Time extension in construction project

CONTRACTORS APPLICATION FOR AN EXTENSION OF TIME

NORHANA BINTI DANIAL

A project report submitted in partial fulfilment of the requirements for the award of the degree of Master of Science (Construction Management)

Faculty of Civil Engineering

Universiti Teknologi Malaysia

JUNE, 2007

PSZ 19 : 16 (Pind. 1/97)

CATATAN : * Potong yang tidak berkenaan. ** Jika tesis ini SULIT atau TERHAD, sila lampirkan surat daripada pihak

berkuasa/organisasi berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebagai SULIT atau TERHAD.

Tesis dimaksudkan sebagai tesis bagi Ijazah Doktor Falsafah dan Sarjana secara penyelidikan, atau disertasi bagi pengajian secara kerja khusus dan penyelidikan, atau Laporan projek Sarjana Muda (PSM).

UNIVERSITI TEKNOLOGI MALAYSIA

BORANG PENGESAHAN STATUS TESIS

JUDUL : CONTRACTORS APPLICATION FOR AN EXTENSION OF TIME

SESI PENGAJIAN: 2006 / 2007

Saya : _______NORHANA BINTI DANIAL________________ (HURUF BESAR)

mengaku membenarkan tesis (PSM/Sarjana/Doktor Falsafah)* ini di simpan di Perpustakaan Universiti Teknologi Malaysia dengan syarat-syarat kegunaan seperti berikut:

1. Tesis adalah hak milik Universiti Teknologi Malaysia. 2. Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk tujuan

pengajian sahaja. 3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran antara institusi

pengajian tinggi. 4. **Sila tandakan ( )

SULIT (Mengandungi maklumat yang berdarjah keselamatan atau

kepentingan Malaysia seperti yang termaktub di dalam AKTA RAHSIA RASMI 1972)

TERHAD (Mengandungi maklumat TERHAD yang telah ditentukan oleh organisasi/badan di mana penyelidikkan dijalankan)

TIDAK TERHAD

___________________________________

(TANDATANGAN PENULIS)

Alamat Tetap: 51, JALAN BELIBIS 15, TAMAN PERLING, 81200 JOHOR BAHRU, JOHOR.

Tarikh : 28 June 2007_

Disahkan oleh

___________________

(TANDATANGAN PENYELIA)

PROF. DR. MUHD ZAIMI BIN ABDUL MAJID

(Nama Penyelia)

Tarikh : 28 June 2007_

PDF processed with CutePDF evaluation edition www.CutePDF.comPDF processed with CutePDF evaluation edition www.CutePDF.com

*I/We hereby declare that *I/We have this project report and in *my/our opinion this report is sufficient in terms of scope and quality for the award of the degree of

*Master of Science (Construction Management).

Signature : Name of Supervisor : Professor Dr. Muhd Zaimi bin Abdul Majid Date : 28 June 2007

* Delete as necessary

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I declare that this project report entitled Contractors Application for an Extension of Time is the result of my own research except as cited in the references. The report has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.

Signature :

Name : Norhana Binti Danial

Date : 28 June 2007

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To my beloved mother and father

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ACKNOWLEGEMENT

In preparing this project, I was in contact with many people, researchers, academicians and practitioners. Firstly and of course, I wish to express my sincere appreciation to my project supervisor, Professor Dr. Muhd Zaimi Abdul Majid for his encouragement, guidance and friendship during the writing of this project. Secondly, to my fellow postgraduate student and also practitioner in the construction industry, Aniza Abu Bakar, for her kind assistance, views and tips in this master project. My other fellow postgraduate students should also be recognised for their support. Thanks also due to my parents for their support, and all my colleagues past and present who have offered numerous helpful suggestions.

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ABSTRACT

Invariably an evaluation of extension of time (EOT) will be made based on the information submitted by the contractor such as work programme and architects instructions. Lack of information of delay is one of the common mistakes by the contractor in the application of EOT and this can lead to obstacles in prompt settlement of claims for EOT. The objectives of this research are: to identify the information that needs to be considered in evaluating extension of time application; to identify the common mistakes by the contractor in the application of extension of time; and to identify the ways to reduce the mistakes by the contractor in the application of extension of time. The methodology of this study includes literature reviews, data collection and analysis. Data is gathered from responses of questionnaire survey with professionals involved in the construction project. The research findings indicate that insufficient quality of information and poor presentation of the application to show how the progress of the work has been delayed remained as the highest common mistakes. This research highlights the ways to reduce the mistakes to speed up the evaluation process in order to establish the contractors entitlement for EOT and also to avoid disputes about contractors entitlement for EOT. In conclusion, the mistakes could be best controlled or reduced by the implementation of a document management system.

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ABSTRAK

Penilaian lanjutan masa biasanya dibuat berdasarkan maklumat yang diserahkan oleh kontraktor seperti program kerja dan arahan arkitek. Kekurangan maklumat kelambatan adalah salah satu kesilapan biasa oleh kontraktor dalam permohonan lanjutan masa dan ini boleh membawa kepada halangan untuk penyelesaian segera tuntutan lanjutan masa. Objektif-objektif kajian ini adalah: mengenalpasti maklumat yang diperlukan dalam menilai permohonan lanjutan masa; menenalpasti kesilapan-kesilapan biasa oleh kontraktor dalam permohonan lanjutan masa; dan mengenalpasti cara-cara untuk mengurangkan kesilapan tersebut. Kaedah kajian ini termasuklah kajian literatur, pengumpulan data dan analisis. Data diperoleh daripada maklumbalas kajian soal selidik dengan professional yang terlibat dalam industri pembinaan. Penemuan kajian menunjukkan bahawa ketidakcukupan kualiti maklumat dan kekurangan dalam permohonan untuk menunjukkan bagaimana kemajuan projek menjadi lewat adalah kesilapan-kesilapan yang tertinggi. Kajian ini memfokuskan kepada cara-cara untuk mengurangkan kesilapan tersebut untuk mempercepatkan proses penilaian dalam memberikan hak kontraktor terhadap lanjutan masa dan juga untuk mengelakkan pertelingkahan tentang hak kontraktor terhadap lanjutan masa. Kesimpulannya, kesilapan-kesilapan tersebut dapat dikurangkan dengan melaksanakan sistem pegurusan dokumen.

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TABLE OF CONTENTS

CHAPTER TITLE PAGE

DECLARATION ii DEDICATION iii ACKNOWLEGEMENT iv ABSTRACT v ABSTRAK vi TABLE OF CONTENTS vii LIST OF TABLES xi LIST OF FIGURES xiii LIST OF APPENDICES xiv

1 INTRODUCTION

1.1 Introduction 1 1.2 Background 2

1.3 Problem Statement 4 1.4 Research Aims and Objectives 5 1.5 Research Scopes and Limitations 5 1.6 Importance of the Study 6 1.7 Research Methodology 7

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2 PROVISION OF EXTENSION OF TIME IN CONSTRUCION CONTRACTS

2.1 Introduction 11 2.2 Contract Provision for Extension of Time 12

2.3 Purposes of Extension of Time 24 2.4 Benefits of Extension of Time 24

2.5 Procedures for Claiming an Extension of Time 25 2.6 Conclusion 28

3 THE REQUIREMENTS IN THE APPLICATION FOR AN EXTENSION OF TIME

3.1 Introduction 29 3.2 Proof of Entitlement 30

3.2.1 Information That Needs to be Considered in Evaluating Extension of Time Application 32 3.2.1.1 Construction and Progress Records 33

