Responsibility for Delays: Contractor vs. Engineer in Utilizing Provisional Sums

In construction projects, the efficient use of Provisional Sums is crucial for maintaining project timelines and budgets. However, when delays occur in the instruction to utilize these funds, determining responsibility can be complex, particularly when the Engineer instructs the Contractor to submit a proposal while also retaining the option to nominate a subcontractor. In such cases, the question arises: who should be held responsible for the delay?

Understanding Provisional Sums:

Provisional Sums are allowances set aside in the contract for specific work or items that cannot be precisely defined at the time of tendering. They provide flexibility for unforeseen circumstances or scope changes during the project. However, their effective utilization requires clear and timely instructions from the Engineer.

Contractual Framework:

Under contracts such as the FIDIC Red Book, the Engineer typically has the authority to instruct the Contractor to utilize Provisional Sums. This instruction may involve requesting the Contractor to submit a proposal for the intended use of the Provisional Sum. Additionally, the Engineer may retain the option to nominate a subcontractor against the same Provisional Sum.

Responsibility of the Contractor:

When instructed by the Engineer to submit a proposal for utilizing the Provisional Sum, it is the Contractor's responsibility to act promptly and diligently. Delays in submitting proposals may result in project disruptions and cost overruns. Therefore, the Contractor should ensure timely compliance with such instructions to mitigate delays.

Responsibility of the Engineer:

While the Engineer has the authority to instruct the Contractor regarding Provisional Sums, they also bear responsibility for managing the process efficiently. This includes promptly reviewing and approving the Contractor's proposals or, alternatively, exercising the option to nominate a subcontractor if deemed appropriate.

Determining Responsibility:

In cases where delays occur in utilizing Provisional Sums despite the Engineer's instruction, responsibility for the delay must be assessed based on the circumstances. If the delay stems from the Contractor's failure to submit proposals in a timely manner, they may be held accountable for the delay. Conversely, if the Engineer fails to promptly review proposals or exercise the option to nominate a subcontractor, they may share responsibility for any resulting delays.

Conclusion:

In construction projects involving Provisional Sums, responsibility for delays in their utilization must be carefully evaluated based on the actions of both the Contractor and Engineer. While the Contractor is responsible for promptly submitting proposals as instructed, the Engineer must also fulfill their obligations by reviewing proposals promptly or nominating subcontractors when necessary. By working together and adhering to the contractual framework, project stakeholders can mitigate delays and ensure the successful completion of the project.