Do project consultants understand their obligations with regard to claims?
I recently presented a training course on claims and FIDIC and quite surprisingly, almost all attendees were from contractors or subcontractors. Does this mean that those appointed to act as ‘the Engineer’ under FIDIC or other consultants appointed to administer contracts consider that they already understand this subject fully, or are Engineers just not interested in dealing with claims properly?
My own personal experience, which was supported by those attending the course, suggests that there are major problems with the way that Engineers deal with claims and in the majority of cases Engineers simply do not comply with their contractual obligations. The FIDIC contracts provide the following obligations on the Engineer:
The Engineer shall respond to a claim within 42 days (Sub-Clause 20.1).
This hardly ever happens.
In the case of rejection, the Engineer shall respond with detailed comments (Sub-Clause 20.1).
The Engineer often fails to provide any meaningful comments as to his reasons for rejecting claims. Additionally, comments are often spurious and do not take into account the provisions of the Contract.
‘Each Payment Certificate shall include such amounts for any claim as have been reasonably substantiated as due’. (Sub-Clause 20.1).
Engineers usually wait until the final details have been ascertained before certifying any monies at all in respect to claims.
‘The Engineer shall consult with each Party in an endeavour to reach agreement’ (Sub-Clause 3.5).
Engineers often issue their response as a ‘fait accompli’ without any form of consultation with the Contractor, or any attempt to reach agreement.
‘If agreement is not achieved, the Engineer shall make a fair determination in accordance with the Contract, taking account of all relevant circumstances’ (Sub-Clause 3.5).
Determinations, if issued at all, are usually made to defend the Employer’s position and are often patently not fair and are not in accordance with the Contract.
‘The Engineer shall give notice to both Parties of each agreement or determination, with supporting particulars’ (Sub-Clause 3.5).
Determinations are seldom issued and if they are, they do not contain any meaningful particulars.
If a Contractor has a just claim that is dealt with by the Engineer in the ways that are discussed above, the Contractor’s only way of obtaining his contractual entitlement is to elevate the matter to a dispute. As the majority of contracts in the Middle East do not include dispute board provision, this means arbitration, which, in turn means that the matter may take years to settle and cause the Parties to incur significant needless costs.
Is the Engineer doing the Employer any favours in such a situation? I think not.
Given the opinions above, it seems that more Engineers should be taking steps to understand their obligations and to comply with them.
This blog was written by the ICCP’s Executive Officer and Fellow, Andy Hewitt. If you would like to learn more about claims, check out our training partner, Claims Class or, if you’d like to join the ICCP community, check out our Membership page.
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