3.3 Common Mistakes by the Contractor in the Application of Extension of Time 36 3.3.1 Major Mistakes 37 3.3.2 Lack of Proper Baseline Schedule 37 3.3.3 Lack of Proper Site Records and Insufficient Quality of Information 38

3.4 Practical Ways for Minimising Contractors

Mistakes in the Application of Extension of Time 39 3.5 Conclusion 41

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4 RESEARCH METHODOLOGY

4.1 Introduction 42 4.2 Literature Review 43 4.3 Selection of Respondents 43

4.4 Research Design 44

4.4.1 Questionnaire Survey Design 44 4.5 Analysis Method 47 4.5.1 Frequency Analysis 48 4.5.2 Average Index Analysis 48 4.6 Conclusion 51

5 RESEARCH ANALYSIS AND DISCUSSION

5.1 Introduction 52 5.2 Data Analysis for Questionnaire Survey 53

5.2.1 Analysis for General Information of the Respondent 53

5.2.2 Analysis for Background of Project 56 5.2.3 Analysis for Information That Needs

to be Considered in Evaluating Extension of Time Application 60 5.2.3.1 Information for Delays Relating

to Reason of Architects/ Superintending Officers Instructions 61

5.2.3.2 Information for Delays Relating to Reason of Late Instructions,

Drawings or Level 62

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5.2.3.3 Information for Delays Relating to Reason of Delay by Nominated Subcontractors or Suppliers 64

5.2.3.4 Summary of Information That Needs To Be Considered in Evaluating Extension of Time 65

5.2.4 Analysis for Common Mistakes by the Contractor in the Application of

Extension of Time 66 5.2.5 Analysis for Ways to Reduce the

Mistakes by the Contractor in the Application of Extension of Time 68

5.3 Conclusion 70

6 CONCLUSION AND RECOMMENDATION

6.1 Introduction 71 6.2 Conclusion 72 6.3 Recommendations 73 6.4 Limitation of the Study 75 6.5 Recommendation for Further Study 75

REFERENCES 76

BIBLIOGRAPHY 79

APPENDIX 80

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LIST OF TABLES

TABLE NO. TITLE PAGE

2.1 Reasons of delay that can entitle a contractor to claim extension of time and loss and/or expense 13

2.2 Relevant events causing delay which extension of time may be given 15-23

2.3 Procedure for an extension of time under PAM 98 and PWD 203A standard form of contract 27

4.1 The classification of the rating scales in Section A of the questionnaire 50

4.2 The classification of the rating scales in Section B

of the questionnaire 50

4.3 The classification of the rating scales in Section C of the questionnaire 51

4.4 The classification of the rating scales in Section D of the questionnaire 51

5.1 Respondent organization 54

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5.2 Respondent post 55

5.3 Respondent experience 56

5.4 Standard form of contract used in the construction project that the respondents have experienced 57

5.5 Reasons of delay which EOT may be given 60

5.6 Information that needs to be considered for the reason of architects/ superintending officers instructions 62

5.7 Information that needs to be considered for the reason of late instructions, drawings or level 63

5.8 Information that needs to be considered for the reason of delay by nominated subcontractors or suppliers 65

5.9 Common mistakes by the contractor in the application of EOT 67

5.10 Ways to reduce the mistakes by the contractor in the application of EOT 69

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LIST OF FIGURES

FIGURE NO. TITLE PAGE

1.1 Research methodology 10

5.1 Respondent organization 53

5.2 Respondent post 54

5.3 Respondent experience 55

5.4 Standard form of contract used in the construction project that the respondents have experienced 57

5.5 Types of projects that the respondents have experienced 58

5.6 Application for extension of time in construction projects 59

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LIST OF APPENDICES

APPENDIX TITLE PAGE

A Questionnaire form 80

CHAPTER 1

INTRODUCTION

1.1 Introduction

Provision of EOT is made in building contracts for architects/ S.O to grant EOT for the completion of the work where delay due to certain specified causes has occurred. The contractor should be compensated with the time he suffers loss due to causes outside his control. The clause in the standard form requires the contractor to inform the architect/ S.O in writing of the delay fact when he realizes that the progress of the works is delayed. A contractor should be required to supply information about the delay, including identifying the event that led to the delay in order to take into account by the evaluator and to determine whether the contractor is entitle to EOT or not. Lack of information of delays is one of the common mistakes by the contractor in the application of EOT and this can lead to obstacles to prompt settlement of claims for EOT. Besides that, there are other common mistakes that need to be identified and after that knowing the ways to reduce the mistakes.

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1.2 Background of the Study

The contractors obligation is to carry out and complete the works before or on completion date (Nor Ainah, 2001). An employer could impose liquidated damages for contractors failure to meet the completion date as a result of delaying circumstances. Such delaying circumstances can be of three types which are delays caused by the contractor, delays caused by neutral events and delays caused by the employer or his agents (Sundra Rajoo, 1999).

A delay in the building work may arise from a number of causes as mentioned before which may prevent completion by the agreed date. Some events are beyond the control of the builder and it is considered not to take into accounts would be unfair. Instead, the contractor should be compensated with the time that has been lost and this compensation is what is termed as extension of time (EOT) in contract administration (Manson, 1968; Hashim, 2001).

Most building contracts contain express provisions for time extension to be granted by the architect in the event of delay that permitted in the contracts. Provision of EOT is stated in the standard form of contract, clause 23 PAM 98, and clause 43 PWD 203A. The operation of EOT provision modifies the obligation of the contractor to complete the works by the date for completion specified in the appendix, and his liability to pay liquidated damages for late completion. EOT is given with the view to extend the contract period and it is given solely to replace the time lost to the contractor. EOT will not be given if the delay is caused by the contractor. By this reasoning, EOT is not given on contractual ground to help the contractor to complete the work because EOT is a right in the building contract and not a privilege (Hashim, 2001). It imposes a duty on the architect to grant a fair and reasonable EOT for completion of the works in specified circumstances.

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EOT shall be exercised by the architect upon the concurrence of the event, upon knowledge of the contract programme and before the final certificate. However, because the EOT clause comprehends delays due to causes of many kinds, it may not be necessary to grant an EOT before completion, in exceptional cases example a strike mean to last beyond the contract date and the extend delay could not be known until after the contract time had expired (Lim, 1998).

The evaluation to derive at the EOT entitlement can indeed be a complex subject especially when there is more than one delaying events (Entrusty Group, 2006). Invariably, an evaluation of EOT will be made based on the programmes submitted by the contractor (Kevin, 2005). Besides the programmes, the contractor is advisable to provide relevant information related to delays such as variations and architects instruction for references, towards consideration for EOT (Lim, 1998). The strength of the contractors case will depend on the quality of his information (Brian, 1997).

A contractor should be required to supply facts about the delay, including identifying the event that led to the delay. The contractor must also provide proof of the events that were allegedly responsible for the delay. The matter of proof is one frequently overlooked by potential litigants in their enthusiasm to formulate arguments as commented by Keith Pickavance (Nicholas, 2005):

Poor quality of project documentation leads to poor factual evidence and presents serious difficulties in identifying the rights of the parties.

Poor factual evidence such as lack of information of delays is one of the contractors mistakes in the application of EOT and this can lead to obstacles to prompt settlement of claims for EOT.

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EOT needs serious deliberation and consideration when it is applied to construction projects. There are risks that failure to accurately assess delays to completion of a construction contract will result in unnecessary extensions to the

completion time, excessive delay-related costs, or disputes about a contractors entitlement to EOT or delays costs. Therefore, it is important by the evaluator to consider and refer all the information that related to delays, which can assist them in evaluating EOT application (BLR, 1985). It will be prudent to seek advice about the procedures and all the information that needs to be submitted for EOT application from an architect, engineer or a quantity surveyor, who act as an evaluator when a

contractor wishes to apply EOT in relation to delays.

