Extension of Time (EOT) and Related Costs Extension of Time (EOT) and Related Costs in Construction

•Time is of Essence

•Delays are inevitable on construction projects

•Time and Money go hand-in-hand. When projects get delayed,

additional costs are incurred to all the parties .

•This makes it imperative to take control of project delays; timely and

effectively.

•Majority of construction projects worldwide are administered by the

FIDIC forms of contract.

•FIDIC recognises delay and related costs and has provisions related

thereto. For example;

� Sub-Clauses 8.4 & 20.1 (FIDIC 1999 Edition)

FIDIC

FIDIC

FIDIC

FIDIC

FIDIC

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� Clauses 44 & 53 (FIDIC 1987 Edition)

The FIDIC Provisions define the conditions where delay may be claimed as the basis for an Extension of Time (EOT). Some examples are;

� Late provision of design or drawings

� Unforeseeable Physical Conditions encountered on Site

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� Unforeseeable Physical Conditions encountered on Site

� Inclement Weather

� Variations instructed by the Engineer (Additional Works etc.)

Meanwhile the principles of how delay and relatedcosts should be calculated are not defined by FIDIC.This leads to issues;

issues which are usually contentious due to various

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issues which are usually contentious due to various'schools of thoughts' and varied interpretationsexisting worldwide.

Disputes are the usual outcome.

Contentious Issues in Delay Analysisresulting in Disputes

– Critical Path

– Who owns the Float?

– Concurrent (or Contractor) Delays and how these effect Entitlement

– EOT and its relation with Compensation for Delay

– Which is the best Method of Delay Analysis?– Which is the best Method of Delay Analysis?

» As-Planned Vs. As-Built Comparison

» Impacted As-Planned

» Collapsed As-Built / But-For

» Time Slice / Sub-Networks / Time-Impact

» Etc.

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In order to eliminate disputes or facilitate settlement of disputes, there are now certain standards used worldwide. The leading standards are;

� Society of Construction Law’s

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� Society of Construction Law’sDelay and Disruption Protocol (SCL Protocol)

� AACE 29R-03 (Forensic Schedule Analysis)

The SCL Protocol was finalized in October 2002 after several years of deliberations and considerable debate and

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and considerable debate and agreement between experts from different backgrounds

The objective of the SCL Protocol

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The objective of the SCL Protocol was to bring reasonableness and fairness into the delay assessment

process and to eliminate widespread manipulation of

complex delay issues

The SCL Protocol tried to standardize

the issues such that disputes would be

reduced or eliminated

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It is recommended that;

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should be adopted as a Standard and should be, where possible, incorporated in the Construction

Contracts

The SCL Protocol can be downloaded from:

http://www.ibclegal.com

www.eotprotocol.com

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The remaining slides of this lecture will review and discuss the basic Principles suggested and recommended by the

SCL Protocol

Basic Principles suggested and recommended by

the SCL Protocol

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The Principles suggested by the SCL Protocol are simple.

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Some of the key principles suggested by the Protocol are;

RULE NO. 1

If there is an Employer’s delay, which is beyond the Contractor’s control, and if this delay impacts the Completion Date of the Works,

the Contractor should be entitled to receive an Extension of Time (EOT).

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[This will effectively result in an extended Time for Completion and will relieve the Contractor from having to pay penalties for delay (or

Delay Damages under FIDIC)]

RULE NO. 2

For the case of recovery of delay (or prolongation) costs incurred due to the Employer delays, the Contractor must be able to prove that there has been no other delay, which is in his own control, and which is equally

(or partly) contributing for delaying the Time for Completion.

This category of delay is called a ‘Concurrent’ (or Contractor’s) Delay

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(or Contractor’s) Delay

[In order to win a Delay Costs Claim, the Contractor must be able to prove that he has not been responsible for Concurrent Delays to

the Time for Completion]

RULE NO. 3

Where Contractor’s Delay to Completion occurs concurrently with Employer’s Delay to Completion, the Contractor’s concurrent

delay should NOT reduce anyExtension of Time (EOT), which is due.

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Extension of Time (EOT), which is due.

[Result of Rule No. 1 will not change and is irrespective of the result of Rule No. 2]

The foregoing Rules proposed by the SCL Protocol are meant to bring fairness and reasonableness into the

delay assessment process.

