责任风险和风险评估管理高速公路项目

HIGHWAYPROJECT

LIABILITYRISKANDEXPOSUREMANAGEMENT

PresentationOutlineLiabilityTerminologyRisksduetoProjectScopeandProjectManagementRisksinDesign-BuildProjectsContractLiabilityLimitsClaimsClassificationClaimsAdministrationLessonsLearnedforClaimResolutionLIABILITYTERMINOLOGYLiabilityTerminologyinThisPresentationLiability:Contractor’sresponsibilityfordamagescausedbyactionsdonebyClient,thirdparties,ornature.Sowearenottalkingaboutcontractor’scontractualresponsibilitiesforprojectexecution.ButwearetalkingaboutsituationswhereContractoriscalledtobeliablewhileheshouldnotbe.LiabilityRisk:Probableandpotentialsituations(events)leadingtoContractor’sliabilityLiabilityExposure:AmountoflosscausedtoContractorduetoaliability(situation)LiabilityRiskManagementDefineContractlimits(allparties’responsibilitiesandrights)MinimizeContractor’sliabilityrisks(delays,disruptions,prolongations,andadditionalcosts)ReduceContractor’sliabilityexposure(latecompletionandadditionalcosts)ClaimforExtensionOfTime(EOT)andAdditionalCostsDisputeClientclaimsDisputesub-contractorsclaimsFileinsuranceclaimsProjectRisks

ClientandContractorCompletionRiskDelayincompletionDelayinClientrevenueoperationProjectcostoverrunincompletionFinancingRiskRevenueRiskPoliticalRiskForceMajeureRiskPartneringRiskRISKSDUETO

PROJECTSCOPEandPROJECTMANAGEMENTPROJECTSCOPE40-monthprojectstartedinSeptember2006528kmoftollroadMorethan950bridgesincludingoverpasses,underpasses,junctions,andelevatedbridges2Tunnels132x106m3ofearthworksRegionNo.OfSegmentsApplicationContractsDesignTeamsConstructionTeamsCenter7(M1toM7)334West9(W1toW9)335ProjectExecutionArrangementProjectManagementCharacteristicsAdesign-buildprojectFastTrackAlignmentispartlypre-defined.ClientisDPNrepresentingtheAlgerianGovernment’sMinistryofPublicWorks.Therearealso10Willayaswiththeirowngoverningbodiesandauthorities.ProjectManagementCharacteristicsNottoexcludeotherAlgerianministriesinvolveddueto:InfrastructuresimpactsWorkforcerequirementMaterialsinquiryImportingLandacquisitionEnvironmentimpactsSecurityneedsLiabilitycoverageContractRequirementsContractorisresponsibleforFinalDesignandtheContract:RequirestheConstructedworkstobeof“bestQuality”SetsouttheClient’sdesignreviewprocessanddefinesresponsibilitiesoftheContractor’sExternalControlTeamProvidesaschematicQualityPlanHasSpecialTechnicalSpecificationsbutdoesnotdefinedetaileddesignspecificationsProvidesforsomesegmentstheClient’sGeometricDesignDrawingsContractorOrganizationTheClientOrganizationClientManagementIdealClientattitudeGovernmentContractManagementTargetandcostorientedIdeal&GovernmentalFraud/corruptionpreventionOriented.PublicwelfareisprimaryconcernDesignApproval“SONO”byDPN.ContractortakesthemainResponsibilityIdeal“Approval”byGovernment.Governmentshareresponsibility.FastTrackingConstructionisallowedunderconditionsifDesigndoesnotget“SONO”GovernmentalConstructionisnotallowedifdesignisnotyetapprovedDefectorDeviationNegotiation/promptsolutionHopefullymoreideal&lessGovernmentalIdentifyresponsibility.Lengthyprocedure.Hesitatetomakedecisions.Itispublicservant'sattitude.TheClientManagementDPNisanewlyformedorganizationwithintheMinistryofPublicWorks.DPNhasnodesign-buildmanagementexperienceandpracticeformajortransportationprojects.BesideGovernmentalandPoliticalobligations,DPNhasnootherincentive.RISKSin

