VietNamNet Bridge – The delay in the site clearance work has become so commonly seen in Vietnam. However, things may change a lot after a Japanese contractor asked for additional expenses to compensate the losses it incurred due to the delay in the site clearance.

Nguyen Quoc Hiep, Deputy Chair of the Bidders’ Association 

Vietnamese side pays penalty for delays

Tokyu would not be the final foreign contractor who asks to pay additional money for the delay of the project implementation.

“We are awaiting the final decision from competent agencies. However, if referring to the provisions of the contract, paying additional expenses to Tokyu is inevitable,” said Nguyen Thanh Van, General Director of the Project Management Unit 85 (PMU 85), the representative of the investor developing the Nhat Tan bridge project.

Being one of the three main construction and installation components of the project capitalized at VND13,626 billion, the bidding package No. 3 was kicked off in March 2009. Under the contract signed between the contractor and the investor, Tokyu would have to fulfill its works within 34 months since the day the construction starts. Meanwhile, PMU 85 commits to give the construction site on schedule to the contractor.

However, by the end of August 2011, after two years of the project execution, the Hanoi People’s Committee had just allocated 60 percent of the construction site area. Meanwhile, the implementation of the bidding package No 3 should have been completed one month before.

“The Hanoi’s authorities never handed over the site on schedule, thus causing big difficulties to both investors and contractors,” Van said.

Due to the big workload left, the government has accepted the Ministry of Transport’s proposal to extend the deadline of the package No. 3 to May 2014.

Right in early 2012, anticipating that the package No. 3 would be delayed, Tokyu sent letters to involved parties and investors, showing the expenses arisen due to the delay in site clearance. These include the office rents, equipment rents, salaries for workers and others.

“The contractor wishes to receive additional money to cover its difficulties arisen due to the delay. The two sides are discussing to fix a reasonable support level. We would discus to reach an agreement, while the problem is not too serious and the case would not be brought to the court,” Van said.

However, PMU 85 seems to be luckier than others. Danish MT Hojgaard A/S once brought the Bac GIang provincial people’s committee to the International Arbitration in Paris for the province’s delay in allocating site clearance. At first, MTH claimed for 3.645 million euros, while the final decision was 1.15 million euros, according to Dau tu.

More contractors to claim for damages?

Nguyen Quoc Hiep, Deputy Chair of the Bidders’ Association, in an interview given to Tien phong newspaper--said that Tokyu case should be seen as a good thing for the Vietnamese construction industry.

He said contractors have usually been punished in the delay in project implementation. Meanwhile, the investors, who violate the committed provisions, do not.

“I think that the contractor (Tokyu) had made a reasonable claim for damages. It is necessary to ensure the fairness between contractors and investors,” Hiep said.

Experts have warned that a new wave of foreign contractors suing the Vietnamese sides for the delay in fulfilling their commitments may occur, following the Tokyu case. The projects on the road linking the Nhat Tan bridge and the Noi Bai airport, the urban railway Cat Linh – Ha Dong and the Noi Bai – Lao Cai highway all have been cited as the projects with delays in site clearance.

Compiled by Thu Uyen