BRIEF:

The case pertains to variation in the contract for construction of dam being executed by a joint venture company of a large hydroelectric project in the state of Himachal Pradesh, India. The project was financed by the World Bank and therefore, FIDIC method of claims settlement was followed. The approx. value of the claim was INR 80 Crore. The claim was raised due to variation in the specifications of the Sluice Liner. The claim was settled through negotiations.

APPROACH:

At the outset, an analysis of specifications and contract clauses was done to determine as to whether the claim was contractually tenable or not. After analysis of the specifications and relevant contract clauses, it was concluded that the drawing issued for the construction had different specifications and thus amounted to variation. Thus, a new rate had to be workout.

The contractor claimed a rate of approx. INR 2.4 Lakh per MT which appeared to be very high. The market rate analysis was done based on the quotations from the suppliers and the quantum of welding involved in fabrication. The guidelines prescribed by Central Water Commission – “Guideline for preparation project estimates for river valley projects” were followed. Since steel plates used for the Sluice Liner had to imported, foreign exchange component was also inbuilt in the rates. Based on the final rate worked out on behalf of the client by our team member, a negotiated settlement was arrived at and implemented by the project owner.

The entire exercise took approx. 60 days in settlement.