Extension of Time in the Construction Industry
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Construction Contract Extension Of Time (EOT)
As a Specialist Contractor you will often find yourself being delayed on site, or even starting the job much later than planned. So, it’s important to know exactly what you should do to protect your interests.
Money and time are probably two of the biggest issues that cause disputes in construction. No surprise then that time and matters related to programme, completion, and extension of time have been, and will continue to be the subject of dozens of text books!
We have literally seen businesses destroyed by failing to secure extensions of time when their works have been delayed and disrupted. And if having read this information you are in any doubt about securing an extension of time (EOT) don’t forget to contact our friendly team at StreetwiseSubbie.
Programming and Delay
Delay can be caused by a variety of factors but high on the list is poor planning and programming. We have all experienced Contractors who couldn’t plan their way to the bar in Wetherspoons, and unfortunately what tends to happen is that all their Sub-Contractors suffer as a result!
If you do not complete your works by the contractual completion date and you cannot claim an extension of time, you may incur liability for substantial costs arising from the delay.
Remember that under most forms of sub-contract, liquidated and ascertained damages imposed on the Main Contractor by the Employer will be just part of a thick sandwich of costs in the form of a claim against you for general damages. The other parts of the claim being the Contractor’s own costs and any other Sub-Contractor that makes a claim against him as a result of your delay.
For more information about the difference between liquidated and general damages please see the Liquidated Damages section on the right-hand menu.
Make Sure You Know And Understand What The Contract Says About Time
When you are being delayed by circumstances and problems beyond your control, you have to be able to demonstrate the impact of those problems on your progress. It is imperative therefore that you plan and programme your works right from the start.
Ideally, planning should start at the time when you tender for the works. Your estimate of the cost of the work should take into account the proposed method of working and the time required/allowed to carry out the work.
In order to plan and programme effectively you need to know a certain amount of time related information which should be set out in the tender documents but may not be!
This information should include:
…the dates of possession and completion of the main contract works
…the order of works
…the dates between which the sub-contract works can be commenced
…the period required to approve drawings after submission.
When submitting your tender, you should set out the following information:
…the period you require for submissions of your drawings
…the time required for the execution of works on site
…the notice which you require to commence on site
…the period required for off-site work prior to commencement on site
…any other relevant time related information
It is essential that these items are completed carefully; taking into account all the factors which you consider will affect your works. By including such items in your tender, you will be identifying the factors outside your control (such as preceding works by other trades) that need to be in place to enable you to complete your works.
If these factors change when you subsequently come to do the work, then it will be easier to demonstrate that you have been prevented from completing your works in the way that you envisaged and are therefore entitled to an extension of time.
Date For Commencement
Many Sub-Contracts are entered into without the precise starting date having been established. How many times have you seen the words “to be agreed” inserted into the sub-contract documents? This is a very risky way for you to proceed.
If you do not have a starting date, or a definite window for commencement, how can you claim for extension of time in the event of delay?
And as regards that window for commencement i.e. the section which states something along the lines of “The Sub-Contract Works shall commence on site between … and … “, this needs to be as short as possible from your point of view. Obviously, from the Contractor’s point of view he will want it to be as long as he can get away with. I have seen periods of several months, which commits the Sub-Contractor to be ready to start at a weeks notice, any time during a 6 month period!
How can you possibly plan for that?
Please don’t risk entering into a sub-contract which does not contain a date of commencement, or a realistic window for commencement.
Programming and Progress
Under most Standard Forms of contract and related sub-contracts (other than the NEC contracts-please see the NEC section), you are obliged to carry out and complete your works in accordance with the time periods set out in the contract and not in accordance with the Contractor’s programme.
Some non-standard Sub-Contracts provide that the programme becomes a contract document and that your obligations as to time are defined in accordance with a programme. Trust me, this can be a very dangerous way to proceed. Consider the following clause from a non-standard form of contract:
“The Sub-Contractor will commence, carry out and complete the works in accordance with the Contractor’s requirements for the Main Contract Works and in accordance with any relevant programmes or revised programmes as the case may be. Such programmes will be available for inspection by the Sub-Contractor at the Site Office for the Main Contract Works and it is the duty of the Sub-Contractor to inform himself of any revision to the programmes or revised programmes or other requirements of the Contractor which might affect the Works. The Sub-Contractor will be deemed to have included the necessary cost of complying with such programmes”
As you can see a Sub-Contractor operating under this provision will be at considerable risk Let’s break it down and see how it might pan out.
“The Sub-Contractor will commence, carry out and complete the works in accordance with the Contractor’s requirements for the Main Contract Works…The sub-Contractor will be entirely at the mercy of and subject to “the requirements of the Contractor”. Start when he says start, do your work when he says, complete when he says you should complete.
“…and in accordance with any relevant programmes or revised programmes as the case may be,”
The Contractor’s original programme could be considerably revised during the progress of the works and you’ve guessed it you do your work when he says you do it and you complete when he says you should complete, even if that is nothing like his original programme.
