Feb. 7, 2023
Delay Vs. Disruption in Construction Contract Administration
Delay in construction refers to a situation where a contractor experiences an extension of the completion date of a construction project beyond what was agreed in the contract. Delays can be caused by various factors, such as disruptions, changes in the scope of work, design problems, errors or omissions in the contract documents, poor project planning, lack of resources, weather conditions, and many others.
In construction law, there is often a provision for "delay claims" or "time extension claims," which allow contractors to recover additional costs and time incurred due to delays. The legal remedies and procedures for dealing with delay claims vary by jurisdiction and the terms of the contract and may involve negotiation, arbitration, or court proceedings. Delay can have significant financial and practical implications for both the contractor and the owner, and it is important to understand the legal remedies and procedures available to deal with delays in order to minimize their impact on a construction project.
Disruption, on the other hand, refers to a situation where a contractor experiences unexpected delays or increases in costs during a construction project that are not their fault and that have a material impact on their ability to complete the project in accordance with the contract terms. This can be caused by factors such as changes in the scope of work, design problems, errors or omissions in the contract documents, faulty materials, late delivery of materials, weather conditions, and many others. Similar to the case of delay, there is often a provision for "disruption claims" which allow contractors to recover additional costs and time incurred due to disruptions. The legal remedies and procedures for dealing with disruption claims vary by jurisdiction and the terms of the contract, and may involve negotiation, arbitration, or court proceedings.
Differences Between Delay and Disruption
Delay and disruption are often used interchangeably in construction law, but they have different meanings.
Delay refers to a situation where a contractor experiences an extension of the completion date of the project beyond what was agreed in the contract. Delay can be caused by various factors such as disruptions, but it can also be caused by the contractor's own fault, such as poor project planning or lack of resources.
Disruption, on the other hand, refers to a situation where a contractor experiences unexpected increases in costs or reductions in productivity due to events or circumstances that are not their fault and that have a material impact on their ability to complete the project in accordance with the contract terms. Disruptions can cause delays, but they can also impact other aspects of the project, such as quality or safety.
In summary, delay is a measure of time, while disruption is a measure of impact on the contractor's ability to perform the contract.
What should a disruption claim statement contain?
A disruption claim in construction should contain sufficient information and evidence to support the contractor's claim for additional costs and time incurred due to disruptions. The specific information and evidence required will depend on the jurisdiction and the terms of the contract, but a typical disruption claim should contain the following elements:
1. Description of the disruption: A clear and detailed description of the events or circumstances that caused the disruption, including the date and the impact on the project.
2. Evidence of the cause: Evidence, such as correspondence, reports, or photographs, that shows the cause of the disruption and how it impacted the project.
3. Impact on the project: A clear and detailed description of the impact of the disruption on the project, including any additional costs incurred, any reductions in productivity, and any extensions of the completion date.
4. Calculation of the claim: A clear and detailed calculation of the additional costs and time incurred due to the disruption, including any supporting documentation, such as invoices or time records.
5. Contractual basis: A clear explanation of the contractual basis for the claim, including any relevant provisions in the contract, any notifications given to the owner, and any previous negotiations or discussions related to the disruption.
6. Supporting documentation: Any additional documentation, such as expert reports or statements from witnesses, that supports the contractor's claim.
Jan. 8, 2023
The Basics of Construction Contract Administration: What You Need to Know
Construction projects are complex undertakings that require careful planning and management. As such, construction contract administration is an essential part of any successful construction project. It involves the management of contracts, the enforcement of contractual obligations, and the monitoring of performance to ensure the project is completed on time and within budget. Contract administration is a critical component of the construction process and it is important to understand the basics of construction contract administration in order to ensure the successful completion of any construction project. This article will provide an overview of the basics of construction contract administration and what you need to know to be successful.
What is Construction Contract Administration?
Construction contract administration is the process of managing a construction contract during the course of the project. Specifically, it involves administering the contractual rights and obligations of the parties, monitoring performance, and resolving disputes that may arise throughout the course of the project. Contract administration is an essential component of any successful construction project, and it is important to understand the basics of construction contract administration in order to ensure the successful completion of any construction project. Additionally, with the growing trend towards project risk transfer, contract administration will likely shift away from a focus on dispute resolution, towards a greater emphasis on risk management. This will require contractors to be able to identify and report on risk throughout the course of a project, and the contractor’s risk management plan will likely play an important role in this.