1.3 Problem Statement

The contractors duty is to give the architect as much information as he can about the cause of delays and so assist the architect in performing his duty, as mentioned in clause 23(1) PAM 98, the notice (for extension of time) shall contain sufficient information and reason why delay to completion will result. The contractors failure to provide information if requested is one of the contractors mistakes in the application of EOT. No action would be taken by the employer if the contractor failed to submit such information unless the actions are stated in the contract. The contractors failure to provide related information of delays puts himself at a disadvantage on proof of entitlement to EOT.

The next mistake is the submission of work programme by the contractor is not detailed and unrealistic. In Malaysia, generally, the programme of works as prepared by the contractor is usually not detailed, not realistic or not have the activities properly linked to show the critical path. It is usually used for show only more than anything else which is the cause of many incidents where EOT was not

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granted even when the contractor rightly has its entitlement to EOT if a proper programme of works was presented and all the information related to delays was provided (Entrusty Group, 2006).

1.4 Research Aims and Objectives

The aim of this study is to identify and recommend the best way to reduce the common mistakes by the contractor in the application of extension of time. To achieve this aim, the following objectives have been identified:

1. To identify the information that needs to be considered in evaluating extension of time application.

2. To identify the common mistakes by the contractor in the application of extension of time.

3. To identify the ways to reduce the mistakes by the contractor in the application of extension of time.

1.5 Research Scopes and Limitations

Basically, this research project focuses on explaining provision of EOT in PAM 98 and PWD 203A standard form of contract. Furthermore, several common law cases related to EOT will be used to support explanation and arguments. The scope of this research also will be focusing on the study of the information that needs to be considered by the evaluator in evaluating EOT application. This research is

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limited to professionals (evaluator) working in quantity surveying, architecture and civil engineering firm located in Johor Bahru area. Besides, the study would be made to determine the common mistakes by the contractor relating to the information on the application for EOT. Hence, the view of the Quantity Surveyor, Architect and Engineer to reduce the mistakes is essential towards improving the current mistakes of the contractor in the application of EOT.

1.6 Importance of the Study

From the facts as mentioned before, it can be concluded that all the information related to delays are very important to assist the evaluator to recommend or grant EOT to the contractor. The contractor needs to provide sufficient information in order to assist the evaluator in the evaluation process. It is important to identify the information that needs to provide by the contractor in order to get a fair and reasonable extension of time. This research is not only focused to the information that related to the work programme, but it is also considered other relevance information (supporting documents) that caused delays to take into account by the evaluator and to determine whether the contractor is entitle to EOT or not.

One of the common mistakes that occurred in EOT application is when the information related to delay was not provided by the contractor. Besides, there are other mistakes that need to be identified to avoid risk of failure to accurately assess delays in the application of EOT and after that knowing the ways to reduce the mistakes. With this study, the contractor could indeed benefit from this studys outcome and have more knowledge about the improvement of the preparation for EOT application in order to speed up the evaluation of the architect to establish contractors entitlement for EOT and to avoid disputes about contractors entitlement for EOT.

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1.7 Research Methodology

A few stages of work need to be carried out in order to achieve the stated objectives. Implementation of the stages of work is arranged to ensure the research can easily be done and impressive. This approach is to ensure that all relevant information can be collected and precisely analyzed. Stages of work for this research are elaborated as follows:

1. Planning and pre-discussion

The process involved in this stage is survey need to be carried out to identify area of study, for example the study in the aspect of construction contract and all the relevant issues. Detail discussion with supervisor can assist to find out idea about the area of study to be done. Next process is to determine project topic and objectives and state the scope and limitation of project to achieve the objectives.

2. Pre-Study

Pre-study is carried out to get a clear description about the research. The literature reviews provide useful guidelines and information on EOT provision in construction contract. Those literature reviews were also used to guide the process of extracting the idea and relevant issues, and to easily prepare the research process.

3. Identify Data

Data that needs to be identified is primary data and secondary data to fulfil the research objectives.

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4. Data Collection

This process is the most important process to do the research. All the data collected is arranged into a form that can be studied easily. Data collection for this research can be divided to two types:

a) Primary Data

Collection of primary data is an important process to get the source of information and for the purpose of analysis. It has been obtained from questionnaires of the quantity surveyor, architect and engineer as a practitioner, who has extensive experience and knowledge in evaluating EOT.

b) Secondary Data

Secondary data has been obtained from reading and studying from printed materials such as standard form of contract (PAM 98 and PWD 203A), books, journals, articles, previous study, and seminar papers to study the information of delay and EOT in construction contracts. Those literature reviews were also used to guide the formation of questionnaire design.

5. Analysis of Data

Primary data is analyzed in order to achieve the research objectives. Besides, summary and suggestion of the research are prepared based on the results from the analysis. The methods to analyse the data are detailed elaborated in chapter 4 to ease the process of analysing data.

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6. Writing and Completion

All the information will be arranged to understandable form for the purpose of writing before submission to the supervisor. Next is correction process before documentation process can be done. Finally, the complete project is ready to be submitted on the submission date.

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1st Stage .

2nd Stage .

3rd & 4th Stage .

5th Stage .

Figure 1.1: Research Methodology

Detail review on thesis, articles and books

Detail discussion with supervisor

Questionnaire survey

PRE-DISCUSSION

IDENTIFY AREA OF STUDY

SELECTION OF TOPIC

DISCUSSION WITH SUPERVISOR

IDENTIFY DATA & DATA SOURCES

DATA COLLECTION

LITERATURE REVIEW

Books, articles, seminar papers, journals, PAM 98 & PWD 203A Standard Form

of Contract

SECONDARY DATA PRIMARY DATA

ANALYSIS & INTERPRETATION OF DATA

RESEARCH WRITING

REVISION & CORRECTION

DOCUMENTATION

SUBMISSION OF PROJECT

COMPLETION

CHAPTER 2

PROVISION OF EXTENSION OF TIME IN CONSTRUCION CONTRACTS

2.1 Introduction

The legal prevention is of general application in contracts and is to the effect that one party cannot impose a contractual obligation on the other party where he has impeded the other in the performance of that obligation. Given the complexity of construction projects, the very real possibilities of variations, the difficulties of coordination and other unforeseen issues it is, unless some relief is available, almost impossible for the employer to avoid falling into the trap of prevention. Therefore, extensions of time clauses provide this relief (Lawrence, 2001).

Extension of time provisions preserve the contractors obligation to complete within a specified time and in doing so the provisions preserve the employers right to liquidated damages, when by prevention, he has delayed the contractor and is responsible in part for late completion. It is common to provide an express power for the EOT for completion and if an extension has been granted it operates wholly or partially as a defence to a claim for liquidated damages from the original completion date. If there is no express power to extend for a delay which is not the fault of the employer, the contractor takes the risk of that delay and will not avoid liquidated damages (Lawrence, 2001).

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A fundamental point is that the time for completion can only be extended where the contract permits, and strictly in accordance with the contract provisions. If delay is caused by some event which the contract does not cover, then the contractor cannot claim an extension (Murdoch and Hughes, 1992). Time extensions may be justified when the contractor experiences delay caused by the labour disputes, fire, extremely unreasonable weather conditions, acts or neglect on the part of employer or a nominated contractor, or other causes beyond the contractors control (Harold, 1976). Without an EOT clause, the contractor is under a strict obligation to complete on time unless he is prevented from doing so by acts or breaches of the employer or by operation of the law (Vincent; Michael, 1984).

