcomings in FIDIC 1999 which we discuss in detail during the
Advanced Class. The last Advanced Class for 2013 starts on December 13th.
Regards,
Prof. Sam.

Thanks and Regards,

CECILIA F. DAZA :)
----- Original Message ----From: Thayakaran Sandirasegary
Date: Mon, 23 Sep 2013 11:12:27 +0000
Subject: Question
Dear Sir,
Further to your answer to the following question, I would like to clarify the following from you:
1.
FIDIC 99 Clause 5.1 b says that nominated Subcontractor means a Subcontractor whom
the Engineer, under Clause 13, instructs the Contractor to employ as a Subcontractor. This
is correct and therefore it is the Engineer who should nominate the Nominated
Subcontractor.
2.
Under Guidance for the preparation of particular Conditions, Page 8, it is stated that if the
Employer anticipates that a Subcontractor is to be instructed under Clause 13 but is not to
be a nominated Subcontractor, Clause 5 should be amended... This amendment should be

done before the contract is signed. If the amendment is not done, then only Nominated Subcontractors
can be nominated.
In view of the above, it seems that the Engineer can instruct the Contractor to nominate a
subcontractor for Variations Work. There are no provisions in FIDIC 1999 for the Engineer to instruct
the Contractor to give part of his scope to be done by a subcontractor. This applies to both original
scope of work and variations. Therefore if the Contractor objects to it, an instruction cannot be issued
as suggested. As previously mentioned, the available option is to first instruct the Contractor to add a
provisional sum (for the specific work) and to nominate a Nominated Subcontractor under that PS.
Regards,
Prof. Sam.

I seek your kind comments in this regard.

Thank you
Kind regards
----- Original Message ----From: "Subramanian, Segaran"
Date: Thu, 22 Aug 2013 04:41:03 +0000
Subject: Awarding of EOT-Reg
Dear sir,
I am Alumini of 2012 Batch. I am working in a major infrastructure projects undergoing
in Abudhabi. I have one question regarding EOT.
This project is having four phases and each having separate milestone to complete the
work. During the progress of work the employer has deferred some portion of work from
phase I to phase 4 and as such the contractor is not in a position to complete the phase I
work as per the original contract.
Now the employer is telling the Phase I works are completed and the deferred works are
to be completed during the progress of other phases and it should be completed within
the completion date of pahse 4 and there is no additional EOT for the deferred portion to
be completed during the overall contract period.
However the contractor is arguing that we need additional time and cost to complete the
deferred works because we have to go back to phase I area to complete the deferred
works and due to this deferred works we are not in a position to handover the partially
completed works and also cost due site office maintenance mobilization and
demobilization.
Pl comment for a fair determination as per FIDIC 99 contract conditions.
The purpose of EOT is to avoid the levying of Delay Damages. If the Employer is not
levying Delay Damages for the late completion of the deferred part, then there is no
requirement of EOT.
Costs and EOT are two different issues. The deferment of part of the works amounts to a
Variation pursuant to Sub-Clause 13.1 (f), which Variation should be valued pursuant to
Sub-Clause 12.1. Such valuation would include all the additional costs that you are
referring to. (However, valuation of Variations under FIDIC 1999 is very complex due to
absence of adequate provisions in FIDIC 1999 requiring many interpretations, unlike in
FIDIC 1987. We discuss this topic in great detail with worked examples in the Advanced
Class. The last Advanced Class for 2013 starts on December 13th).
Regards,
Prof. Sam.

Thanks and Best Regards,

S.SEGARAN
Senior Quantity surveyor
----- Original Message ----From: Wasantha Senevirathne
To: "Prof. Sam" <sam99@eim.ae>
Date: Sun, 25 Aug 2013 15:18:48 +0400
Subject: Variations under FIDIC 1999 Red Book
Dear professor Sam,

Hope you are fine.
Kindly clarify whether the Contractor needs to give a notice for additional
payment for a Variation arising
due to some change on drawings under FIDIC 1999 red book eg. change of
levels.
If the Engineer has instructed the Variation, then Notice is not required to value
the direct value of the Variation. Notice is only required if the Contractor intends
to claim EOT/Costs due to such Variation. If however the Variation is not as a
result of a direct instruction of the Engineer, but as a result of the Engineer
approving a proposal under Sub-Clause 13.3, then the Contractor needs to notify
the Engineer via that proposal, the value of the Variation or the proposed method
to calculate that value. We discuss these in detail during the Advanced Class.
The last Advanced Class for 2013 starts on December 13 th.
Regards,
Prof. Sam.


Regards,
Wasantha.
----- Original Message ----From: kapila perera
Date: Mon, 02 Sep 2013 06:01:30 -0700 (PDT)
Subject: FIDIC Yellow Book and Loss of profit issue
Dear Professor
I am an alumni of sound contract advance course.

