CONSTRUCTION CLAIMS MANAGEMENT

TRAINING

CASE STUDIES OF CONTRACTOR’S CLAIMS

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INSTRUCTION TO THE TRAINEES:

Conduct detail assessment on the submissions of claims submitted in accordance
with the Contract, the prevailing law and actual site condition

I. Relevant Clauses from the Conditions of Contract;

Notice of Claims 53.1 Notwithstanding any other provision of the Contract, if the
Contractor intends to claim any additional payment pursuant to
any Clause of these Conditions or otherwise, he shall give
notice of his intention to the Engineer, with a copy to the
Employer, within 28 days after the event giving rise to the claim
has first arisen.

COPA The Contractor shall also state on which Clause or Clauses of

the Conditions of Contract his claim is based.

Upon the happening of the event referred to in Sub-Clause 53.1,

the Contractor shall keep such contemporary records as may
Contemporary 53.2
reasonably be necessary to support any claim he may
Records
subsequently wish to make. Without necessarily admitting the
Employer's liability, the Engineer shall, on receipt of a notice
under Sub-Clause 53.1, inspect such contemporary records and
may instruct the Contractor to keep any further contemporary
records as are reasonable and may be material to the claim of
which notice has been given. The Contractor shall permit the
Engineer to inspect all records kept pursuant to this Sub-Clause
and shall supply him with copies thereof as and when the
Engineer so instructs.

Contractor to 44.2 Provided that the Engineer is not bound to make any
Provide determination unless the Contractor has
Notification and (a)within 28 days after such event has first arisen notified the

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Detailed Engineer with a copy to the Employer, and

Particulars (b)within 28 days, or such other reasonable time as may be
agreed by the Engineer, after such notification submitted to the
Engineer detailed particulars of any extension of time to which
he may consider himself entitled in order that such submission
may be investigated at the time.

Extension of 44.1 In the event of:

Time for (a) the amount or nature of extra or additional work,
Completion
(b) any cause of delay referred to in these Conditions,

(c) exceptionally adverse climatic conditions,

(d) any delay, impediment or prevention by the Employer,

(e) other special circumstances which may occur, other than

through a default of or breach of contract by the Contractor or
for which he is responsible,

being such as fairly to entitle the Contractor to an extension of

the Time for Completion of the Works, or any Section or part
thereof, the Engineer shall, after due consultation with the
Employer and the Contractor, determine the amount of such
extension and shall notify the Contractor accordingly, with a
copy to the Employer.

Not Foreseeable 12.2 If, however, during the execution of the Works the Contractor
Physical encounters physical obstructions or physical conditions, other
Obstructions or than climatic conditions on the Site, which obstructions or
Conditions conditions were, in his opinion, not foreseeable by an
experienced contractor, the Contractor shall forthwith give
notice thereof to the Engineer, with a copy to the Employer. On
receipt of such notice, the Engineer shall, if in his opinion such

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obstructions or conditions could not have been reasonably

foreseen by an experienced contractor, after due consultation
with the Employer and the Contractor, determine

(a) any extension of time to which the Contractor is entitled

under Clause 44, and

(b) the amount of any costs which may have been incurred by
the Contractor by reason of such obstructions or conditions
having been encountered, which shall be added to the Contract
Price,

and shall notify the Contractor accordingly, with a copy to the

Employer. Such determination shall take account of any
instruction which the Engineer may issue to the Contractor in
connection therewith, and any proper and reasonable measures
acceptable to the Engineer which the Contractor may take in the
absence of specific instructions from the Engineer.

Payment in Event 66.1 If any circumstance outside the control of both parties arises
of Release from after the issue of the Letter of Acceptance which renders it
Performance impossible or unlawful for either or both parties to fulfil his or
their contractual obligations, or under the law governing the
Contract the parties are released from further performance, then
the parties shall be discharged from the Contract, except as to
their rights under this Clause and Clause 67 and without
prejudice to the rights of either party in respect of any antecedent
breach of the Contract, and the sum payable by the Employer to
the Contractor in respect of the work executed shall be the same
as that which would have been payable under Clause 65 if the
Contract had been terminated under the provisions of Clause 65.