2.2 Contract Provision for Extension of Time

All construction contracts usually contain provisions for time extension and monetary claim in the event of delay. The relevant events causing delay which shall be the ground for the contractor to apply for an EOT are detailed and stated under PAM 1998, clause 23, PWD 203A clause 43. Any event falling outside the listed events will not entitle the contractor to any EOT (Entrusty Group, 2006; PAM 1998, JKR 203A). The events for delay can be categorized into three major groups, which are the delays by the contractor, by the client, or by a third party or neutral events (other than contractor and client) (Hashim, 2001; Sundra Rajoo, 1999).

The delaying events that are entirely due to the contractor itself are commonly termed as culpable delay. It is sometimes called inexcusable or non-qualifying (for EOT) delays. Strictly, culpable delay is the situation where the contractor has failed to complete the works on completion date and has no entitlement to an EOT let alone monetary compensation. Culpable delay is also sometimes used to describe the situation prior to the date for completion where the

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contractor has fallen behind programme of schedule without cause for extension (Entrusty Group, 2006).

If the delaying events are due to defaults by the employer and/or his agents (compensable delays), the contractor will be entitled for both time and monetary claim (depends on the wording of the contract the parties have entered into). Compensable delays occur when the owner or consultant has delayed the contractor in the completion of the work. It entitles the contractor to additional compensation and the contractor may be granted EOT and money. The examples for this event are late decision or information of the Architect/Engineer/S.O, late site delivery, compliance with the Architect/Engineer/S.O, delay by the employers agents, delays by nominated subcontractors/suppliers, etc. For the delays due to a third party or excusable delays, the contractor is entitled for time extension but no monetary claim. The causes due a third party are those affecting a delay by those other than contractor and the client, and by element of nature (Entrusty Group, 2006; Hashim, 2001; Abdul Rahman, 2006).

The grant of an EOT does not carry any automatic entitlement to extra money. The test for granting EOT and the consequential right to loss and/or expense can be displayed in Table 2.1 (Basar, 1997). The clauses which related to relevant events causing delay which EOT may be given, together with description and explanation are indicated in Table 2.2 (PAM 98; PWD 203A; Lim, 2004, Vincent, 1990; Sundra Rajoo, 1999).

Table 2.1: Reasons of delay that can entitle a contractor to claim extension of

time and loss and/or expense

Reason of Delay Extension of Time Loss and/or Expense

Contractors fault (non-excusable) No No Employers fault (compensable) Yes Yes Nobody fault (excusable) Yes No

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Table 2.2: Relevant events causing delay which extension of time may be given

Event Clause Description under PAM 98 Clause Description under PWD

203A Explanation

1. Force Mejuere

23.7(i)

Force Mejuere

43(a)

Force Mejuere

Force mejuere is a term derive from French law and is used with reference to all circumstances independent of the will of man and which are not in his power to control. It is unanticipated event or an event that one cannot reduce to control (e.g. earthquake).

2. Exceptionally inclement weather

23.7(ii)

Exceptionally inclement weather

43(b)

By reason of any exceptionally inclement weather

Inclement weather means severe stormy, harsh or merciless weather/ climate.

The emphasis is on the exceptional nature of the inclement weather and the meaning has to be applied considering two factors. The first factor is the kind of weather that may be expected at the site at the particular time when the delay occurs and the second factor is the stage in which the works have reached.

The reference to meteorological records of local weather over a considerable period of time may be helpful in showing that the weather is exceptional for that area exceeding what may on the evidence of past years be reasonably expected.

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203A Explanation

3. Insurance Contingencies

23.7(iii)

Loss or damage occasioned by one or more of the contingencies referred to in clause 20.A, 20.B.1 or 20.C.1 as the case may be.

43(d)

By reason of loss or damage occasioned by anyone or more of the contingencies referred to in clause 36 hereof (provided end to the extent that the same is not due to any act, negligence, default or breach of contract by the contractor or any subcontractor, nominated or otherwise, whether in falling to take reasonable steps to protect the works or otherwise).

This applies to extension of time granted for rebuild or repair of damages or loss to the works, caused by fire, storm, tempest, lightning, flood, earthquake, aircraft and other aerial devices or articles dropped therefrom, riot, civil commotion and in respect to claim from insurances.

4. Civil commotion, strikes, lockout

23.7(iv)

Civil commotion, strike or lockout affecting any of the trades employed upon the works or any of the trades engaged in the preparation, manufacture or transportation of any goods or materials required for the works.

43(h)

By reason of any action due to local combination of workmen, strike or lockout affecting any of the trades employed upon the works, provided the same are not due to any unreasonable act, neglect or default of the contractor or of any subcontractor, nominated or otherwise.

The events are limited to only local combination of workers, strikes, or lockout affecting the trade employed upon the works. Local combination of workers probably covers obstructive industrial activities short of a strike.

It should be noted that the contractor must not have the local combination, strike or lock out, such as through a failure to pay the workmens wages.

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203A Explanation

5. Architects/ S.O.s instructions

23.7(v)

Compliance of architects instructions under clauses 1.2, 11.2, 21.1 or 21.4.

43(e)

By reason of SOs instructions issued under clause 5 hereof, provided that such instructions are not issued due to any default or breach of contract by the contractor or any subcontractor, nominated or otherwise.

The instructions referred to are summaries in the stated clauses. The contractors entitlement to an EOT is subject to the proviso that the instruction is not issued due to any default or breach of contract by the contractor or by those for whom he is responsible.

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203A Explanation

6. Late instructions, drawings or level

23.7(vi)

Contractor not having received in due time necessary instructions, drawings, details or levels from the architect for which he had specifically applied in writing provided that the application was made on a date having regard to the date for completion was neither unreasonable close to the date on which it was necessary for him to receive them.

43(f)

By reason of the contractor not having received in due time necessary instructions, drawings, level or instructions, in regard to the nomination of subcontractors and/or suppliers provided in this contract, from the SO due to any negligence or default of the SO and for which he shall have specifically applied in writing on a date which having regard to the date for completion stated in the appendix to these conditions or to any EOT then fixed under this conditions, was neither unreasonably distant from nor unreasonably close to the date on which it was necessary for him to receive the same.

The failure of the architect/ SO to provide the contractor with further reasonably necessary information to amplify the drawings or bill of quantities as and when necessary or in good time puts the employer in breach of contract. That notwithstanding, it is essential in order to sustain a claim for an EOT for the contractor to have made a specific written application to the architect/ SO for the information and this must have been done at the right time.

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203A Explanation

7. Delays on the part of nominated subcontractors or suppliers

23.7(vii)

Delays on the part of nominated subcontractors or nominated suppliers for the same reasons as set out in the sub-clauses 23.7(i) to 23.7(vi) and sub-clauses 23.7(viii) to 23.7( xii).

43(k)

By the delay on the part of the nominated subcontractors and/or nominated suppliers of their works and such delay shall be caused by the same reasons affecting their work as stated above in sub-clauses (a) to (f) inclusive (provided that the same are not due to any act, negligence, default or breach of contract by the nominated subcontractor and/or nominated supplier and/or the contractor, or any of the servants or agents of such nominated subcontractor or nominated supplier or the contractor).

Delay on this ground is very common but it does not include a situation where the nominated subcontractor or nominated supplier has ceased work altogether, for example through receivership or liquidation.

The contractor is allowed EOT on account of delays on the part of the nominated subcontractors or nominated suppliers for the same reason as set out in the clause 23.7, PAM 98 and 43, PWD 203A. Essentially, the contractor is entitled for an EOT if the delays of the nominated subcontractors or suppliers fall within the same relevant events for which the contractor himself if in delay would be given an EOT.

