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Final Cost Valuation No. 1(Prefabricated Bathroom & Kitchen Pods) May 2014

Table of Contents

CONTRACT PARTICULARS3SECTION 1 INTRODUCTION & BACKGROUND61.1Introduction:61.2Purpose of this Document:7SECTION 2: Contractors Claim92.1Claim Statement:92.2Entitling Provisions:10SECTION 3: The Facts113.1Pre-Fabricated Bathroom and Kitchen Pods:113.2Central Water Heating System:173.3Kitchen Ventilation System:173.4Kitchen Appliances:173.5Glass Shower Door:183.6Omission of Insulation to Pods:183.7New Provisions of Washing Machine:193.8Conclusions:20SECTION - 4:VALUATION OF VARIED WORKS:224.1An Overview:224.2Approach of Valuation:23List of attachments25


The Employer:Qatar Airways, P.O Box 22550, Doha,State of Qatar

Employers Representative:

Vice President Capital ProjectsQatar Airways, P.O Box 22550, Doha,State of Qatar

The Engineer:Arab Engineering BureauBuilding No. 100, Ibn-e-Sina Street 950, Zone-24, Al Muntaza,P.O Box No. 1148, Doha, Qatar.

The Contractor:Redco International Trading and Contracting W.L.L PO Box 16750, Doha,State of Qatar

Contract price:QAR 451,796,152.72. Lump Sum.Construction Phase:QAR 421,900,000.00 Construction PriceQAR 6,208,922.72 Facade Redesign VO No. 1 to xx QARMaintenance Service Phase:QAR 23,687,230.00

Key dates:Commencement Date 01st February 2011Scheduled Completion Date 21st November 2012Time for completion of Construction Phase 660 days

Form of Contract:Public Works Authority Standard Conditions of the Contract (As modified)SECTION 1 INTRODUCTION & BACKGROUND


1.1 Introduction:

1. The Parties to the Contract entered into an agreement for construction of works forming Construction Qatar Airways Crew Accommodation reference QTR-CNT-2011-0087 and Maintenance Services Qatar Airways Crew Accommodation reference QTR-CNT-2011-0091 by the endorsement of the Letter of Acceptance[footnoteRef:1] dated 20th January 2011 with a commencement date of 01st February 2011 for a combined value of QAR 451,796,152.72 with a completion date of 21st November 2012. [1: QA Letter of Acceptance reference QTR-CNT-2001-0088 dated 20th January 2011.]

2. Prior the award of the Project, the Contractor by way of Post tender clarification[footnoteRef:2] dated 6th September 2010 conveyed its consent to be part of the value engineering. [2: The Contractors letter reference no. RT/T/09-23/SRK/AS/L/010 dated: 6th September 2010]

3. The Employer prior award of the Project undertook Design review of the Project through ARUP and developed a review report[footnoteRef:3]. The Employer awarded the Project without incorporating those Design issues. The ARUP Design report was recently handed over to the Contractor unofficially; which reveals that the Employer awarded the Project with Design deficiencies and with the intent that the Scope of Works shall be varied to a significant extent during the execution of the Project. Such intent was never incorporated in the Contract. This report has presented around 92 items. [3: ARUP Peer review report. ]

4. At the time of writing of this document around 56 numbers of variations orders are issued by the Employer/ the Engineer in line with the ARUP Design Report. Out of these 56 variations orders, 7 variation orders are related to the works in Bathroom and Kitchen, which constitutes significant portion of the works such varied works were formalised by way of issuing Variation Orders as detailed hereunder:-Table 1Sr.No.Variation OrderDates


109Pre-Fabricated Bathroom & Kitchen Pods31-10-201131-10-2011

218Change from Individual water heaters to Centralized Water Heating System29-03-201211-04-2012

320Kitchen Ventilation System19-04-201215-05-2012

431Kitchen Appliances and Spare parts04-10-201204-11-2012

545Addition of Glass Shower doors20-06-201324-07-2013

651Omission of Insulation to Pods26-01-201411-03-2014

756New Provisions for Washing Machine20-02-201424-04-2014

5. The Contractor is of the opinion that in all the above mentioned Variation Order, procedure laid down in the Contract was not adopted due to lack of Design, Specifications and clear scope of works and hence it was not possible to ascertain pre-performance cost of the above named variations. Since the Design, Specifications and scope of Works are now finalized hence cost reimbursement is requested on the basis of actual after-the-fact basis. 1.2 Purpose of this Document:

The purpose of this document is to:- i. Reimburse actual costs incurred on the varied works related to Bathrooms and Kitchens and to agree on the revised Contract Price. ii. Substantiate that the Contractor is entitled for such reimbursement from the Employer.

