Loss AND Expense
I was recently commissioned to advise on an extension of time for a project in the Mena region part of which involved the deduction section of the works which was then awarded to another contractor.
There has been some discussion in LinkedIn on the subject of “Descoping†so I thought it was necessary to give my thoughts on the subject of the type of claim the contractor may raise in compensation.
The clause applicable in this particular case read as follows:
“If the Engineer issues a Variation to omit part of the Works included in the Work Order, the Authority shall be entitled to instruct other contractors or persons to carry out such omitted work. In which event the Authority shall have no liability to the Contractor for loss of profit, loss of opportunity or any other liability in law for any losses whatsoever from such variation to omit work.â€
The wording of this clause mentions loss and/or losses and even liabilities in law but does not mention the word “expense†which I believe to be significant in that there is complete difference the meaning of the words in dictionary form and in the law.
Meaning of loss: fact or process of losing something.
Meaning of expense: the cost incurred in or required for something.
My interpretation of this clause is that whereas the contractor cannot claim for any loss that he has experienced is fully entitled to claim for the expenses that he has incurred.
The following is a list of the type of expenses the contractor may have incurred in any such situation. This is by no means an exhaustive list of costs incurred.
Cancellation cost of long-term orders for plant and/or materials, although these may be novated to the incoming contractor by agreement.
Payment for specialist equipment that has been ordered for this project only, though they may be resold to the incoming contractor by agreement.
Payment for existing orders and storage on site that are needed for the cancelled work.
Note: The above may constitute significant bargaining chips between your employer and the incoming contractor, particularly with respect to the time factor.
Payment for plant left standing until deployment in the existing works or elsewhere.
Payment for labour resources and supervisory staff left standing until deployment.
Anything else that you can think of that may be relevant.
Mike Testro
Expert Delay Analyst
01986892345
miketestro@outlook.com
open for commissions regarding extensions of time, loss and expense, contractual advice in the construction industry.
Contract Specialist |Chartered Quantity Surveyor, Chartered Construction Manager. FIDIC Certified Contract Manager.
4 å¹´Good luck If you Can get the client to Pay...... but you do have A point
FIDIC Certified Adjudicator, Dispute Avoidance Practitioner; Contracts/Claims Advisor
4 å¹´Hi Mike, a worthwhile approach!
Contract Administrator
4 年All types of expense can be a loss ———- but not all types of loss can be an expense. In the context of cost claims: Expense is only: - the money which ought not to have been expended. Loss is both: - the money which ought not to have been expended. - the money which ought to have been received.
Advice and expert witness services concerning delay & disruption
4 å¹´Depends on what falls under “ any other liability in lawâ€. Please let us know how you get on.