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

From: somasundaram sp
To: "Prof.Sam" <[email protected]>
Date: Thu, 09 Oct 2008 12:38:54 +0000
Subject: Re: Q&A

Dr.Sam,

From Somu Archgroup consultants, Your Q & A section is very much helpful as we get an insight of various
occurneces all over UAE.

Kindly explain on the powers to issue the following letters and the right terminology to be used : Engineer
does not have the power to issue any of the following except item 4.

1. Letter of Intent ( main & NSCs) Main – by Employer to Contractor. NSc – by Contractor to NSc (not by
Employer to NSc). Terminology is correct, if the offer/tender is not accepted at the time, but there is intention
to accept in the future. (The contract does not form at this stage). LOI must clearly state what the other party
is expected to do, such as only to get ready to do the work or to actually commence and proceed with the
work, inform who the Engineer is and to comply with Engineer’s Instructions etc. The parties are not bound
by any of the provisions in the tender/offer documents. If subsequently the tender/offer is not accepted or
contract is not signed, payment should be made on a quantum meruit basis for any work done as instructed
by the LOI.
2. Letter of Acceptance ( main & NSCs) - Main – by Employer to Contractor. NSc – by Contractor to NSc
(not by Employer to NSc). Terminology is correct. The contract forms at this stage. Parties are bound by all
the provisions in the offered and accepted documents.
3. letter of Award ( Main & NSCs) Should be avoided. LOI or LOA should be used as appropriate.
4. Letter of Nomination confirming nomination of subcontractor to the Main contractor. From Engineer to
Contractor with copy to NSc. Terminology is correct.
5. Main contractor's letter to nominated subcontractor to proceed with the work until a proper subcontract
agreement is in place. Should be LOI or LOA as appropriate, and not any other letter.

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
somu

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

From: Moothedath Sreekumar
To: [email protected]
Date: Thu, 09 Oct 2008 12:17:59 +0400
Subject: Sound Contract Administration - Query

Dr.Sam,

 I would like to clarify some of my doubts which came into my mind during our classes in
September 2008.

 Question No. 1:

Situation is as follows:
 

Contract Type :   Lump sum – fixed price  (Final Contract Value is AED 10,000,000/-)

No allowance in Tender Document for ‘Tenderer’s Adjustment’

Client BOQ listed an item ‘GRC Dome’ – 1 Nr.

As per Drawing & Specification – not shown

Contractor priced against BOQ item – AED 50,000/-

The Engineer/Client is deleting this item from final contract and making the final contract value as
9,950,000/-.

Because as per the Tender documents, Instruction to bidders says, if there any discrepancy in
the tender documents, this should bring to the attention to the Engineer prior to the
tender. (The documents do not say that the Contractor would lose his rights if any
discrepancy is not brought to the attention of the Engineer/Employer !)

Contractor is not clarified/queried this item prior to the tender.

Whether the contractor will be eligible to get that AED 50,000/- ? Contractor is entitled to have the
50,000/-. If you deduct it, then what your are doing is re-measuring the Works, which should not
be done in a Lump Sum Contract. 

Question No. 2:

 Is there any provision in FIDIC, if client getting financial benefits if the project is completed prior
to the agreed completion time? Not in the General Conditions, but in the Conditions of Particular
Application, one could add a Bonus Clause as 47.3 after the Liquidated Damages Clause.

 for example:

Project:   Container storage yard.

              (Client is getting rent for the yard from the logistics company)

Contract Duration :   12 months

Contractor finished the work and handed over to client within 10 months.

Hence the construction finished 2 months earlier; client is getting benefit (revenue from the
logistics company as rent).

Whether contractor can claim a percentage of this revenue from client?

Not unless the Contract stated that. However this would be a good case for an ex gratia claim, by
which you appeal to the conscience of the Employer, especially if the Contractor incurred
additional costs in completing early. (However, it is at the Employer’s sole discretion as there is
no contractual obligation to honour such a claim).
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

Please advice.

 Regards,

 Sreekumar. M

Senior Estimator

 Al Futtaim Carillion LLC,

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

From: rabbay alam alam
To: "Prof.Sam" <[email protected]>
Date: Tue, 14 Oct 2008 08:34:46 +0000
Subject: Q. Extension Of Time
 

Dear Professor Sam,

First of all Thank you for sharing your Knowledge with all Contract administrators.

 I was a student of September 2008 session-Sound Contract Administration. I would like

ask one question related to Extension of Time & Claim For it.
 
CLAIM : DELAY DUE TO UNAVAILIBILTY / SHORTAGE OF CONCRETE IN
MARKET
 
Situation is : A Contractor is ready for casting the RCC slab with DM Inspection but due
unavailability/shortage of concrete in the market, Contractor could not get the concrete
on time. Client/ Consultant know about the situation. This type of delay occurs 3 - 4 time
for whole construction period. Is Contractor should be entitled for extension of time &
prolongation cost for that delay. According to which clause of FIDIC it should be entitled
/Payable. It is not right to say concrete was unavailable. Yes, there was a shortage.
Supply of material is the Contractor’s responsibility and failure to supply in a timely
manner would not fall into any of the 5 categories of Sub-Clause 44.1 which gives a fair
entitlement to EOT.