I have a question and seek your comment on this matter.
I am working for a project in Qatar and it is a design and build project. The
contract is based on FIDIC yellow book.
Recently engineer issued a variation order under clause 13.1 of General
Condition of Contract (Yellow Book). The effect of the variation is
reduction of the work scope worth around QR 123,000,000.00. According
to the clause 13.1 of General Condition of Contract the omitted work
cannot be awarded to another party. However client has reserved his
rights, to award the omitted work to another party, by amending the
clause 13.1 through particular condition of contract.
There is no specific clause in the contract for contractor to seek his loss of
profit due said omission. So in the absence of such clause in the contract,
should the contractor to seek the remedy under Qatar Civil Law . If not
what is the most appropriate route to overcome this type of issue.
As we discuss in detail, during the Advance Class (the last Advanced Class
for 2013 starts on December 13th), with reference to the UAE law and
provisions of both FIDIC 1999 and FIDIC 1987, such omissions amount to
de-scoping and they are neither necessary nor appropriate as Variations,
and therefore the Contractor can get compensation for his loss of profit as
damages for breach of contract. The position under the Qatari Law is
unlikely to be different (as both Civil Codes have their roots in the
Egyptian Civil Code), but better to seek legal advice.
Regards,
Prof. Sam.

Thank you In Advance.

Kapila Perera
----- Original Message ----From: Prince Samuel
Cc: Robert J Woodward <rob.woodward@khansaheb.ae>
Date: Thu, 10 Oct 2013 07:47:09 +0000
Subject: RE: Final Call - Advanced Class
Respected Dr. Sam,

We are working in a project, under FIDIC Redbook 1999.
We are a Sub-contractor working for a Main Contractor.
Do we have a clause in the above, similar to the Clause 52.3 (Variations exceeding 15 percent) of
FIDIC 1987.
If not, could you please advise us how to proceed further for the entitlement of site costs and general
overheads.(Prelims). The client/ Consultant is reluctant to agree this upfront.
The problem we are experiencing is that the original contract value has increased by 100% due to site
instructions and variations leaving us heavily exposed.
FIDIC 1999 does not have a clause similar to 52.3 of FIDIC 1987. However the
head office overheads under-recovery of a contractor can be claimed under 12.4
by presenting the arguments as we discuss in detail with worked examples
during the advanced course. 12.4 however cannot be interpreted to give the
Employer an opportunity to deduct a Contractor's overheads over-recovery. To
this extent FIDIC 1999 is silent. We discuss all this in great detail dutring the CAAC class. It is too complex to be given in a short answer of this nature.
The last Advanced Class for 2013 starts on December 13th.
Regards,
Prof. Sam.

Sincere thanks for spending your valuable time for us.

Thanks and Regards,
Prince Samuel
Senior Quantity Surveyor
----- Original Message ----From: niyaz mohammed

To: sam99@eim.ae
Date: Wed, 04 Sep 2013 16:28:11 +0400
Subject: Re: Advanced Q&A
Dear Sir,
Can you please clarify the below:

We got a new project in Dubai which is under FIDIC Conditions of
Contract for Construction for Building and Engineering Works
designed by the Employer, First Edition, 1999.
I am new to this type of contract, kindly advise regarding administration of
the contracts including the payments. Also can you send me a copy of the
above FIDIC.
It is a vast subject and cannot be addressed in this short Q&A forum. Due
to many shortcomings in FIDIC 1999, unless the contractor is fully aware
on how to deal with them, disputes are unavoidable. Your company should
educate its Contract Administrators on all those shortcomings and on how
best to deal with them in order to protect its interests. The last Advanced
Class for 2013 starts on December 13th
Regards,
Prof. Sam.

Thanks and regards,

Niyaz Mohammed. M
Senior Quantity Surveyor
----- Original Message ----From: jerome goonawardana
To: "Prof.Sam" <sam99@eim.ae>
Date: Sun, 08 Sep 2013 23:02:27 -0700 (PDT)
Subject: Request for advise
Dear Sir,
If you have time, appreciate your comments on following issue.
Conditions - FIDIC 1999
Can contractor propose to omit part of his work which according to contractors view is not necessary
for the project (Omission of sound insulation to fire pump room, as fire pump only works in the case of
fire). If so can this saving be considered as a value engineering under clause 13.2.
Yes, it could be proposed and the saving could be equally shared between the Employer and the
Contractor, if the Employer accepts the proposal, provided that Sub-Clause 13.2 is not otherwise
amended through Particular Conditions which usually is the case as we discuss during the Advanced
Class.(The last Advanced Class for 2013 starts on December 13th).
Regards,
Prof. Sam.

