FIDIC Administration and Contract Claims Series 1
It is a fact that most of the contract claims come out of vague contract terms and conditions. It is also known that the contract administration is greatly efficient in way to respond and resolve contract claims. It is a matter of fact that contract disputes can be very costly for the owner and contractors, as well as any third parties involved. Parties would benefit the most from having a contract administrator, managing all records as soon as anything becomes evident.
It is known that the contract documents, the agreement, the general terms and the specification with the scope of supply will form the basis of any claim related to the particular contract. Therefore the same will contain the drawings and responsibility matrix from the contract and related specifications. The claim may also include other documents and communication between parties, tender documents and proposals, which all form the claim resolution.
It is true to mention that disputes between parties usually arise based on ambiguities with contract documentation and its interpretation. If the same is poorly drafted then the potential for claims and disputes raise enormously.
Moreover, dealing with contractual matters as minutes of a meeting, daily activities would help a lot for preparing a potential claim, as this would serve as a basis for claim preparation. It is also inevitable that the programme which the contractor should submit to the engineer is also to serve as a basic document for potential claims. Contract administration should help a lot for the programme to be maintained on a daily basis, hence the contract claims. Keeping an updated programme would predict the completion date and any deviation from the contract terms, as well as any changes if they are about to occur.
Sometimes the claims can be seen as an opportunity for a piece of the agreement to be made more clear for the parties if a level of vagueness still persists.
The person who is responsible to complete the claims is to establish a rapport with the contractor and programme engineer and to be kept updated in due course about all activities.
Lack of proper FIDIC contract administration can lead to outrageous results in claims, costing millions to parties; as for example: ‘’Beckton notified Murphy that they were liable to pay liquidated damages amounting to £8,274,000 and when Murphy did not pay the sum claimed, Beckton called the performance bond’’1
It is therefore imperative to put in place robust contract administration procedures and techniques to record every event on a daily basis. This proves very useful as it come time to submit a claim, the database is available and is ready to use whenever is needed.
1Murphy’s £8 M Bill for Misunderstanding FIDIC Contract on Fat Fuelled Power Plant. Online at: http://www.infrastructure-intelligence.com/article/mar-2016/murphys-£8m-bill-misunderstanding-fidic-contract-£50m-fat-fuelled-power-plant Accessed 21 March 2021.
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