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II. Relevant Provisions from the Ethiopian Civil Code are;

A. Force Majeure

Art. 1792. - Force majeure.

(1) Force majeure results from an occurrence which the debtor could normally not
foresee and which prevents him absolutely from performing his obligations.
(2) Force majeure shall not exist where the occurrence could normally have been
foreseen by the debtor or where it renders more onerous the performance by the
debtor of his obligations.

Art. 1793. - Cases of force majeure.

The following occurrences may, according to the circumstances, constitute cases of force
majeure:

(a) the unforeseeable act of a third party for whom the debtor is not responsible; or
(b) an official prohibition preventing the performance of the contract; or
(c) a natural catastrophe such as an earthquake, lightning or floods; or
(d) International or civil war; or
(e) the death or a serious accident or unexpected serious illness of the debtor.

B - Unforeseen circumstances

Art. 3183. - Principle.

(1) Where circumstances which could not be foreseen on the making of the contract upset the
balance of the contract, the party contracting with the administrative authorities shall perform
his obligations where such performance remains materially possible.
(2) Such person may, however, require that the administrative authorities with which he has
contracted assist him in overcoming the supervening difficulties by sharing in the loss arising
from such circumstances.

Art. 3184. - Upsetting of Contract.

The balance of the contract shall be deemed to be upset where new circumstances impose on the
party contracting with the administrative authorities’ additional obligations which certainly
surpass the extreme limits which. could be expected by the parties on the making of the contract.

Art. 3185. ~ Unforeseeable Events.

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(1) An event shall be deemed to be unforeseeable where it could not reasonably be envisaged by
the parties on the making of the contract.
(2) An event shall not be deemed to be unforeseeable where it is due to the act of the person who
avails himself thereof.
(3) The fact that an event was not foreseen may be invoked by reason of unforeseeable
consequences or an unforeseeable extension of events which had already happened on the
making of the contract;

Art. 3286. ~ Unforeseen difficulties.

(1) Where, in the performance of his contract, the contractor encounters material difficulties of
an absolutely abnormal nature, unforeseeable at the time of the conclusion of the contract, he
may require that the contract be revised.

(2) The administrative authorities with whom he has contracted shall in such case assume at their
charge a part of the exceptional expenses due to such unforeseen difficulties, unless they
prefer to cancel the contract.

(3) The provisions of this Title relating to cases of unforeseen events shall apply in such case
(Art. 3183-3189).

Art. 1734 of the Civil Code of Ethiopia, Common intention of the parties
(1) Where the provisions of a contract are ambiguous, the common intention of the parties
shall be sought
(2) The general conduct of the parties before and after the making of the contract shall be
taken into consideration to this effect.
Art. 1738 of the Civil Code of Ethiopia, Interpretation in favor of the debtor
(1) In cases of doubt, a contract shall be interpreted against the party who stipulates an
obligation and in favor of the party who assumes it.

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Case Study 1, EOT Claim, Delay due Effect of COVID-19

I. Contractor’s Statement of Case

1. The Contractor in relation to this claim head states that during the execution of the work on
December 12, 2019 a pandemic disease called COVID-19 acute respiratory disease caused
by coronavirus outbreaks in Wuhan city identified by WHO as a Public Health Emergency of
International Concern (PHEIC) on January 30, 2020. In relation, the Contractor suffered
delays and incurred cost in mobilizing resources and most of his staff were not able to return
to the project from China after New Year vacation. In relation, the Contractor submitted
notification and its effect of inability of his staff to the project from China
2. Further, following the discovery of the disease in Ethiopia the federal government as well as
regional government declared state of emergency that further affected overall execution of
the work. Likewise, different countries have taken their own rules and regulations and such
rules and regulation will affect the execution of the work.
3. The delay suffered by the Contractor in connection with the COVID-19 is construed as
unforeseeable condition that an experienced contractor could not foresee. Accordingly, the
Contactor is entitled for an extension of time pursuant to Sub Clause 44.1 (e) of the GCC.
Further, the delay suffered in effect of the State of Emergency and other local prohibitions
are construed as physical obstruction that entitles the Contractor for an extension of time
under Sub Clause 12.2 and Sub Clause 44.1(b) of the GCC.
II. Contractor’s Contractual Framework

