QUANTIFYING THE FINANCIAL EFFECTS OF TERMINATION – Practical Considerations

Introduction

Most standard form construction contracts contain provisions under which the employer can terminate the contractor’s employment for default. Default of the contractor can arise for several reasons. The events that entitle the employer to terminate should be clearly set out within the contract.

Notwithstanding the reasons for termination, quantifying the financial effects and the monies due to, or from, a party can be problematic, which may lead to disputes and the expenditure of additional monies to expedite recovery.

The purpose of this article is to identify some of the basic principles to consider when quantifying the effects of termination, either as the engineer, the parties to a contract or as a third party (collectively hereinafter referred to as the “Assessor”). Reference is made to the termination provisions of the FIDIC Red Book 2017 (“Red Book”), however this article intends to identify principles that can be adopted generally.


ABOUT THE AUTHOR 

Michael Berrigan is an Associate Director working in HKA’s Expert Services team in Dubai, UAE. He is a Quantity Surveyor with 17 years’ experience working initially for main contractors in the UK and for the past 6 years working in the dispute resolution sector in the Middle East, Africa and Asia.

Michael has been involved in the preparation of claims and has assisted quantum experts in the preparation of expert reports for matters in dispute adjudication boards and arbitration. Michael has worked on a wide range of international projects including high-rise buildings, infrastructure works, airports, power stations and oil and gas facilities.

Michael holds a BSc in Quantity Surveying and Commercial Management from Bolton University, UK and an LLM in Construction Law and Dispute Resolution from Salford University, UK.

Michael is a Fellow of the Chartered Institute of Arbitrators (FCIArb), a member of the Chartered Institute of Building (MCIOB), an Associate Member of the Academy of Experts (AMAE) and an Associate Member of the Royal Institution of Chartered Surveyors (ARICS).


This publication presents the views, thoughts or opinions of the author and not necessarily those of HKA. Whilst we take every care to ensure the accuracy of this information at the time of publication, the content is not intended to deal with all aspects of the subject referred to, should not be relied upon and does not constitute advice of any kind. This publication is protected by copyright © 2019 HKA Global Ltd.

A reasonable price at any point in time will, to a large extent, be dictated by market forces, and, given that the tender for the completion works will inevitably be carried out later than the original works, varied market conditions may prevail.”
Michael Berrigan, Associate Director, HKA
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