SECTION 2Contractors Claim(Facts, Reasons and Justifications)

SECTION 2: Contractors Claim

2.1Claim Statement:1. The Contractor is of the opinion the Engineer/ Employer, for the purpose of varied works tabled at Table-1, exercised their power to amend the Works in accordance with Sub-Clause 51.1 & 51.2 of the General Conditions of Contract. 2. The Engineer/ Employer, for the purpose of interim payment and formalization of the changes to the Works issued Contract Variation Form in accordance with Sub-Clause 2.1 Part-5 of the Supplemental Conditions of Contract with budget price.3. The Contractor has now performed the varied works. 4. For revising the Contract Price, the Engineer/ the Employer did not follow the procedure set out in Sub-Clause 4.1 & 4.2 of Part -5 of Supplemental Conditions of Contract.5. It was impossible for the Employer, the Engineer and the Contractor to follow up the procedure as the Design, Scope of Works and Specifications for varied works were not finalized at the time of issuance of Variation Order Form. 6. The provision of Design, Scope of Works and Specification is the sole responsibility of the Engineer/ Employer. 7. The Design, Scope of Works and Specifications for the varied works is now finalized after issuance of VO 56 on 24th April 2014 and hence the Contractor is now in a position to request for the reimbursement of the actual cost incurred for these varied works on an After-the-fact basis in the sum of QAR _______________________

2.2Entitling Provisions:1. The extent of the Contract, in accordance with Clause-5 of General Conditions of Contract, is limited to Construction only where the Design is the responsibility of the Employer/ the Engineer. The Design of the Works and/or varied works is the Expected Risk in accordance with Sub-Clause 20.2 of the General Conditions of the Contract. 2. The Design of varied works, as is evident from the issued Variation Order Forms[footnoteRef:4], is the responsibility of the Engineer, in accordance with Sub-Clause 4.2 of the Supplemental Conditions of the Contract. [4: Variation Order Forms no. ___________]

3. The procedure for selecting the Subcontractor(s), the revision to the Contract Price and issuance of Contract Variation Form is stipulated in the Sub-clause 4.2 of the Supplemental Conditions of Contract. Such procedure was never adopted by the Engineer/ Employer.4. The Design, Scope of Works and Specifications were never provided by the Engineer/ the Employer at the time of issuance of the Variation Orders as is evident from the records detailed at Section 3 of this document. 5. The As-Built Design is now finalized and final Variation Order No. 56 is issued. 6. In accordance with Second Paragraph of Sub-Clause 51.4, it is not practicable to for the Contractor to claim for the reimbursements of the costs as the Design, Scope and Specifications of the Varied Works is finalized and actual cost is known.

SECTION 3: The FactsAs illustrated in Section - 2 of this document:-i. The Varied Works were ordered with due consultation of the Employer. ii. At the time of issuance of order(s) for undertaking Varied Works the Design, Scope of Works and Specification of varied works were not provided by the Engineer/ Employer. iii. The specialist Subcontractor/ Supplier was selected by the Engineer/ the Employer.iv. In the event of absence of Design, Scope of Works and Specification it was impossible for all the parties involved in the Contract to calculate the projected direct and associated costs with the Varied Works. This Section of the document is therefore put together with the view to substantiate the above statement of the Contractor from the records of the Project as under:- 3.1Pre-Fabricated Bathroom and Kitchen Pods:1. Immediately after award of the Project:-a. The Engineer, through his email[footnoteRef:5] dated: 7th December 2010, introduced Modular to the Contractor for preparing a proposal for the Project. [5: Email dated 7th Dec'2010]

b. M/s Modular (the selected supplier/subcontractor) confirmed to the Contractor by way of email[footnoteRef:6] date: 18th December 2010 that they are in the preliminary discussion directly with the Engineer for introduction of pods into the Project. [6: Email dated 18th Dec'2010]

2. In Design meeting No. 3[footnoteRef:7] on 27th January 2011, the Engineer confirmed that they visited three (3) Pods manufacturers in UAE and wanted the Contractor to get information from them. [7: Design Meeting Minutes No. 3]

3. In the Design meeting No. 8[footnoteRef:8], the Engineer insisted on the use of pre-fabricated bathroom and kitchen pods. It was informed by the Contractor that M/s Modular is ready to present their solution on 29th March 2011. [8: Design Meeting Minutes No. 8]

4. On 5th April 2011, the Engineer instructed AEB (the then Designer and now the current Engineer) to expedite and initiate the layout in view of t