Construction Contracts & Law CB514 Lecture Notes PDF

CONSTRUCTION CONTRACTS & LAW CB514 Dr. Kareem Adel Lecture (6) AGENDA Week Topics 2 Introduction 3 Types of construction contracts P1 4 Types of construction contracts P2 5...

CONSTRUCTION CONTRACTS & LAW CB514 Dr. Kareem Adel Lecture (6) AGENDA Week Topics 2 Introduction 3 Types of construction contracts P1 4 Types of construction contracts P2 5 Project Delivery System (PDS) 6 Tendering Process/Procedure 7 7th week Exam 8 Contract and Tender Documents 9 Claims and Dispute Resolution 10 Construction law – Egyptian Civil Code 11 Construction law – Egyptian Government procurement law 12 12th week exam 13 Fidic Suite of International Contracts P1 14 Fidic Suite of International Contracts P2  3 CLAIMS AND DISPUTE RESOLUTION Lecture 6 4 CLAIMS AND DISPUTE RESOLUTION Claim : a request by the contractor to the owner/consultant for what he/she thinks is his/her right in terms of time and money. Triggers / Reasons for Claims: Changes in designs, specifications, dimensions, requirements, sequence of work by owner/consultant Owner suspension of works Delayed owner payments Delayed owner/consultant approvals or issuance of drawings or necessary information Types of Claims Additional works Extension of Time Claims Omitted works Acceleration Claims Increased quantities over contractual limits Variation Claims Force majeure Delayed Payment Claims Delays due to third parties Suspension of Works Claims Penalties Termination Claims Unforeseen conditions Disruption Claims Premature/early contract termination Exceptional Events Claims ‫‪Lecture 6‬‬ ‫‪5‬‬ ‫‪CLAIMS AND DISPUTE RESOLUTION‬‬ ‫‪Stages of Claims Handling‬‬ ‫يقوم فيها أحد طرفي العقد بدراسة التجاوز التعاقدي الذي تم من قبل الطرف الثاني‪.‬‬ ‫تحديد طبيعة األضرار التي لحقت بهذا الطرف نتيجة خرق الطرف االخر ألحد بنود العقد‪.‬‬ ‫تعريف و تحديد المطالبة‪:‬‬ ‫تحديد البند أو البنود التي يرتكن اليها هذا الطرف عند االعالن عن مطالبته‪.‬‬ ‫تشمل محتوي المطالبة و اسباب اصدارها‬ ‫اعالن الطرف الشاكي‬ ‫تقييم مبدئي للخسائر التي تعرض لها الشاكي نتيجة هذا الخرق‬ ‫للمهندس بالمطالبة‪:‬‬ ‫‪Common Contents of Claims‬‬ ‫إمداد المهندس بكافة المستندات الدالة علي شكواه و كافة مرجعياته التعاقدية و القانونية و‬ ‫ ‬ ‫‪Introduction‬‬ ‫التي تثبت حقه في الشكوي‬ ‫اعداد مستندات المطالبة‪:‬‬ ‫ ‬ ‫‪Sequence of Events‬‬ ‫تقديم تحليل لقيمة المطالبة إلثبات المرجعية التعاقدية‪/‬القانونية لقيمة تلك المطالبة‪.‬‬ ‫ ‬ ‫‪Entitlement‬‬ ‫عرض كافة المستندات السابق تقديمها علي المهندس بغرض توضيح وجهة نظر الشاكي في‬ ‫استعراض المطالبة‪:‬‬ ‫ ‬ ‫‪Quantification‬‬ ‫ما قدمه إلثبات حقه في المطالبة‪.‬‬ ‫ ‬ ‫‪Documentation‬‬ ‫في حالة قبول المطالبة‪ :‬عقد اجتماعات بين الطرفين للتفاوض علي قيمة التعويض المستحق‬ ‫التفاوض علي قيمة المطالبة‪ :‬في حالة رفض المطالبة‪ :‬تقديم الطرف المشتكي ضده المستندات الدالة علي عدم استحقاق‬ ‫المطالبة‬ ‫يتم االتفاق بين الطرفين في وجود المهندس علي ايجاد حل توافقي‬ ‫في حالة عدم التوصل لحل توافقي يتم اللجوء الي وسائل فض المنازعات المختلفة الي ان يتم‬ ‫تسوية المطالبة‪:‬‬ ‫انهاء النزاع حتى لو ادي ذلك الي اللجوء الي التحكيم‪/‬المحكمة‬ Lecture 6 6 CLAIMS AND DISPUTE RESOLUTION Stages of Claims Handling Lecture 6 7 CLAIMS AND DISPUTE RESOLUTION Stages of Claims Handling Dispute Resolution Methods Acceptance (‫)القبول‬ Negotiations (‫)التفاوض‬ Consultation )‫(اإلستشارة‬ Mediation (‫)الوساطة‬ Adjudication (‫)تحكيم غير نافذ‬ Litigation (‫)التقاضي‬ Arbitration (‫)التحكيم نافذ‬  Lecture 6 8 CLAIMS AND DISPUTE RESOLUTION Topics Related to Claims Notices for claims and associated time periods Employer claims Delay Types, Concurrency & Analysis Methodologies (DAMs) Float ownership Cost Calculation in claims  Lecture 6 9 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Due to different reasons, construction contracts may be delayed. A delay that occurred on a non-critical activity does not participate to the delaying completion date of the contract. Therefore, delays on non-critical paths are not considered.  Lecture 6 10 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Compensable delays; those over which the client has control; Non-excusable delays; those over which the contractor has control; Excusable delays; those over which neither party has control; Concurrent delays Lecture 6 11 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Non-excusable Delays In this category, the contractor’s own actions or inactions have caused the delay. The contractor is entitled neither time extensions nor monetary recompense from the client He/she may pay liquidated damages according to the contract Solution ? Recovery Schedule >> Fast Tracking / Schedule Compression / Schedule Work items Crashing  Lecture 6 12 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Excusable Delays Delays with no control from the client nor the contractor: Unforeseen future events which the contractor has not been aware Impracticable things which the contractor can only do at an excessive cost Events in which the contractor is blameless, material shortage not expected at the time of bidding The sole relief for these delays is a time extension. Lecture 6 13 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Compensable Delay A delay is deemed compensable to the contactor when it’s within the control/fault/negligence of the client: Late possession of site Faulty design Incomplete drawings and specification Changes in scope Suspension of work differing site conditions late delivery of client-supplied materials client’s failure to disclose information vital to the contractor For this type of delays, the contractor is entitled to a time extension and to monetary recompense for extra costs associated with the delay  Lecture 6 14 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Concurrent Delays Two or more delays occur at the same time, either of which, if occurred alone, would affect the completion date. They can be classified as follows: excusable delays and non-excusable delays; excusable delays and compensable delays; compensable delays and non-excusable