My comments are given in red below:-

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

From: Sarath Munasinghe
To: sam99@eim.ae
Date: Mon, 11 Aug 2008 09:18:36 +0400
Subject: [No Subject]

Thank you very much Prof, Sam for giving us your valuable comments for contractual
matters using day to day queries made by our colleagues.

 So please briefly explain followings   

 Differences and similarities between Claims (under Cl 53) and Variations (Cl 51).

What could be considered as “Variations” are those instructed by the Engineer (under the
10 Sub-Clauses in the second column as described during 1st session of the course – see
handout) whose direct cost + OH&P are valued under Sub-Clause 52.1 for which
valuation no notices are required. The value could either be an addition or a deduction.

What could be considered as “Claims by the Contractor for Additional Payment” (which
Clause 53 refers to) are those resulting from the 11 events (in the first column as
described during the 1st session) where the entitlement is only to “cost”. Notices are
required for these under the individual Sub-Clauses such as 6.4, 12.2 etc. as well as Sub-
Clause 53.1. Indirect cost + OH&P to be valued where the Contactor claims extra
payment or a varied rate/price pursuant to Sub-Clause 52.2(a) as a result of Variations,
(requiring notices under 52.2(a) as well as 53.1) also fall into this category of Claims.

Prime Cost (PC) item

PC Sums under JCT Forms of contract are similar to the Provisional Sums under FIDIC
Forms of Contract, where the work is to be done by a nominated subcontractor.

PC Rate Items are those where the documents require a specific amount of money to be
allowed by the Tenderer within the Tender Price, which money the Employer can use to
purchase material (either directly or through a nominated supplier). Where the cost of
material exceeds the money allowed, the Contractor is compensated together with
OH&P. Where the cost is less the saving (including OH&P) is in favour of the Employer.
Depending on the wording in the contract/BOQ/Preamble, wastage, delivery to site etc.
too may need adjustment.

PC rate adjustment becomes complex in lump sum contracts, where there are errors
between the BOQ quantity and the Drawings, and also where the actual quantity differs
from the BOQ and/or Drawing quantity. This subject would be dealt with in detail during
the “Contract Administration – Advanced Course”. Alumni are enquiring when the
advanced course would be conducted. I am still structuring it and would need time.
Probably sometime next year. Following are the topics (not final) intended at present
after revising from an original list previously circulated among the Alumni and taking
into consideration the comments of the majority. :-

1. Variations, Extension of Time, Prolongation Costs and Notice Provisions in New

FIDIC 1999 compared with FIDIC 4th Edition 1987. (12 to 15 hours)

2. Termination by the Employer/Contractor. (3 hours)

3. A workshop on a complete take-off and bill writing for a Pipe Line according to
CESMM3 with emphasis on depth range calculations and interpolation of pipe
run (3 hours)

4. Dealing with Provisional Sums and PC Rate Items. (3 hours)

5. Basics of Contract Law. (3 Hours)

6. An introduction to negotiating the terms and conditions of the

contract/subcontract with the other party. (3 hours)

7. Indemnity/Insurance. (3 hours)

8. Stress Management for Contract Administrators. (3 Hours)

9. Thirty complex issues in Contract Administration. (3 Hours)

10. ……………… ?

After structuring and testing, the Advanced Course would be available only for those who
completed the 10 sessions of the foundation course (“Sound Contract Administration”) or
for those who can demonstrate that they have achieved full competency in all 10 topics
by other means. Course duration would remain the same (i.e. 10 evenings – 30 hours).
Course Fee could be higher by about 20-30%). Your suggestions regarding the topics for
the Advanced Course are welcome.

Regards,

Prof. Sam.
Prof. 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: "Panicker, Rajeev"
To: sam99@eim.ae
Date: Mon, 11 Aug 2008 08:41:18 +0200
Subject: RE: Q&A-Jul 08-2

Hello sir,

I had one query if u cud answer the same..

Is there a clause in FIDIC 4th edition for the following:

During construction phase a lot of  contract instructions(CI) are sent by the Main
Contractor and as a subcontractor there are many CI which are non relevant to us
however we are spending time in reviewing the same so is there a clause to claim for the
time spent?

 It is quite common for a Main Contractor to pass copies of all Instructions received
under the Main Contract to all his Subcontractors, so that they can identify those
affecting the Subcontract work. FIDIC 4th does not have a provision to claim in this
respect. (Since you are a Subcontractor FIDIC 4th may not be your Subcontract !)

