DEFECTS LIABILITY AND TAKING OVER CLAUSES COMPARISON W.R.T DIFFERENT CONTRACT AGREEMENTS VIS. CPWD,FIDIC,NEC,AIA

1. DEFECTS LIABILITY PERIOD
AND TAKING OVER
CONTRACTS CLAIMS MANAGEMENT
Submitted By: GROUP 13
Arpan Wasan: PP18023
Shashank Chorage: PP18055
Rohith Anand: PP18060
Somesh Koradi: PP18069
Mansi Thakker: PP18075
Shivam Sood: PP18085
Sourabh Kori: PP18097

2. CPWD- DEFECTS DURING DLP CLAUSE 17
• If the contractor or his working people or servants shall break, deface, injure or
destroy any part of building in which they may be working
• Any building, road, road curb, fence, enclosure, water pipe, cables, drains,
electric or telephone post or wires, trees, grass or grassland, or cultivated ground
contiguous to the premises.
• On which the work or any part is being executed.
• Or if any damage shall happen to the work while in progress, from any cause
whatever.
• Or if any defect, shrinkage or other faults appear in the work.

3. • Within 12 months (6 months in the case of work costing Rs. 10 lacs and below except Road
work)
• After a certificate final or otherwise of its completion shall have been given by the E-C as
aforesaid arising out of defect or improper materials or workmanship
• The contractor shall upon receipt of a notice in writing on that behalf make the same good at
his own expense or
• In default the E-in-C cause the same to be made good by other workmen and deduct the
expense from any sums that may be due or at any time thereafter may become due to the
contractor, or from his security deposit or the proceeds of sale thereof or of a sufficient
portion thereof.
• The security deposit of the contractor shall not be refunded before the expiry of 12 months (6
months in the case of work costing Rs. 10 lacs and below except road work) after the issue of
the certificate final or otherwise, of completion of work, or till the final bill has been prepared
and passed whichever is later.
• Provided that in the case of road work, if in the opinion of the Engineer-in-Charge, half of the
security deposit is sufficient, to meet all liabilities of the contractor under this contract, half of
the security deposit will be refundable after 6 months and the remaining half after 12 months
of the issue of the said certificate of completion or till the final bill has been prepared and
passed whichever is later.
• In case of Maintenance and Operation works of E&M services, the security deposit deducted
from contractors shall be refunded within 1 month from the date of final payment or within 1
month from the date of completion of the maintenance contract whichever is earlier.

4. CPWD Handing Over Clause 8
• Within ten days of the completion of the work, the contractor shall give notice of such
• completion to the Engineer-in-Charge and within thirty days of the receipt of such notice, the
Engineer-in-Charge shall inspect the work and if there is no defect in the work, shall furnish
• the contractor with a final certificate of completion.
• Otherwise a provisional certificate of physical completion indicating defects (a) to be rectified
by the contractor and/or (b) for which payment will be made at reduced rates, shall be issued.
• But no final certificate of completion shall be issued, nor shall the work be considered to be
complete until the contractor shall have removed from the premises on which the work shall
be executed.

5. CPWD Handing Over Clause 5.17.3
• Occupancy Certificate: The Engineer-in-Charge shall obtain the Occupancy
certificate with the help of concerned Architect/Consultant before handing over
of buildings where ever applicable for the budgeted works. For all works, the
Engineer in Charge shall also ensure that all the “Completion”/”As Built
drawings” drawings of services i.e. Water supply, Drainage, E & M services are
handed over to the Client as well as to the maintenance unit invariably. In case if
consultant is engaged, the responsibility will be as per the agreement signed
between the Engineer in Charge and the Consultant but overall responsibility
will be of the Engineer in Charge. For deposit works, responsibility will be as per
the MoU.

6. DLP in NEC (CORE CLAUSE 4), COST REIMBURSABLE TYPE
• According to NEC, a defect is a part of the works which is not as stated in
the works Information or not in accordance with applicable law or the
accepted design.
• Until the defects date, there is an obligation on both the supervisor
and contractor to notify each other as soon as they are aware of a defect.
The defects date is the date until which the contractor is liable to rectify
any defects and this is typically 26 or 52 weeks from the completion of the works.
• The defects correction period is set out in the contract data and defines the
maximum period within which the contract must rectify a notified defect,
although the contractor is required to rectify defects, whether they are notified
of it or not.
• Different defects correction periods can be specified for different types
of defects.

