By: Dawson Jenner, Binnington Copeland & Associates legal consultant (email@example.com)
Throughout my dealings with the various role players in the mining industry, be they employers, contractors or sub-contractors, I am often amazed at the parties’ total lack of interest in utilising their contracts as a project management tool.
In an all too common occurrence, after the contract has been signed by the respective parties, it is, quite literally, thrown into the bottom drawer of the project manager’s desk only to see the light of day once a dispute has inevitably arisen. By then, however, it is often too late and the parties have no choice but to turn to their legal advisors for advice, at which time the damage has already been done.
In light of such a undesirable circumstance it is astonishing that so few parties are au fait with the contents of their contract and that in some cases many of the project teams have never even read the contract.
Let us, for the purpose of illustration, consider the most common claim on any large project – a claim by a contractor for an extension of time with associated. The Society for Construction Law in the UK, on 16 October 2002, published the delay and disruption protocol, which exists to provide guidance to the parties involved in construction and engineering works in respect of dealing with time and delay related manners.
The protocol can thus be used, and should be used, as a “best practice guide” for handling extension of time claims. Modern day construction and engineering contracts in many respects echo these recommended practices from within their pages and have, to a large extent, incorporated the guidelines of the protocol to provide a step by step process for effectively dealing with such claims as and when they arise.
The process for the submission, evaluation and subsequent payment of such claims differ from contract to contract but the underlying principles remain consistent. The procedure namely provides as follows:
1. Within a specified period of becoming aware its claim (or when the contractor should have become aware) the contractor is required to notify the employer of its intention to submit a claim.
2. Within a further period the contractor is then required to submit its final detailed claim.
3. The project manager then has a period of time to determine such claim.
This is a simple yet effective process for notifying, submitting and determining claims; however even a process as simple as this is rarely used. In my experience, for a myriad of reasons, what often unfolds is a reluctance by the contractor to put in notifications and where claims are notified they are rarely submitted within the prescribed periods.
Furthermore, the submission of claims is often regarded by the employer not as a mechanism for effectively resolving claims but rather as an instrument manipulated by contractors to make undue profit on the jobs by taking advantage of the employer through creative pricing and manipulation of the construction programme. This is especially true where a particular project is substantially behind schedule and consequently running considerably over budget. The submission of claims by contractors, in this instance, is frequently met with considerable hostility by the employer.
I have also found that the parties often forgo the available contractual mechanisms in favour of what is often termed an “amicable settlement approach.” While I am a stern advocate for the settlement of claims as opposed to the more formal route of adjudication or arbitration one must be careful not to relinquish one’s contractual rights in perusing this alternative route. The parties are best advised to protect themselves contractually in the event that the negotiations do not go as planned. There is no reason, to my mind, why the negotiation cannot function parallel to the contractual submission of the claim.
What then can we do to avoid this problem, the write provides the following recommendations:
1. All parties should have a working knowledge of the provisions Contract;
2. Parties should not spurn away from the Contract but rather embrace the provisions and procedures contained therein to facilitate and support the project management process;
3. Parties should ensure compliance with the terms of the agreement least they find themselves in the unfortunate position of having lost an otherwise enforceable entitlement;
4. Parties should not, however, limit themselves to the contract as the contract can never be a wholly encompassing document, providing the solution in each and every situation. Accordingly there is no substitute for an amicable Client-Contractor relationship with a primary focus on “getting the job done.”
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