Eng.

E J Basil Jayasiri Perera

Contracts Manager, K D Ebert & Sons Holdings Pvt. Ltd., Sri Lanka

'cost' ENTITLED FOR THE CONTRACTOR WITH RESPECT TO OMISSIONS

I am grateful to receive replies, clarifications or your actual experience if any,

with respect to the following.
GCC: FIDIC Red Book 1st Edition 1999
Sub-Clauses: 12.4 & 13.1 (d)

1.0 SC 12.4 - Omissions

1.1 What are the costs the Contractor can claim, with respect to 'cost', referred to
in last paragraph of the Clause?
1.2 Can the Contractor claim profit too since this is 'cost' and NOT 'Cost' which
does not include profit as defined in this GCC.

2.0 SC. 13.1 (d) - Right to Vary - Omissions

This will be a Variation, ONLY when the "omission of any work, which will not get
performed, by any other Contractor."
If the Employer, gets the omitted work done by any other Contractor, it will NOT
be a Variation but it will be a breach of Contract.
Under such situation.
2.1 What are the damages/costs the Contractor can claim?
2.2 Can the Contractor claim profit too?Show less
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Eng. E J Basil Jayasiri Perera Contd. from above.

It is evident from above, the Contractor is entitled for PROFIT of any item omitted.

SC 13.1(d)- Omission not considered as a Variation- A Breach of Contract.

Ref. Book on Guide to Project Management and Contract Management issued by the Ministry
of Finance, Government of Sri Lanka.

"When either party to the Contract breach the Contract, the other party can seek relief in
the form of the following legal remedies:
i. Recovery of Damages from defaulting party;
ii. Specific Performance; and
iii. Obtain an Injunction forcing the defaulting party to perform certain actions and/or refrain
from taking certain actions.

Contd. below.
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Eng. E J Basil Jayasiri Perera Contd. from above.
 Damages for Breach of Contract

The main principle on which damages for breach of contract are awarded in Sri Lanka is that
the sum to be awarded should, as nearly possible be a sum which will put the wronged party
in the position which he would have enjoyed if the wrong had not occurred. The amount of
damages should include compensation to the party for ACTUAL LOSSES as well as LOSS OF
PROFIT."

I suppose, the above conditions is applicable not only for Sri Lanka, but for any other
country.

I am pleased to receive, any further clarification or comments.

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Chris Nixon Eng Perera, I would still maintain these are not separate cases of omission.
SCl 12.4 deals with valuation omissions. SCl 13.1 states omissions will be a variation, but
carves out that an omission which is intended to be given to another contractor cannot be a
variation .. QED it is a breach or requires an addendum to the contract. SCl 13.3 final para
underlines this that variations 9including legitimate omissions under the contact ) are
valued under Cl 12 .. which includes the specific detail process to value an omission in SC
12.4 ... tha is back to the starting point. It is then a legitimate omission or a breach (with the
later needing to be normalised by an addendum to contract not a variation). Show less
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Chris Nixon I suggest the "take away" here is to read the contract holistically, rather than
separating and focussing in individual clauses / subclauses.

While SCl 1.2 makes the point Headings are not to be taken account of in interpretation,
they do however provide good guidance on the purpose of a clause or clauses..... several
clauses may deal with the same situation / aspect as in this case Cl 12 deals with
specifically valuations, Cl 13 deals with specifically what can be a variation ... and then
refers back to Cl 12 for the valuation of that variation. Show less
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Eng. E J Basil Jayasiri Perera I am pleased to extend my gratuity to Chris Nixon and
all the others, for participating this discussion and providing detailed comments.

Further to these, I was fortunate to gain absolutely perfect answers with reliabl ...Show
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Todor Unkovski
Dear Basil,

just to finish, regarding general, actual experience with omissions and additions in the
construction contracts.

Nine out of ten contractors, when the Employers/Clients omit some contract work items, do
not react, and in a manner "thank you very much" await Final Accounts to balance
contract's omissions and additions, if any. Only one in ten contractors are reacting with "wait
a minute", there has to be added the following expenses incurred until now...

Case were the Employer/Client omits One Block of Flats, out of Three in the same Project,
 and engage the other contractor, could be dealt in three ways:

a) The contractor agrees with the Employer/Client for the compensation and loss of profit,
b) The Contractor Terminates the Contract as per agreed conditions,
c) The Contractor, for some reasons, accepts new situation and continues outstanding work
like nothing happened.
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Eng. E J Basil Jayasiri Perera Thank you Todor Unkovski for your above comment.

Since Contract is a legal activity, there are lot of things to be monitored and initiated
throughout the entire Contract period, commencing from the Letter of Acceptance ...Show
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Eng. E J Basil Jayasiri Perera Contd. from above.
Few important capabilities of the Contract Administrator/Manager are
1. Close understanding of all the Contract Documents and perfect knowledge
and hands on experience in all the pertinent subjects.
2. Identifying exactly the interpretation of Terms, Clauses and other contents
when there is discrepancy, ambiguity or vagueness, using acceptable way of
interpretation and presenting them in detail to the Engineer with available
documentary evidences.
3. Identifying the exact way of performing any work item and it's quantum and
continuously monitoring them.
4. Identifying claimable situations and serving the Notice followed by the
detailed claim, as specified in the Contract withing the specified Time Bar.
5. It is to be noted clearly that, FIDIC Red Book 1987 specifies direct in SC 2.6
that, "the Engineer should Act Impartially", such obligation is not available in
FIDIC Red Book 1999 or FIDIC Pink Books. As such, --

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Katharina Brinkmann GuB GmbH an omission has to fullfil three criteria to be
considered a variation. The variation procedure defines, the Contractor has to record the
Costs (direct + indirect costs, which cannot be covered by an decrease in the Contract Price
minus savings of increase of Contract Price - within the period of execution - .

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Eng. E J Basil Jayasiri Perera Thank you Katharina Brinkmann GuB GmbH, for your
comment.

My request was not to get clarifications for Omissions, but with regard to the compensation
the Contractor is entitled for an Omission, which is regarded as a Variation and an Omission
which is NOT regarded as a Variation.

Anyway, the comments I received, encouraged me to seek further clarifications, accordingly

now I have received a reply with acceptable documentary evidences, which is noted above.
 I am grateful to everybody who came forward to assist me and hope to receive similar
assistant in future too.Show less
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