Ann: Response to Civmec Legal Action, page-39

Civmec stated that they were delayed by AJM. Not knowing the details, there is every possibility that this is true. The usual suspect (as named by CVL) is late engineering. AJM contracted the engineering services directly (not under Civmec under a "Design and Construct" form of contract). As such, it is AJM's obligation to provide engineering to CVL in accordance with nominated dates under the Contract. Recent industry experience indicates that late engineering (and in some cases inaccurate/wrong engineering) is a big contributor to project cost and schedule overruns. Unfortunately for the likes of AJM, recourse to the engineering provider is typically limited to reperformance of services, or profit-at-risk type of provisions, and engineering providers carry no liability towards consequential cost and schedule impacts.

(In all of this, I am making the assumption that the contracts between CVL, AJM, and AJM and others are based on AS4000 with little deviations.)

Hence my assertion that, based on experience and admittedly scant information, I think that CVL has entitlement to a claim of some sorts. In which case AJM's entitlement to, and application of Liquidated Damages may be invalidated by the court.

With regards to Civmec not being a tier-1. Let me qualify that by saying that I wasn't specific enough - I was referring to Civmec's ability to perform on-site construction.

Civmec in recent times invested heavily in fabrication facilities south of Perth, targeting the marine and defence sectors. They also do lots of steel and module fabrication for other industry sectors. As a fabricator, their facilities (and abilities) are impressive - tier-1 within the Australian context, but probably not on par with the larger fabricators in Korea/China etc.

As far as their ability to manage construction works on-site, I would not rate them tier-1. Tier-3/4 as I indicated. I cannot provide more details, unfortunately.