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203A Explanation

8. Delay on the part of artists, tradesmen or others engaged by the employer

23.7(viii)

Delay on the part of artists, tradesmen or others engaged by the employer in executing work not forming part of this contract.

43(i)

By delay on the part of artists, tradesmen, or others engaged by the Government in executing work not forming part of this contract.

This provision permits the employer to carry out the work not forming part of the contract. The employer accepts responsibility for delay on the part of such people. This is however restricted to delay in the execution of their work and does not extend to delay caused by their returning to carry out remedial work after purported completion.

9. Delay in the supply of material and goods

23.7(ix)

Delay in the supply of materials and goods which the employer had agreed to supply for the works

-

-

It must be noted that there is no express provision in the conditions to allow for the possibility of the works being carried out using materials and goods which are to be supplied by the employer. But such circumstances do in reality exist and if there is a delay caused by the employer in supplying the materials and goods, the contractor should be entitled to an appropriate EOT. This could possibly include instances where the delay is caused by the employer having supplied the materials and goods on time but they proved defective either before use or after being built into the works. In such situation, the employer should indemnify the contractor.

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203A Explanation

10. Testing and inspection

23.7(x)

Opening up for inspection any work covered up or the testing of any work, materials or goods in accordance with clause 6.3 (including making work in consequence of such opening up or testing) unless the inspection or test showed that the work, materials or goods were not in accordance with the contract.

-

-

This clause requires the contractor to provide test report and samples before commencing work. Generally, architect is reluctant to open up, unless there is high degree of suspect of the works and premature defects arising. The contractor can recover the cost and time of opening up, testing and making good, unless this has been provided for in the contract bills or unless the inspection or test shows that the works, materials or goods are not in accordance with the contract.

11. Act of prevention or breach of contract by the employer

23.7(xi)

Any act of prevention or breach of contract by the employer not mentioned in this clause 23.7.

-

-

This is a useful clause, because of employers agent, action of constant interruption, on large projects these days. If the contractor alleges that there has been an act of prevention or breach of contract by the employer, the architect can continue to administer the contract and grant EOT as and when he considers these appropriate.

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203A Explanation

12. Disputes with neighbouring owner

-

-

43(c)

By reason of directions given by the SO consequential upon disputes with neighbouring owners provided the same is not due to any act, negligence or default of the contractor or any subcontractor, nominated or otherwise.

The delay must have arisen as a result of the direction given by the SO consequential to a dispute by the Government, or possibly the contractor, and the neighbouring owner, though not necessarily of the adjacent site.

The commonest dispute here is over the boundary of the site as a result of the dispute, the delay could be occasioned by the reconstruction or suspension of the work or by a restricted method of working as directed by the SO.

There is however the proviso that the dispute must not be due to any act, negligence or default of the contractor or for those whom he is responsible, the commonest being erroneous setting out resulting in boundary encroachment.

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203A Explanation

13. Delay in giving possession of site

-

-

43(g)

By reason of delay in giving possession of the site as provided under clause 38(d) hereof.

This is to be read in conjunction with clause 38(d), PWD 203A where the SO is empowered to issue and so issue, an instruction revising the date for possession due to the inability or failure on the part of the employer to give possession of the site on the date for possession fixed in the letter of acceptance.

14. Inability to obtain materials or goods

-

-

43(j)

By the contractors inability for reason beyond his control and which he could not reasonably have foreseen at the date of closing of tender of this contract to secure such goods and/or materials as are essential to the proper carrying out of the works.

This applies only if the securing of the goods or materials are beyond the contractors control, but the shortage must have been one that could not have reasonably been foreseen at the date of the closing of the tender. It should be noted that this clause is not applicable for shortage of labour even though essential for the execution of the works.

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2.3 Purposes of Extension of Time

The operation of EOT clause modifies the liability of the contractor to complete the works by the date for completion specified in the appendix and to LAD to the employer upon the failure of the contractor to meet the deadline. It imposes a duty on the architect/ S.O to grant a fair and reasonable EOT for the completion of the works in certain specified circumstances. The effect of extending the time for completion prevents the architect/ S.O from issuing the Certificate of Non-completion until and unless the revised completion date has passed (Lim, 2004). Extension of time clauses, therefore have various purposes (Brian, 1997):

a) To retain a defined time for completion b) To preserve the employers right to liquidated damages against acts of

prevention

c) To give the contractor relief from his strict duty to complete on time in respect of delays caused by designated neutral events

2.4 Benefits of Extension of Time

The express provisions for EOT in building contracts obviously benefit the contractor who will not be liable to pay damages for delay during the period for which time is validly extended. In addition and less obviously, the power to extend time is also for the employers benefit, for the following reason (Murdoch and Hughes, 1992).

At common law, the contractors obligation to complete the works by the specified date is removed of the employer delays the contractor in the execution of the works. Thus if the contract administrator issues and instruction which increases

25

the amount of work to be done, or is late in giving the contractor necessary instructions, the specified completion date no longer applies. In this situation, time is said to be at large and the contractors obligation is merely to complete the works within a reasonable time. In order to fix what is reasonable, all the circumstances of the particular project must be taken into account, but in many cases, it will simply mean that the amount of delay for which the employer is responsible will be added to the old completion date (Murdoch and Hughes, 1992).

The importance of losing the fixed date is that, a contractor who may be liable to pay damages for delay which is his fault, can no longer be made liable for liquidated damages. Even where the delay caused by the employer is a very small part of the overall delay, the employer cannot simply discount this and claim liquidated damages for the remainder. The liquidated damages provision fails altogether, and the employer can claim only for losses actually due to the delay. It is therefore very much in the employers interest to extend time for delays which are his fault, thus enabling claims for liquidated damages from the revised completion date (Murdoch and Hughes, 1992).

2.5 Procedures for Claiming an Extension of Time

In the usual course of events, the initiative for taking action under EOT clause will come from the contractor when he realises that the progress of the works

is delayed. The contractor is not required to give notice of a delay which will be caused by some expected future event. He has only to give notice when it becomes apparent to him that the progress of the works is delayed. It seems clear that the contractor is bound to notify the architect/ S.O of all delays to the progress and not merely those caused by events listed in the clause (Brian, 1997). Nevertheless, the architect is not prohibited to give EOT without received any notice of delays from the contractor (Nor Ainah, 2001).

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The clause in the standard form requires the contractor to inform the architect in writing of the delay fact when he realizes that the progress of the works is delayed. Basically, the contractors need to give a notice in reasonable time that stated relevant causes that resulted to delays. The contractor also needs to explain about the expected impact, and estimation of time extension needed, with the notice or subsequently (Nor Ainah, 2001). The notice shall contain sufficient information and reasons why delay to completion will result. The contractors failure to provide such information can be a factor which the architect can consider in assessing the EOT (Sundra Rajoo, 1999).

On receiving the written notice from the contractor, the architect, if he

satisfied that the cause of the delay comes within one of a number of ground listed, is to grant an EOT. The architect is to consider making an EOT independently in the light of his knowledge of the progress of the works and of other matters affecting or likely to affect its progress (Sundra Rajoo, 1999). The architect must then fix a new completion date which is fair and reasonable in the circumstances. The architect also has power to fix a new completion date after the date of practical completion of the building (Manson, 1968). If the architect/ S.O decides that the completion date will not be affected, he should notify the contractor of his decision, although this is not expressly stated. The contractor must seek recourse under clause arbitration if he wishes to challenge that decision (Lim, 2004).

