Case Studies > Aluminium Plant

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Upgrading of an existing aluminium plant in sub Asia, including the basic design, engineering, procurement and supply of key equipment, the supervision of the civil works and erection. The contract was awarded by a government agency responsible for industrial projects (the Employer) to a consortium (the Contractor) of which our client was one of the consortium members responsible for the basic design, procurement, and supply of key equipment.

KEY FEATURES
The contract was awarded on a fixed price, lump sump, turnkey basis using the Employer`s own form of design and build contract. Almost from the date of coming into force, the project was subject to numerous causes of disruption, delay and additional costs and expenses which continued to occur on a regular basis during the various phases of basic design, engineering, materials procurement, transport and erection. The collective result was both a serious delay to the contract period of completion and most of the budgets set within the original contract price being considerably exceeded. The most significant delays were caused in essence by the Employer and the consortium partner responsible for the execution of the civil works.

Our Client considered it was entitled to several extensions of time and financial reimbursement arising from a loss of productivity, contract period prolongation and other events caused by the Employer and / or the consortium partner. Both the Employer and the consortium partner contended that the delays were (in part at least) the cause or responsibility of our Client.

CONSULTANCY SERVICES - Claims Management (Prosecution / Defence)
Lancaster House International Consulting were requested by our Client to undertake a detailed contract review and analysis of the claims submitted by them against the Employer and consortium partner together with the respective counterclaims. The primary objective was to clearly demonstrate that the project delays were caused principally by the consortium partner and / or the Employer in a manner and to such extent that either the Contractor was entitled to an extension of time equivalent to the total duration of demonstrable critical delay or that any period of critical delay within the responsibility of the Contractor could not be held to be our Client’s liability. The secondary objective was to successfully defend any residual counterclaim position from either of the two other parties. Achieving the primary objective would alleviate our Client from the liability (share) of liquidated and ascertained damages for delay, while at the same time it would assert their contractual entitlement to the reimbursement of additional costs and expenses incurred through prolongation, disruption, delay and other causes.

Through forensic research and carefully detailed and presented analyses, we provided further and better particulars and thereby demonstrated to the satisfaction of the other parties that all the critical delays were their liability, individually and collectively. On behalf of our Client, we subsequently secured the Engineer’s award of an extension of time to the period for completion sufficient to alleviate the Contractor from any liability for L & A damages. This position alone alleviated a potential liability of tens of millions of US$. At the time of writing, our Client’s prolongation costs (also in tens of millions of US$), resulting from the awarded extension of time as well as disruption loss and expense costs together with other minor issues remain to be negotiated.

Finally, we were successful in rebutting in entirety over 80% of the counterclaims received from the consortium partner and the Employer. Negotiations with both parties currently continue in regard to the remaining 20%. Irrespective of the items yet to be settled, our Clients were extremely satisfied with the complete financial turnaround that we were able to assist them with.