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CONTRACT LAWS & CLAIMS

(CASE STUDY OF DISPUTE BETWEEN ATHENS GENERATING COMPANY AND BECHTEL POWER CORPORATION )

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CONTRACT DETAILS

Contract - Construction of 1080 megawatt power plant in New York

( includes installation of 3 gas turbines manufactured by Siemens esting!ouse po

Client - #t!ens generating company

Contractor - $ec!tel power corporation

Sub contractor % Siemens esting!ouse power corporation

&ype of contract - 'C

Contract price - )*++millionContract start date - 1+ t! ,une +001

Contract completion date - 1+ t! #ugust +003

#ctual completion date % 18 t! marc! +00

.i/uidated damage - )000 day turbine

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CONTRACTORS PERSPECTIVE

2eason for delay

i" 4odi5cation in t!e products by t!e client ( as per clause +061 "

ii" &ornado (as per clause 161 7 "

iii" 2egional power outage

i" client suspended t!e use of fuel gas for 3* days due to !ike in price ( a

clause 86* b 9 c "

Contractor also argued t!at daily rate of ) 000 day turbine constituteimpermissible penalty

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CLIENTS PERSPECTIVE

roduct modi5cation are wit!in t!e scope of contractors contract (as per clause

Contractor was aware t!at Siemens tec!nology for gas turbine is immature6( as

6 "

Some of t!e modi5cation are not needed for t!e substantial completion of cont

made for t!e conenience of bot! contractor and sub contractor6(as per clause

:n any point of time t!e actiities are not on t!e critical pat! of work6

$ecause of tornado ; Contractor was entitled to one day of e

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RULING

&!e panel of arbitrators found t!at t!e product modi5cation and prbetterments alleged by t!e contractor were wit!in t!e scope of concontract because it is an 'C contract; t!e time delays and cost cau

implementation of product modi5cations s!ould be borne by t!e co

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Contractors ExpertWitness

.aurie ?ppel;w!o testi5ed t!e t!ings regarding t!e economics ofoperating t!e generating plant at t!e time Contractor claimed6

@er opinion addressed t!e actual damages #t!ens incurred as a result oflate completion rat!er t!an t!e estimate used at t!e time of contract

formation6

Clients Expert Witn

4ic!ael , Aing;a representatie of client;in cestimates used in arriing at t!e daily rate of )0

@e testi5ed t!at t!is !ad been reasonable fcontract formation ; of t!e actual damages #

re

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RELEVANT FIDIC ( EPC / TURNKEY PROJECTS) CLAU

Clause +061 Contractor>s Claim

Clause 161 ( 7" force ma=eure

Clause 86* (b" Contractors work !as been disrupted by t!decision of aut!orities6

Clause 86* (c" Belay caused by aut!orities due tounforeseeable reasons 6

Clause 1361 7ariations 9 ad=ustments (2ig!t to ary "

Clause 6 Subcontractors ( &!e contractors s!all beresponsible for acts of Subcontractor"

Clause *68 Besign errors

Clause +6* employers claim

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FINAL VERDICT

&!e arbitrators found clients testimony credible and rulet!e li/uidated damages clause in t!e contract is enforce

@ence; t!e contractor was awarded remaining contract B'BC&:ND t!e li/uidated damages6(as per clause +6*"

Contract balance E ) +8;303;FF

.i/uidated damages E ) +G;*0;000

rice awarded E ) 1;3*3;FF

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REFERENCE OF THE CASE

Construction Claims #disor

eekly e-letter

7olume-F :ssue-G

+3 No +00

www6constructionclaims6com

www6constructionrisk6com

http://www.constructionclaims.com/http://www.constructionrisk.com/http://www.constructionrisk.com/http://www.constructionclaims.com/

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&@#NA Y?