Almost the first question that could be asked when talking about business projects, in general, and construction projects, in particular, would be “What is the expected time for completion”. Time is one of the most important factors when dealing with contracts. Completing the work within the time limit is a contractual obligation. And the failure to meet this obligation is a “breach of contract” which allows the other party to claim for liquidated damages from the defaulting party. Work can be delayed due to different reasons and many of them are not the Contractor’s fault. For example, the Employer might not provide all the information needed by the Contractor for the purpose of the Works. There could be a delay in delivering the building material to the site. And many other unforeseen or exceptional events might occur. In these cases, Contractor may request what is called “extension of time” or “EoT”. Contracts normally do preserve the right for compensation for time-impacting incidents and events clearly identified in the provisions.
“Extension of Time” Claims: A challenging process?
The process of requesting such “extension of time” (as mentioned in FIDIC contracts) or “compensation events” (as mentioned in NEC contracts) is sometimes complicated and tricky. Hence, it is particularly important for the Contractor to negotiate these terms and to try to explicitly mention all the events and scenarios in the Contract.
Complications in claiming “extension of time” come when more than one cause of delay is occurring simultaneously. Each has its own conditions that make it hard to calculate the amount of time to be extended. Other problems appear when the Employer considers that the delay in a particular part should not affect the remainder of the works or when it should not have impacted the overall completion time stated in the contract. The different approaches in contracts make the process of identifying the delay causes and their corresponding effects not an easy job.
The Claim: What should it include?
Contractors will do their best to prove delays and disruptions in their schedules. This process is time consuming where Contractors should collect all data and relevant information that support their claim for “extension of time”. Records are the key to a successful claim. The claim should clearly show the causes, liability and the disruptions suffered by the Contractor as a direct consequence of such delaying event.
Below are some of the records and issues that the claim must cover:
- The date when the event occurred;
- Affected tasks and activities from the schedule;
- Activities that took place, whether on-site or off-site, because of such delaying event;
- All the photographs, plans, and sketches related to this event;
- All communications that happened between the Contractor and the Employer in response of such delay;
- The actions taken by the Contractor to prevent and reduce any delay;
- Proposed solutions and alternative plans for the recovery phase.
It is important that the Contractor covers all the possible events when formulating the contract. Otherwise it makes the claim process more complicated and difficult and reduces the likelihood of a successful claim.
Below are examples of the most relevant events:
- National strikes;
- The Client did not provide the necessary information as agreed before a specified date or event;
- Force majeure (Exceptional Events that are beyond the control of the parties like pandemic or wars);
- The Client was late in providing the building material and goods to the site (if this was the Client’s responsibility);
- The Client was late in giving the Contractor access to the site;
- Delays due to authorities and in obtaining permits (unless attributable to the Contractor).
Conclusion and final thoughts on Extension of Time!
The schedule proposed by the Contractor before the commencement of the works is based on assumptions, likely events, wishful thinking and many other factors that might not turn out as expected. A contract should always ensure that “extension of time” is possible. Otherwise, we may end up in a “time at large” situation (which could be a good future blog post).
Although the standard “extension of time” clauses do provide the right to claim for delays, the Contractor should still make sure to timely notify the delays, to record the consequences and to properly formulate its claim in accordance with the Contract.
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