Purpose: A Closer Look
The main objective of this clause is to establish a protocol for scenarios where the Works or a Section don’t pass the Tests after Completion. This is a critical clause because it has both financial and operational implications for the Contractor and the Employer. It serves as a safety net, offering alternative actions that can be taken to resolve the situation.
Why is it Important?
Imagine a scenario where a construction project involves building a dam. The failure of a single test could have severe repercussions not only for the project but also for the communities that the dam serves. This clause outlines the “what next” in such high-stake situations.
Implications: Expanding the Scope
Financial Repercussions: In a construction contract, time is money. A failed test can lead to delays and penalties. However, if the contract specifies a sum for non-performance damages, and the Contractor pays this, the Works can bypass this bottleneck and proceed as if they have passed the tests.
- Example: If a water treatment plant fails its purification test, the Contractor could pay a pre-determined fee to circumvent this failure, allowing the project to move forward while adjustments are made.
Contractor’s Liability: This part of the clause safeguards the Employer. If the Works fail, the Contractor isn’t off the hook. They must make adjustments or modifications, contingent on receiving notification within a pre-defined period.
- Example: If a roadwork project fails its durability test, the Contractor must redo the asphalt mixture. However, the Employer must inform them within the Defects Notification Period to enforce this obligation.
Additional Costs: The Employer must exercise caution as unreasonable delays could give the Contractor a right to claim additional costs. This aspect adds a layer of responsibility on the Employer’s part.
- Example: If the Employer delays access to a site, causing the Contractor to rent machinery for additional days, the Contractor can claim these costs.
Technical Standards and Laws Specific to North United States
When we talk about the North United States, several technical standards and laws come into play.
ASCE (American Society of Civil Engineers): Any construction and testing must adhere to ASCE standards.
ASTM (American Society for Testing and Materials): Material quality and testing methodologies should align with ASTM norms.
IBC (International Building Code): This code sets the minimum public safety standards for building design and construction.
Environmental Laws: Federal laws like the Clean Air Act or Clean Water Act could be relevant, especially if the project involves emissions or waste discharge.
Main Points to Keep in Mind
Immediate Notification
- Always notify the Engineer immediately if the Works or a Section fail to pass any of the Tests after Completion.
Financial Repercussions
- Be aware of the financial implications of failing a test, especially if a sum payable as non-performance damages is defined in the Contract.
Defects Notification Period
- Pay attention to the Defects Notification Period, as certain actions or relaxations in obligations may be triggered during this timeframe.
Rights to Access
- The Employer has the right to delay the Contractor’s access to the Works for retesting or modifications until a convenient time. Be prepared for this potential delay.
Claims and Determinations
- Keep in mind that you can resort to formal claims under Clause 20.1 or determinations under Clause 3.5 if disagreements or disputes arise.
Consult Operation and Maintenance Manuals
- Always refer to the Operation and Maintenance Manuals under Clause 5.7 to ensure that retesting procedures are standardized and consistent.
Time Sensitivity
- Understand that time is of the essence, especially when the Contract specifies the number of days for retesting or adjustments. Delays could lead to additional costs or penalties.
Legal Obligations
- Remember that unfulfilled obligations even after the completion of the project can lead to legal implications under Clause 11.10.
Documentation
- Keep meticulous records of all communications, test results, and actions taken in the case of a failed test. This can be invaluable in the case of disputes or claims.
Interactions with Other Clauses: A Detailed Look
Clause 5.7: Operation and Maintenance Manuals
- Why It Matters: Adherence to the operation and maintenance manuals ensures standardized procedures for retesting. This is crucial for reliability and consistency.
- Illustration: Suppose the clause specifies a particular procedure for testing a water filtration system. Failure to follow the guidelines in the manual could result in a ‘failed’ test, triggering the stipulations of Clause 12.4.
- Why It Matters: Delays in retesting could incur financial penalties for the Contractor. This is intertwined with Clause 12.4, which also involves financial repercussions for test failures.
- Illustration: If the Contractor takes an unreasonable amount of time to rectify a failed test, this could result in delay damages under Clause 8.7.
Clause 11.9: Performance Certificate
- Why It Matters: The need for retesting may arise after the issuance of the Performance Certificate, making the interaction with Clause 12.4 relevant.
- Illustration: The Employer may issue a Performance Certificate under Clause 11.9, but if the Works or a Section fails a subsequent test, the procedures outlined in Clause 12.4 come into play.
Clause 11.10: Unfulfilled Obligations
- Why It Matters: This clause handles responsibilities that extend beyond project completion, overlapping with the contingencies for failed tests in Clause 12.4.