“Such programmes will be available for inspection by the Sub-Contractor at the Site Office for the Main Contract Works and it is the duty of the Sub-Contractor to inform himself of any revision to the programmes or revised programmes…” The Contractor is not even obliged to issue a copy of his programme! The Sub-Contractor would have to acquaint himself constantly with revisions to the programme.
“…or other requirements of the Contractor which might affect the Works” Not only might he revise his programme, he might have some “other requirements” that the Sub-Contractor would be stuck with as well!
“The Sub-Contractor will be deemed to have included the necessary cost of complying with such programmes”
So not only does the Sub-Contractor have to jump through hoops for this Contractor he needn’t even bother to ask for any extra money-no matter how much more it costs!
What To Do If You Are Being Delayed and Disrupted
If things start to go wrong and you are prevented from doing your works when you were contracted to do so, you must ensure that any delay notices are issued in order to be entitled to extension of time.
DO NOT allow anyone to persuade you not to issue delay notices!
This is the oldest trick in the book, and one that has cost Specialist Sub-Contractors £millions over the years!
Some Contractors deliberately use this ruse to stitch up their Sub-Contractors, and the majority of the big national Contractors non- standard contracts make the giving of notice a condition precedent to your entitlement to extension of time and/or recovery of loss and expense.
Your notices must be prepared correctly and should record all the necessary information. Failure to do so could invalidate your claim or prevent you getting your full entitlement. What does this mean?
5 Top Tips On Extension Of Time For Subcontractors
Well here are 5 top tips to get you going and help protect your commercial position.
1. Make sure your notice relates to the contract
Any delay notice must relate to the provisions of the contract including any bespoke amendments. Each contract will potentially have slightly different requirements in respect of delay notices, what is required, when it is required and even what they are called.
One of the worst things you can do is assume that the notice requirements are the same as your previous job. Make sure anyone who is in a position to submit a delay notice knows what the requirements under the contract are.
2. Record as many facts as possible
A lot of time and effort can be expended trying to research the background and facts of a delay notice in 1 or 2 years time after the event. Wherever possible include as many facts and cross references to relevant documents as possible.
Will you be able to remember all the issues in say 2 years time? Will you be able to remember what drawing/sketch/part of the building you were referring to? The best approach is often to imagine you know nothing about the project, could you read the delay notice and make an assessment of the impact? If the answer is no then you may need to do some more work.
3. Give the notice on time
If your contract has strict terms regarding time limits make sure you are aware of them, and submit the relevant notices within those timescales. Under some forms of contract not providing the necessary notice on time will result in you losing an entitlement to an extension of time. Even under contracts where this is not the case, not providing notice as soon as possible could leave you in a weakened commercial position.
4. Back up the notice with evidence
Don’t rely on anyone else to have details of the delay issue. They might be the party who ends up making the final decision if the issue gets referred to Adjudication or Arbitration, and/or be keen to see your claim fail.
Wherever possible supply back up information to support the delay notice, if you can cross reference all other information, including, if possible, a programme showing the effect on the works. If you can’t send back up information at the time then follow it up as soon as you can with further information.
5. Think carefully about mitigation proposals
Say you are delayed by 6 weeks, think carefully before you say you can mitigate this to 3 or 4 weeks. Can that mitigation actually be achieved? Whilst most construction contracts contain a requirement to mitigate any delays, don’t put forward a proposal which actually carries a high level of programme risk.
If you have been delayed by 6 weeks for reasons outwith your contracted responsibility then so be it, that is the effect. If you can mitigate this, then great, but why say something to the Contractor that is very tight, or can’t actually be achieved. It is far better to be upfront and say this is the effect of the delay, we will try and mitigate this if possible.
In addition, consideration and care should be given when considering bringing additional resources onto the project. Do you have an express agreement for the recovery of any additional costs? What impact will they really have?
Above all else remember that the aim is to try and demonstrate / describe the effect of a delay issue on the works, be that the end date, a sectional completion date or a section of the programme. Whatever information is provided should be geared to achieving this aim as quickly and efficiently as possible.
The “Real World”
Please, please, don’t say; ”But, it doesn’t work like that in the real world.”
In the “real world” we have seen the Contractor’s set offs and claims against his Sub-Contractor, literally destroy the subbie’s business.
If you do not protect your position by securing extensions of time it could cost you dearly. There is no shortcut, no easy answer. No quick fix. But there are steps you can take and with our help you can protect your business and sleep easier at night.
Whilst most of these tips may seem like common sense we find that in practice that they are not carried out, and some Sub-Contractors will still try and argue that it doesn’t work like that in their “real world”. Do not be one of them!
If you simply haven’t got time to deal with all of this or are still unsure about what to do; or have any other business problem whatsoever and you can’t find what you are looking for, then why not give our friendly team a call on 01773 712116 and get some Free Advice**, or email us on firstname.lastname@example.org.
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