Thanks,
regards, jerome
----- Original Message ----From: Tareq Tayeh
Date: Fri, 11 Oct 2013 01:17:09 -0700 (PDT)
Subject: Question for the SCA Course
Dear Prof.Sam,
Greetings!!!
First of all I would like to extend my great pleasure for the great SCA course given by your goodself
in the last june.
I am extremely sorry for being late to raise my questions but i was much busy in preparing for my
PMP exam,and then i went for a long vacation.
15-Is Final TOC=Performance Certificate? There is nothing called a Final TOC in standard forms of
contract such as FIDIC. Performance Certificate is the name give in FIDIC 1999 to a certificate
similar to the Defects Liability Certificate under FIDIC 1987. As we discuss in the advanced class,
new terminology introduced by FIDIC 1999 would give rise to many disputes. (The last Advanced
Class for 2013 starts on December 13th)
16-Under LS contract, if an item isnt mentioned in the drawing and not mentioned in the boq, but it is
mentioned in the specs, how to deal with it in case of +/-variation? Prepare a suitable rate/price for the
item (the total value of which is deemed to be included within the Lump Sum Contract Price). Use the
rate/price to value only the increase/decrease due to the instructed variation, and adjust the Lump Sum
Contract Price by that value.
17-Is this priority correct (conditions of contract, specs, dwg, boq)? This is correct for FIDIC 1999
but for FIDIC 1987 Specification, Drawings and BOQ are of equal priority but lower priority than the
Conditions of Contract. In FIDIC 1999 priority of documents create a huge problem, that the parties
did not have to face under FIDIC 1987, as we discuss in detail during the advanced class. (The last
Advanced Class for 2013 starts on December 13th)
Regards,
Prof. Sam.

I am sorry that my questions are much more.

Thanks in advance for your appreciated efforts.
Have a great day.
Best Regards,
Tareq.
From: george thayyil [mailto:thayyil.george@yahoo.com]
Sent: Saturday, October 19, 2013 9:28 AM
To: sam99@eim.ae
Subject: Sub-Clause 20.1 of the General Conditions of Contract
Dear Sir,
Regarding few claims for additional cost in our Design and Build Contract the Engineer
requires us to justify the late filing of the claims.
Is there any provision to counter the argument?
The excerpts from the Engineer's letter is copied below.
In accordance with the requirements under Sub-Clause 20.1 of the General Conditions of
Contract(GCC).the Contractor shall give notice of a claim and send to the Engineer a fully
detailed claim within specified period of time, as follows:
1st paragraph, quote; "If the Contractor considers himself to be entitled..............................the
Contractor shall give notice to the Engineer, describing the event or circumstance giving rise
to the claim. The notice shall be given as soon as practicable, and no later than 28 days after
the Contractor became aware, or should have become aware, of the event or circumstance."
unquote.
5th paragraph, quote; "Within 42 days after the Contractor became aware (or should have
become aware of the ...............................and additional payment claimed............"unquote.
Failure on the part of the Contractor to give notice of a claim within the period stated above,
the relevant condition under Sub-Clause 20.1 of the GCC, as stated below shall apply.
2nd paragraph, quote; "If the Contractor fails to give notice of a

claim.................................,the Employer shall be discharged from all liability in connection
with the claim......"unquote.
Notwithstanding, however, the seemingly non-entitlement of the Contractor to additional
payment on account of the aforementioned grounds for late filing of the claim, hereunder is
the Engineers initial assessment of the claim.
Your valuable response will be a great help to me.
As we discuss in detail during the advanced class, notices are condition precedent
according to FIDIC 1999, as stated in 1st & 2nd paragraphs referred to above, and therefore it
is advisable to seek legal opinion to see whether the UAE law would provide otherwise.
However, regarding the fully detailed claim the wording in the 5th paragraph cannot be
construed in the same manner due to the existence of a provision for the parties to agree on an
extension to the 42 day limit.
Regards,
Prof. Sam.

Regards,
George

September 2013 Q&amp;A

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My comments are given in red below.

From the following Questions, you will observe

Work being executed under different circumstances.

Arbitrator / Mediator - London Court of International Arbitration

To: Sam <sam99@eim.ae>

We are client/owner having contract FIDIC 87 4th edition. We have terminated

Arbitrator / Mediator - London Court of International Arbitration

Dear Dr. Sam,

Arbitrator / Mediator - London Court of International Arbitration

Thanks and Regards,

be a nominated Subcontractor, Clause 5 should be amended... This amendment should be

Arbitrator / Mediator - London Court of International Arbitration

I seek your kind comments in this regard.

Arbitrator / Mediator - London Court of International Arbitration

Thanks and Best Regards,

Dear professor Sam,

Prof. Indrawansa Samaratunga PhD, DSc

Arbitrator / Mediator - London Court of International Arbitration

I am an alumni of sound contract advance course.

Arbitrator / Mediator - London Court of International Arbitration

Thank you In Advance.

Respected Dr. Sam,

Arbitrator / Mediator - London Court of International Arbitration

Sincere thanks for spending your valuable time for us.

----- Original Message ----From: niyaz mohammed

Can you please clarify the below:

Arbitrator / Mediator - London Court of International Arbitration

Thanks and regards,

Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Mediator - London Court of International Arbitration

I am sorry that my questions are much more.

2nd paragraph, quote; "If the Contractor fails to give notice of a

Arbitrator / Mediator - London Court of International Arbitration

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