1. The Contractor has generally relied on/considers that the following provisions of the contract
are relevant to his claim for EOT due to the alleged delay due effect of COVID 19.
a) Sub-clause 12.2: Not Foreseeable Physical Obstructions or Conditions
b) Sub-clause 44.1: Extension of Time for Completion, item (b), (d) & (e)
III. Delay Analysis/Cause-Effect Analysis

1. The Contractor in his cause-effect analysis of this claim head asserts that following the
alarming increase of infection and death rate of COVID-19 as of January 22/2020, the
Chinese government has taken strict control measures, population flow is now

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constrained, and most of people are forced to quarantine in their home and are not
allowed to go out. In relation, the captioned project has been affected considerably.

2. The Contractor further mentioned that on January 24/2020, many of the Contractor’s project
staffs went home for Chinese holiday before January 20/2020, as most of them in team 2 and
team 3 have not been back home for 2 years, for this year, they all went back home for
holiday and the remaining staff were very small. Based on the original thought, those staff
were supposed to return in the beginning of February 1/2020, and to resume normal
construction, however, due to that the virus is highly infectious and could spread fast, based
on an attitude of being responsible for local people and to avoid the risk of virus transmission
in Ethiopia. Then, we decided to extend the return date until the episode gets controlled.
3. He further mentioned that in effect of the COVID, team 2 and team 3 couldn’t resume
excavations works timely and assignment of Bridge construction group delayed. Further, for
one of the critical paths of the project, purchase and delivery of equipment for the Bridge
construction affected and same is reported to the Engineer by way of letter Reference: -
20204-0036-20 with date February 04/2020.
4. The Contractor asserts that on February 17/2020, three project staffs return to Ethiopia and
they were immediately quarantined on arrival to Addis Ababa. Then the Contractor received
notice from Chinese center for disease control and prevention (CCDCP) on February 22/2020
that there were another two infected persons in their flight within China and lately it is
identified. Then the Contractor was notified to take high attention and forbidden to arrange
any person to return until the epidemic is overwhelming. In effect, the rest of 20 staffs were
not able to return to their position temporarily, in addition, the purchased goods and materials
delayed and the Contractor reported the case by way of letter Reference: 20200301-0044-20
with date March 01/2020.
5. The Contractor further mentioned that Ministry of Health of Ethiopia confirmed the first case
of infection on March 13/2020 and two persons were found in Bahir dar within March/2020
and in March 30/2020, Region of Amhara and Tigray has closed their borders for public
transport. Hence, the Contractor forwarded official advice to all staffs through letter
Reference: 200331-0086-20 with date March 31/2020 and advised all staffs to stay the Easter
holiday within the camp.

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6. He added that after the discovery of COVID-19 in Ethiopia, the Contractor commenced
implementation of COVID-19 protocols directed by Ministry of Health and Ethiopian Public
Health Institute. Among others, the Contractor availed additional sanitary facilities for
employees, provide face masks, recruited nurse for close follow up, get testing facility and
monitoring the health of employees and various actions.
7. The Contractor states that on April 8, 2020, the Government of Ethiopia, through the
Attorney General announced the declaration or decreeing of State of Emergency
Proclamation No 3/2020 in favor of preventing the spreads of the disease. On the other part
regional governments also decreed their own rules and regulations to be followed. Sub
Clause 5.1 [Language and Law] of the GCC and CoPA the law of the country or the law in
force is the Federal Democratic Republic of Ethiopia. Pursuant to Sub Clause 26.1
[Compliance with Statutes, Regulations] of the GCC the Contractor is under obligation to
confirm in all respects and execute and complete the Works. Accordingly, the Contractor is
under obligation to comply with the applicable laws transmitted whether before and after the
submission of bid and commenced the implantation of the content of State of Emergency.
The declared state of emergency among others incorporates prohibitions and obligations
imposed by law. The full set of state of emergency can be found with the following
address:https://adisabeba.embaixadaportugal.mne.gov.pt/images/COVID_State_of_Emergen
cy_Implementation_Regulation_v1-after_CM.pdf.
8. The Contractor further asserts that under the Contract provisions of Sub Clause 8.1
[Contractor’s General Responsibilities], 19.1 [Safety, Security and Protection of the
Environment] and 34.8 [Epidemics] of the GCC and CoPA, the Contractor is under
obligation for the safety of his operations and activities including specific health, safety and
environmental obligations by ensuring the suitable arrangements for the welfare and hygiene
requirements and prevention of epidemics. However, the encountered pandemic and
subsequent actions incorporated in the State of Emergency is of different nature and beyond
the prevention method specified in the contract.
9. He additionally mentioned that during all the time the Contractor has been doing all his effort
to mitigate the disease by providing the required cleaning tools. Further, the Contractor
forwarded regulation regarding prevention of COVID-19 to project staffs through letter
Reference: -200628-0188-20 with date June 28/2020.