The Contract Administration Process
Typically, the process of contract administration will follow the general stages of a construction project. The stages that may be associated with contract administration include the following: The contract is awarded and the contract administrator is appointed. The contract administrator reviews the contract documents and the contractor is selected. The contractor submits a bid or an estimate for the project. Contract administration occurs throughout the life of the project. However, these stages may vary depending on the nature of the project and the contract type. For example, EPC contracts may begin with the formation of an implementation plan that is based on the available data, prior experience, and the overall strategy. Similarly, contracts that are part of a wider project may begin with the definition of the project followed by the drafting of the contracts.
The Role of the Contract Administrator
The role of the contract administrator can vary depending on the type of project. For example, in EPC projects, the contracting authority has responsibility for the administration of the contract. In other cases, this may be the responsibility of the owner’s representative, the engineer, or some other stakeholder involved in the project. Regardless of the role, the contract administrator is responsible for the day-to-day administration of the contract and ensuring that the contract is executed in a manner consistent with the contract documents. In addition, the contract administrator is responsible for managing disputes and for resolving issues as they arise. The contract administrator is also responsible for managing the flow of information between the various parties and participants associated with the project and the contract. This may include the contractor, the subcontractors, and other parties involved in the project.
The Responsibilities of the Contract Administrator
While the specific responsibilities of the contract administrator will vary depending on the type of project, there are certain responsibilities that are applicable to all projects. Contract administrators are responsible for the following: - The Administration of the Contract: The contract administrator is responsible for administering the contract in a manner consistent with the contractual obligations of the parties. This includes managing the contractual relationship between the contractor, subcontractors, and other parties involved in the project and ensuring that they are meeting their obligations under the contract. - The Management of Risks: The contract administrator must manage risks associated with the project and ensure that they are appropriately managed and controlled. This may include managing contractual risks, operational risks, and other risks associated with the project. The contract administrator must also identify areas for improvement, and may be required to submit a risk management plan. - Monitoring the Progress of the Project: The contract administrator must monitor the progress of the project and identify any potential issues or delays. This may include the monitoring of the contractor’s performance, the availability and use of resources, the scheduling of activities, the use of funds, and the overall progress of the project. - Managing Communications: The contract administrator is responsible for managing communications between the various parties involved in the project and executing any contractual provisions related to these communications. This includes the use of contractual communications, such as notices and the contractual rights associated with these communications, and the timely and accurate transmission of information between the parties and participants.
Common Challenges Faced in Contract Administration
Contract administration can be a complex and challenging process, and there are a number of common challenges that the contract administrator may face. These challenges may include the following: - Risk management: Contract administrators must ensure that risks are appropriately identified and managed, and this may involve the use of risk management tools such as risk matrices, risk logs, or risk logs. - Resource availability: Contract administrators must ensure that resources are available as required. This may include the availability of money, materials, equipment, or human resources required for the project. - Communication: Contract administrators must manage effective communication between the parties, and this may include commercial communications, such as the payment of invoices, and project communications, such as notices and progress reports. - Contract interpretation: Contract administrators must interpret the contract in a manner consistent with the contractual obligations of the parties. This may involve the interpretation of complex contractual provisions such as force majeure events, liquidated damages, or any other contractual provisions.
Best Practices for Contract Administration
The best practices for contract administration will vary depending on the project type and the type of contract used. However, there are certain best practices that apply to all projects and can assist the contract administrator in successfully managing the contractual relationship. These best practices include the following: - Adhering to the Contract: The contract administrator must adhere to the contract and ensure that the parties adhere to the contractual obligations. This may include the monitoring of contractor performance, the use of dispute resolution methods, and the timely transmission of contractual communications. - Managing Communications: The contract administrator must manage communications between the parties and ensure that contractual communications are executed as required by the contract. This may include the use of contractual communications, such as notices, and the timely transmission of information between the parties. - Managing Resources: The contract administrator must manage the use of resources, such as the availability of money, materials, equipment, or human resources, and ensure that they are available as required. This may involve the management of the contractor’s performance and the monitoring of the contractor's progress against the contractual milestones.
Construction contract administration is an important and complex process. Understanding the basics of construction contract administration will assist you in successfully managing any construction project. The contract administrator is responsible for the day-to-day administration of the contract, the management of risks, the monitoring of the progress of the project, and managing communications between the parties. Contract administrators face a number of challenges, such as managing communications, managing resources, and interpreting the contract, and there are certain best practices that can assist in successfully managing the contractual relationship.
