The Arbitration Case of Additional Expense Created by the Number of Times of Use of

Steel Shoring Facilities during the Construction Stage of the Project :

Bih-Tan Bridge - 2nd Northern Expressway


Continental Engineering Corporation (CEC) undertook and constructed the Project of Bih-Tan Bridge on the 2nd Northern Expressway from 1989 to 1996.

According to the minutes of the fifth price negotiation meeting between the project owner - Taiwan Area National Expressway Engineering Bureau (TANEEB), Ministry of Transportation and Communications and CEC, it was recorded that “For the purpose of reducing the final price the tenderer is requested to submit his quotation on the basis of using 4 times of a set of steel shoring facility in main bridge because this portion cost was also considered and estimated by TANEEB on the same basis, and TANEEB may issue a change order during the construction stage if necessary in normal procedure and after Engineer’s verification & validation”.

Actually CEC followed TANEEB’s Standard Operation Procedure (SOP) and demanded a change order of one more set of steel shoring facility which must be used during the construction stage because of the special construction sequence of the main bridge and the owner’s tight time schedule.

TANEEB insisted on rejection of CEC’s request.

Therefore, CEC petitioned that this Dispute should be solved by arbitration court and finally won the case.


                      P4                  P5

Figure 1. Elevation of BIH-TAN Main Bridge of 2nd Northern Expressway       

1.      Definitions

1.1        The Project

Bih-Tan Bridge of 2nd Northern Expressway.

1.2        Introduction of the Project

The Reinforced Concrete post tensioned Bih-Tan bridge is one of the major bridges of Taiwan’s Second Northern Expressway. It is located 8 kilometers south of Taipei in the famous scenic suburban “Bih-Tan” area which many tourists visit for recreation purposes, and therefore it was necessary to build a unique-looking bridge with a long span in order to match the surrounding environment. The bridge has a height of 20 meters above the waterway level. The total length of the bridge is 800 meters with a 750-meter radius horizontal alignment. The bridge crosses Hsin-Tien Creek in two halves of 16.35 meters in width with 3 lanes each running on both north and south bounds. Refer to figure 1 the main bridge includes several piers designated as P4, P5 and the longest span in between which is 160 meters in length. This span was to be constructed using the cantilever segment method due to passing over Hsin-Tien Creek and the length of the span.

Bih-Tan bridge is a structure of rare appearance and a unique example of innovative design and advanced bridge construction technology.

The total amount of CEC’s works on this project is approximately US$ 50 million.

The superstructure and arch girders of piers P4 and P5 of the main bridge must be constructed by a grounded shoring method.

I was assigned to be deputy site manager and site manager of CEC of above project from Sept. 1992 to Dec. 1996.

1.3        The Project Owner

The owner is the Taiwan Area National Expressway Engineering Bureau   (TANEEB), Ministry of Transportation and Communications.

1.4        The Tenderer/Contractor

The tenderer/contractor is Continental Engineering Corporation (CEC) who submitted a proposal for the work contemplated and after the contract award actually executed the work and completed the project.

1.5        The Engineer

T.Y. Lin International was appointed by the owner to act as engineer for supervising the construction of the work on behalf of TANEEB.

1.6        CCO (Contract Change Order)

This is a contract term meaning a written order issued by the owner/supervision consultant to the contractor, covering changes in the work within the scope of the contract and establishing the basis of payment and time adjustments for the work affected by the changes.

1.7        SOP (Standard Operation Procedure)

These are issued by TANEEB, and all parties who join the project are required to follow them.

2.      Descriptions

2.1        Background to Dispute

2.1.1  The Format of the Bid

Originally the project is issued for competitive bids as usual, but it fails to be awarded because there was only one tenderer (CEC). Therefore, TANEEB changed its bid policy from a competitive bid to a negotiated bid with CEC.

2.1.2  The Third Negotiation Meeting

CEC cut the price on the eleventh quotation and mentioned at the same time that the reason why the purchase and assembly expense of the steel shoring facility was so high was because it required 2 sets of this steel shoring system which can only be used 2 times each according to the construction sequence of the main bridge elements P4 & P5. This was during the third negotiation meeting held on 2nd Sept. 1989. It was noted that TANEEB shall issue a CCO to reduce the payment to CEC no matter that the number of set of steel shoring system be reduced or the number of times of using same steel shoring facility be increased during the future construction if the tenderer’s proposal is accepted and awarded according to the conclusion of meeting minutes.

2.1.3  The Fourth Negotiation Meeting

A compromise between TANEEB and CEC could not be reached because CEC would not cut down its last quotation in the fourth negotiation meeting.