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10. The Contractor further states that the Woreda epidemic center has taken samples from 45
project workers on August 14/2020 and two of the tested Consultant staffs have showed
positive on August 20/2020 and taken to the Woreda. Then, the Contractor was informed to
avoid personal contact within the project and the work has been stopped for 20 days.
11. He further indicated that concurrently a flight ET 684 from Addis to Shanghai on August
17/2020 found six confirmed cases, which caused the ET 684 flight canceled on August
31/2020 and other five cases tested positive from ET 684 flight on October 06/2020 and ten
cases tested positive from ET 684 flight on October 13/2020 and flight test on ET 684
October 20/2020 showed another 11 cases. Finally, Civil Aviation administration of China
suspended the ET 684 flight for additional weeks. As a result, since October 26/2020, ET 684
has been suspended for nine weeks. As a result, mobilization of Bridge professionals
becomes difficult mainly it becomes difficult to get Air ticket for near future, even for
December/2020. Having noted the situation, the Contractor by way of letter Reference: -
20201030-0297-20 with date October 30/2020 reported the matter to the Engineer and the
Employer.
12. Further, the Chinese government has introduced new policies to strictly control the issuance
of new passports and visas. The new policy is trying to limit the number of people to go
abroad to reduce the risk. Evidently, it has created new challenge for the bridge team
members to issue the passport and visa and the Contractor raised this problem to China head
office and request them to support and convince the immigration department. The Bridge
team members are from different provinces may have some differences and the Contractor is
from Jiangxi province. In this vein, the Contractor reported the case by way of letter
Reference: -201130-0332-20 with date November 30/2020.
13. The Contractor further asserts that apart from submitting notices, program and reminders, the
Contractor has been submitting contemporary records.
14. Finally the Contractor has summarized his submission by mentioning that the delay suffered
by the Contractor in connection with the COVID-19 is construed as unforeseeable condition
that an experienced contractor could not foresee. Accordingly, the Contactor is entitled for an
extension of time pursuant to Sub Clause 44.1 (e) of the GCC. Further, the delay suffered in
effect of the State of Emergency and other local prohibitions are construed as physical

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obstruction that entitles the Contractor for an extension of time under Sub Clause 12.2 and
Sub Clause 44.1(b) of the GCC.
15. The Contractor asserts that the delaying impact of COVID-19 started from the very early in
February 1/2020 and intends up to composing this claim. Whereas, for this claim submission,
the Contractor only considered the effect until January 2021.
16. The Contractor further mentioned that the bridge work is the critical activity of the project
since 2018 the delay of Team II and III, and most importantly the delay due to bridge team
mobilization. In relation, the Contractor has only managed to mobilize the bridge team
starting from January 2021 whereby the Contractor managed to mobilize the bridge concrete
engineer having resorted the ticket and visa issue.
17. The Contractor concluded that he considered the period from February 1/2020 (whereby the
delay started) up to January 31/2021 (where the bridge team partly mobilized) and hence, the
quantum becomes 365 calendar days.

IV. Summary of Remedy Sought

1. The Contractor alleges in his aforementioned claim head that he hereby requests Engineer’s
determination of 365 calendar days extension of time pursuant to the provision of Sub
Clause 12.2 and Sub Clause 44.1 (b) & (e) of the GCC in connection delay suffered in effect
of COVID-19 disease.

