EPC Contract - Delay in Certification, Approval, Payments by Lead Contractor
We have awarded a EPC Contract for carrying out MEP Works by a lead EPC contractor, based on the s/c agreement there are milestones penalties applicable for each indiv...
We have awarded a EPC Contract for carrying out MEP Works by a lead EPC contractor, based on the s/c agreement there are milestones penalties applicable for each individual building ( There are 27 buildings) which is specified in a Annexure. The Annexure has Installation Start date and End date for each building.
The lead contractor has appointed it's own internal consultant team for reviewing the Heat laod calculations, U Values and other design parameters and shop drawings & material submittal, under the pretext of approving the internal engineering team of the lead contractor is delaying the approval process and asking to resubmit again and again.
The main reason for delaying the approval process is the lead contractor has delayed in handing over site and there is no site access provided as per the milestones specified in Annexure which has a penalty applciable for each building.
The Design concept is also being revised as 85 % of time has elapses, there is a condition precedent that the lead contractor has to issue Architectural drawings and design parameters within 2 months of signing of subcontrcat agreement for all buildings, as of date there is a delay in the submission of the same by lead contractor for each building.
The Lead contrcator is also at default in certifying the payment certificates and release of payments as per contract payments terms which is stipulated as below in Special conditions of Contract:
Payment Mielstones : 1. 5 % of subcontract price upon approval of agreed design and fabrication drawings
2. 60% of subcontract price upon supply and receipt of materials under subcontract items at site with evidence of the same
3. 25 % of subcontract price on successfull installation of s/c items at site
4. 5% of subcontract price on successfull commissioning of s/c items at site
5. 5% of subcontract price o upon receipt of final documentation such as all data, drawings, documentation and operating manuals and maintenance manuals.
Payments for progress invoice to be made through L/C which shall be done within 50 days from date of approval of invoice and the invocie should be certified within 7 days of submission.
UP TO 6 month from Jan to June there was a delay in certification and payments , From July to November the invocies are not certified and returned back in november under the pretext that there is a revised invoicing procedure to be implemented and all the incoices from july to novemeber to be revised as per new format which they are stating is in line with the payment milestones as listed above and the new invoicing procedure is asking for a item by item pricing and weighatge for every component of equipments or material to be supplied and installed as Ïtem rate contract".
The invocing procedure and progress measurement was approved by lead contractor based on which the payments and certifications were made earlier, now after 85 % time has elapsed is the lead contractor fair enough to reject , returned back the invoices .
As per contrcat terms and conditions there is no interest applicable for delayed payments, nor any prolongation cost for extension, moreover the contract stipulates that the s/c should ensure that it carrys out work where work front is available and it will not have full access to all buildings at all times.
There is no contratcual relationship between the client and the subcontractor as per special conditions of contract.
There are severla notifications send to the lead contractor for dleayed certifications and payments, delay in site access, ammending the milestones dates, delay in approval of drawings, design calculations, material approvals, variations approvals based on new design concept as well as a detailed cause and effect study as per SCL Protocols has being submitted.
Under the light of such circumsatnces as listed above , please provide valuable advice and comments of the following
1. Payments
2. Variations
3. EOT
4. LD's
5. Prolongation Cost
6. Suspension
7. Termination