2022-05-08（234）Engineering law and the ICE Contracts

18. “A REASONABLE PERCENTAGE ADDITION…IN RESPECT OF PROFIT” ON COST OF WORK OR PLANT. The authors of the form have abrogated their duty by leaving to dispute the important question of the amount of the percentage addition. It is unfortunate that agreement could not have been reached on some necessarily compromise figure for all claims. Presumably the contractor’s levels of profit on the whole original job and on any particularly comparable work included in it, and the normal market profit (if there is such a thing) on work of the particular kind and size, are relevant. It is impossible to generalise as to how these factors should be balanced. but since the percentage is applied to the contractor’s actual costs, no allowance for risks or contingencies should be included.

19. “THE REASONABLE COSTS INCURRED…BY REASON OF ANY UNAVOIDABLE DELAY OR DISRUPTION OF WORKING”. For delay or disruption of working the contractor is not entitled to any payment in respect of profit, as he is for the additional work. This dovetails with cl. 7, which largely removes the contractor’s right to loss of profit for delay attributable to the employer. The contractor is entitled to profit only on the cost of “carrying out… additional work…and additional Constructional Plant”, not on the additional cost of consequential delay to the remainder of the works. Demarcation problems may arise. For example, if the additional work holds up completion, involving extended watching, lighting and supervision costs, then it is suggested that a proportion of those costs, based on the proportion which the volume of the additional work bears to the volume of all the work executed in the extended period, is part of the “cost of carrying out…(the) additional work done” rather than of “delay or disruption of working”. Plant retained on or brought specially to site to carry out the additional work itself attracts the percentage for profit; plant retained on site to carry out other work delayed as a result of that additional work does not.

20. PAYMENTS NOTWITHSTANDING REFUSAL OF CLAUSE 12 CLAIM. See N. 11, 12 and 19.

21. “THE ENGINEER…SHALL SO INFORM THE CONTRACTOR IN WRITING AS SOON AS HE SHALL HAVE REACHED THAT DECISION” (that there is no claim). Presumably it is intended that the engineer shall make his decision within a reasonable time. The advantage to the contractor of being told that the engineer is not allowing a claim is that he may then decide whether or not to go to arbitration before completion (next note). Exercise of the right to require a decision from the engineer under cl. 66 and to go to arbitration if necessary is the only remedy of a contractor where the engineer is loath to make up his mind. Whether or not he agrees with the engineer’s decision the contractor is generally bound to surmount the unforeseen difficulties and complete the works in the meantime at his own cost (N. 8).

22. ARBITRATION ON CLAUSE 12 CLAIMS BEFORE COMPLETION OF THE WORKS. By cl. 66 (2) either party is entitled to arbitration before completion of the works “in the case of any dispute or difference as to any matter arising under Clause 12”. An arbitrable dispute within these words may be raised by referral back to the engineer under cl. 66 if he acts or fails (presumably within a reasonable time) to act under sub-cl. (2), or allows or (N. 21) refuses a claim, including refusal by failing to include a claim in an interim certificate (p. 292, N. 5).

23. No REVERSE CLAUSE 12. The contractor does not have to give back money to the employer if he encounters conditions that are less onerous than foreseeable at the time of tender. But then the contractor is always entitled to take as pessimistic a view of risks as he thinks fit in his tender, or indeed merely to allow for a large profit, subject only to the pressures of competitive tendering. The contractor does not represent to the employer that his rates are not more than cost plus a reasonable profit on the works as they actually have to be constructed.

At the same time, for example, some piles or parts of a length of sewer taken by themselves may be harder to construct than the average foreseeable, due to physical conditions or artificial obstructions, and some easier. The engineer may particularly be entitled to treat all pile driving or at least driving of a related group of piles and the length of sewer as a single operation. He may hold that variation of conditions above and below the average could have been foreseen so that the contractor overall has no claim under this clause.