Detriments of Meddling With The Engineer's Claims-Related Contract Administration Roles
Detriments of Meddling With The Engineer's Claims-Related Contract Administration Roles
Abstract
INTRODUCTION
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PROBLEM STATEMENT
Regardless of the entity assigned to fulfill the Engineer’s role, the
effectiveness of the contract administration process, as handled by any such entity, is
likely to be influenced by the level of authority assigned or afforded by the owner to
the Engineer through the relevant construction contract provisions. Therefore, it is
vital that owners’ contract drafting practitioners be wary of the impacts of
haphazardly meddling with the Engineer’s authority/role assignment so as not to
cause detriments to the contract administration process.
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Extent of Duties The Employer shall appoint the The Engineer does not represent the Employer for
Engineer who shall carry out all purposes.
the duties assigned to him in
the Contract.
Amending The Engineer shall have no
Contract authority to amend the Contract
The Engineer is not authorized to amend the
Specified or The Engineer may exercise the Contract, but he is deemed to act for the Employer.
Implied authority attributable to the
Authority Engineer as specified in or
necessarily to be implied from
the Contract.
Stipulated If the Engineer is required to
Limitation of obtain the approval of the
Authority Employer before exercising a
specified authority, the If the Employer wishes to impose constraints on the
requirements shall be as stated Engineer’s authority, these constraints must be
in the Particular Conditions. listed in the Particular Conditions, so as to avoid
having to seek the Contractor’s agreement to
Condition on The Employer undertakes not further constraints
Further to impose further constraints on
Limitation of the Engineer’s authority, except
Authority as agreed with the Contractor.
Exercising Whenever the Engineer The Employer’s approval shall be in writing and
Authority exercises a specified authority shall not be unreasonably withheld or delayed.
for which the Employer’s
approval is required, then (for However, when the Contractor receives an
the purposes of the Contract) Engineer’s communication for which the
the Employer shall be deemed Employer’s prior approval was required, the
to have given approval. Contractor is not entitled to query whether it was
approved.
Engineer’s Except as otherwise stated in The role of the Engineer is thus not stated to be that
Capacity these Conditions, whenever of a wholly impartial intermediary, unless such a
carrying out duties or role is specified in the Particular Conditions.
exercising authority, specified
in or implied by the Contract,
the Engineer shall be deemed to
act for the Employer.
Authority to Except as otherwise stated in The main exception is the authority to instruct
Relieve these Conditions, the Engineer Variations, because they may include omission of
has no authority to relieve any work.
either Party of any duties,
obligations or responsibilities
under the Contract.
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CASE STUDY
The objectives of this section are twofold. Firstly, it aims at testing the
possibility of the deduced levels of authorities to actually coexist in practice.
Secondly, it presents a conceptualization of the organizational factors that have a
bearing on facilitating the meddling with the Engineer’s authority on projects. In
serving these purposes, the full record pertaining to a recent construction dispute case
related to a major residential-towers complex was examined. This large-scale project
was recently developed in one of the construction-vibrant countries of the Middle
East and North Africa (MENA) region. Both the Engineer and the general contractor
on the project were reputable local firms, with considerable experience in the locality
of the project. The examination involved a thorough review of the contract conditions
template adopted by the project owner, a real-estate firm recognized as being a
regional leader in the development of mega-sized projects. In addition, the review
included the hundreds of correspondence made available as part of the case
arbitration proceedings, a process that was required under the contract to be
conducted in accordance with the applicable rules and regulations of the International
Chamber of Commerce. Relevant observations related to the Engineer’s authority
being constrained or meddled with can be withdrawn as follows:
• Transferred Authority. The owner assigned for himself the responsibility
for granting extensions of time and notifying both the contractor and the
Engineer of what may in his opinion be reasonable. The granting of any
such extension is stated to follow due consultation with the Engineer and
contractor. Similarly, among several other instances, the owner carried the
responsibility to direct the contractor to vary the work.
• Limited Authority. The owner has retained two additional entities: an
American-based project management firm, which was later replaced by a
Turkish-based one, and a British-based cost/claim consulting firm. Both
entities played certain roles related to claim administration, among other
roles related to other aspects of contract administration. While the project
management firm was mentioned in the construction contract as a
participant to whom communication can be addressed, the other entity
operated more in a backstage mode. No descriptions of the split in roles
between the Engineer, on one side, and the project manager, on the other,
were made. That is, the construction contract terms made reference to the
Engineer only (or the owner in the case of a transferred authority), when
describing actions to be taken on behalf of the owner. The limitation of the
Engineer’s authority can be observed from the actions exercised by each
(engineer or project manager) vis-à-vis matters such as those related to
time-schedule reviews, variation valuations, etc. In general, the Engineer
can be said to have operated in a mail-man capacity on such subjects.
• Diffused Authority. Interesting circumstances seem to have prevailed, in
which the Engineer’s authority can be viewed to have been intentionally
diffused. This was in connection with the administration of contractor-
submitted claims. To this effect, while the contractor was directed to
submit additional-payment claims to the Engineer pursuant to a time-bar
requirement, there was no stipulation as to the entity responsible for
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exercise the relevant specified or implied authority, as in the case of the example
given above.
In-House
Employer’s
Representative PM QS/CC TC
Team
Roles Channeled
Employer
Architect/Engineer
Transferred Authority
Limited Authority
Diffused Authority
Challenged Authority
Contractor
Contractual Relationship
Typically Required Consultation
Employer’s Internal Coordination
Employer’s Induced Consultation
Contractual Correspondence
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CONCLUDING REMARKS
The work presented in this paper focused on the possible detriments
associated with effecting deviations to the authorities and roles that are customary to
be handled by the Engineer under standard conditions of contract. The paper does not
argue against the owner exercising the discretion to play a more active role in
administrating the construction contract, particularly in relation to contractor-raised
claims and disputes. Rather, it acts as an eye-opener to all participants that may end
up being assigned to take part in this process. That is, it highlights the need to have
the assigned roles properly streamlined in order to avoid encountering confusions or
deadlocks with how claims may progress along the resolution mechanism’s timeline.
Furthermore, the presented findings serve to raise awareness on the part of the
contractor as to the critical need of conducting a thorough review of the owner’s
drafted contract conditions at the tendering stage. As such, the early detection of
possible ambiguities in the authorities and roles stipulated to be performed by the
Engineer and other participants employed by the owner can present an opportunity to
have them clarified and possibly revisited prior to the signature of the construction
contract.
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