- Illustration: If the Works have been completed but not all obligations are fulfilled (such as passing all required tests), the guidelines set forth in both clauses would apply.
Clause 20.1: Claims
- Why It Matters: Disputes related to test failures could lead to formal claims. This serves as a legal avenue for both parties.
- Illustration: If the Contractor incurs additional costs due to unreasonable delays by the Employer, they can make a claim under this clause.
Clause 3.5: Determinations
- Why It Matters: This clause provides the protocol for formal determinations, particularly useful in case of disagreements or disputes regarding retesting results.
- Illustration: If the Contractor and Employer disagree on the extra costs incurred from a failed test, Clause 3.5 sets the framework for how this disagreement is resolved.
Flowchart
Detailed Explanation of the Flowchart
Start: The process begins with the question of whether the Works or a Section have failed to pass any of the Tests after Completion.
Works or Section fail to pass Tests?: If the answer is “No,” the process ends. If “Yes,” it moves to the next condition.
Relevant sum for non-performance stated?: Checks if the relevant sum payable for non-performance is stated or its calculation method is defined in the Contract. If “No,” the process ends. If “Yes,” it moves to the next condition.
Contractor pays sum during Defects Notification Period?: If the Contractor pays the relevant sum during the Defects Notification Period, the Works or Section are deemed to have passed the Tests and the process ends. If “No,” it moves to the next decision point.
Contractor proposes adjustments?: If the Contractor proposes to make adjustments or modifications, the Employer specifies a convenient time for these to be made. If “No,” the process ends.
Additional Cost due to Employer Delay?: If the Contractor incurs additional costs due to unreasonable delay by the Employer in permitting access, the Contractor is entitled to additional cost plus reasonable profit.
End: The process ends.
Case Studies
Case Study 1: Failed Energy Efficiency Tests in a North U.S. Building Project
Scenario:
A Contractor was tasked with constructing a commercial building in the North United States, designed to meet LEED Platinum energy efficiency standards. After construction, the building failed to meet the required energy efficiency tests.
Clause 12.4 in Action:
- The Contractor had to pay the non-performance damages as defined in the Contract.
- An independent energy audit was conducted to identify the reasons for failure.
- The Contractor was given a new timeline to correct the deficiencies, keeping in line with local building codes and environmental laws.
Takeaways:
- This case emphasizes the importance of understanding the financial and time-sensitive obligations under Clause 12.4.
- The Contractor was liable for not just the remedial work but also the financial penalties.
Case Study 2: Delay in Access Leading to Additional Costs
Scenario:
A wastewater treatment plant in the North United States required specialized tests after completion. The Employer delayed providing access to the Contractor for retesting.
Clause 12.4 in Action:
- The Contractor notified the Engineer of the delay.
- The Contractor was entitled to additional costs plus a reasonable profit, as outlined under Sub-Clause 20.1 and determined by Sub-Clause 3.5.
Takeaways:
- Clause 12.4 allows Contractors to claim additional costs incurred due to unreasonable delays by the Employer.
- The clause’s interaction with Clause 20.1 and Clause 3.5 provides a structured legal avenue for such claims.
Sample Letters
Sample Letter for Contractor Notifying Employer of Additional Costs Due to Delay in Access
[Your Company]
[Address]
[Date]
[Employer’s Company]
[Address]
Subject: Notification of Additional Costs Due to Delay in Access for Retesting – Project XYZ
Dear [Employer’s Name],
As per **Clause 12.4** of our contract for [Project XYZ], we were supposed to be granted access to the site for retesting on [Date]. We have incurred additional costs due to the delay in access.
As stated in **Sub-Clause 20.1**, we hereby notify you of these additional costs, plus a reasonable profit. We kindly request that these be included in the Contract Price.
Please proceed in accordance with **Sub-Clause 3.5** to agree or determine this cost and profit.
Sincerely,
[Your Name]
[Your Position]
Sample Letter for Employer Instructing Contractor on Timing for Retesting
[Your Company]
[Address]
[Date]
[Contractor’s Company]
[Address]
Subject: Timing for Retesting as Per **Clause 12.4** – Project XYZ
Dear [Contractor’s Name],
Following the failure to pass the initial tests, we are providing you with a timeline for retesting as stipulated in **Clause 12.4**. The retesting will be scheduled for [Date].
Please prepare to comply with the necessary adjustments or modifications to meet the project’s standards.
Sincerely,
[Your Name]
[Your Position]
Sample Letter for Communications Related to Clause 12.4 ‘Failure to Pass Tests after Completion’ in a FIDIC Contract
To:
The Engineer
(Copy to Employer)
Date:
[Insert Date]
Subject:
Failure to Pass Tests after Completion – Clause 12.4 of FIDIC Contract
Dear Sir/Madam,
We are writing to bring to your attention that certain aspects of the Works, specifically [describe the Section or Parts], have failed to pass the Tests after Completion as stipulated under Clause 12.4 of the FIDIC Contract.