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Case Study 2, EOT Claim Due to Frozen Account of the Company

I. Description of Claim

EOT Claim, Delay due to frozen account of the Company

II. Contractor’s Contractual Framework

The Contractor has generally relied on/considers that the following provisions of the contract are
relevant to his claim for EOT
a) Sub-clause 12.2: Not Foreseeable Physical Obstructions or Conditions
b) Sub-clause 66.1 : Payment in Event of Release from Performance
c) Sub-clause 44.1: Extension of Time for Completion,
d) Article 1792 (1), Article 1793 and Article 1771 of the Civil Code of Ethiopia.

III. Delay Analysis/Cause-Effect Analysis

The Contractor has argued that the freezing of the Contractor’s account by court order has led
him to non-performance. Following, the Contractor claimed that the freezing of the Contractor’s
account is a Force Majeure. The Contractor relying on the above legal and contractual
framework, presented the breakdown of the delay suffered in a tabular format under five
descriptions. These are:

 82 calendar days for reason that 100% frozen account of the Contractor account from
August 27, 2017-November 17, 2017;
 30 calendar days for reason of mobilization of resources (Manpower, Material and
Equipment) and reorganizing the project (November 18, 2017 - December 18, 2017);
 50 calendar days for reason of 40% frozen account of the Contractor from December
19, 2017-April 24, 2018;
 13 calendar days for reason of 20% frozen bank account of the Contractor from April
25, 2018 to June 30, 2018.
 15 calendar days for reason of time spent to collect the release of 20% money and
inject to enhance the progress of the project;

To this end, the Contractor has claimed for a total of 190 calendar days due to frozen account of
the company in accordance to Sub-Clause 44.1, 12.2 of the Conditions of the Contract and Civil
Code of Ethiopia,.

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Case Study 3, Financial Claim, Payment for Intermediate Excavation

I. Description of Claim

Payment for Intermediate Excavation

II. Contractor’s Contractual Framework

a) Sub-clause 1.1 of the COPA, Sub – Clause 2.6 (a) of the GCC
b) Item 42.03 (b) of the Standard Technical Specification, BOQ item 42.03 (b)
c) Article 1734, Article 1738 of the Civil Code of Ethiopia.
III. Delay Analysis/Cause-Effect Analysis

There exists an ambiguity in the Contract whether intermediate excavation is to be paid

separately or not. The Contractor said that under Clause 4204, Division 4000 of the Technical
Specification, excavation is classified into different categories of:
4204 (a) Common Excavation, 4204 (b) Intermediate Excavation, 4204 (c) Rock Excavation
 Under item 42.03 of the Technical Specification, different pay items are stipulated for
each class of excavation, including pay-item 42.03 (b) for intermediate excavation. This
pay item is neither amended nor deleted in the Particular Specification.
 The Particular Specification clarified the weighting to be adopted while measuring
intermediate excavation by stating “…an adjustment factor of …1.10 for intermediate
excavation…”
 The bidding document stipulated by the Employer offers opportunity for bidders to tender
a separate rate for intermediate excavation for BOQ item No. 42.02 (b) and the
Contractor tendered a rate of 121.00 ETB/m3
 Meanwhile an ambiguous statement is inserted under Clause 4204 (b) Intermediate
Excavation, of the Particular Specification, stating “This Clause shall be deemed to be
ineffective…”
 Invalidating the class of intermediate excavation is not the common intension of the
parties. Hence, as per Article 1734 (1) of the Civil Code of Ethiopia, the common
intention of the parties when the Contract Agreement is signed was that there shall be a
separate payment for intermediate excavation.
 There exists ambiguity/doubt in the Contract Document. Hence, according to Article
1738 (1) of the Civil Code of Ethiopia, a contract shall be interpreted against the party
who stipulates an obligation (i.e against the Employer) and in favor of the party who
assumes it (i.e the Contractor).
 Finally the Contractor requested a separate payment for intermediate excavation due to
him as per pay item 42.03 (b).

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