Current report no 54 / 2017

Subcontracting of works for the modernization of the railway line No 7 along the Otwock- Pilawa section – signing the contract by Budimex and the consortium of Budimex Construction Sp. o.o. and Ferrovial Agroman SA

The Management Board of Budimex S.A. announces that on 7 June 2017 Budimex S.A. and the consortium of BUDIMEX BUDOWNICTWO Sp. z o.o. (a wholly owned subsidiary of Budimex S.A.) – the consortium leader and FERROVIAL AGROMAN S.A. – the consortium partner, concluded a subcontractor agreement for the comprehensive execution of construction and assembly works under

the contract for execution of works on railway line No 7 Warszawa Wschodnia Osobowa – Dorhusk, along the section Warszawa – Otwock Dęblin – Lublin, section Otwock – Lublin in km 26.050 - 175.850”, under the Operational Programme Infrastructure and Environment 5.1-11 “Works on railway line No 7 Warszawa Wschodnia Osobowa – Dorhusk, along the section Warszawa – Otwock – Dęblin – Lublin, Phase I” – in the scope of Partial Order A - modernisation of railway No 7 along the Otwock – Pilawa section”.

The Company announced the fact of conclusion of the agreement for implementation of the said contract in current report No 43/2017 of 5 June 2017.    

The subcontractor agreement was concluded on condition that the Contract Engineer gives a positive opinion on the content thereof and on condition that the Employer grants a written permission - approval for its conclusion.

According to the concluded subcontractor agreement:   

Agreement value: PLN 327,750,819.16 net

Work commencement date: not later than on the day following the formal handing-over of the construction site to the Subcontractor

Work completion date: 34 months from the date when the Employer arranges for track closures for the Contractor, i.e. no later than by 12 April 2020.

Guarantee period: 72 months.

Warranty period: 72 months.

Advance payment: none

Payment: within 30 days from the date when the Subcontractor delivers a  valid invoice to the Contractor, accompanied by documents required for the invoice issue.  

Contractual penalties paid by the Subcontractor:

The Contractor may require the Subcontractor to pay contractual penalties for, in the amount of and within the limits of restrictions in cumulation, provided that the Employer has previously charged the Contractor with such contractual penalties and reasons for charging the Contractor with the contractual penalties follow from acts or omissions of the Subcontractor, for which the Subcontractor will be held liable:

- For failure to timely execute a determined Phase for each day of delay: 0.02% of the value of Works covered by the Phase (instead of the penalty, the Contractor may submit a Bank Guarantee and in the case of completing the whole Project on time, the penalty may be cancelled);

- For failure to submit and/or commencing Works without the Quality Assurance Programme on time and within the scope — in the amount of PLN 5,000.00 for each day of delay;

- For failure to submit a Progress Report for the works: PLN 2,000 for each day of the delay;

- For commencing the works without the approved Quality Assurance Programme, the Temporary Traffic Organisation Plan: PLN 5,000 for each day of irregularity;

- For commencing the works without the approved Temporary Traffic Organisation Regulations or for conducting the work contrary to the Regulations: PLN 5,000 for each day of irregularity;

- For failure to safeguard the work site in compliance with the guidelines: PLN 10,000 for each day of irregularity;

- For failure to submit the Time Schedule, for the lack of the update of the Time Schedule, for failure to include the Engineer’s comments: PLN 5,000 for each day of the delay;

- For failure to keep the deadline to rectify defects specified in the Work Acceptance Certificate: 1% of the gross value of the individual works which the fault pertains to for each day of delay;

- For failure to keep the deadline to rectify a fault/defect during the fault reporting period within a deadline set forth by the Ordering Party: PLN 1,000 for each commenced hour of the delay;

- For the default in submitting the Insurance Policy document or proof of premium payment: PLN 40,000 for each day of the delay;

- For the need to use the replacement signals following to the extension of the works due to the contractor’s fault: PLN 10,000 for each day;

- For commissioning works with unapproved subcontractors or for failure to submit the subcontractor’s agreement draft to the Employer for approval thereof: PLN 20,000 for each instance;

- For failure to timely submit the copy of the subcontracting agreement or its amendment or for submitting a Subcontractor’s Agreement that is not in conformity with the provisions: PLN 10,000 for each day of delay;

- For failure to amend the payment deadlines in the subcontractor’s agreements: PLN 10,000 for each such instance;

- For the absence or for the untimely payment to the Subcontractors: PLN 25,000 for each instance;

- If the Employer founds that works are performed in a way that endangers human life or health or if the Contractor or persons working on its behalf grossly violate the Occupational Health and Safety, fire protection regulations provided for in the applicable laws as well as for failure to observe provisions of the Contract pertaining thereto: in the amount established according to the “Tariff” constituting Appendix No. 5 to the Ibh-105 Instructions: from PLN 10 to 30 thousand;

- For withdrawal from the Contract by the Employer out of reasons attributable to the Contractor: 30% of the Accepted Contract Value less the value of Conditional Amount and the replacement transport costs.  

The total value of calculated penalties shall not exceed 30% of the Accepted Contract Value under the Contract less the Conditional Amount and replacement transport costs specified in the Bill of Quantities. 

The Contractor is entitled to claim compensation from the Subcontractor in excess of the amount of the stipulated contractual penalties, on general rules.

The Agreement value exceeds the threshold of PLN 111,446 thousand.