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Hi,
Viewpoint in my case, the scenario is this, offshore work;
1) EPIC contractor has contracted work for 12 months with owner.
2) EPIC contractor has subcontracted the major item (mechanical equipment) for 8 months to a vendor.
3) Subcontractor for the major item has (mechanical equipment) failed to deliver in 8 months, instead 16 months. a major delay for EPIC contractor.
4) EPIC contractor asked for contract extension and owner agreed, including price adjustment.
5) Owner handed LD to EPIC contractor due to delay as per contract requirements.
Question:
The owner has agreed for the contract extension and handed the LD? Isn't it LD are applicable when owner refused any extension, recovery or acceleration?
Comments are welcomed.
Regards,
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Hi Wilfredo,
I believed in this case, the owner has agreed to grant you an EOT and price adjustment to prevent time from being at large. Approval or granting of an EOT does not automatically relieved you from the original contract obligations and liabilities.
It is very clear from your statement above that the Contractor did not managed the EPIC sub-contract very well, hence the dalay of 12 months and as Mike mentioned on his comment, the only way to minimized your loss is to passed the LD to your subcon.
Hi,
The project was handed to be monitored and it was delayed by 12 months. Performing an analysis has shown that the project has the following events:
1) EPIC subcontractor did not submit any substantial schedule progress for 14 weeks, thus the EPIC contractor has a flat liner schedule which alarmed the owner. (The owner has reacted after 14 weeks and the EPIC contractor did not manage to assert its rights to the subcontractor)
2) As far my knowledge the EPIC contractor has not imposed LD to the subcontractor, I was stopped from here. (Why did the EPIC subcontractor not imposed the LD to the subcontractor, since the contract stated it clearly? As mentioned I was stopped from here)
3) I was only informed the contract stated LD shall be imposed upon failure of completion to agreed contract end date. (A normal contract condition)
4) The baseline was revised twice, due to the delay of EPIC subcontracor, and recovery plan was submitted and approved by the owner. (The owner has approved the recovery plan without any impact to owners cost)
5) EPIC contractor has submitted an extension of time due to the further late delivery and shall impact the installation schedule. Owner has agreed to EOT including cost contract variances and after two weeks LD was handed to EPIC contractor. (The owner has the right to impose the LD since the delay is not excusable due to the late engineering works of the EPIC subcontractor. The EPIC contractor has the right to ask regarding the LD, as the contract end date was superseded by the EOT unless EOT has clauses regarding the LD to the original contract.)
My suggestion is to identify the delay causes and ownership and clarrify the contract statement. I was given a new project :), no idea if I have done something wrong...
Thanks for all.
Hi Wilfredo
Parties to a contract are at liberty to strike a new bargain at any time they like by changing the original agreement.
It is quite common for an EoT to be awarded with no cost implications but releif from LD.
This one is a little different because it seems to be the other way round.
The EPIC contractor will no doubt be passing his losses to the defaulting Vendor - the fact that these are a pre stated LD sum will make things easier - unless of course the sub-contract states differently.
Best regards
Mike Testro
Hi Wilfredo,
Interesting subject! Based on the above scenario, I think the owner has rightfully and legally acted within the contract terms and applied the LD to recoup the additional cost incurred (price adjustment and damages due to delay). In the first place the Owner has no choice but to grant the contractor an EOT so that they could finish the project without further delay. I do not know why the Owner agreed with the price adjustment if you think of culpability, the Contractor clearly did not do his homework. Offshore projects are tricky and resource driven, the number of workers are normaly limited based on the number bunkers or beds they can accomodate offshore. The subcontractor's failure to deliver is also the contractor's failure.
Email: PPadmin@planningplanet.com
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