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Rafal Morek
K&L Gates
Contract
Administration. Why?
Contractor’s
Perspective
Why Contract Administration Matters ?
The Contractor’s Perspective in three points:
1. Number one cause of construction disputes
2. The most important activity in helping to avoid a dispute
3. Eventually, if a dispute is unavoidable, the key obstacle
in turning the Contractor’s claims into cash
or challenging the Employer’s actions
The Contractors have difficulty
in turning their claims into cash because:
• failed to keep proper records
• cannot establish cause and effect
• cannot quantify their delay disruption and acceleration claims
• …
The 2017 FIDIC Suite shall prevent
”messy” Contract administration?
How the new FIDIC 2017 guides the Contractor
in Contract administration?
• Making use of the contract!
• Enhanced project management tools and mechanisms
• Clarity and certainty
• Balance and reciprocity
• Avoid belated, old or stale claims
More resources on administration needed
Increased risk that if the Contractor does not follow the new
requirements, it will lose its right to make a claim
How the new FIDIC 2017 guides the Contractor
in Contract administration?
• Sub-clause 8.3: Increased programme requirements
• Sub-clause 14.3(c):
• Every payment application must include
the monthly Progress Report with a detailed description of progress
• Sub-clause 3.8:
• management meetings to promote effective communication; different than
progress meetings (do not replace them)
• Sub-clause 4.20: Progress Reports
• Sub-clauses 1.1.7, 1.1.69 and 4.9:
• Quality Management System & Compliance Verification System
Early warning
Sub-clause 8.4:
Each Party shall advise the other and the Engineer, and the Engineer shall
advise the Parties, in advance of any known or probable future events or
circumstances which may:
(a) adversely affect the work of the Contractor’s Personnel;
(b) adversely affect the performance of the Works when completed;
(c) increase the Contract Price; and/or
(d) delay the execution of the Works or a Section (if any)
The Engineer may request the Contractor to submit a proposal under Sub-
Clause 13.3.2 [Variation by Request for Proposal] to avoid or minimise effects
of such event(s) or circumstance(s).”
Contemporary records
• Sub-clause 20.2.3:
• ”records that are prepared or generated at the same time, or immediately
after, the event or circumstances giving rise to the Claim”
• The Contractor’s records may be monitored by the Engineer
who can instruct the Contractor to keep additional contemporary
records
• Higher evidentiary standards for investigation of claims?
Digital construction reports
• Customized IT / Project records applications
• ”Programming software” in Sub-clause 8.3
• Real-time data
• available and synched among all participants
• also to monitor the records of subcontractors?
• BIM
• Designs and Information
• IP Rights
• Methods of working
”Equality of Claims” introduced by the 2017 FIDIC
• Under Sub-Clause 2.5 of the 1999 YB the Employer needed only to
notify ”as soon as reasonably practicable after
[it] became aware of the event of circumstance
giving rise to the claim”
• The 2017 Suite places Employer’s claims on equal footing with
Contractor’s claims
• Employer must now issue a notice within 28 days and submit a fully
detailed claim within 42 days • Sub-clause 20.2.1 refers to the ”claiming Party”
Notices and claims correspondence
• Applies equally to both Employer and Contractor
• Sub-clauses 1.3 & 20.2.1
• shall ”be identified as a Notice” but there is no need to identify or otherwise
include reference to the sub-clause under which it is issued
• Signed by the Contractor’s Representative, Engineer or authorized
representative of the Employer
• delivered to the address stated in the Contract Data
New time limits and deeming provisions
• Examples:
• Deemed rejection under sub-clause 3.7.3
• Notice of dissatisfaction in respect of the Engineer’s determination under
sub-clause 3.7.5
• Deemed completion of the Works or Section and issue of the Taking-Over
Certificate under sub-clause 10.1
• Claims and Disputes Procedures in clauses 20 and 21
Prescriptive but not ”bureaucratic”
The 2017 FIDIC promotes:
• Pro-active contract administration
and record keeping
• Communication (increasingly digital)
• Dealing with changes contemporaneously
• Resolving claims and disputes
as early as possible
