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Panama Canal ruling favours contractor in materials and delays dispute

A conflict resolution panel has found in favour of Panama Canal contractor Grupo Unidos por el Canal (GUPC) to the tune of $234M (£151M) over the central issues of the billion dollar dispute.

The independent Dispute Adjudication Board said that responsibility for the delays in the scheme relating to an issue around the quality of the materials used lay with the Panama Canal Authority (ACP). However, its financial determination was only close to half of what GUPC was seeking.

The panel, a technical organisation established within the framework of the contract, also awarded the contractor a six month extension.

GUPC – a consortium of Spain’s Sacyr, Italy’s Salini Impregilo and Belgium’s Jan de Nul – made a series of claims as far back as February 2011, when it alerted ACP that the properties of the Basalt the client specified for the scheme failed to comply with the quality needed for building the giant new locks. Costs rose as processing of the specified material had to be altered and new sources for the Basalt were found.

In addition, the adjudication panel confirmed that a concrete mix presented by GUPC in 2010 and rejected by ACP, did actually comply with technical specifications required in the contract. ACP delayed approval of the mixture that caused a delay of seven to nine months in the work schedule.

The contractor said this week that the issues impacted heavily on the civils works for the mega scheme, which account for two thirds of the overall project costs (£1.5bn of £2.1bn). There remain outstanding claims by the contractor. ACP has yet to respond formally to the ruling.

Work on the expansion of the canal has reached around 84% completion and its entry into operation is scheduled for the first part of 2016.

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