Delays of a public investment and the Contract Engineer’s remuneration – how to effectively claim payment?

The problem of prolonged public investment

Delays in the realization of public investments are a common problem in the construction industry. The reasons for such situations can be varied – design errors, administrative difficulties, financial problems or unpredictable circumstances, such as legislative changes or unfavorable weather conditions. Prolonged realization of investments results not only in increased costs, but also in the need for longer involvement of investment supervision providers.

It is worth looking at the difficult position of the Contract Engineer, who, if the investment is prolonged, may face an expectation from the Investor to continue performing his duties – often without a formal extension of the contract and without a guarantee of additional compensation. Prolonged implementation of the investment may lead to a situation in which the Engineer’s contractual duty becomes (theoretically) infinite. In the absence of a clearly defined end date for supervision, his duties hypothetically may be indefinite.

In such a situation, does the Contract Engineer have the right to claim additional remuneration? What steps should he take to effectively protect his interests and avoid an indefinite (unpaid?) obligation to the Contracting Authority?

Responsibilities of the Contract Engineer in the context of prolonged construction works

Publicly procured contracts for investor supervision usually specify the duration of this obligation, which corresponds to the planned completion date of the construction works. In a situation where the works are extended and the term of the investor supervision contract remains unchanged, the Contract Engineer has no legal obligation to continue his work.

The problem arises when the Employer expects to continue providing supervision services without formally annexing the contract. Then the Contract Engineer may find himself in a situation where he is providing supervision without a defined time limit and without a clear situation regarding his remuneration for this additional time. This kind of unregulated extension of obligations clearly creates significant legal and financial risks.

It is worth emphasizing that the Contract Engineer’s duties are based on the contract, and their scope – including duration – should be strictly defined. Lack of clear regulation of the termination date of supervision may result in a situation in which the Contracting Authority abuses its position, expecting further work without a guarantee of remuneration.

The nature of the investor supervision contract and the obligation to pay

The contract to act as a Contract Engineer is a contract for the provision of services within the meaning of Article 750 of the Civil Code, and therefore obliges to exercise due diligence, but not to achieve a specific result.

If the Employer uses the services of the Contract Engineer after the expiration of the term of the contract, but does not pay additional compensation, a situation is created in which one party unauthorizedly benefits at the cost of the other. In such a case, it is possible to assert claims under the following provisions:

• Article 735 of the Civil Code in conjunction with Article 750 of the Civil Code. (see also Article 752 of the Civil Code et seq.) – the provision of investor supervision to an additional extent requires additional remuneration, unless unpaid was expressly agreed upon.
• Article 405 of the Civil Code. (unjust enrichment) – The Employer obtains a financial benefit in the form of supervision of the investment at no cost.
• Article 471 of the Civil Code. (contract liability) – if the prolonged work is due to the fault of the Contracting Authority (e.g., failure to apply for an administrative decision or failure to hand over the construction site on time), the Contract Engineer may claim damages.

Restrictions under the public procurement law

Pursuant to Article 434(1) of the Public Procurement Law, public procurement contracts must be concluded for a fixed period of time. This means that the Contracting Authority does not have the right to require the Contract Engineer to provide services indefinitely, without specifying a time frame.

In addition, Article 455 of the P.P.L. indicates that in case of unforeseen circumstances, it is possible to amend the contract. However, the amendment is permissible within the limits of the cited provision.

How to effectively negotiate a contract annex?

In order to avoid a situation in which the Contract Engineer is required to perform indefinite supervision without being paid, the following seems reasonable:

• Monitoring of the investment schedule
• Directing a formal request to the Contracting Authority to extend the contract before its expiration.
• Relating the duration of supervision to additional costs – the annex proposal should include specific financial terms.
• Avoiding informal continuation of work – in case of extension of supervision, explicit confirmation in the form of an annex should be demanded.

Recommendations – how to avoid the obligation of “infinite” supervision and protect your interests?

1. The investor supervision contract should contain a clearly defined term for the completion of duties.
2. Provisions that make the end of the investor supervision contract dependent solely on the completion of construction work should be avoided.
3. If the investment is extended, demand formal annexation of the contract.
4. Avoid continuing to provide services without legal security – do not allow supervision to become a duty of indefinite duration.

Summary

The Contract Engineer cannot be obliged to perform investor supervision for an indefinite, almost infinite period without formally extending the contract and providing additional remuneration. In the case of prolonged investments, it is crucial to adequately safeguard interests by formally annexing such a contract.