delays; and excusable delays, compensable delays and non-excusable delays Lecture 6 15 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Concurrent Delays Lecture 6 16 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Types of Delays Concurrent Delays Concurrent delays with an excusable delay will generally be considered as excusable delays. For these delays, the contractor is entitled to time extension if the delays are on the critical path For concurrent compensable and non-excusable delays, the contractor is allowed a time extension for completion with each party suffering his/her own losses Lecture 6 17 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Delay analysis Techniques Retrospective Prospective As- Planned Windows Time Impact Impacted as VS As- Built analysis Analysis Planned Lecture 6 18 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Advantages Simple Inexpensive Disadvantages Used in a non-complex projects Fail in considering changes in critical path Lecture 6 19 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Owner Delay 1 Advantages Simple Inexpensive Disadvantages Used in a non-complex projects Fail in considering changes in critical path Project Delay  Lecture 6 20 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built The as-planned schedule of a contract is its initial schedule The as-built schedule provides a complete record of the work as-built including the time status of the contract and the causes of all the time changes that happen Both schedules will be drawn as time-scaled diagrams This method shows all delays encountered and the actual starting and finishing dates of every activity Following notations are used: “o” to represent compensable delays ”c” to represent non-excusable delays “n” to represent excusable delays Lecture 6 21 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built 1. Look for critical path or paths 2. If only one critical path, calculate the net working duration Path net working duration = its total duration – all delay times lying on it 3. Then count the delays each party responsible for: contractor, client and neither 4. If the as-built schedule contains more than one equally delayed critical path, each of them will be examined in turn to determine its net working duration 5. Having examined all apparent critical paths, determine the primary path(s) as that (those) with the longest net working duration 6. If only one primary path found, then find the delay each party responsible for as explained before Lecture 6 22 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built 7. If more than one primary path found (paths with the same net working duration), then concurrent delays occur. Compensable and Non-excusable (contractor is allowed a time extension for completion with each party suffering his/her own losses) Excusable with Compensable or Non-excusable (This type of concurrent delay will be handled as an excusable delay) Non-excusable (the contractor should be liquated damages) Compensable (the contractor should be reimbursed for additional overhead expense plus a time extension) Excusable (the contractor should be given a time extension) 8. The responsibility of each party for the contract delayed completion is then determined Lecture 6 23 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Activity IPA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - B A Time Extension = O + N C B Compensation = O Activity IPA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - O B A O N C B N C Lecture 6 24 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Activity IPA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - B - Time Extension = O + N C A Compensation = O C B Activity IPA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - B - O O C A C B C C N N Lecture 6 25 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Activity IPA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - B - Time Extension = O + N C A Compensation = O C B Activity IPA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - B - C C C A C B O O N N Lecture 6 26 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Activity IPA TF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - 0 B - 3 C A 0 D B 4 E A,B 2 Time Extension = O + N F C 0 Compensation = O G D 4 Activity IPA TF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A - 0 N C B - 3 C C A 0 N D B 4 O N E A,B 2 N F C 0 G D 4 Lecture 6 27 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built 0 23  Lecture 6 28 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built 0 23 41 Duration = 41 days Total Delay = 41 - 23 = 18 days  Lecture 6 29 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built 0 23 41 Duration = 41 days Total Delay = 41 - 23 = 18 days  Lecture 6 30 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods As- Planned VS As- Built Two primary critical paths with net working duration = 41 -18 = 23 days The total delay of 18 days can then be divided as follows: Concurrent compensable and non-executable = 3 days Concurrent with excusable = 2 days Inexcusable = 1 day Compensable = 1 days Excusable = 11 days Lecture 6 31 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis Lecture 6 32 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis Lecture 6 33 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis Lecture 6 34 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis Delay Lecture 6 35 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis Delay Lecture 6 36 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis Delay Delay Lecture 6 37 CLAIMS AND DISPUTE RESOLUTION Construction Delay Analysis Analysis Methods Time Impact Analysis  Lecture 6 38 CLAIMS AND DISPUTE RESOLUTION Computerized Report Delay Analysis Methods Windows analysis Impacted As Planned  THANK YOU References: PMP Preparation - Book. Prof. Emad Beltagi - Book. Prof. Hesham Basyouni – Lecture Notes. Dr. Ahmed Dokhmesy – Lecture Notes. Prof. Hesham Osman – Lecture Notes.