Dear Mr.

ranjan,

My comments are given below in red :-

----- Original Message -----

From: ranjan dommaniga "ranjan1967@hotmail.com"
To: sam99@eim.ae
Date: 12:06 AM
Subject: Clause 57.2

Dear Dr. Sam

 I need one clarification regarding Cl. 57.2 of the FIDIC Condition of Contract, if the Engineer needed to
evaluate the lump sum item in re - measurable contract. If the evaluation is required prior to acceptance of
the Tender, then the parties are at liberty to discuss the breakdown of Labour, Plant and Material costs,
but after the acceptance of the Tender, it is too late to evaluate an already accepted lump sum price. Can
the Engineer request detail breakdown (labour, Plant & Material) for that particular lump sum items,
under this Clause. No. Only a break down to facilitate valuation of the proportionate amount of work done
each month could be requested.

If a Labour, Plant and Material cost breakdown of a relevant rate or a lump sum price is required for the
valuation of a variation, then the Engineer's only option is to request it pursuant to Clause 52, in order to
verify its applicability/appropriateness or suitability to use as a basis. Though there is no express
obligation of the Contractor stated in Clause 52, it is in the interest of the Contractor to provide such break
down lest the Engineer would form his own opinion as to what break down to be adopted.  An arbitrator
would order such break down to be submitted and if not complied with, then would form an adverse
opinion. The Courts would order likewise, and if not complied with, penalize the Contractor. So why not
submit it to the Engineer when requested? Anyway, it is advisable to include in Tender Documents (in the
Preamble to the BOQ or elsewhere) a provision, requiring the Contractor to provide such break downs for
the purpose of Clause 52.

 Regards,

Dr. Sam.

_____________________________________________________________________________________

----- Original Message -----

From: Philip "philip@lootahgroup.com"
To: sam99@eim.ae
Date: 10:50 AM
Subject: Liquidated Damages for Delay
 
Dear Dr. Sam,
 
I expect a valuable reply for the below given point:
 
A Tender ( now being to be Contract),  value of Dhs. 40 M. is set a penalty for delay @ Dhs. 200,000/- per day
according to Clause 47.1 of  FIDIC 4th Edition. The Construction period is 300 days. The scope of work is
construction of buildings.
 
Is this rate of Penalty set by the Employer / Engineer,  reasonable or logic for such a small amount of Contract
Value ?  OR Is there any Basic Principle or Formula to calculate or determine the rate of penalty ?
 
Kind Regards
 
 
Philip Mathew
 Dear Mr. Mathew,

Generally in other parts of the world, Liquidated Damages are deemed to be a pre-estimate of the Employer's loss & expense
(due to late completion by the Contractor), which could have reasonably been foreseen at the time of inviting the Tenders. Any
sum included in a contract beyond such pre-estimate would be construed as a penalty and would not be enforceable.

In this part of the world however, penalties are enforceable and therefore if the Tenderer made his offer based on documents
which specified a penalty of 200,000/- per day, he would be liable to that extent once the offer is accepted / contract signed. The
question whether or not such an amount is reasonable or logic should be resolved before making the offer and/or prior to its
acceptance. There is no doubt that an unreasonable or illogical penalty would attract higher Tender Prices.

There is no particular formula in the industry, other than as explained in the first paragraph above. The methodology adopted by
Dubai Municipality is to divide the limit of penalty by 10% of the Tme for Completion, in order to establish the penalty per day. If
this is applied to your project, (assuming that you have a limit of penalty of 10% of Contract Price), the daily penalty rate would
be 133,333.33. But this cannot be quoted as an authority to argue that the 200,000/- rate is too high.

Regards,

Dr. Sam.

___________________________________________________________________________________________________

Dear Mr. Maithri,

My comments are given below in red :-

Distinguished teacher, Dr. Samaratunga,

It is greatly appreciated that your all efforts to expand the horizon of knowledge of contract
administration among us in this part of the world, and especially the way you have concentrated vast
area of the subject in to thirty hours LLL/CPD summer sessions. Obviously that was an exclusively rare
experience.
Dr., If you find time, could you please explain the following points;
1. There is a BOQ item (the Contractor has already priced) in a lump sum contract which can not
be identified elsewhere in the Contract documents except in the BOQ.

a). Is this item within the contractor’s original scope of work ? In other words, is it a contractor’s
obligation to execute the BOQ item within the Contract Price? Whether such item is part of the scope or
not would depend on the circumstances surrounding the issue. This would vary from case to case. If, for
instance, a street lamp post is priced in the BOQ, but not shown in the Drawings or described in the
Specification, then the Contractor has no obligation to construct it, but he is entitled to receive the full
lump sum price in payment without a deduction for the lamp post. The Engineer cannot instruct a
variation to omit it, because what can be omitted is part of the scope of work and not items in the BOQ.