2.1.4  The Fifth Negotiation Meeting

TANEEB clarified that the steel shoring facility of the main bridge can be used 4 times according to their estimation of the budget and CEC is requested to provide a quotation on the same basis. It was noted that TANEEB may issue a CCO if one set of steel shoring facility cannot be used 4 times during construction and also it is assured by the Engineer’s verification & validation. This agreement arose in the fifth negotiation meeting held on 11th Oct. 1989. Finally, CEC submitted the last price with deduction of US$ 1.6 million based on the above condition. This quotation was then accepted by TANEEB because CEC’s revised quotation was now below their budget.

2.1.5  Logic Calculation of Construction Time

Basically for safety reasons, there is an unchangeable sequence required by the original design during construction of the main bridge superstructure. This provides that the steel shoring facilities of the main bridge will not be allowed to be removed immediately after the superstructure (P4 & P5) is completed but must remain until the side spans P3 & P6 are completed.

Actually it needed 318 days to construct the arch girders and top girder of the main bridge pier, and hence it would take 1257 days if one set of steel shoring facility must be used 4 times excluding 15 days to dismantle the shoring facility at the last pier P4S.

Therefore, in addition to 534 days for mobilization, substructures, parapets, expansion joints, and asphalt concrete pavement, the total construction time needed for this project would be 1791 days which was 441 days over the original contract schedule, set by the owner. Quite obviously, to achieve the shorter programme, it is necessary to have a 2nd set of steel shoring facility.

2.2        The Disagreement and its Process

2.2.1  The Contractor to notify the Owner

(1)   CEC mentioned that the proposed construction period of piers P4N and P5N are almost the same in the basic construction program when it was submitted in the beginning of the construction phase, and this period and programme was formally approved by TANEEB later on. In other words, TANEEB, in accepting the program, agreed for CEC to use 2 sets of steel shoring facilities during the construction of 4 piers of the main bridge.

(2)   Actually CEC used 2 sets of steel shoring facilities to construct piers P4N and P5N of south bound bridge with only a month difference no matter when they commenced or completed, and then CEC sent a demand letter to the Engineer for CCO of 2nd set of steel shoring facility at the time of commencing construction of the last two piers P4S and P5S of the north bound bridge.

2.2.2  The Engineer’s verification & validation

The Engineer assured that one set of steel shoring facility could not be used 4 times. It was necessary to have a 2nd set of steel shoring facility-this Engineer’s verification & validation was according to T.Y. Lin’s memo and TANEEB’s negotiation meeting minutes dated on 4th May 1994 and 26th April 1994 respectively.

2.2.3  The Engineer’s Disagreement to Pay

(1)  The Engineer considered that the time when CEC requested the CCO was too late to make a proper decision, which could have addressed extension of time and /or additional payment.

(2)  The Engineer thought that one set of steel shoring facility should consist of steel pipe shoring facility and special steel H beam supporting facility. He considered that the former belongs to general shoring material and so, there is no problem in the number of times of use of same set of steel shoring facility, and the latter is originally 2 sets in his budget. In this way he sought to disagree this additional payment.

2.2.4  CEC Response to the Engineer’s Disagreement

(1)   Actually the time when CEC notified the owner was not so late according to section 2.2.1. Furthermore, a CCO should be actively issued by the Engineer to CEC after it was assured by Engineer’s verification & validation in accordance with section 4.5(1), “Contract Change Order” of General Provisions.

(2)   CEC thought it is necessary to have the 2nd set of steel pipe shoring facility to achieve the short construction time according to section 2.1.5 “logic calculation of construction time”. In the meantime this set of steel pipe shoring facility is so special and unique that it can not be used (and was not used) in any other places on the project. CEC did not know that there were 2 sets of special steel H beam supporting facilities in TANEEB’s budget because it is not disclosed to the tenderer and also not a document of the contract. CEC’s revised quotation was based on one set of steel shoring facility for using 4 times in accordance with section 2.1.4 “conclusion of the fifth price negotiation meeting”.

2.3         Recourse to Arbitration

2.3.1  The Notice to Arbitration

CEC were dissatisfied with any such decision by the Engineer and appealed such decision to TANEEB. Both TANEEB and CEC attempted in good faith to settle such dispute by negotiation, but the settlement could not be reached because TANEEB absolutely insisted on his objection.

2.3.2  The Dispute Process Procedure

The Engineer might act as an expert from his skill and knowledge but should not to be considered an arbitrator. CEC were dissatisfied with TANEEB’s resolution regarding their appeal and followed the (SOP) procedure No.7170 “Flow Chart of Processing Claims and Disputes” when the above dispute continued unresolved between TANEEB and CEC.

