Development of Internal Roads Claim

A Claim submitted by the
contractor during project of:
Development of internal
Roads in GAZA
MAHMOUD SOBEH

contents
Background
Contract duration
Issue 1
Issue 2
Issue 3
Documents

Project background
Development of internal roads in GAZA
Infra-structure
$500K
Refugee camp
3 roads 6+8+9
manual labor and bulldozers together

Project background
Parties
Employer contractor
Municipalit
y
Eng.
Association
N&I F
locals

Contract performance time
2020 2021 2022
10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
1/11/20 1/4/21 9/6/21 31/10/21 28/2/22
Planned (contract) duration
Bid closure date
stopping
period actual duration
3/11/20 3/04/21 24/6
12/7
29/6
29/10/2021

Critical path
lighting
poles
Tiles
base-
course
Curb-
stone
sewage
excava
tion
mobili
zation
water
supply
Rain-
water

Variations and change orders
The project involved a set of change orders that had
been agreed upon, and given an additional 33 days of
time. Execution prices have been agreed upon, and
there is no dispute over them.

List of Major Issues and Problems
1. Delay due to the Employer's failure to handover the site.
1.2. Suspension of work by direct order from the employer
3. Material Prices Increase

1. Delay due to the Employer's
failure to handover the site.
a. From the 1st day encroachments problem was existed, and had been noticed
and informed by contractor. (The correspondence below shows that)
b. The contractor started mobilization works, stocking the raw materials, hiring
the work team, and starting to prepare the shop drawings.

Encroachments report (examples)
street 6 Street 8 Street 9

On June 9, 2021, the problem was resolved in Streets 8 + 9, and the contractor was able
to start work on these two streets, and an understanding was reached between the agency
and the contractor in an official meeting, provided that the agency considers positively
the claim for compensation presented by the contractor, and that it removes any
obstruction to work for the same reason that comes in the future, and that the contractor
has the right to compensation in the event of damage as a result of that, as the paragraph
of the minutes of the meeting stipulates that

work interruption period
month
day 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 3 4 5 6 7 8 9 10 11 12 13
st 8+9
st 6
total state
Jun-21 Jul-21
15 days 13 days
5 days

the planned final delivery date for the project was on
October 29, 2021,
after updating the schedule and entering the stopping
work days according to the work reports the delivery
date became January 23, 2022, which means an
increase of 86 days.

Relevant Contract Provisions
The employer's failure to hand over the site led to a breach of the
contractor's right to access the work site, and this right is stipulated in
the following contractual articles:
a) In the contract documents, it was stated in the document called (infra-structure specification),
section1: work site, paragraph 1.1 called (Right of way and work area), as follows:
(The AGENCY will provide all the necessary right of way and will designate
the access Roads to the Site which the Contractor will be permitted to use The
Work area, i.e., the area or areas where the Contractor may set up his offices,
stores, workshops, yards for mechanical plant, etc. and transport depots, will
be shown on the Drawings or designated by the Director of Works).

b) In the contract documents, General Conditions, Article 3b stated
that (IF the Agency fail to hand over the Site to the Contractor within
the period specified or within the period agree in writing, the
Contractor may serve notice on the Agency, as provided for in Article
19, terminating the Contract).

c) When referring to the unified FIDIC contract, we found that the
first duties of the employer are to enable the contractor to access the
work site and possess all its parts at the time specified for the
implementation of the contract, as Paragraph 2.1 entitled Right of
Access to the site states:
(The Employer shall give the Contractor right of access to, and
possession of, all parts of the Site within the time (or times) stated
in the Appendix to Tender.

d) The same paragraph also stipulated the contractor’s entitlement to claim
compensation in the event that the employer was unable to hand over the
site and was exposed to damage because of that, as it was stated in it (If the
Contractor suffers delay and/or incurs Cost as a result of a failure by the
Employer to give any such right or Possession within such time, the
Contractor shall give notice to the Engineer and shall be entitled subject to
Sub-Clause 20.1 [Contractor's Claims] to: (a) an extension of time for any
such delay, if completion is or will be delayed, under Sub-Clause 8.4
[Extension of Time for Completion], and (b) payment of any such Cost plus
reasonable profit, which shall be included in the Contract Price.