[The emphasis of the SCL Protocol is that no one Party

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[The emphasis of the SCL Protocol is that no one Party should benefit from default of the other Party]

The Illustrations demonstrating the principles of the SCL Protocol are contained in the following Figures A to G

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Protocol are contained in the following Figures A to G

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Path 1 Float = 3.5 Weeks

Figure A - Accepted Contract Programme

Weeks

Path 1

Contract Start Contract

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Path 2 Float = 5.5 Weeks

Path 2

Contract Start

Date

Contract

Completion Date

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

PRIOR TO EXCUSABLE DELAY (UPDATE WITH ACTUAL PROGRESS)

Path 1 Float = 3.0 Weeks

Path 2 Float = 5.5 Weeks

AFTER EXCUSABLE DELAY

Excusable Delay

<=Date of Excusable Delay

Figure B - Delay Impact 1

Weeks

Path 1

Contract Start

Date

Contract

Completion Date

Impact on Path 1

= 2.0 Weeks

Path 2

Path 1

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Excusable Delay

Path 1 Float = 1.0 Week

Path 2 Float = 5.5 Weeks

(a) 2.0 Weeks (a) 5.5 Weeks

(b) 1.0 Weeks (b) 0 Weeks

(c) 0 Weeks (c) 1.0 Weeks

(d) 5.5 Weeks (d) 2.0 Weeks

(a) 2.0 Weeks (a) 0.1% of Contract Price

(b) 1.0 Weeks (b) Direct Costs of Excusable Delay

(c) 0 Weeks (c) NIL

(d) 5.5 Weeks (d) (a) plus (b)

Path 2

(3) Compensation for Delay to

Progress

(1) EOT Entitlement (2) Period of Prolongation Costs

(4) Other Compensation

Contract

Completion Date

Principles & Provisions of the SCL Protocol relevant to Figure B

Core Principle No. 7 - Float as it relates to timeUnless there is express provision to the contrary in the contract, where there is remainingfloat in the programme at the time of an Employer Risk Event, an EOT should only begranted to the extent that the Employer Delay is predicted to reduce to below zero the totalfloat on the activity paths affected by the Employer Delay.

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Guidance Section 1.12.1If as a result of an Employer Delay, the Contractor is prevented from completing the worksby the Contractor’s planned completion date (being a date earlier than the contractcompletion date), the Contractor should in principle be entitled to be paid the costsdirectly caused by the Employer Delay, notwithstanding that there is no delay to thecontract completion date (and therefore no entitlement to an EOT), provided also that atthe time they enter into the contract, the Employer is aware of the Contractor’s intention tocomplete the works prior to the contract completion date, and that intention is realistic andachievable.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

PRIOR TO EXCUSABLE DELAY (UPDATE WITH ACTUAL PROGRESS)

Path 1 Float = 3.0 Weeks

Path 2 Float = 5.5 Weeks

AFTER EXCUSABLE DELAY

Excusable Delay

Impact on Path 1

= 3.5 Weeks

Path 2

Path 1

<=Date of Excusable Delay

Figure C - Delay Impact 2

Weeks

Path 1

Contract Start

Date

Contract

Completion Date

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Excusable Delay

Float = -0.5 Week

(a) 0.5 Weeks (a) 5.5 Weeks

(b) 3.5 Weeks (b) 0.5 Weeks

(c) 0 Weeks (c) 3.5 Weeks

(d) 5.5 Weeks (d) 0 Weeks

(a) 3.5 Weeks (a) 0.15% of Contract Price

(b) 0.5 Weeks (b) Direct Costs of Excusable Delay

(c) 0 Weeks (c) (a) plus (b)

(d) 3.0 Weeks (d) NIL

Contract

Completion Date

Path 2

(3) Compensation for Delay to

Progress

(1) EOT Entitlement (2) Period of Prolongation Costs

(4) Other Compensation

Core Principle No. 4 - Procedure for granting extension of timeThe EOT should be granted to the extent that the Employer Risk Event isreasonably predicted to prevent the works being completed by the thenprevailing contract completion date…..The goal of the EOT procedure isthe ascertainment of the appropriate contractual entitlement to an EOT; theprocedure is not to be based on whether or not the Contractor needs anEOT in order not to be liable for liquidated damages.

Principles & Provisions of the SCL Protocol relevant to Figure C

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EOT in order not to be liable for liquidated damages.

