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Hello Everyone,
Just a topic to know what will help Claim Management in a Project from which we (Contractor or Subcontractor) can calculate the delay charge.
In most of the Contract Client would have already mentioned the amount which will be charged per day for delay which would be a % of the Contract Value.
I have listed down few if those are not relavant please let us know.
Baseline Schedule
Manpower Schedule
Equipment Schedule
Letters regarding the cause of delay.
Thanks
Jithin
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Thanks Mike. Got your Point. So either the Contract should say that "During prolongation Unit Rate can be used" or to show the Client the Account System of the Project.
Thanks
Jithin
Hi Jithin
If your contract says that as an EPC contractor you can used the scheduled rates for prolongation costs then that is what you do.
If not then you have to substantiate the actual costs.
As I have said before in this discussion you can show your accounts to the client or employ a registered accountant or independant QS to certify that the costs that you have listed are correct.
Best regards
Mike Testro
Thanks Mike and Raymund,
What is an Audited Cost and who would come and measure it . What all would be included in Audited Cost.
In UAE the the EPC Contracts (Oil and Gas) are on Lumpsum basis in which you award the Contract to a EPC Contractor to do a certian work say 30 Million $.
So when the EPC Contractor has worn the bid for 30 Million $ he wold have included the cost for Manpower + Equipment + Insurance + Tax + Profit + Overhead (Overhead in the sense that a % of Running cost of Head Office of the company for 12 Months which will include the cost of people who would be working for mutiple project at the same time ) for the total duration of Project say 12 Months.
With the Contract we do give a Manpower and Equipment Schedule with which they can calculate the manpower and equipment alloted for the Project. So even if we flood the Project with other manpower which was not mentioned in the schedule that wont be paid for.
So how owuld Auding Help us in getting the Cost for EOT.Would the Profit be included in that ?
Regards
Jithin
Jithin,
As Mike said, it must be the audited Cost in a span of the Original Project Duration.
Hi Jithin
That is why it has to be audited costs. Another trick contractors play is to flood the site with un necessary staff from another project which they have delayed. Its a rough old world out there.
Raymund,
OK so after the approval of time we can claim for the exepense for the EOT Claim by Days.
So shouldnt we include in the Contract the unit rate for all the item ( Manpower , Equipment , Insurance, Running Cost, Bank Charge ) which is signed both parties the unit rate for everything example,
Project Manager - 500 $ / Day
Project Engineer - 370 $ / Day
Crane 25 Ton - 317 $ / Day
If this is not included in the Contract wouldnt there be a Problem during expense claim for EOT as the Client might not agree to the unit rate we (Contractor) have put in the expense claim ( Might say we have charged high).
Warm Regards
Jithin
Jithin,
Contractor has the right to claim for compensation from the Extension of Time resulted from Non Excusable Client Cause-Delays.
The Extended Overhead (Daily Rate) shall be determined and shall be multiplied with the agreed number of days of Extension.
Thanks Raymond. So overhead charges are non excusable for EOT so it will be paid.
Hi Jithin,
In my understanding from your Post, Contractor Calculation of delay compensation. This is also termed as the Extended Overhead.
A proven non-excusable client delays are compensable delays with Extended Overhead.
Thanks Mike. Ya u were right i was confused . Now got the clear point.
So,
LAD - Put by Client/Employer
EOT - Requested by Contractor
Warm Regards
Jithin
Hi Jithin
You are confusing LAD's - Damages with Prolongation costs.
The first task of a contrators EoT claim is to avoid LAD's - the second part is to establish an entitlement to recovery for prolongation cost /loss and expense.
The two procedures are seperate and require different approaches - this is true for every form of contract that I have encountered.
Best regards
Mike Testro
Hi Mike,
But most of the Contracts are written on the Clients favour in which it says what will happen when the delay is by the Contractor like " Per day of delay is 0.10% of Contract Value (Lump Sum Contract) to a maximum of 10% ". No clasue states as how to calculate the delay cost if the delay is by Client. Then what do we do.
Thanks
Jithin
Hi Jithin
Everything depends on what the contract says - a delay analyst has to read the contract before doing anything else.
Remember that contractor concurrent delays will restrict the prolongation recovery.
Best regards
Mike Testro
Thanks Mike,
That helped a lot. So the Cost of Delay (If the delay is caused by Client) is to be mentioned in the Contract. On the basis of this the delay cost calculation would be done.
Regards
Jithin
Hi Anthony
That is a comprehensive list.
You can add
Fixed Price shift
Foreign currency exchange rate shift.
Best regards
Mike Testro
Hi Jithin
It depends on what it says in the contract.
If your recovery is for Direct Loss and Expense or Costs (JCT) (FIDIC) then it has to be the actual costs from your accounts. You can use an independant accountant / auditor to certify the costs if you do not want the Employer looking into your books.
Other contractcs require payment based on a schedule of costs - such as the daywork list (NEC).
Others base it on the rates in your Prelims BoQ. (Rare)
Best regards
Mike Testro
Thanks Antony,
Ya i know that we have account for Manpower and Equipment, Insurance.
Engineering or Site Running Cost - Like you had planned water , printer etc for 12 Months (Project Duration) - but now extended to 15 months so cant we claim for site running cost for 3 months.
Overhead Cost - We have given the contract value which had a HO overhead cost - who would be working for overall company including projects but partially - So when we bid we do include a % of the overhead cost. So cant we include a Overhead Cost.
Regards
Jithin
Delay would cause and include daily costs of:
All documented well as proof to alleviate grievances claimed against performance bonding
Thanks again Mike.
But would the Client be ready to say OK to the Acoount System for "Loss and Expence" as we (Contractor) would be maintaining the account system.
Shouldnt we fix unit rate of equipment and manpower with the contract itself. Issue time sheet of everyday of the EOT to prove that we had this many people and equipment working during the EOT period so as to prove the cost aquired during the EOT period.
Regards
Jithin
Hi Jithin
That is much clearer.
If the client has caused a delay of - say - 50 days during the progress of the works and that delay extednded the completion date by 20 days the the usual procedure is to be paid the loss and expense for 20 days within the 50 days delay window.
The "Loss and Expense" is calculated from actual time related costs which will be extracted from the accounts system.
Best regards
Mike Testro
Thanks Mike,
It was what document will help us decide the claim cost or EOT cost which should be already part of Contract so that the Contractor would be at ease.
For example the unit charge / day for a Project Manager.
If the Project Manager had to stay 4 more months than the total project duration in the contract and the delay reason is Client then we can charge the cost per day of Project Manager for 4 months. If the unit rate of all the manpower & equipment is included in the contract then the Client cannot argue about the unit rate when we ask for the compensation.
So if we can list out what documents would help us during claim it would be a learning experience.
Thanks
Jithin
Hi Jithin
Sorry but I do not understand your question.
Best regards
Mike Testro
Email: PPadmin@planningplanet.com
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