AUTHOR: Eng. Marilina Placentino
TUTORS: G. Franchi (University), R. Balzarini, D. Di Biasi, E. Ferrari (Firm)
INTERNSHIP: Maire Tecnimont SpA
MASTER: Master in “Contract, Claim and Delay analysis in the construction works” 2018/2019
The Construction Industry is a complex system in which many different shareholders are involved. Since each shareholder has its own interests, the regulation of the Contract and the management of the relationships between the contractual parties could be difficult and often could result in valorous claims leading also to litigation.
The focus of the document is to make an overview of the main issues related to the construction contract regulation, particularly in connection with EPC contractor and subcontractor’s liability. In order to clarify some aspect related to the subcontractor’s claim management, in the document is reported a Case Study concerning a claim arisen during project execution of an engineering, procurement, and construction (EPC) project.Nowadays the condition of the construction market involves figures with a different culture, interests, and different specializations. It is extremely difficult to harmonize the interests of all participants and consequently, the volume of claims increases decade by decade. To minimize disputes and litigation costs deriving from disagreements between the parties, it is important to provide effective management of contracts, negotiating balanced conditions and to improve the claim management in terms of techniques and resources to deploy when inevitable claims arise. This approach is even more important in the field of large engineering and construction projects – as oil and gas processing facilities – which are characterized by a high level of risk.
During execution of works, one of the subcontractors involved has presented a claim alleging substantial costs incurred due to the contractor’s delay, request for additional works and other events that subcontractor considers to be attributable to the contractor. The analyzed case study presents the contractor’s position on the subcontractor’s claim and contractor’s counterclaim, which examines the defaults of the subcontractor, representing the main cause of delays and disruption in the project execution.
The purpose of the document is to demonstrate how important it is to manage properly not only the main contract between the contractor and the client but also between the contractor and its subcontractors with the aim to carry out a project within time limits and according to business profits, and to provide high quality services.