Core Principle No. 5 – Effect of delayFor an EOT to be granted, it is not necessary for the Employer Risk Eventalready to have begun to affect the Contractor’s progress with the works,or for the effect of the Employer Risk Event to have ended.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

PRIOR TO EXCUSABLE DELAY (UPDATE WITH ACTUAL PROGRESS)

Path 1 Float = 3.0 Weeks

Path 2 Float = 5.5 Weeks

AFTER EXCUSABLE DELAY

<=Date of Excusable Delay

Figure D - Delay Impact 3

Weeks

Path 1

Contract Start

Date

Contract

Completion Date

Path 2

Path 1

Contract

Completion Date

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Float = -0.5 Week

Excusable DelayImpact on Path 2 = 6.0 Weeks

(a) 0 Weeks (a) 5.5 Weeks

(b) 6.0 Weeks (b) 0 Weeks

(c) 0.5 Weeks (c) 6.0 Weeks

(d) 5.5 Weeks (d) 0.5 Weeks

(a) 3.5 Weeks (a) (d) minus (c)

(b) 0.5 Weeks (b) Direct Costs of Excusable DelayNIL

(c) 6.0 Weeks (c) Direct Costs of Excusable Delay

(d) 3.0 Weeks (d) 0.2% of Contract Price

Completion Date

Path 2

(3) Compensation for Delay to

Progress

(1) EOT Entitlement (2) Period of Prolongation Costs

(4) Other Compensation

Core Principle No. 4 - Procedure for granting extension of timeThe EOT should be granted to the extent that the Employer Risk Event isreasonably predicted to prevent the works being completed by the thenprevailing contract completion date…..The goal of the EOT procedure isthe ascertainment of the appropriate contractual entitlement to an EOT; theprocedure is not to be based on whether or not the Contractor needs anEOT in order not to be liable for liquidated damages.

Principles & Provisions of the SCL Protocol relevant to Figure D

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EOT in order not to be liable for liquidated damages.

Core Principle No. 5 – Effect of delayFor an EOT to be granted, it is not necessary for the Employer Risk Eventalready to have begun to affect the Contractor’s progress with the works,or for the effect of the Employer Risk Event to have ended.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

PRIOR TO EXCUSABLE DELAY (UPDATE WITH ACTUAL PROGRESS)

Contract Completion Date

Float = -1.5 Weeks

AFTER EXCUSABLE DELAY

Contract Completion Date

Excusable Delay

Figure E - Delay Impact 4

Weeks

Path 1

Contract Start

Date

<=Date of Excusable Delay

Path 2

Path 1

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Excusable DelayImpact on Path 1 = 2.0 Weeks

Float = -3.5 Weeks

(a) 3.5 Weeks (a) 2.0 Weeks

(b) 2.0 Weeks (b) 0 Weeks

(c) 1.5 Weeks (c) 3.5 Weeks

(d) 0 Weeks (d) 1.5 Weeks

(a) 3.5 Weeks (a) (c) plus (d)

(b) 2.0 Weeks (b) Direct Costs of Excusable DelayNIL

(c) 3.0 Weeks (c) Direct Costs of Excusable Delay

(d) 0 Weeks (d) 0.1% of Contract Price

Path 2

(3) Compensation for Delay to

Progress

(1) EOT Entitlement (2) Period of Prolongation Costs

(4) Other Compensation

Guidance Section 1.2.11 …an EOT should be granted to the extent that the Employer Risk Event ispredicted to prevent the works being completed by the then prevailingcontract completion date. This process requires consideration of theavailable float…

Guidance Section 1.4.12

Principles & Provisions of the SCL Protocol relevant to Figure E

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Guidance Section 1.4.12…Where there has been Employer Delay, this may prevent the Employercharging the Contractor with LDs for failure to achieve a contractcompletion date…

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

PRIOR TO EXCUSABLE DELAY (UPDATE WITH ACTUAL PROGRESS)

<=Date of Excusable Delay

Contract Completion Date

Float = -1.5 Weeks

AFTER EXCUSABLE DELAY

Contract Completion Date

Impact on Path 1 = 2.0 Weeks

Figure F - Delay Impact 5

Weeks

Path 1

Contract Start

Date

Path 2

Path 1

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Impact on Path 1 = 2.0 Weeks

Excusable Delay

Float = -3.5 Weeks

(a) 2.0 Weeks (a) 0 Weeks

(b) 3.5 Weeks (b) 2.0 Weeks

(c) 1.5 Weeks (c) 3.5 Weeks

(d) 0 Weeks (d) 1.5 Weeks

(a) 3.5 Weeks (a) (c) plus (d)

(b) 2.0 Weeks (b) Direct Costs of Excusable DelayNIL

(c) 3.0 Weeks (c) Direct Costs of Excusable Delay

(d) 0 Weeks (d) 0.1% of Contract Price

Path 2

(3) Compensation for Delay to

Progress

(1) EOT Entitlement (2) Period of Prolongation Costs

(4) Other Compensation

Guidance Section 1.4.8Where an Employer Risk Event occurs after the contract completion date, in asituation where failure to complete by the contract completion date has been causedby Contractor Delays, the principle set out in Section 1.4.7 above should apply,except where the Employer Risk Event is a non-compensable Employer Risk Event.In such an event, no EOT (or compensation) should be due. Where an EOT is due

