Dilemma 1:  Submitting a contract claim for delay - Dilemma

 

You are the claims manager of a construction company which is carrying out works under a construction contract with the project owner.  Under the contract, your company is entitled to an extension of time and additional costs for delays caused by the project owner.  However, if the delay is your company’s fault, the contract provides that your company will have to pay liquidated damages to the project owner, and will not be entitled to additional costs.  Your company is 100 days late in completing the project and you are preparing a claim against the project owner for the delay.  There are two identifiable reasons for the delay.  The first is the delayed delivery of materials by one of your company’s suppliers for which your company is responsible under the contract.  The second reason for delay is a variation to the specification by the project owner for which the project owner is responsible under the contract.  When you examine the effect of the delays, you believe that 30 days delay is caused by the project owner’s variation, that 30 days delay is caused by the supplier’s delay, and that it is difficult to ascertain whether the remaining 40 days delay was caused by one of these reasons, or by both of these reasons acting in parallel, or by other unidentified reasons.  When you explain the position to the commercial director of your company (to whom you report), he tells you to claim the full 100 days extension of time from the project owner on the basis that the whole 100 days delay was due to the project owner’s variation.  He tells you not to mention in the claim the supplier’s delay.  He tells you that: “Everyone does it: it’s part of the game.  Anyway, the project owner is going to knock two thirds of our claim off, so that will leave us with approximately 30 days, so that will get us to the correct result in the end.  And if he does not spot it, and gives us more than 30 days, then we get a bit of extra time and money.” 

 

What do you do? 

 

Consider your position, and then go to the answer on the next page.