2.3.3  Recourse to Arbitration

CEC demanded that the dispute should be settled by means of arbitration. This notice was served on 10th Mar. 1995.

The procedure required that three arbitrator shall be selected to form the Board of Arbitration. Two of them should be appointed by both TANEEB and CEC respectively, and the third arbitrator was to act as an umpire jointly selected by the arbitrators from both parties.

3.      The Arbitration

3.1         The Amount of the Claim

The total amount which CEC claimed for the 2nd set of steel shoring facility was approximately US$ 1.4 million. The owner maintained that there was nothing further to be paid.

3.2         The Arguments in Arbitration

The Owner’s arguments remained as per section 2.2.3 above. The Contractor principal argument remained as per section 2.2.1 with counter-arguments remaining as per section 2.2.4 above.

3.3         The Conduct of the Arbitration

Hearings were held as per the following dates:

(1)   Hearing No. 1 was held on 21st Jan. 1997

(2)   Hearing No. 2 was held on 6th Mar. 1997

(3)   Hearing No. 3 was held on 5th May 1997

Two number witnesses were heard on behalf of the owner, and three number witnesses were heard on behalf of the Contractor.

3.4         The Award

The award was provided on 21st Oct. 1997. The Board determined that CEC were entitled to the additional expenses to be paid and awarded US$1.4 million as CEC requested. In addition, the Board determined that the costs of the arbitration should be fully paid by the owner, including reimbursement of CEC’s legal costs and that the award should be subject to the interest with annual rate 5% from the date of when the original CCO should have been issued. CEC received reimbursement promptly after the award.

4.      Observations from the Dispute

Certain observations are noted here by the author of this paper, which may be taken as suggestions or “lessons learned” in the due process of this dispute.

4.1         Good Understanding of the Contract

No matter who you are, whether you be the project owner, the engineer, or the contractor, it is your duty to pay attention to the contract documents, and be assured that all the contents of the contract are fully understood by all persons involved in the administration of the contract, especially in those parts of the documents dealing with project cost and construction time.

4.2         Sufficiently Collecting Information and Immediate Actions

Normally the contractor should collect sufficient information as the engineer/owner requires and carry out appropriate actions immediately as the contract progresses. This is vital if he wants to have a successful job.

4.3         Carefully making a decision

If I were the chairperson I would not tell the tenderer how the owner estimated his budget and not promise the tenderer anything when requesting the tenderer to cut down his quotation in the price negotiation meeting.

5.      Conclusions

Certain conclusions are noted here by the author of this paper.

The principal reasons why CEC could win this dispute in the arbitration court is based on following 3 helpful conditions :

5.1         Precedence of Conflicting Provisions

In the event of conflict or inconsistency among any of the provisions of the various portions of the contract, the minutes of the price negotiation meeting shall be first priority in precedence order.

5.2         The Reasonable Amount of The Claim

It is reasonable that the amount CEC claimed is about US$ 1.4 million which is very closed to the deduction of US$ 1.6 million from the last quotation in the fifth price negotiation meeting.

5.3         Meet Contract Requirements

It is very important that everything CEC did met the contract requirements after the contract was signed. There were no default items that were observed by the Engineer/Owner. The project was actually completed on time as a result of the actions taken by CEC to provide the necessary sets of equipment to meet the program.

6.      References

6.1        General Provisions, Standard Specifications for Construction, Issued by the Taiwan Area Freeway Construction Bureau, Ministry of Transportation and Communications.

6.2        Agreement of the Project – Bih -Tan Bridge of 2nd Northern Expressway.

6.3        Standard Operation Procedure (SOP), Issued by the Taiwan Area National Expressway Engineering Bureau (TANEEB), Ministry of Transportation and Communications.


I, a sincere and diligent man, was born in Nanjing, China and grew up in Kaohsiung and Taipei, Taiwan.
I graduated from a certain university in Taiwan and earned a master degree in civil engineering from an American University. I have ever been a civil engineer for more than thirty-eight years which including 5 year experience of bridge maintenance in the Kingdom of Saudi Arabia. Fortunately I had joined some of very famous bridge construction projects in Taiwan, such as Guan-Du highway bridge in Taipei and Bih-Tan bridge of second Freeway in Hsin-Tien city. In the years from 1997 to 2009 I had worked with Taiwan High Speed Rail, which has ever been the biggest BOT project in the world. Recently since May of 2010 until the end of 2013 I joined in China High Speed Rail project with a Germany consultant company (DB International) in Zhejiang province.
I am a man who will try hard to succeed and will not give up when I set a goal.
Reading, walking, playing basketball and listening music are my major hobbies at my leisure. In the mean time, I like to make friend with and talk various topics with the person who is from any place of the world.