Principles & Provisions of the SCL Protocol relevant to Figure F

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In such an event, no EOT (or compensation) should be due. Where an EOT is dueafter the contract completion date, the Employer Risk Event does not exonerate theContractor for all its delays prior to the Employer Risk Event occurring. The effectof the Employer Risk Event should be assessed as described above and any EOTfound due should simply be added to the contract completion date.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

PRIOR TO EXCUSABLE DELAY (UPDATE WITH ACTUAL PROGRESS)

<=Date of Excusable Delay

Contract Completion Date

Float = -1.5 Weeks

Path 2 Float = 2.5 Weeks

AFTER EXCUSABLE DELAY

Contract Completion Date

Path 1

Figure G - Delay Impact 6

Weeks

Path 1

Contract Start

Date

Path 2

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Float = -1.5 Weeks

Excusable Delay = 3.5 Weeks

(a) 2.5 Weeks (a) 0 Weeks

(b) 3.5 Weeks (b) 2.5 Weeks

(c) 1.0 Weeks (c) 3.5 Weeks

(d) 1.5 Weeks (d) 1.5 Weeks

(a) 0 Weeks (a) (b) plus (d)

(b) 2.0 Weeks (b) Direct Costs of Excusable Delay

(c) 3.0 Weeks (c) NIL

(d) 3.5 Weeks (d) 0.2% of Contract Price

Path 2

(3) Compensation for Delay to

Progress

(1) EOT Entitlement (2) Period of Prolongation Costs

(4) Other Compensation

Guidance Section 1.4.1Where Contractor Delay to Completion occurs concurrently with Employer Delay toCompletion, the Contractor’s concurrent delay should not reduce any EOT due.

Guidance Section 1.4.7Where Employer Risk Events and Contractor Risk Events occur sequentially buthave concurrent effects, here again any Contractor Delay should not reduce theamount of EOT due to the Contractor as a result of the Employer Delay.

Principles & Provisions of the SCL Protocol relevant to Figure G – Slide 1/2

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amount of EOT due to the Contractor as a result of the Employer Delay.

Concurrency (Appendix A – Definations and Glossary)True concurrent delay is the occurrence of two or more delay events at the sametime, one an Employer Risk Event, the other a Contractor Risk Event and the effectsof which are felt at the same time. The term ‘concurrent delay’ is often used todescribe the situation where two or more delay events arise at different times, butthe effects of them are felt (in whole or in part) at the same time. To avoidconfusion, this is more correctly termed the ‘concurrent effect’ of sequential delayevents.

Core Principle No. 9 - Concurrent delay – its effect on entitlement to extension of timeWhere Contractor Delay to Completion occurs or has effect concurrently with EmployerDelay to Completion, the Contractor’s concurrent delay should not reduce any EOTdue.

Core Principle No. 14 - Link between extension of time and compensationEntitlement to an EOT does not automatically lead to entitlement to compensation (andvice versa).

Principles & Provisions of the SCL Protocol relevant to Figure G – Slide 2/2

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vice versa).

Core Principle No. 10 - Concurrent delay – its effect on entitlement to compensation for prolongationIf the Contractor incurs additional costs that are caused both by Employer Delay andconcurrent Contractor Delay, then the Contractor should only recover compensation tothe extent it is able to separately identify the additional costs caused by the EmployerDelay from those caused by the Contractor Delay. If it would have incurred theadditional costs in any event as a result of Contractor Delays, the Contractor will not beentitled to recover those additional costs.

Guidance Section 3.2.13Although the programme should be the primary tool for guiding theCA in his determination of EOT, it should be used in conjunctionwith the contemporary evidence to ensure that the resulting EOT isfair and reasonable. It will also be necessary for the parties to applycommon sense and experience to the process to ensure that allrelevant factors are taken into account, and that any anomalous

Key Guideline, Suggestion and Advice of the SCL Protocol

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relevant factors are taken into account, and that any anomalousresults generated by the programme analysis are managed properly.

Figure No. Question 1 Question 2 Question 3 Question 4

B (c) (b) (a) (b)

C (a) (b) (d) (b)

D (c) (d) (d) (c)

E (b) (a) (d) (c)

Correct Responses for Figures B to G

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F (a) (b) (d) (c)

G (c) (a) (a) (b)

Congratulations we have come to the end of

the Lecture.

You are now a Qualified and Certified Qualified and Certified Delay Claims Analyst

and Expert.

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FIDIC and Construction Solutionsthank you for your attendance and contribution.

We wish you all Good Luck.

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We urge all participants to review the SCL Protocol on their own. Construction Solutions’ Claims Management Division

(http://www.ibclegal.com) will remain available for further discussions on the foregoing and any other relevant issue.

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