Required compensation, issue no 1
Ex. Of Time
•77 days
•28*50%= 14 days
•Total = 81 days
Payment
• Damages for one day=
$225
• Total damages= $18,225

2. Suspension of work by direct order
from the employer
On June 24, 2021, the contractor submitted permission to start
the works as planned in the schedule on Street 8, 9 and in
accordance with the usual daily work procedures, and the agency
engineer agreed to that, and after starting the work, the agency
engineer requested to stop work by his order, after work on the
project was prohibited by the local residents. The problem lasted
for five days, when it was solved by the intervention of the
national and Islamic forces, the municipality, the Engineers
Association, the employer (the agency), and the neighborhood
committees

According to FIDIC, the contractor has the right to claim compensation from the
employer as a result of suspending the works in compliance with the employer's
order, as stated Clause 8.9 Consequences of Suspension:
If the Contractor suffers delay and/or incurs Cost from complying with the
engineer's instructions under Sub-Clause 8.8 [Suspension of Work] and/or from
resuming the work, the Contractor shall give notice to the Engineer and shall be
entitled subject to Sub- Clause 20.1 [Contractor's Claims] to:
A. an extension of time for any such delay, if completion is or will be delayed,
under Sub-Clause 8.4 [Extension of Time for Completion],
B. and payment of any such Cost, which shall be included in the Contract Price

Ex. Of Time
•5 days
Payment
• Damages for one day=
$1475
• Total damages= $7375
equipments

3. Material Prices Increase
a. Rising raw material prices
There are huge price differences for raw materials
between the period of preparing and submitting bid
documents, which was in November 2020, and the
implementation period, which lasted until February
2022.

a. Rising raw material prices
This delay is due to a number of reasons:
1. The length of the period between the closing date of tenders and the
signing of the contract: it reached 150 days.
2. The delay caused by issue 1 + 2 delayed the supply of raw materials
by 86 days
3. Due to the delays, the contractor was forced to purchase raw
materials during the expensive period, after entering the war period
from May 11 to May 23, 2021, and the subsequent closure of the
crossings led to an increase in prices.

b. The decline
of the dollar
price.
The decline in the
price of the dollar
during the project by
11%, as it reached its
lowest level, at the
end of 2021

The problem is that the tender prices are in
dollars and the payments and costs paid by the
contractor are in shekels

According to sub-clause 13.8 of in FIDIC, it is prescribed
that the amounts payable to the contractor shall be adjusted
for rises or falls in the cost of labor, goods and other inputs to
the works, by the addition or deduction of the amounts
determined by the formula. The adjustment to be applied to
the amount otherwise payable to the contractor, as valued in
accordance with the appropriate schedule and certified in
payment certificates, shall be determined from formulas for
each of the currencies in which the contract price is payable.

Calculation of compensation (sample)
‫م‬
‫الصنف‬
‫الوحدة‬
‫الكمية‬
"
A
"
‫السعر‬
‫اثناء‬
‫التسعير‬
‫بالشيكل‬
"
B
"
‫السعر‬
‫عند‬
‫التنفيذ‬
"
C
"
‫قيمة‬
‫الفرق‬
D=C-B
‫اجمالي‬
‫الفرق‬
A*D
‫أوال‬
/
‫مواسير‬ ‫أسعار‬ ‫فروق‬
UPVC
1
‫امطار‬ ‫مياه‬ ‫تصريف‬ ‫مواسير‬
UPVC
‫قطر‬
400
‫ملم‬
‫ط‬ ‫م‬
40
160
240
80
3,200
2
‫امطار‬ ‫مياه‬ ‫تصريف‬ ‫مواسير‬
UPVC
‫قطر‬
315
‫ملم‬
‫ط‬ ‫م‬
40
103
150
47
1,880
3
‫صحي‬ ‫صرف‬ ‫مواسير‬
UPVC
‫قطر‬
250
‫ملم‬
‫ط‬ ‫م‬
115
68
85
17
1,955

‫البند‬
‫المبلغ‬
‫أوال‬
/
‫مواسير‬ ‫أسعار‬ ‫فروق‬
UPVC
34,075
‫ثانيا‬
/
‫و‬ ‫والمناهل‬ ‫المسلح‬ ‫الباطون‬ ‫في‬ ‫المستخدم‬ ‫الحديد‬ ‫أسعار‬ ‫فروق‬
‫االسمنت‬
31,250
‫ثالثا‬
/
‫أسعار‬ ‫فرق‬ ‫نتيجة‬ ‫المستوردة‬ ‫الكهربائية‬ ‫المواد‬ ‫أسعار‬ ‫فروق‬
‫النقل‬
57,500
‫بالشيكل‬ ‫اإلجمالي‬
122,825
‫بالدوالر‬ ‫اإلجمالي‬
$ 37,792

Summary of Required Compensation
Issue
Required Compensation
Compensation ($) Time (days)
Delay due to the Employer's failure to
handover the site
18,225 81
Suspension of work by direct order
from the employer (agency) 7,375 5
Material Prices Increase 37,792 -
Total 63,492 86

Documents
Documents
1.1. Correspondence
2. Contract documents
3. Meeting minutes
1.4. Daily report
1.5. Schedule (planned and revised)
CODING
1.D 1.1 – D 1.21
D 2.1 – D 2.5
D 3
D 4
D 5

Development of Internal Roads Claim

Development of Internal Roads Claim

Recommended

Recommended

More Related Content

Similar to Development of Internal Roads Claim

Similar to Development of Internal Roads Claim (20)

Recently uploaded

Recently uploaded (20)

Development of Internal Roads Claim