The standards form of contract used in Malaysia include a procedure relating to the granting EOT. Variously, these procedures include the submission of an initial notice concerning the delay, submission of back up details to support the initial notice and further details to keep up to date the information previously submitted. Table 2.3 indicates the procedure for an extension of time under PAM 98 and PWD 203A standard form of contract (Michael, 2001).

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Table 2.3: Procedures for an extension of time under PAM 98 and PWD 203A standard form of contract

Clause Contractors Obligations Clause S.Os / Architects Obligations

P

A

M

9

8

23.1

23.1

23.3

23.4

If and when it become reasonably apparent that the progress of the works is being or likely to be delayed, forthwith of the occurrence of such event notify the architect in writing identifying the relevant events causing the delays, giving particulars of the expected effect and estimate of the EOT required.

The notice shall contain sufficient information and reasons why delay to completion will result.

Submit to the architect his application for EOT complete with particulars and estimates in a reasonable time before the Date of Completion.

Constantly use his best endeavours to prevent delay.

23.2

23.3

23.5

Upon receipt a contractors notice, consider events causing delay and by written notice to the contractor give a fair and reasonable EOT.

He regard to the sufficiency of the particulars and estimates submitted by the contractor, ascertain and fix such new date for completion within a reasonable time form receipt of the notice.

Not fix a date for completion earlier that the Date of Completion stated in the Appendix.

P

W

D

2

0

3

A

43

43

Upon it becoming reasonably apparent that the progress of the works is delayed, forthwith give written notice of delay to the S.O.

Constantly use his best endeavours to prevent delay.

43

If in his/ her opinion the completion of the works is likely to be delayed or has been delayed by specified events so soon as he/ she is able to estimate the length of the delay.

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2.6 Conclusion

The phrase extension of time is common to most construction contracts.

Simply, the phrase means the postponement of the date by which completion of the contract works is to be expected. One of the contractors obligations under the building contract being the completion of the works on time usually expressly specified within the contract terms.

The significance and effects of EOT provisions in construction contracts is two folds. First, the EOT affect the extent to which the contractor is liable for liquidated damages in the event of delays to the completion of the works within the stipulated completion date. Second, EOT is granted to the contractor due to delay by the employer. In addition, EOT provisions specified the events as grounds upon which the contractor may be entitled to an EOT and serve to streamline the role of architect/ S.O. in determining the contractors right to an EOT.

CHAPTER 3

THE REQUIREMENTS IN THE APPLICATION FOR AN EXTENSION OF TIME

3.1 Introduction

An EOT is granted if a contractor has been delayed and the cause of the delay is one that gives the contractor an entitlement under the contract. A contractor should be required to supply facts about the delay, including identifying the event that led to the delay. The contractor must also provide proof of the events that were allegedly responsible for the delay, including the actions or inactions of the architect/ S.O or other events beyond his control, and to demonstrate that the delay affected the critical path activities and hence delayed completion.

Invariably, an assessment or evaluation of EOT will be made based on the programmes submitted by the contractor. It may seem surprising therefore that while most contracts call for an as-planned programme, many do not expressly require them to be taken into account when evaluating EOT. However, the courts, in tune with practise, regularly make their decisions taking into account evaluation based on as-planned programme.

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3.2 Proof of Entitlement

All claims whether for loss and expense, extra cost, or for EOT, should meet the legal requirement of linking damage with cause. A claim for loss and expense or extra cost is not effective without a cause and a claim for EOT is not effective without a relevant event. Standard forms of contract display the principle by requiring each and every claim to stand on its own merits (Brian, 1997).

Standard forms of contract usually require the contractor to give notice of delays or make his application within reasonable time of the happening of the delaying event and to provide such details and particulars information as are necessary to assist the architect/ S.O in making his decision (Brian, 1997).

The burden to prove the delays will directly rests on the contractor whether the application is made before or after completion and whether the delaying event is the employers fault or neutral. The contractor will have to produce evidence that delay occurred and that the cause of the delay gave an entitlement to an EOT if the contractor wishes to challenge liquidated damages by obtaining an EOT from the contract administrator or arbitrator. Consequently, it is up to the contractor to keep records as evidence of both delay and cause. The strength of the contractors case will depend on the quality of his records (Brian, 1997).

It is not only important to the contractor to keep the records. A similar burden rests with the architect/ S.O to protect the employers position. Ideally, both parties have the same mind as the contract progresses on the causes and extents of any delays. There is probably no effective substitute for the monthly progress meeting at which the parties make their own report, and they jointly agree by discussion what should be placed on record as the true state of affairs (Brian, 1997).

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The records kept on construction projects will be the main source of information on which claim for time or additional payments will be established by the contractor or assessed by the contract administrator. The importance of producing adequate delay documentation has been recognized for many years. There is a multitude of different types of records including correspondence, meeting minutes, delivery notes, progress records, site diaries, day work sheets, photographs and invoices. However, if these are not related clearly to specific delaying events they are unlikely to provide the required clarity of evidence needed to substantiate a claim effectively. Therefore, separate and independent report will often be required which are specifically aimed at documenting and substantiating a delay (Stuart, 2006).

Besides delay records and monthly progress meeting as information needed to prove the delays, programme of work is also important as evidence to establish contractors entitlement to EOT. A delay to a contract activity will not necessarily cause delay to completion of the whole of the works or a milestone if the affected activity is not on the critical path. However, instructing additional work to an activity that was not on the critical path could change the programme relationship such that the activity becomes part of the critical path. Further, a contractor may claim that the variation instruction caused the contractor to take workers off a critical activity and take longer time to construct the works.

The effectiveness of the contractors programme as a scale for the

measurement of delays is depend on how frequently of the contractor update his programme. As the contractor updates the programme in regular basis to show actual start dates, durations and completion dates, and completion dates of significant activities, is at least a credible record of progress even if it says nothing on the actual causes of any delays. The programme can provide a detailed picture which should satisfy the tests of good evidence by referring to the programme indicators on when variations, revisions and the like were ordered, instructions were given, and other events were encountered (Brian, 1997).

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The contractor who fails to produce an effective and realistic programme puts himself at a disadvantage on proof of entitlement to EOT. The contractor must show that he has suffered delay and that this delay has affected completion of the works. Then, he must show that the delay was caused by a relevant event and not his own deficiencies and difficulties (Brian, 1997).

3.2.1 Information That Needs to be Considered in Evaluating Extension of Time Application

Upon receipt of the contractors notice, the architect is to consider making an EOT independently in the light of his knowledge of the progress of the works and of other matters affecting or likely to affect its progress. As part of his duty owed to both the employer and the contractor, he should approach the task in a methodical and systematic way. If necessary, he should explain how he has arrived at his decision and the weight he has given to the various factors involved. Amongst the sources of information which he may utilize to monitor and assess the delay are:

a) the contractors notice of delay and particulars (application letter) b) the works programme c) as-built works programme d) records of when operations and activities actually began and finished e) site progress meeting minutes and records f) contractors day-work sheet g) site staff reports and diaries h) contractors progress reports i) contractors method statements and working cycles

33

The information that needs to be submitted by the contractor in the application of EOT is detail elaborated in the following topic. If the architect concludes based on the sufficient information received from the contractor that the cause of the delay is within the relevant events as listed in the contract, he must decide whether completion of the works has been or likely to be delayed beyond the current date for completion. The architect must then give a fair and reasonable EOT subject to clauses 23.3, 23.4 and 23.7, PAM 98 and fix a new date for completion.

3.2.1.1 Construction and Progress Records

There are a multitude of different types of records kept on construction projects, which are documented with varying degrees of rigour depending on who is responsible for their completion, as well as being dependant on project management effectiveness from one project to the next.

