44.

0 CLAIMS FOR LOSS AND EXPENSE

WHAT IS LOSS AND EXPENSE ?

•Construction contracts will generally provide for

the contractor to claim direct loss or expense .
•It as a result of the progress of the works being
materially affected by relevant matters for which
the client is responsible.
 CLIENTS
RESPONSIBLE

Failure to Failure to give Delays in

give the the contractor receiving
contractor access to and
possession from the site. instructions.
of the site.
Opening up
works or Disruption Issues
Discrepancies caused by
testing works . in the contract works being relating to
that then carried out
documents.
by the client. CDM.
prove to have
been carried In accurate
out in Failure by Instructions forecasting of
the client relating to
accordance variations and works
with the to supply
goods or
expenditure of described by
provisional
contract materials. sums. approximate
quantities.
 PROCEDURE FOR LOSS
AND EXPENSES

1). SO/SOR received notice and estimates for loss and expense.

2). Determine contractor’s eligibility for payment of loss and Expense.

3). Inform Contractor of eligibility for loss and expense

4). Received details and evaluate the information submitted by the

Contractor.

5) Prepare report and submit to Claim Secretariat.

6). Review and prepare recommendation.

7). Decision by Claim Committee.

8).Inform Contractor on the result.

9). Revise Contract Sum; if approved.

 LOSS AND EXPENSE PROVISIONS IN JKR203
& JKR203A CONDITIONS OF CONTRACT.

The Contract Conditions has the following provisions/requirements:

 
1. Contractor shall within one (1) months of the occurrence of the event, give
notice in writing to S.O of his intention to claim supported by an estimate of
the amount of loss and/or expense likely to be incurred.

2. Within three (3) months after Practical Completion, the Contractor shall
submit full particulars of all claims together with any documents, supporting
vouchers, explanations and calculations.
 RELATIONSHIP BETWEEN LOSS AND/OR
EXPENSE AND EXTENSION OF TIME

1. Many Contractors upon being granted and Extension of Time (EOT)

presume that they can claim all additional costs for the extended period
as loss and/or expense.
2. The granting of EOT does not give an automatic right to loss and/or
expense.
3. EOT and loss and/or expense are separate and must be dealt with
independent of each other and on their own merits.
4. Only by examining cause and effect can items of costs, which fall under
loss and/or expense, be identified. If the delay was the responsibility
solely of the Contractor, Contractor should not cover his additional costs
arising from any delay of the building works by claiming Loss and
Expense.
5. If delay is due to natural factors, than loss and/or expense is not
claimable.
 6 ESTABLISHING IF A LOSS AND EXPENSE CLAIM IS VALID
 

(a) The claim is in accordance with the relevant

clauses of the Conditions of Contract.
(b) In line with the above, all notices and claims
must be submitted in writing.
(c) The SOR shall assess all claims for loss and/or
expense as soon as sufficient information is
available.
(d) It must be an expense not recoverable
elsewhere under the contract.
Assess the claim for loss and/or expense as follows:
 
(a) Expenses claimed are actual expenses which are
supported by documentation.
(b) Loss can be proven through documentary proof and
records.
(c) Contractor has shown that the loss and/or expense are
direct consequence(s) of the delay/disruption (cause-and-
effect).
51.0 EVENTS AND CONSEQUENCES OF
DEFAULT BY THE CONTRACTOR
PURPOSE OF CLAUSE 51.0

1. So that the contractor involved can performed according to the procedures in

the clause specified in the contract.
2. To avoid any incidents or disputes or disagreements in the contract.
3. If there is any disagreements or disputes in the contract can be settled fairly
and impartially.
4. To make sure the contractor to understand the impact if the contractor fails to
follow the written procedures in clause.
5. To make sure the contractor to understand the consequences if the project is
terminated.
6. To let know the contractor on his obligations if the contract is terminated.
 CLAUSE 51.0 : EVENTS AND CONSEQUENCES OF DEFAULT
BY THE CONTRACTOR

Contractor Government
fails The contractor
terminates the
to follow the clears the site
contract by
written within given
giving
contract. time.
written notice.

The contract
pays The government
for the any finds a new
losses contractor to
and damages finish the work.
during work.
Once the contract is terminated:
Contractor
1)Stop all construction works.
2)Must make sure the safety
of the site and equipment on
site and cleanliness of site.
3)Remove all his men from
site.
4)Vacate the site.
5)Must hand over the
Government all plans, designs
and any other documents
related to the work.
6)Pay for any losses or
damages.
Government
1)Call upon the Performance
Bond or forfeit the
Performance Guarantee Sum.
2) Visit the site.
3)Take responsibility on his
project to continue and
complete the work.
4)Claim any losses, costs, and
damages from contractor.
 IMPACTS FROM CLAUSE 5.1

1. It gives clear view for contractor on his obligations

towards the contract.
2. The contractor understand the consequences that
he will face if he failed to follow the contract.
3. The contractor understands the requirements of
the government.
4. There is mutual understanding between contractor
and the government so that the flow of work is
efficient and relevant.