By Joseph Salameh, MEng, MSc (PM), PMP – Expert Witness & Certified Arbitrator, CEO at Experts Project Management LLC
The construction industry in the UAE relies on contracts based on the FIDIC Conditions of Contract, or on bespoke conditions of contract sometimes derived from FIDIC.
While the UAE Civil Code does not impose a time bar on notices of claim for time and/or cost, the majority of contracts include a time bar for sending such notices, ranging from 28 days down to 5 days in some contracts. Generally, issuing such a notice is mandatory and a condition precedent to submitting any claim; without it, the Claimant would lose its rights under the conditions of contract.
Generally, the relationship between the Engineer (or Employer) and the Contractor, or between the Contractor and the Subcontractor, is a honeymoon lasting a few months after the commencement date. Despite potential delays from both sides and/or changes to the scope of work, every party strives to keep conflicts to a minimum.
When the notices start
Since time is of the essence in the majority of construction contracts, time lost to delays is not easily compensated, and the injured party starts sending notices of delay and/or of additional time and/or cost. Unfortunately, in the majority of cases, the person receiving such notices becomes very irritated and takes the subject personally. All his subsequent actions then put high pressure on the injured party: sending similar notices, delaying due payments, rejecting or postponing submitted variations, issuing back-charges, and sometimes taking personal actions against the sender.
Such a mentality is widespread in this region, and it is very difficult to convince the receiver that the notice is required under the conditions of contract or subcontract and should not be taken personally. The receiver usually insists that the notice letter be withdrawn and the issue resolved amicably in person, without letters, to maintain a good relationship and a consistent cash flow. When this happens, experience has shown that the result is usually more delays and conflicts, and the parties end up in a greater dispute that may not be resolved amicably.
Why notices feel personal
Notices of claim explain the reason(s) for the delay or change attributed to the Employer, the Engineer or the Contractor. The truth is always hard to accept, and a notice may be seen as an accusation that the receiver has failed in his duties in front of his superiors. This generates a feeling of guilt and a self-defensive reaction.
How to respond professionally
Correspondence is always between the parties, i.e. company to company. It is therefore important to understand that a delay cannot be attributed to one person alone, but to several people working on the project from either party, and the subject should not be taken personally.
It is recommended not to answer the notice immediately, as an immediate reply may reflect a tone of anger that can go out of control and create more complications. Instead, the receiver (or his team) should draft a professional reply to the notice and/or claim, defending his position by considering all the evidence at hand.
Conclusion
Simply put, notices of delay and claim are the professional means of raising a flag to all project parties, so they can take appropriate action, address issues or expedite decisions that eliminate, or at least mitigate, the impacts of the claim event. Notices of delay and claim should therefore be treated as a contractual trigger tool, to be dealt with professionally in the context of business management, apart from personal considerations.
Need help with notices, correspondence or claims?
Experts Project Management LLC drafts and responds to contractual notices and claims for contractors and subcontractors across the GCC.
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