Progress records are commonly kept by the contractor and the architect/ S.O. independently. If at all possible, these records should either be jointly taken or agreed at the time of compilation. The following list of records should be considered a minimum to be kept by the contractor that can be used as the main source of information in quantifying delays (Michael, 2001; David, 1984).

1. A master programme together with subsequent updates A programme should be updated on a regular basis to provide good contemporaneous evidence of what happened in the project, in case of dispute.

2. A comparison of master programme with actual records The contractors programme could be of relevance in considering rates of progress and if there was a question of determination of the contractors

34

employment for lack of progress, under express terms or at common law, it could be some interest as evidence.

3. Site diaries in a standard format A daily diary should be maintained by each member of the field staff. The book is a quasi-legal document and should be neatly and accurately recorded. An entry should be made everyday, whether or not work was performed.

4. A drawing register kept up to date as new drawings are issued and incorporating issue dates Drawings of clarification or change, or drawings that contain supplemental information should be filed at the field office, in addition to a complete set of all contract drawings as bid. The evidence of a drawing is often crucial. If revisions have taken place, the date and nature of the revision should be noted on drawing. The drawings provide clear evidence of architects instructions to the contractor.

5. A weekly log of activities commenced and completed

6. A weekly log of those areas which were considered problematic

7. Progress meetings

Minutes meetings may provide a vast resource of information for claims preparation. In order to have credibility the minutes must be approved by the other various parties involved in the meeting who probably had no hand in the preparation of the minutes contractor.

Other documents which are not listed from the previous list such as project daily reports and tests of materials can also be used as information in quantifying delays (David, 1984).

1. Project daily reports A daily construction report containing a description of the work commenced, new work started, status of work in progress, manpower and equipment at the

35

site, weather, and visitors to the site. If no work was performed at all, a daily report should still be filed, stating no work. On projects where several inspectors are involved, this report is compiled from each inspectors daily record of work progress.

2. Tests of materials

A record should be kept of all material samples sent out to laboratory for testing as well as those tests performed at site. The report should include space for later inclusion of the test results as well as the location of the structure where the

particular material was to be installed.

3. Correspondence Correspondence, written by one person for the eyes of another, is potentially the best sort of evidence save only for documents (such as the contract) agreed and signed by both parties. Copies of all correspondence concerning the project that have been sent to the resident project representative should be maintained and filed by date.

Letters are an extremely valuable source of evidence because they indicate intentions and attitudes at the time of writing. Letters must be read with care and always in the context of other letters and documents. Written evidence is always useful provided that it is clear. A letter from the contractor asserting that a particular situation exists (for example, lack of drawings) is persuasive in the absence of a letter from you refuting the assertion.

Records should be kept as to when particular works activities have been carried out and what resources were used to carry the works. In situations where the employer or his agents have breached the contract or instructed variations or taken other actions that could entitle a contractor to additional time, the marked up copy of the contractors program maintained by the architect/S.O must clearly show when such events occur, what work activity is affected, what effect the events may have on the critical path, and whether the terms of the contract, the contractor has an entitlement to an EOT.

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3.3 Common Mistakes by the Contractor in the Application of Extension of Time

Most contracts do not require the contractor to do more than give notice of delays, maintain records and provide particulars. Provided that the contractor has provided details of all events, dates, what work was affected and the like, it appears that the contractual provisions have been satisfied and the obligation is then on the architect to decide what extension is reasonable on the basis of the particulars provided and/ or on the basis of further information obtained from other sources. Many contractors only provide information (often insufficient) and rely on the architect to make a reasonable EOT. This tactic can be successful, but there is a risk that the extension made will be insufficient. Not all is lost, as the contractor can always present his case at a later date, hoping to persuade the opposition that more time is justified. The problems with this approach are (Thomas):

a) It is usually more difficult to persuade someone to change their mind after they have made a written EOT unless there is additional evidence which can be used to explain a change in the period of the extension.

b) There will almost certainly be a period of protracted discussion during which the current (extended or otherwise) completion date and the progress of the works are inconsistent with a realistic programme and a subsequently revised extended completion date.

Claims for EOT probably cause more disputes than any other contractual or technical issues. There are several mistakes done by the contractor in the application of EOT which elaborated below.

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3.3.1 Major Mistakes

Major mistakes which can lead to obstacles to prompt settlement of claims for EOT applications are (Thomas):

a) Late, insufficient or total lack of notice of delay on the part of the contractor b) Failure to recognise delay at the appropriate time or failure to describe the

cause of delay c) Poor presentation of the application to show how the progress of the work has

been delayed

3.3.2 Lack of Proper Baseline Schedule

The first contractors mistake is the non-availability of proper programme reflecting the actual site progress at the time of the event of the claim. It is common

fact that there is often a lack of a proper as planned baseline construction schedule with which to aid comparison with an as-built construction schedule in times of delay analysis or assessment or evaluation of EOT. Very real project pressures to get the work done usually result in the as-built construction schedule (if any in the first place) not being updated periodically. Procedures of acceptance of the baseline as-planned construction schedule are also not formalised as there is a tendency for employers agent to request for several revisions of the contractors as-planned schedule. Constant revisions of the baseline as-planned programme may sometimes continue even though actual works may have commenced on site. This prevents any meaningful analysis form being carried out.

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3.3.3 Lack of Proper Site Records and Insufficient Quality of Information

Proving the extent of delays, especially delays which overlap to a delay which is continuous and causes slowdown in the overall project progress is a constant issue. Disputes over the calculation of time and the validity of the formulae used in the calculation are the main reasons for prolonged negotiation. Records to substantiate any calculations are usually not kept or not updated. Records or information of the master programme, critical path networks, resources allocation,

site diaries and correspondence are given insufficient attention.

The production of information in proving delay is often of insufficient quality to enable an effective investigation into issues of delays and disruption to be undertaken in retrospect, as observed by Major and Ranson (1990):

It is all to common, when seeking to establish what actually happened on a project, to find that even a considerable amount of investigation will produce only an incomplete picture. It will often be necessary to analyse minutes of progress meetings, valuations, diaries, and various charts and programmes which neither individually nor collectively enable an actual progress chart to be produced or a detailed history of the project to be written. This is a common and substantial area of failure in site and head office management.

The quality and rigour with which records are kept varies widely between different organizations. Many have different procedures for keeping records and on many jobs quality procedures for record keeping are not implemented effectively. Inadequate records as information to delays can lead to delays in assessment of EOT claims (Stuart, 2006).

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3.4 Practical Ways for Minimising Contractors Mistakes in the Application of Extension of Time

Contracts conditions are clearly and unambiguously drafted to identify the exact factors which constitute valid delays to the project. The procedural requirement for applying EOT is set out clearly. Before signing the contract, the contractor should fully comprehend what events the contact considers claimable in terms of time. The contractor should also be aware of the notice requirements for submitting claims for EOT (Lawrence, 2001).

There must be an agreement and acceptance of the baseline programme. There should be in place a procedure for formal acceptance of the final as-planned schedule. This schedule will serve as that all-important baseline, a record of the contractors intent in carrying out the works. Subsequent evaluation or assessment of EOT and delay will be facilitated with the baseline as-planned programme finalised and accepted (Lawrence, 2001).

