CONSTRUCTION CLAIM

Construction Claim Under FIDIC

Table of Contents

Construction Claim Under FIDIC3

Background of the Project3

Claim's Main causal Factors4

Overhead Costs under FIDIC Guide Book13

Mobilisation Period16

Construction Period17

Defects Liability Period17

Time - Related Costs18

Valuation of Variation to Avoid Claims19

Engineer's obligations and rights in accordance with the claims for overhead costs20

Role of the engineer under the FlDlC contracts20

Procedure for claims and disputes Procedure for claims25

Conclusion25

References27

Construction Claim Under FIDIC

Background of the Project

A multi story office construction project at (location) has been awarded to (Contractor), with budget allocation of £1525000. The construction process was going smooth, till the government increased the taxes on import in an attempt to reform the tax structure of United Kingdom. Under these new reforms, several non-taxable items that are required/used in construction projects have also fallen in the tax net. This increase the cost more than the estimation, whereas, a slight increase in minimum wage rate has also put extra burden on the contractor, because he assessed that this multistory office building at (location) cannot be completed in allocated budget. Thus, the contractor decides to present a construction claim under FIDIC to the employer in order to continue the construction process, because this will lead to miss the deadline of the project. Whereas, there is a fact that the success of every construction project largely depends upon the coordination between contractor, employer or owner, consultant. However, in every construction project disputes and problems emerge because of difference in opinion regarding the design, description, and method of completion and vice versa (American Institute of Architect, 1997). This makes construction project too complex. However with the introduction of new standards, safety procedures and guidelines, the complexity of already complex construction process increased. Construction is expensive and exhausting activity, and when the huge amounts are involved, the possibility of disputes and contradictory opinion which leads to financial claims also increases. This study in this connection will attempt to analyse how construction claims forms are submitted by the contractor to the client or owner of the project, under the guidance of FIDIC guide book. However, this study will specifically focus on the overhead cost of the project that incur during the completion of the project.

Claim's Main causal Factors

Before describing the overhead costs in general it is important for the contractor to examine some other main casual factors of claim in order to make a proper assessment of the required finance to complete the construction of the project. In the construction industry disputes arise from the claims that are not settled properly, primarily because of the inaccessibility or unavailability of the different interpretation on contract and contemporary record. The best way to avoid the disputes, particularly to reduce its impact, is firstly to understand the main causal factors of claims and then the employer should try to find the pre contract strategy and to improve the monitoring system of the project (Seifert 2005, pp. 149-157). Both parties i.e. the employer with the assistance of the engineer and the contractor should have good and organized records and detailed particulars to ...