RETENTION Claim

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RETENTION Claim

Post by riddler on Fri Jun 04, 2010 3:12 pm

what is the process in claiming the 10% Retention of the Contractor by the Procuring Entity to cover defects of an Infra project after a Certificate of Completion was released?

A certain Contractor has been notified by the PE to correct the defects of our project. However, 'seems that the Contractor ignored our notices.. The Cost of Correction is around P 30T while the 10% retention of the contractor is 100T. Shall the PE prepare a Job Order with corresponding PR's and Obr's chargeable against the 10% Retention and procure it thru SVP? Very Happy
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Re: RETENTION Claim

Post by sunriser431 on Sat Jun 05, 2010 1:26 pm

excerpt from the PBD for infra.
38. Uncorrected Defects
38.1. The Procuring Entity shall give the Contractor at least fourteen (14) days notice of his intention to use a third party to correct a Defect. If the Contractor does not correct the Defect himself within the period, the Procuring Entity may have the Defect corrected by the third party. The cost of the correction will be deducted from the Contract Price.
38.2. The use of a third party to correct defects that are uncorrected by the Contractor will in no way relieve the Contractor of its liabilities and warranties under the Contract.

I believe we can use the procedure outline in section 38, even though the certificate of acceptance had been issued, however we are still obliged to follow the procurement law. If SVP can be applied in this instances then why not. My take on this topic. Hope it will help. bounce
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Re: RETENTION Claim

Post by RDV @ GP3i on Sun Jun 06, 2010 10:43 am

riddler wrote:what is the process in claiming the 10% Retention of the Contractor by the Procuring Entity to cover defects of an Infra project after a Certificate of Completion was released?

A certain Contractor has been notified by the PE to correct the defects of our project. However, 'seems that the Contractor ignored our notices.. The Cost of Correction is around P 30T while the 10% retention of the contractor is 100T. Shall the PE prepare a Job Order with corresponding PR's and Obr's chargeable against the 10% Retention and procure it thru SVP? Very Happy

If the procuring entity has claim against the contractor for any defects in the infra project due to use of materials of inferior quality, during the defects liability period or within one year after the issuance of Certificate of Completion, it should first notify the contractor of such defects and ordering that such defects be corrected within 90 calendar days from the issuance of such order. The order should also include a proviso that failure of the contractor to make the necessary repair needed within that period, the procuring entity shall undertake such necessary repair works and should be entitled to the necessary reimbursements of the expenses incurred upon demand (Sec. 62.2.2.1 of IRR).

Failure on the part of the contractor to reimburse the cost of repairs, the procuring entity can now call on the retention money and/or the Performance Security.

The cost to be incurred by the procuring entity in the repair, therefore, will have to be charged from other funds of the procuring entity and not directly from the retention money. The procuring entity will have to show to the contractor proof of actual cost of repair and demand reimbursement before it could call on the contractor's Retention Money and/or Performance Security. The contractor has the right to contest your claim for reimbursement; hence, you cannot, at first instance, use its Retention Money to make the necessary repair without its consent.
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Re: RETENTION Claim

Post by riddler on Mon Jun 07, 2010 2:31 pm

RDV @ GPPPI wrote:
riddler wrote:what is the process in claiming the 10% Retention of the Contractor by the Procuring Entity to cover defects of an Infra project after a Certificate of Completion was released?

A certain Contractor has been notified by the PE to correct the defects of our project. However, 'seems that the Contractor ignored our notices.. The Cost of Correction is around P 30T while the 10% retention of the contractor is 100T. Shall the PE prepare a Job Order with corresponding PR's and Obr's chargeable against the 10% Retention and procure it thru SVP? Very Happy

If the procuring entity has claim against the contractor for any defects in the infra project due to use of materials of inferior quality, during the defects liability period or within one year after the issuance of Certificate of Completion, it should first notify the contractor of such defects and ordering that such defects be corrected within 90 calendar days from the issuance of such order. The order should also include a proviso that failure of the contractor to make the necessary repair needed within that period, the procuring entity shall undertake such necessary repair works and should be entitled to the necessary reimbursements of the expenses incurred upon demand (Sec. 62.2.2.1 of IRR).

Failure on the part of the contractor to reimburse the cost of repairs, the procuring entity can now call on the retention money and/or the Performance Security.

The cost to be incurred by the procuring entity in the repair, therefore, will have to be charged from other funds of the procuring entity and not directly from the retention money. The procuring entity will have to show to the contractor proof of actual cost of repair and demand reimbursement before it could call on the contractor's Retention Money and/or Performance Security. The contractor has the right to contest your claim for reimbursement; hence, you cannot, at first instance, use its Retention Money to make the necessary repair without its consent.

i thought we can already use the standby "Retention Money" since the process of selecting a " third party contractor" shall be done pursuant to the provisions of the GPRA. what if the PE has no sufficient fund to institute the repair? Very Happy
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Re: RETENTION Claim

Post by RDV @ GP3i on Mon Jun 07, 2010 5:16 pm

riddler wrote:
RDV @ GPPPI wrote:
riddler wrote:what is the process in claiming the 10% Retention of the Contractor by the Procuring Entity to cover defects of an Infra project after a Certificate of Completion was released?

A certain Contractor has been notified by the PE to correct the defects of our project. However, 'seems that the Contractor ignored our notices.. The Cost of Correction is around P 30T while the 10% retention of the contractor is 100T. Shall the PE prepare a Job Order with corresponding PR's and Obr's chargeable against the 10% Retention and procure it thru SVP? Very Happy

If the procuring entity has claim against the contractor for any defects in the infra project due to use of materials of inferior quality, during the defects liability period or within one year after the issuance of Certificate of Completion, it should first notify the contractor of such defects and ordering that such defects be corrected within 90 calendar days from the issuance of such order. The order should also include a proviso that failure of the contractor to make the necessary repair needed within that period, the procuring entity shall undertake such necessary repair works and should be entitled to the necessary reimbursements of the expenses incurred upon demand (Sec. 62.2.2.1 of IRR).

Failure on the part of the contractor to reimburse the cost of repairs, the procuring entity can now call on the retention money and/or the Performance Security.

The cost to be incurred by the procuring entity in the repair, therefore, will have to be charged from other funds of the procuring entity and not directly from the retention money. The procuring entity will have to show to the contractor proof of actual cost of repair and demand reimbursement before it could call on the contractor's Retention Money and/or Performance Security. The contractor has the right to contest your claim for reimbursement; hence, you cannot, at first instance, use its Retention Money to make the necessary repair without its consent.

i thought we can already use the standby "Retention Money" since the process of selecting a " third party contractor" shall be done pursuant to the provisions of the GPRA. what if the PE has no sufficient fund to institute the repair? Very Happy

The "Retention Money" at this point in time is still the contractor's own money. You have to call on the RM first before you could use it.

If the procuring entity has no sufficient fund to spend for the repair, which in the normal course should be done by the contractor which has ignored the procuring entity's notices, I would suggest that you send another notice informing the said contractor that failure to institute the necessary repairs (but remember the contractor has 90 c.d. to do the necessary repairs from your first order, per IRR), within a given period (maybe the remaining period from the time you sent the first order to complete the required 90 c.d.), you will call on his retention money to be used for the necessary repairs to be done by the procuring entity. You have to avoid situations where you could be charged of unilaterally appropriating their retention money without due process.

Just my point of view. It is better to be on the safe side. You don't know why the contractor has "ignored" your notices. If he has ignored previous notices, make sure that your succeeding notices duly are served first.
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