A multi billion construction contract is awarded to a Work Package Contractor with Prime Sum are awarded to Designated/Nominated Subcontractor to complete the project. According to the Main Contract between WPC & PDP (Project Delivery Partner) of this Project, WPC should submit a detailed Master Work Programme to PDP within one month after Site Possession Date.
As times goes by, it has been a year that the tracking, monitoring, review and reporting of work progress to Client i.e the Government is based on Non-Baseline Master Work Programme. WPC has failed to obtain a baseline Work Programme on this Project.
My question: As a PM of PDP, what is the potential arbitration implication of using Non-Baseline Work Programme to the Contract administration especially on Extension of Time (EOT) & Liquidated Ascertain Damage (LAD) claims related matter that may happen in the future? Saving Changes...
Not really a question for lawyer. PM could prevent this before lawyer is taking charge over this matter. Above predicament happens in most construction contract administration that eventually may lead to arbitration. While PM is the leader in managing the Project and thus the Contract or the Agreement, knowledge in contractual administration related event is necessary for competent PM. The PM in construction field should familiar with this. Saving Changes...
Yes a PM should be "familiar" with contracts and arbitration. Your question is "what is the arbitration implication..." and I am saying that is more a question for a lawyer or perhaps the contract/procurement department than a PM because "implications" are subjective, yet they need to be quantified legally in this example in my view. I have project managed construction projects before, and we both have MBA's, but I have to be honest, I have no idea what the question is about. Let me consult a lawyer ;-) Saving Changes...
Henry HattenrathProject Consultant| Tectonic Engineering MSA LLCNew York, Ny, United States
As described, the contract is in-progress for one year without a Baseline Schedule from the contractor [Seller] that can be accepted for approval by the Project Delivery Partner [Buyer.] Based on US contracting standards, upon award by the Buyer, the Seller is committed to the specified contract milestones and dates as well as the LADs identified for milestone(s). Despite not having an approved Baseline Schedule from the Buyer, the Seller continues to progress contract work and to submit invoices for work completed.
Most typically the LADs is limited to substantial completion, which may not be achieved for quite some time. Applying LADs can only be initiated by the Buyer after the milestones is passed and the amount is determined for each day delay in meeting the milestone. Even then, arbitration is not yet a viable action because the terms and conditions in the contract for performance have not been exhausted. The performance process includes demonstrating several Buyer notifications of deficiency to Seller and the Seller’s repeated failure to correct the deficiency.
Most contract general/supplemental terms and conditions address the process that ultimately leads to arbitration before litigation. In the interim, the Seller continues to progress contract work and to submit invoices for work completed. At this point, the Buyer’s actions are limited to withholding payments on invoices until the Seller provides a Baseline Schedule can be accepted for approval. Saving Changes...
Henry, is withhold payment on invoices until the Seller provide a Baseline Schedule, a vested right in the Contract as per U.S contracting standards? Saving Changes...
Henry HattenrathProject Consultant| Tectonic Engineering MSA LLCNew York, Ny, United States
Working with the contracting officer, the PM [Buyer] can withhold payments to Seller and provide notification to the Seller. The Seller's Baseline Schedule is required to demonstrate the planned value of work to Buyer, for Seller to present to Buyer the actual value of progress made by Seller, which will be reflected in monthly invoice requests to Buyer, and for Buyer to substantiate the actual earned value for completed work. If the Baseline Schedule is not approved, there is no way to contractually determine the amount of progress payment the Buyer is obligated to pay the Seller.
Working with the contracting officer, the PM [Buyer] can withhold payments to Seller and provide notification to the Seller. The Seller's Baseline Schedule is required to demonstrate the planned value of work to Buyer, for Seller to present to Buyer the actual value of progress made by Seller, which will be reflected in monthly invoice requests to Buyer, and for Buyer to substantiate the actual earned value for completed work. If the Baseline Schedule is not approved, there is no way to contractually determine the amount of progress payment the Buyer is obligated to pay the Seller.
Thank you for the reply. Appreciate it. Saving Changes...
