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DISpUTeS IN CONSTRUCTION pROjeCTS.

Any construction project is a complex and competitive environment, where all stakeholders interact with different views, knowledge and processes of

construction. Further, each participant has its own profession, goals and motivation to make the most out of this complex and dynamic environment. With this degree of diversity and complexity among the participants,

conflicts are inevitable, which may quickly turn into disputes if not managed in time. Disputes are the main factor which prevents the successful execution of the construction projects.

In the Sultanate of Oman, most construction contracts entered into use Standard Documents for Building and Civil Engineering Works, usually referred to as the Standard Forms of Contract. The two editions currently in use are Third Edition (in English, July 1981) and Fourth Edition (in Arabic, 1999). The settlement of disputes & arbitration clause (no. 67) in Standard Form of Contract has been described in a simple and non-controversial form.

Like the trend prevailing in rest of world, the construction projects in Middle East countries are gradually becoming prone to complications and disputes, as size and nature of projects are getting bigger as well as more complex. As per Arcadis Global Construction Disputes Report 2016, the dispute value in 2015 was US$82 (from US$76.7 in 2014) and average length

of dispute in 2015 was 15.2 months (from 15.1 months in 2014) in Middle East Region (Source: Arcadis Global Construction Disputes Report 2016 - https://www.arcadis.com).

As per the report, the most common cause of disputes in the region remained failure to properly administer the contract followed by poorly drafted or incomplete and unsubstantiated claims. Incomplete design information or employer requirements were the third cause in the list.

The construction companies, which find difficulty to comprehend, manage and present their claims to opposite party or in dispute resolution forum, are increasingly taking support from Claim Consultants. These Claim Consultants are supporting clients and their legal advisors to manage construction disputes ranging from its

avoidance at early-stage to arrival at binding settlement at last stage. These consultants coordinate among client's top management, contracts department, project site teams, legal counsels and audit people, and provide techno- contractual services in the form of consulting as well as strategic advice, independent analysis and expert evidence at dispute resolution forum.

CLAiMS & DiSPUTES iN A CONSTRUCTiON PROjECT In any construction project, there are mainly three participants i.e. owner, contractor and engineer. Contractor generally claims for delays, additional costs for extended period, unforeseen circumstances, disruption & loss of productivity, change of scope & variations, and damages against suspension or termination. Similarly, owner has its share of claims in the form of delay-liquidated damages, deficient or defective work, negative variations and negligence in performance claims. Since,

owner as well as contractor is generally reluctant to accept the claims of opposite party, and therefore, claims later take shape of dispute among the parties.

In all the construction claims, Delay Claims are the most complex and disputed claims; as contractor claims for entitlement of Extension of Time whereas owner imposes Liquidated Damages on the same case. Therefore, a Delay Analysis based on Critical Path Method is undertaken to understand and assign owner's and contractor's liability for delays and associated damages. Depending upon the project circumstances; any suitable methodology (i.e. Time Impact, As-Built But-For

and Windows analysis) is adopted; which considers planned versus actual durations, labor and equipment resources, means and methods, contractual requirements, for its analysis. The Delay Analysis is admissible in dispute resolution forum including court of law, in most of the countries.

The objective of Delay Analysis is to have an equitable allocation of responsibility of various delays among parties, which is essential for resolution of entire gamut of delay disputes. After the analysis undertaken on software (on MS Project or Primavera), the delays are divided into the categories of: Compensable Delays, Non-excusable Delays, Excusable Delays and Concurrent Delays. The responsibility for each delay is then apportioned either to owner, contractors, any third party or to force majeure etc.

Masin Projects can provide its expert services in preparation and submission of Delay Analysis Report, in order to establish the cause-effect relationships of each party's actions or inactions and the resulting delays attributable to project owner, contractors, any third party or to force majeure etc. The outcome of analysis is shown in simple language & graphic description to make it simplified and easily understandable, even by non- technical observers. This analysis along with Expert Testimony by professionals in the meeting/ amicable settlement/ arbitration proceedings can be used as an independent reference point.

Rohit Singhal is the Managing Director - India, South East Asia and Middle East, Long International. Masin Projects (www.masinproject.com) is

a Claim Consultancy and Contract Management firm; and is having professional team with experience in critical projects in infrastructure, oil & gas, energy, power, highways, and buildings sectors. With its closely coordinated offices in Muscat, Dubai and India, Masin is undertaking many engineering and construction dispute and arbitration cases, on both national as well as at international levels. Masin is the local partner of Long International (www.long-intl.com), USA for India, Middle East & South East Asia regions.

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Publication:OER Dossier
Date:Feb 26, 2017
Words:867
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