CIAP Doc 102: Contract Procedures

• CIAP document 102 sections 8 and 9 cover contract procedures.

Section 8: Contract Procedures

• Section 8 of the CIAP Document 102 outlines the procedures that must be followed during the contract period, including contract interpretation, variations, claims, and dispute resolution.
• The contract documents must be consistent and complementary.
• The priority of contract documents is as follows
  • Contract Agreement
  • Bid Form incl. appendices
  • Conditions of Contract
  • Drawings
  • Specifications
  • Daywork Schedule
  • Other Documents
• If a conflict among the contract documents is present, the priority of these documents will settle the conflict.
• The interpretation of the contract shall maintain it valid, if possible; give words their ordinary meaning or technical meaning in the construction industry, and consider the customs and usages of the trade.
• If ambiguity exists, it will be interpreted against the party who prepared the contract.
• Should discrepancies occur in the drawings, the contractor must immediately refer the matter to the Owner/Engineer for clarification and instructions.
• Any work done by the contractor after discovering discrepancies, but before receiving instructions, will be at the contractors risk.
• The Owner/Engineer has the power to order variations to the works.
• These variations may include alterations, additions or omissions to the works.
• All varied or extra work which the Contractor may be directed to do must be performed in accordance with the contract terms.
• No varied or extra work will be undertaken by the Contractor without written instruction from the Owner/Engineer.
• An agreement must be reached between the Owner/Engineer and the Contractor regarding the cost of the variations.
• The value of the variations must be agreed upon before they are performed if possible.
• If an agreement cannot be reached, the Owner/Engineer will determine the value.
• The determination made by the Owner/Engineer will be final and binding, unless the Contractor can prove that determination was manifestly wrong.
• If instructions for varied/extra work necessitates the postponement of work, the contractor can apply for an extension of time.
• No extension of time will be given for trifling reasons.
• Any request for extension must be made no later than 30 calendar days after the cause of the delay.
• If the Contractor fails to comply with the 30 day requirement, their right to claim an extension of time is deemed waived.
• The Contractor must prove that completion of the works will be delayed due to the cause.
• The Owner/Engineer will examine the facts and determine the extension of time warranted.
• The contractor is entitled to claim for unforeseen physical conditions or artificial obstructions.
• This unforeseen event could not have been reasonably foreseen by an experienced contractor, after inspecting the site and reviewing the data given to them.
• The contractor must give written notice to the Owner/Engineer within 15 calendar days of discovering the condition.
• The Owner/Engineer will investigate the condition.
• If the claim is valid, the Owner/Engineer will determine the additional payment and/or extension of time due to the contractor.
• Any claim for payment must be set out in detail and submitted to the Owner/Engineer.
• The contractor is responsible for ensuring the works are not damaged.
• Following completion of the project, the contractor must deliver the works to the Owner in accordance with the contract.
• In case of disagreement, both parties must seek to resolve it amicably.
• Either party can request referral of the dispute to the CIAC (Construction Industry Arbitration Commission) for mediation/conciliation.
• If unsuccessful, either party may initiate arbitration in accordance with the Construction Industry Arbitration Law.

Section 9: Suspension of Work, Termination and Resumption

• Section 9 of CIAP Document 102 specifies the conditions and procedures for suspension of work, termination of the contract, and resumption of work following a suspension or termination.

Suspension of Work

• The Owner/Engineer has the authority to order the Contractor to suspend the work, wholly or in part, for a reason and period considered necessary.
• Reasons for suspension:
  • Failure by the Contractor to correct conditions which are unsafe.
  • Failure to carry out provisions of contract or failure to follow orders.
  • Conditions that warrant such action
• Adjustments will be made for increases in the cost of performance caused by the suspension.
• No adjustment of compensation shall be made if performance would have been suspended by other causes, or if the fault lies within the contractor.
• If the suspension was caused by the contractor, the contractor must pay the owner the amount of expenses caused by the delay to the project completion.
• If the suspension exceeds 90 calendar days, adjustments should be determined by mutual agreement. Should they fail to agree, the contractor can treat the suspension as a termination by the Owner.

Termination by the Contractor

• Occurs if the work is completely stopped for more than 90 calendar days through no act or fault of the Contractor or Subcontractors.
• The contractor can terminate the contract by written notice to the Owner/Engineer.
• The owner must be paid for reasonable costs of demobilization.
• The contractor can terminate for the following reasons
  • Owner defaults in paying contractor.
  • Owner interferes with or obstructs the progress of work.
  • Owner suspends the whole work for more than 90 calendar days for their convenience.
  • Owner fails to make payments in accordance with the contract.

Termination by the Owner

• Occurs if the Contractor neglects or fails to perform the work.
• Occurs when the contractor violates any provisions of the contract.
• Contractor becomes insolvent or bankrupt.
• Contractor makes a general assignment for the benefit of creditors.
• A receiver is appointed due to the contractor's insolvency.
• Contractor performs work contrary to the instructions of the Owner/Engineer.
• Contractor abandons the contract.
• Contractor subcontracts any part of the contract without approval.
• Contractor fails to proceed with the work as directed by the Owner/Engineer.
• Contractor fails to provide sufficient, qualified personnel or materials.
• Contractor fails to make prompt payments to subcontractors or suppliers.
• Contractor is found guilty of any offense involving moral turpitude in relation to the contract.
• Upon termination, the Owner can take over the work and complete it.
• The contractor is not entitled to receive further payment until the work is finished.
• All costs of the works completion will be deducted from the contractors earnings.
• If the expenses exceed the sum which would have been payable, the contractor is liable for the difference.
• The Owner may take over materials, equipment, and plant on site for the purpose of completing the Work.
• Termination does not prejudice any rights or remedies available to the Owner.
• Owner can still go after the contractor to recover damages.
• If there is sufficient evidence that the contractor was not in default, or that the termination was improper, the termination shall be converted to a termination for convenience of the Owner.
• In this case, the Contractor will be paid for all work executed and any loss sustained, including reasonable profit.

Resumption of Work

• If the work is suspended, the Contractor must resume as directed in writing by the Owner/Engineer.
• If the contract was terminated but later found to be unjustified, the work can be resumed under conditions agreed upon by both the Owner and Contractor.