By Neeraj Gangal
Korean giant seeks advice from UAE law firm Al Tamimi & Co - report.
A top contractor employed on the Burj Dubai has sought legal advice for a mammoth $4.1bn (AED15bn) claim related to work it carried out on the world’s tallest tower, Arabian Business’ sister publication has revealed.
Construction Week( constructionweekonline.com) claims that Korean giant Samsung Engineering & Construction sought advice from UAE-based law firm Al Tamimi & Co, according to the Legal 500 2009: Europe, Middle East & Africa, published by UK-based Legalease.
All three parties concerned in the Legal 500 report have refused to discuss the possible multi-billion-dollar claim further, Construction Weekadded.
The Legal 500 report stated that: “[Al Tamimi] continue to receive important instructions, notably in the contentious segment.
It recently advised Samsung Corporation Engineering & Construction Group in connection with a $4.1bn claim relating to the famous Burj Dubai Tower.”
The Legal 500 provides coverage of legal service providers and their capabilities, in over 100 countries, including the UAE. The cross-referenced service has been published for over 20 years and is internationally recognised in the legal community, according to Construction Week.
Also read: Emaar Properties posts $351m Q2 loss
It is inconceivable for a competent Project Manger to allow "Changes in Scope" to be performed without properly processing and documenting such changes. Samsung Engineering & Construction is negligent in it's oversight of Project Management and the responsible Project Manger is incompetent if the proper documentation was not processed in accordance with best practice. If the proper processes and procedures were followed, then the Client is liable for the claim and a court of competent jurisdiction should adjudicate in favor of Samsung Engineering & Construction and impose adequate compensation for the delay in prompt payment. This situation is avoidable through competent Professional Project Management where "Scope Change" and "Request for Additional work" is properly administered through implementing and following the proper precesses and procedures. Samsung Engineering & Construction should perform a RCA (Root Cause Analysis) to determine where the initiating factor for this massive blunder originated and implement changes to its process to assure similar future occurrences are avoided. In addition to the Project Manager, other personnel who are culpable and deserve scrutiny should include the Project Controls Manager who should have documented the changes in the schedule to accommodate the Changes and the person responsible for the cash flow management. The "cost-of-money" alone in this situation should have been a Red Flag to Samsung Engineering & Construction Management. This is a very sad example of UN-Professional Project Management.
Wow Ali, I think Al Tamimi should hire you, in two seconds you solved a $4bn law suit. Don't you think it might be a bit more complicated than you just described? You sound very professional in quickly calling other people un-professional... Cheers
I am surprised at the comments by Mr. Ali Esshaq from Cairo, Egypt. From the Arabian Business news report it seems there are no details yet available for the reasons for the $ 4.1 b claim, if correct at all. The Parties involved have all refused to comment on this. However, Mr. Ali has presumed the basis for the claim is Additional Works and incorrect claim submittal procedures. Mr. Ali has then advised the best practice for such claims. I do wish to request Mr. Ali to refrain from presumptions as the news report may not be entirely correct. The basis or premise for the claim may be entirely different from what Mr. Ali has assumed. Construction Disputes should be handled in such a manner that the these are reduced and not increased by incorrect presumptions and advice. This is in the interest of all Parties. Khalil Hasan Managing Partner Construction Solutions www.cspk.org Member of Committes for the Society of Construction Law (UAE Region)
There is not enough information in this article to come to your conclusion,.. unless of course if you work for Emaar (do you :-). Any how, a project this size obviously had a prototype done initially and approved by Emaar before proceeding. At that point both parties should be aware what part of the scope can be changes and what areas are too large to change. As you may well know, a lot of the clients in this region change part of their scope in order to avoid paying part/full amount of the project costs. This kind of unprofessional habits are commonly practiced in this region by clients both small and big. This COULD well be such a unprofessional ploy in order to avoid paying the Samsung Engineering & Construction. We can only speculate which part is guilty at this point, just as you and me are doing, because we do not have access to all the details of this case.
Dear all, first of all what does the agreement between the two parties involved says in this regard ,because when it comes to variations or changes there is much to be written about it to cover each party right.secondly for such huge and imprtant project like Brurj Dubai, there are lots of QA/QC and documentations
Claims are usually made for two reasons. One when the owner is in breach of the contract, and the other when the scope is changed during the execution. But there is a third case which is also quite common and it's very difficult to simply elaborate; it's when a contractor awards a job in a certain market era and during the execution (especially a long term one such as this one) both purchase of materials and resources sky rocket and costs becomes really high. I believe Samsung's case looks likely to be a combination of the three. In such cases the contractors usually ask far more than the real value of the claim as to reach a comfortable settlement. But do you really believe that a Main Contractor, whoever it might be, can manage to finance over 4 BN $ and wait to collect it's dues at the end of the job? I have serious doubts honestly.
If the article is our only source of information nothing more than assumptions can be made on the reasons etc. I have a question though, why did Samsung complete the work? Should they not have downed tools until any issue was resolved? Do contractors have a right to do this?
Prior to anyone assuming whether the claim is for the total amount, part of the 4.1billion, or related to changes please keep in mind that the Burj Dubai budget is USD4.1billion. Variations Claim: Don't think so. Total 4.1billion amount claim: Less likely.
Every contract MUST have clauses related to dispute settlement & this 4.1 bln contract is NO EXCEPTION . I believe that the issue is to be settled in accordance with the contract Terms & Conditions. There is also another part in the contract that deals with changes in materials prices & cost of manpower. A third part of the contract deals with changes in Scope of work & related Amendments & how to handle them . The possibility also exists for an out-of-court settlement and Arbitration through a legally-binding process .