No matter how much you plan, prepare and assess risks, any project can still experience delays. There is always a chance of something unexpected popping up, and if it does, then the only thing you can do is manage the impact. But in the world of construction works and surveying, even small delays can cause big problems, which is why we do everything we can to reduce the chances of unexpected issues, and to minimise the impact they may have on a project. In todays blog, we will be discussing how managing the unexpected can prevent costly delays.
There is a specific person in any construction project whose job it is to monitor and manage the progress of the works on the clients behalf. This is role is commonly referred to as the Contract Administrator., The Contract Administrator, working along side the project teamwill assess the progress on the site and compare to the initial plan or programme. These programmes are often represented on charts with horizontal bars called Gant charts, These allow everyone to clearly see what stage the works are at, whether they are on track, behind or even ahead of schedule.
If the works are on time or ahead of schedule, that’s great! But if they have fallen behind, adjustments need to be made and, depending on the nature of the delay, the completion date can be affected and need to be adjusted. This is done using something called an Extension of Time Notice.
An Extension of Time Notice, also known as an EOT, is a contract mechanism designed to change the end date for ongoing works. Under most contracts these can only be granted for very specific reasons, called ‘Relevant Events’. Relevant Events are changes or occurrences outside of the Contractor’s control that can affect the works and cause delays. A few examples include:
It’s worth knowing that contractors are not allowed to use this to claim for delays caused by their own action or inaction on the project.
Whatever the reason given, it has to be valid under the terms of the contract, and Contract Administrations must be aware of and familiar with the wording in the contract, making sure their Clients are complying with their duties to help avoid unnecessary delays or penalties, and highlighting any potential extra costs that might be incurred.
Standard construction contracts will also state the timescales dictating when applications for an Extension of Time need to be issued by the Contractor. They normally say that this should happen as soon as it is reasonably apparent that a delay will be suffered, and the contractor has to submit the application forthwith, meaning without delay.
If an application for an Extension of Time notice is made, then it needs to include the relevant contract clause (or ‘event’) that matches the reason for the delay. It also needs to provide a statement confirming why the delay occurred, as well as an assessment of the time impact the delay will have on the project. They do have the opportunity to submit this last part later if a full analysis of the impact is yet to be completed.
Once this notice has been issued, the Employer has to respond to the notice within the set time frame, which can be found in the Contract. If the Employer agrees that a Relevant Event has occurred and the delay will cause the works to be finished after the contract completion date, then they must issue a suitable Extension of Time Notice.
However, if they assess that the event being claimed for doesn’t meet the definition of the Relevant Events in the contract, or the delay doesn’t affect the ‘critical path’ of the works, then they will need to confirm this in writing with the Contractor.
For example, if a contractor can’t get access to the site at the start of the job because the ground decontamination phase is overrunning, this will meaningfully delay the completion of works, due to matters outside of the contractor’s control. This being so, this would meet one of the clauses contained within the relevant events section of the contract. Similarly, if one of the service providers fails to provide new connections for a significant time, then this can also cause a delay that will push back the completion date. However, if a Contractor tried to claim a delay due to their own mistake, or for an event that doesn’t prevent the remaining works from being completed on time, then this will be rejected.
The Extension of Time Notice pretty much does what it says on the tin. The time granted to complete the contract works will be extended. In some situations, this time may be reduced instead, and the completion date brought forward, but it can never be brought forwards to an earlier date than that in the original contract.
However, receiving the completed project later isn’t the only thing to be mindful of when managing the progress of a project. There can be a knock-on effect from pushing back completion that can have a significant impact.
Firstly, if the funding for the project is being borrowed, then the extra time will mean extra interest payments. This extra money has to come from somewhere, and the additional funding will usually be required at the end of a project when the highest amount of borrowing is being carried (since funds are normally released in stages). Depending on the delay, this could have costly implications for the project.
Secondly, depending on what caused the delay, the contractor may be within their rights to claim for additional ‘running’ costs, which are also called preliminary costs. If extra time is granted and the delay is covered under the definition of ‘Relevant Matter’ in the contract, then the Contractor will be able to claim for additional money to keep the site open, operational and staffed for the additional period. On bigger projects, this can add up quickly!
The reality is, delays and changes to projects happen on a fairly regular basis, but the key to managing them properly is developing an open and trusting project team who can work together to keep the delay to a minimum.
Regular communication between everyone involved in the project ensures everyone is acting in an open and honest way, and means these people can work together to identify issues at the earliest possible opportunity so that mitigation efforts can be put in place. This is where a skilled Contract Administrator can really shine. It’s their job to foster this type of relationship and encourage all participants to highlight issues as soon as possible, even if they believe they will receive a potentially negative reaction. The truth of the matter is knowing the issues exist, this means that others can take action to manage the impact, or work together to resolve the issue altogether.
If you’re facing delays in a project, or want some support in managing the unexpected, then we would love to help. Just contact our friendly team here at Harrison Clarke on 02381 55 00 51, and we would be delighted to assist you.
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