Article 36 COMMENCEMENT, TIME TO TAKING-OVER AND EXTENSIONS OF TIME

THE PURPOSE OF THE TIME PROVISIONS

36.1 The purpose of the time provisions is to ensure that the Contractor is afforded adequate time to complete the Works, given the time in which it originally agreed to complete the original scope of work, and that the Employer is assured of a predictable completion Date and of the fact that it retains the right to impose Delay Damages if the Contractor completes the Works or any Section of them after the Time to Taking-Over as adjusted under the Contract. It is normally preferable to reach contemporary agreement on extensions of the Time to Taking-Over.

START DATE

36.2 Unless otherwise agreed, the first Day of the Time to Taking-Over is calculated from the Day after the Start Date.

36.3 Unless otherwise agreed, the Start Date shall be determined as follows:

(a) It is a pre-condition to the commencement of the Works on the Start Date that the Contractor has received (i) the advance payment (if any); (ii) the evidence under Article 13.5; (iii) possession of such Sections of the Site as are required; and (iv) the Notice to Proceed.

(b) The Employer shall issue to Contractor the Notice to Proceed in the form set out in an Appendix (if any) or in a letter identifiable as the Notice to Proceed, once it has received (if applicable):

  1. the Contractor’s advance payment guarantee; and
  2. the Contractor’s performance guarantee.

(c) The Day after which the requirements of Articles 36.3(a) and/or 36.3(b) have been met shall be referred to herein as the “Start Date.”

(d) If the conditions of Articles 36.3(a) and/or 36.3(b) have not been satisfied six months after the Contract Date, each Party shall have the right to terminate this Contract at any time by 14 Days’ notice to the other Party.

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EXTENSION OF THE TIME TO TAKING-OVER AND ADDITIONAL COSTS

36.4 The Contractor shall be entitled to an extension of the Time to Taking-Over and, where applicable, additional payment subject to Article 36.5 for the whole of the Works or for any Section of them if it is or will be delayed either before or after the Time to Taking-Over by any of the following causes:

  1. a cause of delay giving an entitlement to extension of the Time to Taking-Over, including an event of Force Majeure, and, where applicable, additional Costs under any Article;
  2. any suspension by the Contractor to which it is entitled under the Contract, or any suspension, delay, impediment, default or breach of the Contract by the Employer or its agents or any activity, act or omission of any other contractors employed by the Employer preventing the Contractor from proceeding efficiently with the Works; or
  3. any action or inaction of third parties (including, without limitation, public authorities) that the Contractor has not reasonably been able to prevent, which has the effect of delaying the Taking-Over of the Works.

36.5 If the Contractor intends to assert an entitlement to an extension of the Time to Taking-Over under this Article 36, the Contractor shall give a notice to the Employer (the “Notice”) of such intention as soon as reasonably practicable after the Contractor has become aware of the event giving rise to the delay and/or any other likely additional payment claim(s). Repeated Notices are not necessary where it is reasonably obvious that the event has or may have a continuing impact.

36.6 Where practicable, the Contractor shall keep such contemporary records as may be necessary to substantiate any assertion of entitlement to an extension of Time to Taking-Over. The Contractor shall permit the Employer to inspect all such records, and shall provide the Employer with copies as required.

36.7 Within 42 Days of the Contractor giving Notice as set out above (or such other period as may be agreed with the Employer), the Contractor shall submit such further details of its application (if any) that it considers necessary to demonstrate its entitlement.

36.8 The Employer has an obligation to assess or agree appropriate extensions of time as soon as any Notice has been received and, in any event, not later than 45 Days after receipt of any Notice (unless a different period of time is agreed). Alleged failures to give sufficient details or other supporting information are not reasons for failing to give an extension, but may be grounds for not giving the full extension requested. If the Employer decides that in fairness no extension should be granted, it must immediately inform the Contractor at the time the decision is made. In all cases, the Employer must consult with the Contractor about the right to, and/or length of, the extension. In all cases, the Parties should attempt to agree on the result of the Notice.

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36.9 If, notwithstanding Article 36.8, no determination of entitlement has been made under that Article within 60 Days of the Date of the Notice, the full extension applied for will be deemed to be granted. Unless otherwise agreed by the Parties, a late determination by the Employer will not amend the full extension deemed to be granted.

36.10 When determining each extension of time, the Parties shall review any previous determination, but shall not decrease the total extension of time.

36.11 The right to an extension of time relates to the Works as a whole or to Sections. The fact that a particular Section is not on, or alleged not to be on, the critical path for the Works as a whole, is not a valid reason to deny an extension for that Section.

