EPC and infrastructure

Keeping subcontracts back-to-back with the head contract.

A project is one head contract and a hundred packages under it. Every subcontract has to carry the head contract's obligations down, the delay damages and the guarantees have to add up, and every variation has to be matched across the chain or the gap lands on you. Leela reads each subcontract and each variation against the head contract, flags where the flow-down is incomplete or the back-to-back breaks, and keeps the issues list per package across the life of the project.

Leela Received. I am checking the subcontract return against the head contract. 3:36 PM

Checked against the head contract: 5 breaks in the back-to-back, 8 other issues

Dear Marcus

The subcontract is no longer back-to-back in five places.

The head contract at clause 8.7 sets delay damages at $45,000 per day capped at 15 percent of the contract price. The subcontract at 8.4 now caps the subcontractor's delay damages at 5 percent of the subcontract price, which is exhausted after 11 days against a head contract exposure that runs for 90. The defects liability period at head contract 11.1 is 24 months from taking over; the subcontractor has reduced it at 11.1 to 12 months from its own completion, which ends up to 9 months before yours. The performance security at 4.2 is reduced from 10 percent to 5. The time bar on claims at 20.1 has been removed from the subcontract while it remains in the head contract, so the subcontractor can claim late against you while you cannot claim late against the employer. The force majeure definition at 19.1 is broader than the head contract's.

Each is redlined back to the head contract's position with the clause quoted. The other 8 issues are in the memo, and the parent company guarantee at 4.5 is open for you since the subcontractor has offered a bank guarantee instead.

Leela

W Westbridge mechanical - back-to-back memo.docx62 KBW Westbridge mechanical - redline.docx461 KB

Delay damages and their cap

The daily rate and the cap in each subcontract, read against the head contract exposure they have to cover. The arithmetic is done and the gap in days is stated.

Defects, guarantees and security

The defects period, the performance security and the guarantees, each matched to the head contract's dates and amounts so nothing expires before your own obligation does.

Variations and flow-downs

Each variation matched across the chain. Time bars, force majeure and the dispute clause flowed down so the subcontract cannot do to you what you cannot do to the employer.

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