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21 August 2014
   
 
 
Article by: Creamer Media Reporter
 
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Introduction


In January this year we published an article entitled “FIDIC Red Book: Contractor’s claim for incorrectly detailed drawings: what does the contract imply?” This examined the contractor’s remedies in the event that he is delayed and/or incurs costs as a result of such errors. It further highlighted the following and very important difference and is stated in the following context:
“We quite often find contractors trying to force a claim for an error in the design based on sub-clause 1.9 (delayed drawings or instructions) for the simple reason that this provision in sub-clause 1.8 (care and supply of documents) is often overlooked. The difference, although it may appear obvious, between a claim for a delayed drawing or instruction and one based on an error in the drawing is quite large but the effect may be the same. The consequences of the contractor not notifying the engineer of an error or defect which it has discovered will be at its own risk.” (Own emphasis)

This article examines the claims provisions in FIDIC where a drawing or instruction is late.

The relevant provisions of FIDIC


Clause 1.9 (Delayed drawings or instructions) states that the contractor shall give notice to the engineer whenever the works are likely to be delayed or disrupted if any necessary drawing or instruction is not issued to the contractor within a particular time, which shall be reasonable. It states that the notice shall include the following details: (i) details of the necessary drawing or instruction, (ii) details of why and by when it should be issued, and (iii) details of the nature and amount of the delay or disruption likely to be suffered if it is late.

The clause goes on to state that, if the contractor then suffers a delay as a result of a failure of the engineer to issued the notified drawing or instruction within a time which is reasonable and is specified in the notice with supporting details, the contractor shall then be entitled, subject to clause 20.1 (contractor’s claims) to (i) an extension of time under sub-clause 8.4, and (ii) payment of any cost and reasonable profit.

The effects of this clause


This clause contains a pre-emptive provision – it obliges the contractor to notify the engineer that it is of the view that the works may be delayed or disrupted if the engineer does not provide the contractor with a necessary drawing or instruction within a reasonable time. Secondly, if the engineer failed to comply with this notice and the contractor does suffer a delay or incurs a cost, he may make a claim under this clause, as read with sub-clause 8.4(b), (e) and 20.1.

This effect of clause is as follows: It is a pre-warning procedure. If, for example the programme indicates that certain drawings/instructions will be issued by a certain date, the contractor has to anticipate this date. If he is of the view that the engineer will not issue those drawings or instructions by that date, it has to give it a reasonable time within which to issue it.

From our experience contractor’s generally miss the boat when claiming under this clause and typically make the following mistakes:

• They discover too late that a drawing or instruction is needed to complete the works. The contractor has to take into account lead times to procure certain items, the details of which may only be apparent in the drawing or instruction;

• They then do not draft a notice which sets out the details of the drawing or instruction, nor do they include details why and by when it should be issued;

• They generally do not allow the engineer a reasonable time to issue the drawing or instruction. This is a classic example where the contractor tries to make urgency on his part the engineer’s problem. Of course, the term ‘reasonable’ denotes a more factual enquiry to establish whether the contractor is the author of its own misfortune or whether he was proactively managing the contract to avoid this risk.

Therefore, clause 1.9 is a condition precedent. It is the means by which the obligation to provide a drawing or instruction is imposed on the Engineer. The second notice serves to advise that the delay has been incurred could also be the same letter as the clause 20.1 notice. The reason for the sanction for not providing the various notices, the condition precedent in clause 1.9 first notice and the resolutive condition (the time bar) in clause 20.1 is that it (the giving of the notice) gives the employer/engineer an opportunity to mitigate his position. That is to avoid or reduce the effect of the potential delay. If there is no notice he may not be able to mitigate.


Conclusion


Contracts are risk management tools, and, if used correctly go a long way in mitigating and even completely avoiding some risks. This holds true at a contract negotiation stage and at the execution stage. Not only does FIDIC provide ‘after the fact’ claims provisions for delays but the contract may be used proactively to prompt the engineer into action, such as is the case in this clause.

Edited by: Creamer Media Reporter
 
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