36.12 If practical, the Contractor’s entitlement to compensation (if any) for Costs arising from any extension of time shall be negotiated at the same time as the extension of the Time to Taking-Over.

DIRECTION TO RESCHEDULE

36.13 Where the Contractor’s rate of progress on the Works is too slow to ensure Taking-Over of the whole of the Works within the Time to Taking-Over and there are no circumstances that would indicate that the Contractor is or may be entitled to an extension of the Time to Taking-Over, the Employer may order the Contractor to revise its Time Schedule or Method Statement to show accelerated activity and/or resources leading to completion within the Time to Taking-Over as it then stands. If the Employer is later shown to have been incorrect in its assessment, the additional Costs incurred by the Contractor (if any) will be payable as a Variation.

AGREEMENT TO EARLIER TAKING-OVER

36.14 The Parties may agree at any time to an earlier Date of Taking-Over than that foreseen, and the Contractor will upon agreement to the earlier Date, confirm, if it has not already been agreed, what compensation it claims (if any) for the earlier Taking-Over.

OBLIGATORY REASSESSMENT OF EXTENSIONS OF TIME AT THE END OF THE TIME TO TAKING-OVER

36.15 The period towards the end of the Time to Taking-Over is important and sometimes determinative of whether or not contracts stay within budget or lose money for the Parties. The Parties will often also, as construction activities slow down, be able to undertake a retrospective examination of progress. Accordingly, 90 Days prior to the expiry of the Time to Taking-Over, as adjusted under the Contract, the Employer at its own initiative and within seven Days shall, in consultation with the Contractor, review all the events and circumstances of the Works and shall determine whether or not, all things considered, the Contractor is fairly entitled to any further extension(s) of time. The review shall give full effect to and apply (and shall not shorten) any extensions that have been previously agreed between the Parties or ordered by an arbitral tribunal or CDB.

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36.16 For the purposes of these obligatory reassessments the Employer shall not take into account any failings or alleged failings of the Contractor to submit supporting details or claims in sufficient detail or in the contractual timeframe, but can take into account only such details as it has received from the Contractor or is aware of itself. 21 Days after starting the review, the Employer will send its fully reasoned decision on whether or not the Contractor is entitled to an extension of time to the Contractor with a copy to the CDB.

36.17 Extensions of time can be agreed, determined or instructed before or after the Time to Taking-Over as originally scheduled.

Article 37 DELAY DAMAGES AND BONUs

DELAY DAMAGES

37.1 Delay Damages are payable by the Contractor if the Taking-Over occurs after the Time to Taking-Over. A bonus is payable to the Contractor for Taking-Over earlier than the end of the Time to Taking-Over. Both may be accomplished sectionally as the circumstances require.

37.2 If the Contractor fails to complete the Works or any Section within the Time to Taking-Over as adjusted under the Contract, then the Contractor shall pay to the Employer the relevant sum (if any) calculated in the Contract as Delay Damages for such default and not as a penalty (which sum shall be the only monies due from the Contractor for such default and any other consequences of the delay) for every week that shall elapse between the Time to Taking-Over as adjusted and the Date specified in the relevant Taking-Over Certificate(s), subject to the limit stated in an Appendix (if any). The Parties agree and acknowledge that the value of the Delay Damages so to be paid is estimated here by the Parties because of the difficulty of ascertaining accurately the exact amount of damage prior to the occurrence of any delay.

37.3 If no rate of Delay Damages is stated otherwise in the Contract, the rate of Delay Damages6shall be 0.5% (one half of one per cent) of the Contract Price agreed upon signature of the Contract or, if there is a delay to a Section or some Sections only, 0.5% of the value that the Section or Sections delayed bears in proportion to the value of the whole of the Works for each complete week of delay up to a maximum of 10% (ten per cent) of the Contract Price agreed upon signature of the Contract. Subsequent amendments to the Contract Price will not be taken into account in calculating the rate of Delay Damages or the maximum amount of the Delay Damages.

37.4 The payment of such Delay Damages shall not relieve the Contractor from its obligation to complete the Works or from any other of its obligations under the Contract, but shall be in full discharge of the Contractor’s liability for delay in Taking-Over and any other losses related to that delay. Such Delay Damages shall be the sole and exclusive remedy for late Taking-Over.

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37.5 If the Employer takes over, uses or occupies (whether or not acknowledged as Taking-Over) Sections of the Works, then Delay Damages, if payable, shall be reduced in the proportion that the value of the Section so taken over, used or occupied bears to the value of the whole of the Works. Similarly, a proportional bonus shall be payable for partial occupation by the Employer prior to the Time to Taking-Over.

