PMIS 354: PMIS for Construction Contract Notice Letters

The FIDIC Conditions of Contracts are used extensively on construction projects in the Middle East and North Africa (MENA) in general and the Gulf Corporate Council (GCC) countries in particular. Claims often arise due to many reasons including but not limited to unforeseen site conditions, delayed response to project’s communications, nonpayment, directed and constructive acceleration, additional work among many others.

Under Clause 20.1, the Contractor must give notice of any claim, whether for time or money, not later than 28 days after the Contractor became aware, or should have become aware, of the circumstances giving rise to the claim. If he does not comply with this rule, he will not receive an extension of time, and he will not be entitled to additional payment, and the Employer s discharged from all liability in connection with the claim.

The claim notice letters should make references to the FIDIC contract clauses that relate to the claim subject. Those could include for example Clause 1.9 – late information, Clause 2.1 – denied or late access or possession, Clause 4.7 – errors in setting out information, Clause 4.12 – adverse physical conditions, Clause 4.24 – fossils, Clause 7.4 – testing, Clause 8.5 – delays caused by authorities, Clause 8.9 – Engineer’s instructions to suspend work, Clause 10.3 – Employer’s interference with Tests on Completion, Clause 16.4 – termination by Contractor, Clause 17.4 – Employer’s Risks, Clause 19.4 – force majeure, Clause 19.6 – optional termination among others.

Great care should be given to the content of those notice letters as they would have direct impact on the follow-on actions that will be taken by the different parties of the FIDIC contract and their authorized representatives. The Contractor’s construction project management team might not have the contractual and legal skills to draft those letters. Therefore, it is highly recommended that claim notice letters are created by the team who have the contractual and legal skills. The article titled “Construction Contract Notice Letters” by “Richard J. Long P.E.” provides examples of many notice letters that can be used on construction contract. (https://www.long-intl.com/articles/long_intl_construction_contract_notice_letters.pdf)

Project Management Information Systems (PMIS) like PMWeb can help Contractors, Project Owners, Consultants, Project Management Consultants, Subcontractors and other vendors to have a repository of all construction contract contractual communications including notice letters. Those letter templates will become available in PMWeb Correspondence module where the user can select the desired letter template and complete the pre-specified fields needed for each letter template.

The Contractor needs also to provide the supportive documents to the events and other items stated in the notice letter. It is highly recommended to create a folder in PMWeb document management repository titled “Notice Letters” and then create a subfolder for each issued notice letter. Those subfolders will be appended with the supportive documents and other particulars that the Contractor will be required to submit within 42 days from the notice letter submission date. Those supportive documents will be attached to the relevant notice letter. Although PMWeb allows linking other PMWeb records and imported emails to the notice letter, but it is recommended to have a PDF version of all those records and emails to be stored in the relevant subfolder. This will enable sending those records and emails as attachments to the notice letter.

One of the good practices that is highly recommended for notice letters is to link the details of the referenced FIDIC contract clauses to the letter. PMWeb Clauses modules allows capturing the details of all FIDIC and non-FIDIC contracts and the clauses of each contract. PMWeb also allows adding notes and other details to better explain the contract clause.

Another recommended practice to ensure the quality of issued construction contract notice letters is the assigning of an audit checklist for each letter. PMWeb allows creating unlimited number of checklists to enable having predefined list of tasks that could be specific for each type of notice letters. The project manager needs to formally check out each listed task to ensure that the notice letter is complete and ready to be issued.

Before formally issuing the construction contract notice letter, the project manager might need to secure internal approvals from the organization’s legal or commercial department or senior management. Those included in the internal approval process might differ depending on the nature of the construction contract notice letter. PMWeb workflow will be used to create the steps required to review and approve the notice letter before it is formally issued. Comments made by each workflow step reviewer will be captured along with the date the review was completed.

If there is a need to share the construction contract notice letter with someone who is not part of the workflow process or even not a PMWeb user, PMWeb allows sending the notice letter via email to those parties. PMWeb Notification module allows sending each notice letter and keeping register of all those issued notifications.

PMWeb report writer will be used to create a log of all construction contract notice letters. The form and format of the register can be designed in any desired format. Graphical visuals can be added to summarize the details of the notice letters like having donuts for notice letter causes and relevant FIDIC contract clauses.