 Secondly in case of drawings due to variations and other changes on site there are many
comments due to which we have to amend the drawings and remake…can we claim for
the same under which clause and what limit? Engineering costs (shop drawings etc.) are
an acceptable cost in the valuation of variations. If your engineering costs are priced in
the Preliminaries and if you can demonstrate that the amount allowed therein is now
increased, then you can give a notice and claim a varied price under Sub-Clause 52.2(a).
If your engineering costs are distributed throughout the rates, since these rates would be
used to value the variations you are receiving some compensation for engineering costs
but if the compensation is disproportionate to the actual costs, then you can give notice
and claim varied rates to price that variation under Sub-Clause 52.2(a).

If however no variations have been instructed but the engineering costs are increased due
to unreasonable requests from the other party to revise the drawings due to no fault of
yours, then your claim could be for damages for breach of contract following a notice
under the appropriate provision in the Subcontract (similar to Sub-Clause 53.1 of FIDIC
4th).

Regards,

Prof. Sam.
Prof. 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

Thanks & rgds,

Rajeev

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

From: James O'Brien
To: "'Prof. Sam'" <sam99@eim.ae>
Date: Mon, 11 Aug 2008 15:41:07 +0400
Subject: Class of 07

Dear Professor Sam,

 I’ve come up against two interesting issues:

 We had a requirement for two 1600 kVA diesel generator sets. Due to value
engineering (AED 200k saving) i.e. deletion of individual fire pumps, the DG sets had to
be re-sized to one 1360 kVA and one 2000 kVA.  We agreed with the contractor that this
is a variation.

 The contractor claims an addition of AED 847k based on the difference between the
original supplier quotation at tender, and a Letter of Credit amount for the new
requirement.  We have gone out to three suppliers for quotes for the three DG sizes for
comparison.  This resulted in quotes of AED 52k, AED 413k and AED 250k.  Absolutely
no pattern or benchmark seems possible.  The contractor had been honest with his
original submission which was for AED 1.2m based on a later quotation (higher), even
though he had the reduced quotation.

 How do we value the variation fairly? Too complex. The possibility of obtaining
genuine prices for the 3 sizes of the same make should further be investigated (There
must be some way of finding this out – an alternative would be to appoint an
independent third party –Lloyds/BVQ/E&Y/KPMG?- to establish these 3 prices). Perhaps
prices for similar sizes in other contracts could be investigated. Why not also consult the
VE team. If they did not err in their exercise they would have based the saving of 200K
on enquiries of the cost increase of new sizes of DGs. Perhaps when they are informed
about the result of +647K instead of the -200K of VE they would use their resources to
procure genuine quotes for the 3 sizes or at least show the basis of their exercise.

In any VE team the Contractor plays a big role. Knowing that the VE result was -200K, it
is unbelievable that he raised an LC for DGs costing +847K, without having first notified
the team about the matter.

 A spiral staircase was specified with stainless steel balustrades and priced (at a very
high rate per staircase) as such in the BoQ AED 1.5m. The specification for the
balustrades has been changed to wrought iron but stone treads and polished hardwood
handrail had to be maintained as per the contract.  The subcontractor invoice value of
the new stairs plus contractor O&P is AED 850k.  The PQS believes we should take a
saving of AED 650k based on add/omit using the BOQ rates (omit) and Invoice value
(add).

 Is the PQS correct? No. A mini BOQ should be prepared for the original design with
as many detailed items and their quantities, as possible. Each item should be priced
using fair and reasonable rates. The difference between the sub-total thus arrived and
AED 1.5 million should be inserted as the last item of the mini BOQ with the description
“Contractor’s Risks”. Similar exercise should be done for the revised design. In this
revised mini BOQ only those items which are affected by the new design would have
revised items/quantities/rates. All the other items/quantities/rates should remain
unchanged. The item for Contractor’s Risks should appear in the revised exercise too
with the amount unchanged. Thus a new total price for the revised Stairs could be
determined.

 Regards,

Prof. Sam.
Prof. 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

Kind Regards and thanks for your assistance

 James O'Brien

Class of 07

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

From: preethy vikas
To: sam99@eim.ae
Date: Thu, 14 Aug 2008 16:20:52 +0530
Subject: RE: Away from Dubai
Dear Dr. Sam,
 
I had a small suggestion. If you could open a Group email address for Sound Contract Administration
queries with membership only to the Class attendees. This could be monitered by you to make sure the
replies are in order. We have a yahoo email address for CETA members where fellow engineers post their
queries and get reply from different batchmates. Let me think about it. Already I find it difficult to manage
with the current extent of questions. Monitoring replies given by others would be an impossible task to be
managed by one person.