Details of Failed Tests:
- Test 1: [Describe the test and reason for failure]
- Test 2: [Describe the test and reason for failure]
- Test 3: [Describe the test and reason for failure]
Technical Aspects:
The failure to pass these tests is attributed to [provide a detailed technical explanation]. The impact of these failures on the overall project is [describe the impact].
Consequences and Actions:
In accordance with Clause 12.4, we are liable to [describe the consequences such as payment of non-performance damages, etc.]. We propose to undertake the following remedial measures:
- [Action 1]
- [Action 2]
- [Action 3]
We request your cooperation in granting us access to the Works or Section at a time convenient to the Employer for the purpose of carrying out these remedial measures.
Timeline for Resolution:
We aim to complete these actions and re-conduct the tests within [insert reasonable time frame].
We understand the gravity of this situation and are committed to resolving it promptly. We kindly request your guidance and cooperation in this matter.
Thank you for your attention to this serious matter. We look forward to your prompt response.
Yours faithfully,
[Your Name]
[Your Position]
[Your Contact Information]
Checklists
Checklist for Proficient Execution and Deployment of Clause 12.4
| Step No. | Task Description | Responsible Party | Deadline | Status |
|---|---|---|---|---|
| 1 | Review Clause 12.4 in detail | Legal Team | ||
| 2 | Communicate failure of initial tests | Project Manager | ||
| 3 | Prepare cost estimate for retesting | Finance Team | ||
| 4 | Send notice for additional costs (if any) | Legal Team | ||
| 5 | Schedule retesting | Project Manager | ||
| 6 | Conduct retesting | Quality Team | ||
| 7 | Evaluate retesting results | Quality Team | ||
| 8 | Confirm completion or further action | Project Manager |
Checklist for Applying and Overseeing Clause 12.4
| Step No. | Task Description | Responsible Party | Deadline | Status |
|---|---|---|---|---|
| 1 | Confirm failure of initial tests | Quality Team | ||
| 2 | Review Clause 12.4 for compliance | Legal Team | ||
| 3 | Approve or deny additional costs | Finance Team | ||
| 4 | Monitor retesting process | Project Manager |
Checklist to Guide and Monitor Execution of Clause 12.4
| Step No. | Task Description | Responsible Party | Deadline | Status |
|---|---|---|---|---|
| 1 | Confirm understanding of Clause 12.4 | All Teams | ||
| 2 | Document initial test failures | Quality Team | ||
| 3 | Notify Employer/Contractor as applicable | Legal Team | ||
| 4 | Execute retesting | Quality Team | ||
| 5 | Document retesting results | Quality Team | ||
| 6 | Determine next steps | Project Manager |
Frequently Asked Questions (FAQs) about Clause 12.4
What does Clause 12.4 cover?
- This clause outlines the procedures and implications if the Works or a Section fail to pass the Tests after Completion.
Who bears the cost for retesting under Clause 12.4?
- The Contractor is responsible for the costs, but they may claim additional costs if there are unreasonable delays by the Employer.
Can the Contractor avoid retesting?
- No, unless the Employer fails to give reasonable notice for retesting, in which case the Works or Section are deemed to have passed.
What happens if the retests also fail?
- The Contract may specify non-performance damages. If these are paid, the Works or Section will be considered to have passed the tests.
Is the Contractor liable for delays in retesting?
- Yes, but they can claim additional costs under certain circumstances, as per Sub-Clause 20.1.
What is the role of the Engineer in Clause 12.4?
- The Engineer will make determinations regarding the costs and profits related to retesting.
Can the Employer deny access for retesting?
- Yes, but they must give notice to the Contractor specifying when access will be convenient.
How does Clause 12.4 interact with other clauses?
- It closely interacts with clauses like 5.7, 8.7, 11.9, 11.10, 20.1, and 3.5 for various procedural and legal considerations.
Common Misunderstandings
Immediate Termination: A common misunderstanding is that failing the Tests after Completion immediately leads to contract termination. However, Clause 12.4 provides options for retesting and potentially paying non-performance damages.
Cost Responsibility: Some might think that the Contractor is always responsible for the costs of retesting. In reality, Clause 12.4 allows for claims of additional costs under specific conditions.
Access to Works: Another misconception is that the Contractor has unrestricted access for retesting. However, the Employer can specify when access will be convenient.
Engineer’s Role: The Engineer’s role in determining costs and profits might be underestimated. They play a crucial part in the execution of this clause.