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

Thank you Sir,

 Regards,

Rabbay Alam
----- Original Message -----
From: prabath kahandawa
To: [email protected]
Date: Thu, 09 Oct 2008 00:51:51 -0700 (PDT)
Subject: Questions

Dear Professor Sam,

 
Once again a sincere thanks for sparing your valuable time to respond to our queries.
Would be really thankful if could provide your advise on the following :
 
Under FIDIC “Condition of Subcontract for Works of Civil Engineering
Constructionâ€‌ book Variation Clause 9.1 says:
 
The Sub contractor shall not make such variations of the Subcontract Works, whether by
way of alteration, addition or omission as may be instructed by :
(a)    the Engineer under the Main contract and notified and confirmed as an
instruction to the Subcontractor by the Contractor, or
 
My query is, as Subcontractor are there any requirement to notify variations to Main
contactor under above clause ? If what you mean by “notify variations” is whether a
notice is required to be given as a prerequisite to payments for the variation, then the
answer is NO. If however you need varied rates or prices to be used in valuing that
variation then you have to give a notice because the Main Contractor has to give such
a notice under the Main Contract.
 
And is there any time period to send variation notifications ? In a timely manner
(about a week) to enable the Main Contractor to give his notice to the Engineer within
the time stated in the Main Contract (14 days if Main Contract is 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
 Regards,
 
K.R.H.P. Kahandawa

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

From: Nicolas Mendoza Manalo
To: [email protected]
Date: Wed, 08 Oct 2008 22:33:34 +0400
Subject: Querry

Hi Dr. Sam,

I have some querries regarding this head office overhead expenses. Because it
happens in our current project that we are going to claim a prolongation cost...and that cost I
included the head office overhead; if the client says that ''why you are claiming head office
overhead which was already included under your preliminaries''. How we are going to deal with this
question from client? And what is the difference between PRELIMINARIES and HEAD OFFICE
OVERHEAD(HOO),Preliminaries are site overheads and HOO are Head Office overheads.

how we can explain that the HOO is not included in Prelimns? Show a break-down of the Preliminaries
which includes costs of site offices, site personnel, insurance, bonds etc. and demonstrate that a portion of
the Head Office rentals, Managers’/Directors’ salaries, advertising etc. are not in that break-down.

What is the advisable percentage that we are going to claim under HOO againts fully compliance BOQ/
Effective Project amount? Is it 5%, 8%, or 10% neglect the formula from your session. The percentage
calculated from your audited annual accounts, by dividing the annual head office administrative/overhead
expenses by the total annual turnover.

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,

Nick
Al Tayer Stocks

From: Eulogio Cachero [mailto:[email protected]]

Sent: Tuesday, October 07, 2008 1:15 PM
To: [email protected]
Subject: RE: CA Training

Dear Dr. Sam,

 
Thank you very much for your unwavering passion of educating us and passing the knowledge
and experiences you have (as if giving your heart) on to the next incoming CA, and arbitrators. I
have learned much and it has change my way of thinking, and in dealing with issues. It has
increased my hunger to learn more. (awaiting the advance course you are preparing)
 
I have forwarded the flyers to my colleagues and friends in the same field as I am.
 
Also I would be attending the 3 sessions I missed due to abrupt changes in my schedule.
 
I appreciate it very much. More power.
 

Best regards,

 Eulogio Cachero

Mobile # (+971) 50 5031148

Commercial Dept.

Marriott Courtyard Hotel Project 

NASA MULTIPLEX LLC

Many Thanks for your kind words. If all trained Contract Administrators would
recommend the course to others as you have done, perhaps we can have sound
contract administration in Dubai in the near future.

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: somasundaram sp [mailto:[email protected]]
Sent: Friday, October 10, 2008 1:32 PM
To: Prof.Sam
Cc: vinod
Subject: Re: Q&A

  Dear Mr. sam,

Thank you very much for the great Q&A session. Kindly reply my query as follows:

The CAR policy and Third party liability insurance are covered under the Main
contractor's scope of work and the BOQ contains a slot in the prelims section towards the
procurment of these insurances.     

Subseqently,the client decides to procure the insurance themseleves and an instruction is

issued to the Main contractor to delete this requirement and submit savings.

Based on FIDIC provision that any work/item contained in the contract if deleted shall
not be exceuted by others, can the Main contractor object this arrangement? Yes. If the
Employer insists and the Engineer omits the Insurance requirements then the Contractor
would be entitled to have all costs, expenses and losses that he can demonstrate,
reimbursed.

If the Main contractor agrees in good faith, the minimum deductibles are far high in the
opinion of the Main contractor and therefore they state that Insurance obligation shifted
to the Client, the client should be responsible for the minimum deductibles. If the loss is
less than the minimum deductible, the client needs to reimburse the Main contractor the
losses.

These are matters open for negotiation between the parties under the new arrangement. If
the Contractor has to obtain a separate policy to cover the deductibles, then the cost of
that policy would become part of the valuation of this variation.

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
somu