DESIGN-BUILDPROJECTSDesign-BuildContractMainpartoftheriskiswiththeJV.Alump-sum-priceorunit-rates-based-pricecontractConstructionexpertiseincorporatedduringdesignphaseleadingto‘constructible’designsContractorincontrolandWorkonSitecanstartearlierthanmoretraditionalprocurementroutesExpectationtodeliverontimeandwithinbudgetClientinstructedchangeslikelytoincurhighcostandnegativeaffectstothetimeforcompletion3R’sofDesign-BuildProjectsRisksResponsibilitiesRelationshipsDesign-BuildProjectsRisk-SharingFullRiskCostofdesignDesignliabilityChangesinsubcontractorpricesDelaysSharedRisk/NoRiskAlignmentdesignRiskofobtainingpermitsRight-of-WayacquisitionUtilityrelocationsQuantitygrowthSecurityDifferingsiteconditionsChangesingovernmentallawHazardouswasteEnvironmentalapprovalsDesign-BuildProjectsResponsibilitiesDesigncoordinationConstructabilityreviewsDesignQC/QAConstructionQC/QADesignservicesduringconstructionDefectscorrectionafterconstructionDesign-BuildProjectsRelationshipsContractCo-LocationofContractor/Designer/ClientClient/ContractorContractor/DesignerPartneringCONTRACTLIABILITYLIMITS(MainItems)GoverningLawConventionsA1TheContractshallbegovernedbyandconstruedinallrespectsaccordingtoeffectivelawsandlegislationsinHostCountrybeinginforceatthetimeoftender.CCAPA75AllprovisionsintheContractwhichareagainstthelawsandregulationsinAlgeriashallbedeemedasineffective.Civillaw(Order75-58,26September1975)Civillitigationlaw(Order66-154,8June1966)Publiccontractsregulations(Decree02-250,24July2002)Commerciallaw(Order75-59,26September1975)Biddingregulations(Order03-03,19July2003)Insurancelaw(Order95-07,25January1995)Taxlaws(Order2000-06,23December2000)Invoicepreparationregulations(Decree95-305,7October1995)CCAGforpubliccontracts(21November1964)MaterialquarryingregulationsLaborandforeignworkerslawsEnvironmentalregulationsCustomlawsSecuritylawsContractCeilingPriceConventionsA15WestandCenterContractshaveceilingpricesnotincluding:PriceadjustmentduetoinflationAdditionalcostsforclaimsrelatedto:DelaysforapprovingAPSandAPDofCategoryIIILandacquisitionandutilitiesrelocationGettingpermitsDelaysforimportinggoodsSupplementedworksLateCompletionPenaltyConventionsA8TheContractdurationof40months(startedfromSeptember2006)isforApplicationContractsNo.1,2,and3.CCAPA50.1LatehandoverPenaltiesareappliedaccordingtotheContractSchedulewithoutanypriornotification.Note:Noliquidateddamageschargeforlatecompletion.ConventionsA27impliessamepenalties.ContractProlongationConventionsA8.2IfanyreasonattributedtoClientortoanybodyassignedorhiredbyhimindirectlyordirectlycausesContractordelayinplannedexecution,theContractperiodshouldberationallyprolongedfortimeagreedbythebothparties.TheadditionalcosttoContractorduetothisdelayshouldbecompensatedbyClient.DelaysResolutionCCAPA49.3WhenResidentEngineer(RE)assessesthattheactualworkprogressisdelayedevenwithcontractoracceleratingmeasures,heshallrequireacatch-upplanfordelays.ShouldContractorfailtoprovideasatisfactoryplanwithin10days,REmaydisapprovethetemporarybilloftheverymonthuntilasatisfactoryplanisprovided.REmaysuggesttoClienttoapplydelaypenalties.ProductQualityCCAPA7Constructionqualityshallatnotimebereducedundertheconditionthattheconstructionscheduleandspeedarewarranted.Theguaranteeofconstructionqualityshallbeabsolute.CCAPA14Contractorshallbetheonlypartyresponsibleforconstructionquality.APDDocumentsCCAPA19.1Thedetailpreliminarydesign(APD)providedtotheContractorbytheClientshallnotrelievetheContactorofanyresponsibility.Contractorshallnotshifthisresponsibilitiesonthepretextofcertainmistakesandomissionsinthedrawings.ForceMajeureCCAPA55.1&ConventionsA39ForceMajeureshallmainlymean:Wars,Invasions,hostileactions,mobilization,confiscationAllresultsofanucleareventSeriousanarchyinpublicorderCCAPA55.1EvenincaseofForceMajeure,theentireorpartiallossesofContractor’sequipmentsshallnotbereimbursedsincetheinsurancechargesforthesaidequipmentsarealreadyincludedinthecontractprices.CCAPA55.2ProlongationofconstructionperiodIncaseofForceMajeureaffirmedbybothparties,theyshallnegotiateontheprolongationoftheconstructionperiod.ConventionsA39requiresthesame.ExceptedRisksConventionsA12.1Ifdamagesorlossesoccurduetofollowingrisks,ContractorshouldimmediatelyinformClientandrectifythedamagesifClientrequires.Contractorisentitledtoprolongationandtocompensationforadditionalcosts.War,invasionRevolution,militarycoup,civilwarRiotsExplosives,radioactivitySupersonicpressurewaveUseoroccupationofapartorwholeofawork,tunnel,bridgestructurebytheClientwithoutagreementofbothpartiesDesignofallpartsofaworkbyClientNaturaldisastersSevereWeatherCCAPA56:SevereWeather–ProlongationofConstructionPeriodThepredictablesevereweathereachyearisspecifiedto20days.Flood,severerainfall,andstrongwindsarementionedinthecontractforspecificworksinadditiontoothernaturalphenomena.Theprolongationisdeterminedbasedonthespreadofsevereweatherimpact.InsuranceCCAPA28Contractorprovides:TransportinsuranceforimportedgoodsThirdpartycivilliabilityinsuranceOccupationalaccidentinjuryinsuranceInsuranceforsiteworksbeforecommencementCCAPA28.6ShouldContractorfailtosignormaintaininsurance,Clientshallsignormaintaininsuranceandtherelativeexpensesshallbedeductedfromconstructionbills.ConventionsA12.2requiressimilarinsurances.DefectsLiabilityCCAPA27PerREinstruction,ContractorshallreplacetheproductsnotconformingtotherequirementsofCCTP,drawings,andworkinstructions.Theinstructionshallsetadelayofexecution.CCAPA69.1Thedurationofthedefectsliabilityperiodshallbeoneyearandcountedfromtheprovisionalcompletionacceptance.CCAPA64PerformanceGuaranteeContractorsubmittedaperformanceguaranteeequalto10%ofthetotalvalueoftheContract.Thisguaranteeshallbetransformedtoqualityguaranteeafterprovisionalcompletionacceptance.OtherLiabilityRisksSecurityLatepaymentsPriceadjustmentsDamagesto:EnvironmentNearbystructuresandresidentsOtherprojectsUtilitiesRoadsandrailroadsLabTestsSubcontractingNightworksLabordisputesMaterialsquarryArchaeologicalfindingsConfidentialityPatentsFinancingCCAPA67ContractMortgageThisApplicationContractshallbemortgageable.TheaccountingserviceinchargeofpaymentshallbeBanqueAlgéériennedeDéveloppement.TerminationCCAPA71.1EachPartyisentitledtopartiallyorcompletelydissolvetheContractundertheCaseofForceMajeurewhensuspensionexceeds180daysorthenatureofForceMajeureleadstotermination.CCAPA71.2TerminationinCaseofContractor’sfaultsSubcontractingofworkswithoutClientpriorapprovalBankruptcyorlegalliquidationDeathofContractorFailuretomitigatedefectswithinthegiventimelimitSettlementofDisputesCCAPA72ShouldthetwopartiesfailtosettlethedisputewithfriendlynegotiationortheverdictmadebyNationalContractCommitteearenotacceptedbytheContractor,thedisputeshallbesubmittedtoanarbitrationcourt.ConventionsA48ThegoverninglawisAlgerialaw.CLAIMSCLASSIFICATIONClaimNaturesAnEOTclaimshouldbefiledforaneventaffectingthesubstantialcompletionofthewholeoftheWorksorSection.AnAdditionalCostclaimshouldbefiledwheneveraneventcausescostincludingallexpenditure,includingdesigncosts,whollyandnecessarilyincurred,whetheronorofftheSite,overheads,depreciationinContractor’sEquipment,financecostsandotherchargesproperlyallocablethereto,butdoesnotincludeanyallowanceforprofit.ClaimsClassificationBasedonClaimNature:EOT(ExtensionOfTime)AdditionalCostBoth(EOTandCost)BasedonApplicationContracts:ApplicationContractNo.1ApplicationContractNo.2ApplicationContractNo.3ClaimsClassificationBasedonSectionandSubsections:CenterorWestM1throughM7W1throughW9BasedonExecutionStage:DesignPlanning,survey,andpreparationConstructionexecutionProvisionalcompletionDefectsdiscoveryandcorrectionSubstantialcompletionClaimsClassificationBasedonProjectWorks:RoadwaysEarthworksBridges(overpasses,underpasses,junctions,andelevatedbridges)TunnelsRetainingwallsDrainageSignalingParapetsandbarriersLandscapingandmore……ClaimsClassificationBasedonClaimStatus:NewContinuingFilednotresolvedResolvedWithdrawnStatusofParticularsNotprovidedGuesstimateDetailedClaimsClassificationBasedonClaimAmount:MinorWithclaimvaluelessthanonemillionDinarsOrfordelayoflessthan1weekforamajorworkortaskOrdelayforaminorworkortaskMajorWithclaimvaluegreaterthanonemillionDinarsOrfordelayofmorethan1weekforamajorworkortaskNotes:(1)Claimvalueanddelayareguesstimatedforissuingaclaimnotice.