BONUS

37.6 If the Contractor achieves Taking-Over prior to the Time to Taking-Over as adjusted, the Employer shall pay to the Contractor a sum as a bonus in addition to the Contract Price calculated at the rate as stated in the Contract for every week between the Date specified in the Taking-Over Certificate and the Time to Taking-Over up to the limit set out in an Appendix (if any).

37.7 If no rate of bonus is stated otherwise in the Contract, the rate shall be 0.5% (one half of one per cent) of the Contract Price agreed upon signature of the Contract payable for each complete week that Taking-Over was early, up to a maximum of 10% (ten per cent) of the Contract Price agreed upon at signature of the Contract. If the bonus applies only to certain Sections of the Works, it shall be calculated by reference to the value of the Section(s) so taken over in proportion to the value of the whole of the Works.

Article 38 SCHEDULE OF CONTRACTUAL DATES, TIME SCHEDULE AND REPORTING PROGRESS

38.1 Agreement on the important stages of performance of the Works and monitoring/reporting progress (and problems) are important aspects of turnkey contracts. With a turnkey contract, however, the Contractor has the responsibility and right to manage progress in the most efficient fashion for its organization. Nonetheless, the Contractor undertakes to perform the Design and the Works in accordance with the Contract and also the Schedule of Contractual Dates as set out in an Appendix (if any).

38.2 The Schedule of Contractual Dates shall contain:

  1. the Start Date set out in an Appendix (if any) or otherwise agreed;
  2. the Dates by which the Contractor is obliged to submit to the Employer each stage of the Design and the Dates by which the Employer’s review is required;
  3. the Dates by which each of the permits set out in an Appendix (if any) will be provided by the Party responsible for it;
  4. the Date(s) on which the Contractor will be given possession of the Site or Sections thereof;
  5. milestone Dates (if any);
  6. the Date(s) of Completion of the Works, or Sections of the Works, including the Dates of any Performance Tests; and[Page52:]
  7. the Date(s) of Taking-Over of Sections of the Works in respect of which a separate Time to Taking-Over has been provided in the Contract (or otherwise agreed) and the Date of Taking-Over of the whole of the Works.

38.3 The Dates set out in the Schedule of Contractual Dates may be amended by agreement of the Parties or application of the extension of Time to Taking- Over provisions of this Contract.

38.4 The Contractor shall normally, unless the circumstances do not require it, prepare a detailed programme for performance of the Works and their interrelationship by using the “critical path method” or such other method/schedule as agreed (the “Time Schedule”). The Contractor shall submit the Time Schedule to the Employer not later than two months after the Start Date. The Time Schedule shall be updated monthly thereafter as part of a monthly progress report to reflect any changes to the Time Schedule. The Employer shall be entitled to comment on the Time Schedule and any update thereof and the Contractor agrees to consider in good faith any and all comments made by the Employer.

Article 39 PROGRESS REPORTS

39.1 Unless otherwise agreed in writing as unnecessary due to the nature of the Works, monthly progress reports shall be prepared by the Contractor and submitted to the Employer. The first report shall cover the period up to the end of the first month following the Start Date. Reports shall be submitted monthly thereafter, each within ten Days after the last Day of the period to which it relates.

39.2 Reporting shall continue until the issue of the last Taking-Over Certificate for the Works.

39.3 The progress reports should be suitable for monitoring the progress of the Works. Unless otherwise agreed each report shall include:

  1. charts and adequately detailed descriptions of progress, including each stage of Design, Contractor’s Documents, procurement, manufacture, delivery to Site, construction, erection, testing, commissioning and trial operation;
  2. photographs showing the status of manufacture and of progress on the Site;
  3. the details of the deployment of Contractor’s Personnel and Equipment;
  4. safety statistics, including details of any hazardous incidents and activities relating to environmental aspects and public relations; and
  5. comparisons of actual and planned progress, with details of any events or circumstances that may jeopardize Taking-Over in accordance with the Contract, and the measures being (or to be) adopted (if any) to overcome delays. [Page53:]

39.4 The progress reports will be prepared and understood as evidence of the Contractor’s position on the state of actual completion of the Works at the time the report is made. If the Employer disagrees with any of the contents of a report, this disagreement will be recorded in a letter to the Contractor within 14 Days of the Date of the report, otherwise it will be considered for all purposes to be agreed.

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These figures normally vary from industry to industry and depending on the type of Project, and its individual circumstances. These figures are inserted for certainty, but should be subject to specific negotiation.