Regards,

Prof. Sam.
Prof. 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

 
Thanks,
 
Jayalakshmy

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

From: ANANDA WEERAKOON
To: sam99@eim.ae
Date: Sat, 16 Aug 2008 08:07:31 +0000 (GMT)
Subject: Re: Q&A-Jul 08-2
Dear Prof. Sam
 
very much thanks for your kind cooperation , My question is
 
The Nominated Sub Contractor shall be appointed by Employer under fidic 4th edition for the provisional
sum item allocated in the Contract. If any works(new work) not allocate in the provisional sum items, can the
employer appoint the sub Contractor for such works ? if yes,  Is it to be considers as nominated sub
Contractor under  the same terms and condition establish clause 59 of the Conditions of Contract.?  Further
is it to be administrated under provisional sum adjustment or as variation to the Contract or as to follow a
new appendix when finalise the final bill sett element ? 

If the new work is necessary or appropriate, then there is no restriction to first instruct the addition of a new
Provisional Sum (for new work) as a variation and thereafter to nominate a nominated subcontractor for the
new work. Administration would be as per Clause 59. However the addition of Provisional Sum itself being a
variation, if the Contractor can prove that his % mark-up for provisional sums given in the Contract is/are
inapplicable or inappropriate, he can ask for a revised % under 52.2(a).
Regards,

Prof. Sam.
Prof. 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: anilkumar sb
To: sam99@emirates.net.ae
Date: Sun, 17 Aug 2008 04:14:51 -1200
Subject: [No Subject]

 Dear Dr. Sam,

Would you please to advice me for the following case?

If an employer suspends the work Partially/ Fully because of unavailibility of work area (delayed approval
from statutory authorities) or design related issue ( clashes in design ).
 
What will be the consequence/liability of Employer? regarding
 
1. LD'S Contractor is not liable.
 
2. EOT Contractor is entitled
 
3. Idle resoures (labour/equipment) Contractor is entitled
 
4. Escalation of prices because of delayed approvals Depends on the “Price Fluctuation” provisions,
Payment for material on site provision, advance payment provision etc. in the Contract as discussed during
the course.

Regards,

Prof. Sam.
Prof. 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
 
regards
 
Anil

From: carlo magno guerrero <carl_guerrero@yahoo.com>

Subject: EOT Entitlement
To: sam99@emirates.net.ae
Date: Tuesday, August 19, 2008, 1:50 AM

Dear Dr. Sam,

 
I have some query reqarding the method of calculating the entitlement for the extension of time. See the
attached file for the sample of scenarios.
Please explain which method is appropriate (Contract is FIDIC 1999).
 Not possible to answer in this forum. Please consult a specialist Delay Analyst.
Regards,

Prof. Sam.
Prof. 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

Thanks and Regards,

 
Carlo

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

From: SANJEEWA
To: sam99@eim.ae
Date: Tue, 19 Aug 2008 00:03:50 +0400
Subject: Contract Correspondence
Prof. Sam

I would like to get the following clarified:

Supposing a letter (third letter) in the Schedule of correspondence of the

Contract has referred to another letter (second letter) which further refers
to another letter (first letter) that may have been submitted at the tender
stage but may have been superseded by other subsequent letters. The third
letter is listed in the Schedule of correspondence in the Contract but not
the first letter.

What is the validity/legal acceptance of that first letter if that has some
useful information regarding the contract.

Hope the question is clear and waiting for a reply.

If there is clear reference to the document, then it is deemed incorporated by reference (unless the wording
in the contract provides for its exclusion). The affected contents however are chronologically superseded.
The unaffected contents can/cannot be used in the interpretation or construction of the contract depending
on the rules of evidence such as parole, which varies according to jurisdiction. Local legal consultation is
advisable, depending on the purpose for which such contents need to be relied upon.

Regards,

Prof. Sam.
Prof. 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

Regards

Sanjeewa Wijayathilaka
June 08 Batch

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

From: Samagata Chakravorty
To: sam99@eim.ae
Date: Wed, 27 Aug 2008 19:20:31 +0400
Subject: Advise required

Dear Sir,

 We need your kind opinion on the following. (In this forum, opinion should not be sought on
company business matters ! Questions should be limited to those of academic interest –
especially those related to Course contents.)

1. Contract is a Lump Sum contract. There is an item of work that is shown on the drawing
but there is no separate BOQ item shown for the same (this is a miss out by the
consultant who prepared the BOQ).  

2. However, there comes a variation where-in this item is deleted/not required to be

executed.

 Now can we deduct any reasonable amount from the lump sum Contract Price on account of
above deletion in scope? Yes. The Lump Sum Contract Price is deemed to be inclusive of a fair
and reasonable price for the missed-out item, which can be deducted after giving due
consideration to the provisions in Clause 52 (unless the Contractor can demonstrate that the
missed-out item is not in the contract scope of work with evidence such as a Tender Qualification
to this effect or Document Priority of BOQ being higher than Drawing etc.)

Regards,

Prof. Sam.
Prof. 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

 Regards

 Samagata Chakravorty