(2)Amajorworkortaskhasavalueofgreaterthan1%oftotalpriceofconstructioncontractforagivensection(M1,M2orW1,W2).ClaimsClassificationBasedonEntitlement:Low(lessthan25%)Moderate(between25%and75%)High(morethan75%)Notes:(1)EntitlementrepresentstheContractor’scontractualrightwithoutprejudice.(2)EntitlementisguesstimatedbytheclaimsmanagersatSite,West/CenterHO,andJVwhichcouldbedifferentvalues.ClaimsClassificationPriceCentersClaimsClassificationBasedonClaimHeadings:DelaysforapprovingAPSandAPDLandacquisitionUtilitiesrelocationGettingpermitsandauthorizationsDelaysforimportinggoodsandequipmentsSupplementedworksChangesinworksUnforeseensiteconditionsClaimsClassificationClaimHeadings:ExceptedrisksForceMajeureSevereweatherMobilizingforeignworkersInsuranceclaimsDefectsliabilitySecurityClaimsClassificationClaimHeadings:LatepaymentsPriceadjustmentsEnvironmentalDamagesDamagestonearbystructuresDamagestoresidentsDamagestootherprojectsDamagestoutilitiesDamagestoroadsandrailroadsClaimsClassificationClaimHeadings:LabTestsSubcontractingNightworksLabordisputesMaterialsquarryArchaeologicalfindingsConfidentialityPatentsClaimsClassificationClaimNatureApplicationcontractSubsectionExecutionstageProjectWorkClaimStatusClaimAmountEntitlementPriceCenterheadingClaimHeadingCLAIMSADMINISTRATIONClaimsManagementTasksKeepcopyofrelevantcorrespondencesInitiate,manage,andresolveclaimsClaimNoticesClaimsStatusReportsClaimParticularsAdministrateClaimFilesClaimsnegotiationandresolutionDisputeClientandthirdpartyclaimsPositiveandNegativeDefensesReviewVariationOrdersandSupplementaryAgreementsClaimManagementTomaintaintheentitlementtopursueaclaim,theContractorshouldshow:CauseandeffectsrelationshipclearlyexpressedConditionsprecedentsatisfiedMitigationeffortsusedandcontinued(bestendeavors)FullparticularsorinterimparticularssubmittedContemporaryrecordsmaintainedStatusreportssubmittedClaimManagementConditionsPrecedentConditionsPrecedentforclaimsis:“AdministrationrequirementsofContractforfilingandprocessingclaims”including:SendingnoticePreparingparticularsMaintainingrecordsSubmittingclaimsstatusreportClaimresolutionprocessIssuingvariationordersClaimManagementConditionsPrecedentStep1-SubmitclaimnoticeAssoonasadelayingoradditionalcosteventcanbereasonablyforeseenNotlaterthan10daysaftercommencementofsuchaneventStatingtheprobableextentofthedelayandcostCitingtheprovisionsoftheContractapplicableSpecifyingdefiniteentitlementClaimManagementConditionsPrecedentStep2-Within28daysofclaimnotification,submitbyfurtherwrittennoticetotheClient:FullanddetailedparticularsofthecauseandactualextentofthedelayandcostAprogramidentifyingtheeffectsofthedelayDetailsofthemeasureswhichtheContractorhasadoptedand/orproposestoadopttoavoid,reduceormitigatethedelayingandcostingeffectsDetailsofthedocumentsmaintainedtosupportsuchclaimClaimManagementConditionsPrecedentStep2forwhen:AneventhascontinuingeffectContractorisunabletodeterminewhethertheeffectofaneventwillactuallycausedelaytosubstantialcompletionofthewholeoftheWorksorSectionItisnotpracticablefortheContractortosubmitfullanddetailedparticularsSubmitaClaimStatementtothateffectwithreasons,togetherwithinterimwrittenparticularsincluding:DetailsofthelikelyconsequencesoftheeventonprogressoftheWorksorSectionAnestimateofthelikelyextentofthedelayandcostClaimManagementConditionsPrecedentStep3-SubmitthestatusreportAtmonthlyintervalsaspartoftheMonthlyProgressReportDonotsubmitiftheClientnotifiesinwritingthatitisnotnecessaryProvidefurtherinterimwrittenparticularsuntiltheactualdelayandcostisascertainable,whereuponimmediatelysubmitfulldetailedparticularsInitiatingandQuantifyingclaimsClaimsStatusReportsClaimsNoticeProcess(FortheTimeBeing)LESSONSLEARNEDforCLAIMRESOLUTIONPRE