On the other hand, if an item for monthly progress photographs is priced in the BOQ, but not described
in Drawings/Spec. etc., then the Contractor has an obligation to provide photographs and the Engineer
can omit the item as a variation, if necessary/appropriate and deduct it from the lump sum price.
b). Are the contract Drawings & Specification only documents to decide the scope of work? No.
Clause 5.2 : The several documents forming the Contract   are to be taken as mutually explanatory of one
another, ……………
c). BOQ is just an indicative tool in a lump sum contract. Is it correct? Yes, except in circumstances such
as the example of photographs stated in (a) above. Also the rates/prices may become applicable in some
instances though the items and quantities may not.
 d). If an item mistakenly included in a contract BOQ (not anywhere else in the Contract), does it
represent the contractor’s scope? No. Contractor should be paid the lump sum price without deducting
such item.
2. An item which is to be compliance with authority requirement was excluded from the Contractors offer
and the same has been included in the Contract drawings. (My comments below assumes that the
exclusion has been accepted by the Employer and carried to the Contract.)
a). In accordance with the Sub-Clause 26.1 of the Conditions of Contract, the Contractor shall comply
with authorities requirements. Does the Contractor is having right to request variation to execute the
item as stated above? If the exclusion is very clear that this is the requirement excluded, then yes, a
variation is required to restore the obligation to comply with authority requirements.
b). Should he execute the such work without variation? (addition) No. Hecould claim that the
contract is frustrated if the Engineer does not issue thenecessary instruction for the variation, as he is
unable to progress the workwithout complying with authorityrequirements.

c) The Contractor claims that the Contractor should comply with authorities requirements only as a
variation . Is there any possibility to interpret the Sub-Clause 26.1 as claimed? No, unless the wording in
the original exclusion is ambiguous. If the wording is clear, then the Engineer is duty bound to instruct
the variation which is NECESSARY for the Works to proceed.

Regards,

Dr. Sam.

Dear Mr. Edwin,

My comments are given below in red :-

----- Original Message -----

From: Edwin "edwin@blair-anderson.com"
To: sam99@emirates.net.ae
Date: 05:14 PM
Subject: Target Cost Contract

Hi Dr. Sam,

Thanks for the invaluable knowledge you have shared to us on

Contract Administration.

 By the way, I just wanna ask you the following questions:

What is “Target Cost Contract”? This is a type of Contract (there are several variations of this), where the Employer
and the Contractor agree on a Target Cost as the Contract Price and mutually attempt to achieve that Target Cost
for all work done including variations. Both parties end up paying more, if the Target Cost is exceeded but would
share the savings if the opposite is the case.

How would you differentiate it from the more familiar types of contract such as “Lump
Sum Fixed Price Contract”, etc? These are Employer favoured Contracts which put the Contractor on the
deffensive, whereas Target Cost contracts aim at a common goal.

Could you please recommend any reference books dealing with this type of contract? I am afraid I do not have any
information at present. Time permitting I shall try to find out and let you know. If anyone of the "Class of Summer
2007" has a reference please circulate using "reply all" function.

Regards,

Dr. Sam.

Dear Mr. Hesham,

My comments are given below in red :-

-----Original Message-----
From: Hesham Mahmoud [mailto:hesham.mahmouds@gmail.com]
Sent: 16 August 2007 15:27
To: sam99@eim.ae
Subject: Provisional Sum

Dear Dr. Sam,

Thanks for your invitation for the certificate ceremony.. i will do my best to be there. Your certificate is
with me and can be collected at any time.

If it is convenient for your good self, i would like to seek your advice on the following:

The same Main Contractor is to be awarded on the Provisional Sum ("PS") items that are already in his
BOQ. Does he has the right to increase the bid amount of that item? Moreover, is he free to break up this
Provisional Sum value the way he wishes? By the phrase "bid amount of that item", are you refering to
the OH&P mark-up and attendance etc. priced by him against the related items such as OH&P and
Attendance given below the PS item? These items are applicable only if the work under the PS is awarded
to a nominated subcontractor.

Where the work under the PS is awarded to the Contractor himself, the value thereof is determined in
accordance with Clause 52 (if FIDIC) in the same manner that a variation is valued. Therefore, the value
of the work can be either higher or lower than the PS. Therefore, the Contractor can ask for re-rating if the
existing rates are inapplicable or inappropriate as we discussed in detail during the first session of the
training course.

Regards,

Dr. Sam.

Dear Mr. Ram,

My comments are given below in red :-

----- Original Message -----

From: Ram "ramasubramanian@alnaboodah.ae"
To: "Dr. Sam" "sam99@emirates.net.ae"
Date: 10:57 AM
Subject: CESSM3

Dear Sir,

size=2>            
At the outset I thank you very much for the invaluable lectures on Sound
contract management  in which I was one of the attendees. I have
suggested few of my colleagues to enroll for the forthcoming
sessions. Thank you.

In our project (Discovery Gardens by

Nakheel) we are using CESSM3. I request you to clarify 
the below given pertaining to CESSM3.

According to CESSM3, pipes in trenches

shall be measured along the centreline including the dimensions of the fittings. It is the lenghth of the
fitting that is included, and not other dimensions.
Also the fittings can be measured seperately. Fittings should definitely be measured separately, but should
be priced "extra-over" by discounting the cost of pipe length which would otherwise be double counted.