7. • If notified defects are not rectified within the defects correction period,
they may be rectified by others and the cost reimbursed by
the contractor.
• At, or just after the defects date the supervisor issues a defects
certificate, which either certifies that there are no remaining patent
defects, or lists any uncorrected defects. The only circumstances when
the defects certificate might not be issued on the defects date is if a
previously notified defect has a defects correction period that ends
after the defects date, in which case it is issued on that later date.
• The parties are permitted to agree that certain defects need not be
rectified, and in this case the contractor must submit a quotation for
reduced prices, an earlier completion date or both, and an adjustment
is then made to the works information.

8. Taking Over in NEC Clause 35
• 35.1:
The employer need not to take over the works before completion date if it is
stated in the contract that he is not willing to do so, Otherwise Employer takes
over the works not later than 2 weeks after completion.
• 35.2:
The employer may use any part of the works before completion has been certified.
if he does so, he takes over the part of the works when he begins to use it except if
the use is
for a reason stated in the works information or
to suit the contractor’s method of working.
• 35.3:
The project Manager certifies the date upon which the employer takes over any
part of the works and its extents within one week of the date.

9. AIA: Between Owner and Contractor (Cost of work plus
fee with GMP)
Article 8 : Costs not to be reimbursed
• Cost to repair defective work, and other costs to comply with contractor’s
warranty obligations under the contract, other than the cost to repair defective
work under the warranty obligation which is performed post-final completion
by the contractor on behalf of a defunct Subcontractor and such cost does not
exceed the GMP.
Article 15: Misc. Provisions
• 15.6.12: When any nonconforming work is found, the entire area of affected
work involved shall be corrected unless contractor can completely define the
limits of non conforming work, except to the extent that to do so would
constitute economic waste, in which event, owner shall be entitled to an
equitable adjustment of the cost of the work credit for such defective work.
DEFECTS LIABILITY PERIOD

10. • Additional testing, sampling, needed to define non conforming work shall be at
contractor’s expense.
• Contractor shall employe owner’s independent testing lab, or a mutually
satisfactory testing lab if required.
• All corrected work shall be at contractor’s expense.
• Extra architectural services required by contractor to analyze nonconforming
work shall be paid for by contractor.
Article 15: Misc. Provisions Contd..

11. Date of Substantial Completion-AIA
• As time is of essence of this agreement, the contractor acknowledges and
recognizes that the owner is entitled to full and beneficial occupancy and use
the completed work following expiration of contract time,
• Owner may enter into binding agreements demising all or part of premises
where work is to be completed
• Owner may have entered into financing agreements based on contractor’s
achieving substantial completion of work within contract time
• if contractor fails to complete the work within contract time, owner will sustain
extensive damages and serious loss.

12. 4.3: The contractor shall achieve substantial completion of the entire work not later than
number of days decided in contractor (in calendar days or calendar date from date of
commencement of work).
4.2.2
• weekly meeting or more if required by owner to review the progress.
• if contractor is behind schedule, in good faith shall be given 30 days to be back on
schedule
• if still lags and not in contractors control, owner shall give 3 days to take whatever
action to be taken
• after these 3 days if still lags shall terminate the contract

13. FIDIC DNP CLAUSE 11
11.1 Completion of Outstanding work and remedying defects
•During the DLP the contractor is required to
a) Complete any outstanding work on the date stated in TOC within such reasonable time as
instructed by engineer
b) Execute all work required to remedy defects or damages as may be notified by the employer on
or before the expiry date of the defects notification period for the work or section
•Works and documents completed
– Fair wear and tear accepted
– Complete all outstanding work in TOC
– Remedy defects and damages notified by the end of DNP
•Remedy works at contractors cost
•Extension to DNP
–MAX 2yrs or
–Suspension cl-8,8/16.1-to be deducted from the 2yrs.