Nov. 16, 2022
FIDIC Red Book 1999 – The Force Majeure Clause
The definition of force majeure provided in the FIDIC Red Book 1999 Edition form in Clause 19 is widely drawn. Sub-Clause 19.1 defines a force majeure event as one:
A) which is beyond a Party’s control, B) which such Party could not reasonably have provided against before entering into the Contract, C) which, having arisen, such Party could not reasonably have avoided or overcome, and D) which is not substantially attributable to the other Party.
Force Majeure may include but is not limited to, exceptional events or circumstances of the kind listed below, so long as conditions (A) to (D) above are satisfied:
1) Munitions of war, explosive materials, ionizing radiation, or contamination by radioactivity, except as may be attributable to the Contractor’s use of such munitions, explosives, radiation or radioactivity, and
2) Natural catastrophes such as earthquakes, hurricanes, typhoons, or volcanic activity.
3) War, hostilities (whether war be declared or not), invasion, the act of foreign enemies,
4) Rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war,
5) Riot, commotion, disorder, strike or lockout by persons other than the Contractor’s Personnel and other employees of the Contractor and Sub-Contractors.
There is a broad definition of force majeure and it should be remembered that the examples listed above are not an exhaustive list but, reflect the basic premise of a force majeure clause, namely that it serves to exempt a party from performance on the occurrence of a force majeure event.
A problem that has been identified with the FIDIC Red Book 1999 Edition is that there is a risk of potential overlap and/or contradiction between Sub-Clause 19.1 and the court's definition of force majeure under the Ethiopian Civil Code. Indeed, incorporating a clause such as Clause 19 into a contract not only duplicates what is usually provided for under law but also enlarges the scope of the meaning and application of force majeure. This could result in the Parties getting into a contradictory situation.
There was no specific force majeure clause in the Red Book FIDIC 4th Edition. However, the Contractor was afforded some protection by Clause 65, which dealt with special risks including the outbreak of war, and Clause 66, which dealt with payment when the Contractor was released from the performance of its contractual obligations. The scheme of the FIDIC form is that the party affected, which is usually the Contractor but could also be the Employer, is entitled to such an extension of time as is due and (with exceptions) additional cost where a “force majeure” occurs.
For Clause 19 to apply, the force majeure event must prevent a Party from performing any of its obligations under the Contract. The now classic example of this is the refusal of the courts to grant relief as a consequence of the Suez crisis during the 1950s. Those who had entered into contracts to ship goods were not prevented from carrying out their contractual obligations as they could go via an alternative route even though the closure of the Suez Canal made the performance of that contract far more onerous it did not make it impossible.
Sub-Clause 19.7 of the FIDIC Red Book 1999 Edition is also of interest. Here, the parties will be released from performance (and the Contractor is entitled to specific payment) if (i) any irresistible event (not limited to force majeure) makes it impossible or unlawful for the parties to fulfill their contractual obligations, or (ii) the governing law so provides. It acts as a fallback provision for extreme events (i.e., events that render the contractual performance of the contract illegal or impossible) which do not fit within the strict definition of force majeure laid out under Sub-Clause 19.1. It also grants the party seeking dismissal the right to rely on any alternative relief which may be contained in the law governing the contract.
If common law applies, the affected party will be able to rely on the common law concept of frustration, which occurs whenever the law recognizes that without the default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. To claim frustration, it is not enough for a Contractor to establish that new circumstances have rendered its contractual performance more onerous or even dangerously uneconomic. For frustration to be held by the courts as grounds for termination, it is a requirement that a radical turn of events completely changes the nature of the contractual obligations. It is a difficult test to fulfill, but not as difficult as that of Sub-Clause 19.4 (force majeure) or the first limb of Sub-Clause 19.7 which both refer to the concept of impossibility (or illegality).
Nov. 12, 2022
Aug. 16, 2022
EUREKA Engineering Consult has Signed a Technical Assistance Services Contract with Afework Gidey General Contractor (AGGC), a grade one Construction Contractor.
The services include Construction Contract Administration, Claims Handling, and Staff Capacity Building services.
The services commenced on 20th April 2022 whereby the two companies agreed on a contract period of one year, with a possibility of extending further.
April 17, 2022
We would like to share this pleasureful news today, in regards to the launch of our website. We have been working on it for a bit and after its launch, we hope it will help to widen our reach. This website contains information about our services, projects, and some articles we post. Browse through our pages and give us feedback at our contact email: email@example.com. Thank you for celebrating this day with us!Read More
April 17, 2022
"It is my greatest pleasure to welcome you to EUREKA Engineering Consult. EUREKA was established on June 2021 and is commencing its endeavors in giving consultancy services and targeted trainings for construction contractors and consultants particularly in tender document preparation, project management, contract administration and claims handling."Read More