My questions are :

1.  Is, is there any

limitation about the fittings
dimensions? No limitation.                     
(because in landscape irrigation works, fittings in
the range of 25mm -63 mm are extensively used).

2. If there is any limitation in the fittings

dimensions, how an estimator can cover the cost of the fittings  in his rate
analysis. No limitation. (It is only in POMI that cost of fittings of diameter less than 60 mm is deemed to be included in the cost
of pipe length. This should not be mixed up with the rules in CESMM3).

Regards,

Dr. Sam.

Dear Mr. Chandra Mohan,

Answers to your questions are given in the attached sheet. The documents that you are requesting, are copyright material and
should be obtained from ICE and JCT.

Regards,

Dr. Sam.
Dr. Indrawansa Samaratunga PhD, DSc
FRICS, FAIQS, FIQSSL, FCIArb, FCIOB, FCMI, FASI, FBEng
Chartered Quantity Surveyor and Registered Arbitrator / Expert
Australian Inst.of Qty.Surveyors-Middle East Representative
PO Box 23461, Dubai, UAE. T +971504588949 F +97143378668

----- Original Message -----

From: Santhanam Chandra Mohan "scmohan72@yahoo.com"
To: sam99@emirates.net.ae
Date: 01:53 PM
Subject: About Course
Hello Dr.Sam,

The course conducted for us for the past 10days was

very interesting and useful. Definitely we will be

able to use these in our life and career.

Dr.I have few queries which i am attaching with this

mail. Please advise on the above questions.Secondly if

you can send me soft copy of CESSEM3 and JCT contract

copy it would help full.

Thank You

S Chandra Mohan

QUESTIONS TO Dr.SAM
1. Is there any time frame to issue to EOT. Yes, as we discussed during the 2nd session, it can be
inferred from Sub-Clause 44.3 (i.e. before the Contractor submits the next set of interim
particulars in 28 days)
2. In a Project, Employer/Engineer initially nominates a supplier to the main contractor. The
Supplier assures to deliver the material in 60 days duration but unfortunately the shipment which
carries the material could not able to reach in time and supplier fails as a result main contractor
suffers the delay. The main contractor notifies the engineer & employer about the failure of the
supplier. In this case who is responsible for the delay? Pursuant to Sub-Clause 59.1 nominated
suppliers are deemed to be “subcontractors to the Contactor”. Pursuant to Sub-Clause 4.1, the
Contractor is responsible for the acts and defaults of all such subcontractors.
3. What are the parameters the rate priced by the contractor should include. Too general for a short
answer. All Contractor’s costs, risks, overheads and profit.
4. Is there any limitation in fixing the Liquidated Damages %. Yes, it should be a pre-estimate of
the Employer’s future losses foreseeable at the time of entering into the contract.
5. What is the basic Qualification to become an arbitrator. Thorough academic education/knowledge
in the practice and procedure of international arbitration and law related thereto, plus a minimum
of 4 years pupilage to a registered arbitrator.
6. Highlight us the major changes between FIDIC 1992 & 1999. Perhaps in another 20 session
training programme.
 7. For the Extended period of works, whether the main contractor has to extend the insurance,
performance bond etc. related to the project. If yes can he claim for the additional premium paid.
Insurance – Yes. PB – at Employer’s discretion. Reimbursement – yes.
8. In a project main contractor is taking care of the CAR policy for the full project amount. Shoring contractor
fails to extend the insurance cover for his works. In case of failures, who will be held responsible. Can the
CAR policy take care of the shoring failure as it is covered for whole project cost. Yes, the Main contractor
should procure a policy covering all work of subcontractor’s.
9. Which method of delay analysis is considered as more accurate. If the necessity is to verify whether or
not the project could have been completed on the originally scheduled date for completion, then the
Impacted As-Planned method. During a concurrent delay situation this is a necessity.
10. The 52.3 clause is deleted in the contract. In that case how will variations exceeding 15% be handled.
Every single Dhiram H.O. over-recovery should be deducted from the final account in favour of the
Employer. Every single Dhiram H.O. under-recovery should be restored in favour of the Contractor. To
avoid this nightmare Sub-Clause 52.3 has been provided.
11. In a contract, the employer plans to remove the AC work from the Main contractor’s scope & plans to
give it to a third party. Main Contractor says its upto his domestic subcontractor to decide. If he agrees
what are his eligible claims. Can this be treated as a variation? Yes, as an omission under 51.1(b) and after
compensating the Contractor for his losses.
12. In one of our contracts, clause 70 is deleted & the following is added.
70(1) “No adjustment to the contract price shall be made in respect of any increase or decrease in t5he
cost to the contractor of employing labour or staff in the execution of works which may take place
subsequent to the date of tender”
70(2) “No adjustment to the contract price shall be made in respect of any decrease or increase in the
cost to the contractor of goods & materials (whether for permanent or temporary works), consumable
stores or plant or in the cost to the contractor of ocean or air freight and other associated charges which
may take place subsequent to the date of tender.”
In this case is the contractor eligible for inflation in costs.
Advice to companies can be provided after agreeing on a fee with the company.

N.B.

Questions should be brief (not long lists) and specific (not generic).