14. •Failure to remedy
–Reasonable notice
–Carryout work himself or by others.
–Contractor has no responsibility
–Reduction in contract price
–Recover all sums paid and costs/financial
•Removal
–Further tests
–Right of access
–Contractor to search

15. 11.2 Cost of Remedying Defects
● The term DLP is defined in sub clause 1.1.3.7 as ‘the period for
notifying defects in the work’ and is calculated from the date of taking
over certificate (S.Cl 10.7)
● At the expiry date of the DLP the work shall be in the condition
required by contract (fair wear and tear is accepted)
● Outstanding Work and remedying defects shall be executed at the risk
and the cost of the contractor if work is attributable to:
○ Any design for which the contractor is responsible
○ Plant, Material, Workmanship not complying with contract or
○ Failure by contractor to comply with any other obligation.
If and to the extent that such work is attributable to any other cause. The
contractor shall be notified promptly and S. Cl. 13.1 (variation) shall apply

16. 11.3 Extension of DNP
• New Provision within FIDIC 1999.
• Allows DNP to be extended if a defect or damage prevents the Work, Section or a
major item of plant being operated.
• It states that if the Works, Section or a major item of Plant cannot be operated for
a certain number of days , then the employer is entitled to require the Defects
Notification Period to be extended by that number of days.
Sub-Clause 2.5:
• states that a notice relating to the DNP has to be given before the expiry of that
period.
• The Employer must give particulars specifying basis of the claim and the amount of
time required.

17. ● If the Contractor is not responsible for the defect or damage , the remedial
work would constitute a variation and entitle the contractor to additional
payment, including compensation for the extension to the DNP.
● DNP cannot be extended by more than 2 years.

18. 11.4 Failure to remedy defects
•If the contractor fails to remedy within a responsible time, a date may be fixed on
by which the defect or the damage is to be remedied. The contractor shall be given
reasonable notice
•If the contractor fails to remedy the defect the employer may
• Carry Out the work himself or others in a reasonable manner on the cost of
contractor.
• If major and substantial failure to rectify, terminate.

19. 11.5 Removal of Defective work
•If the defect or damage cannot be remedied expeditiously on the site and
the employer gives consent the contractor may remove from the site for the
purpose of repair such items of the plant
11.6 Further tests
•If performance is affected, request repetition of any of the test described in
the contract
•The requirement shall be made by notice within 28 days after the defects or
damages remedied

20. FIDIC-TAKING OVER (Cl.10.1)| Red| Silver| Yellow
• Except as stated in sub-clause 9.4 (failure on pass tests on completion) works shall be taken over by employer
when
• The Works have been completed in accordance with the Contract, including the matters described in Sub-Clause
8.2(time for completion)
• A Taking-Over Certificate for the Works has been issued, or is deemed to have been issued in accordance with
this sub clause.
• The Contractor may apply by notice to the Engineer for a Taking-Over Certificate not earlier than 14 days before
the Works will, in the Contractor’s opinion, be complete and ready for taking over. If the Works are divided into
Sections, the Contractor may similarly apply for a Taking- Over Certificate for each Section.
• The Engineer shall, within 28 days after receiving the Contractor’s application:
• Issue the Taking-Over Certificate to the Contractor, stating the date on which the Works or Section were
completed in accordance with the Contract, except for any minor outstanding work and defects which will not
substantially affect the use of the Works or Section for their intended purpose (either until or whilst this work is
completed and these defects, OR
• Reject the application, giving reasons and specifying the work required to be done by the Contractor to enable
the Taking-Over Certificate to be issued. The Contractor shall then complete this work before issuing a further
notice under this Sub- Clause.
• If the Engineer fails either to issue the Taking-Over Certificate or to reject the Contractor’s application within the
period of 28 days, and if the Works or Section (as the case may be) are substantially in accordance with the
Contract, the Taking-Over Certificate shall be deemed to have been issued on the last day of that period.

21. FIDIC-TAKING OVER (Cl.10.2)| Red| Silver| Yellow

23. Thank You!