The contractor is considered investing in computerised scheduling systems such as the Primavera Project Planner or Microsoft Project. The contractor need to updated their work programme by using such software because such software speed up the calculations and are versatile tools in comparing as planned and as-built schedule (Lawrence, 2001). The contractor is required to regularly update work programme to reflect project progress and changes. Then, the contractor should keep reliable and accurate progress and programme records to assist contemporaneous assessment of the cause and effect of project changes (Stuart, 2006). In addition, the contractor can refer previous common law cases which related to entitlement to EOT to get an idea about the effective preparation of EOT claim to eliminate their mistake. The judge in the English case of Balfour Beatty Construction Ltd v The Mayor and Burgess of the London Borough of Lambeth (2002), gave a good summary of the information a contractor should provide to establish its entitlement to EOT:

40

a) A reliable original programme b) The establishment of valid critical paths initially and at every later

material point in time

c) Sound revisions on the occurrence of every event to demonstrate cause and effect

d) A means of demonstrating the effect of concurrent or parallel delays

The contractor also needs to implement a proper claim administration system. An effective administration of the contract is of utmost importance in minimising EOT disputes. The voluminous backload of data required to substantiate a point claims clearly to the need for an established and efficient contract administration system (Lawrence, 2001).

Besides, the implementation of a document management system must be considered and done by the contractor. The key to effective documentation is that the crucial data required are highlighted clearly and simply for recording. The contractors management must identify the information pertinent to the substantiation of claim for time due to the employers delay. As effective documentation is a key principle of the ISO 9000 Quality Management Standards, contractor should consider implementing the ISO Quality Standards for their company if they have. This documentation system must also be extended to include the subcontractors to ensure the timely documentation and furnishing the essential data to substantiate any claims for time extension (Lawrence, 2001).

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3.5 Conclusion

Where the notice form the contractor was clear and well supported with relevant documents to demonstrate a possible or actual delay to the progress of the works due to the particular events, not only was the assessment of the architect/ S.O will sped up to establish contractors entitlement for EOT, the architect/ S.O was in a position to quickly advice the employer and initiate pro-active measures to minimise delays and ensure the timely progress of the works. It is therefore advisable for the contractor to retain the information pertaining to work programme, which are a

master programme together with subsequent updates and a comparison of the programme with actual as-built records. In addition, the contractor is also advisable to keep the projects factual record such as variations, correspondence, minutes of meetings and progress reports.

CHAPTER 4

RESEARCH METHODOLOGY

4.1 Introduction

This chapter outlines a methodology that can be used to guide the research. The information needed for this research was obtained from two principal sources which are literature reviews and questionnaire survey. The method to analyse the data also detailed elaborated in this chapter to ease the process of analysing data. The questionnaires were analyzed in two methods, which are frequency analysis and average index analysis.

43

4.2 Literature Review

For the second type of data in this study, it is based on comprehensive literature review on the contract provision for extension of time in the standard form of contract and text books. In addition, information related to the problem was obtained from reliable sources which in this case were from the internet for recent journals published and articles, and from the seminar paper on matters related to delay and extension of time. The information was help in resuscitating the problem at hand. Text books related to construction contract were used as well and the books were available from the university library. The books were to give the general overview of delay and extension of time and were to enhance the researcher to be focused on the problem statement. The literature reviews in this study were also used to guide the formation of questionnaire design.

4.3 Selection of Respondents

The targeted respondents were professionals from consultant organization including quantity surveying, architecture and engineering consultants located in Johor Bahru. Addresses of consultants for the survey are selected randomly from The Professional Journal of The Institutions of Surveyors, Malaysia and list of respondents in previous study.

In this study, the questionnaires were handed over manually to 50 respondents. This is to ensure that the questionnaire form will be received by the target person and it is much easier to collect. The hand manual method is also target to pass to the respondents such as the director and also those higher management level person or project executive, who are more experienced to response the matter of evaluating extension of time application.

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4.4 Research Design

A questionnaire survey form has been prepared for this research as shown in appendix A. It was base on the literature reviews from journal papers, seminar papers, previous study, standard form of contract and also articles from internet. The questionnaire survey is aimed to get the answer or opinion regarding to EOT application from the construction practitioner who has experience in evaluating EOT.

The questionnaire survey will include the information in evaluating EOT application and the common mistakes by the contractor in the EOT application. The ways to reduce the mistakes by the contractor in the application for an EOT are also stated in the questionnaire. The details of the preparation of the questionnaire survey are discussed in the following section.

4.4.1 Questionnaire Survey Design

The steps required to design and administer a questionnaire include defining the research objectives, determining the sampling group, writing the questionnaire, administering the questionnaire and interpretation of the results. The discussion will concentrate on how to formulate the questionnaire design for this research.

The questionnaire survey design were intended to be as simple as possible but to be full of table in information gathering in 12 pages, double sided of paper. There are rating scale technique and also fill in the blanks method for optional if the respondents have any views or opinions to add for this research. The respondent are oblige to tick at the appropriate box and the appropriate rating scale for each section.

45

The questionnaire has divided to four sections, which are Section A for generally, Section B for information, Section C for common mistakes by the contractor, and Section D for ways to reduce the mistakes. Section A is aim to get general information of the respondents such as respondents name, post, year of experience, and representing firm/ consultant. From this section, we may know the view from variety consultants, different post and total experience of respondent. Section A also aims to get the background of projects that have experienced by the respondents such as standard form of contract that used in the project, type of project, whether their project usually need application for EOT or not, and significance of the reasons of delay which EOT may be given. The significance of the reasons of delay needs to be answered with five rating scales as follows.

1 - Never

2 - Seldom 3 - Sometimes 4 - Often

5 - Very Often

Section B will state the information that needs to be considered in evaluating EOT. There are 13 information summarized form the literature reviews and also form the previous study, which are application letter (notice of delay), as-planned schedule, as-built schedule, weather record, drawings, site diaries, site memo, project daily report, variation order, architects instructions, minutes of meeting, test of materials or operating test, and correspondence. The respondents can also add any information in the provided space if they have any additional views. There are five rating scales to be selected for this section as shown below.

1 - Not Considered 2 - Less Considered 3 - Moderately Considered 4 - Highly Considered 5 - Very Highly Considered

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Next, the common mistakes by the contractor in the application of EOT are described in Section C. There are 8 mistakes in this section that have to fill in. The question is about the common mistakes by the contractor in the application of EOT and the mistakes are simplified from the literature reviews and listed in the following point.

a) Late or lack of notice from the contractor b) Failure to recognise delay or failure to describe the cause of delay c) Failure to stated the exact contractual provision which is being relied

upon

d) Failure to stated the date when the delay commenced and the period of delay

e) Poor presentation of the application to show how the progress of the work has been delayed

f) Lack of proper baseline schedule g) Lack of proper site records and particulars relied upon h) Insufficient quality of information (information is not kept and not

updated)

The question in Section C needs to be answered with rating from scale 1 to 5 as shown below.

1 - Never

2 - Seldom 3 - Sometimes

4 - Often 5 - Very Often

Last Section, Section D is aims to identify the ways to reduce the mistakes by the contractor as listed in Section C. The ways to reduce the mistakes are listed as follows.

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a) Be aware of the notice requirements for submitting application for EOT b) Fully comprehend what events the contract considers claimable in terms

of time

c) There must be an agreement and acceptance of the baseline programme (or formal acceptance of the final as-planned schedule)

d) Keep reliable and accurate progress and programme records e) Implement a proper claim administration system f) Implementation a document management system

There are 5 rating scales for question in this section to know the degree of contribution toward each of the way as listed above. The question in Section D also needs to be answered with rating from scale 1 to 5 as shown below.

1 - Very Low Contributing 2 - Low Contributing 3 - Medium Contributing 4 - High Contributing 5 - Very High Contributing

4.5 Analysis Method

There are two methods that will be used in analysing the collected data which are frequency analysis and average index. Frequency analysis is used in analysing general information in Section A of the questionnaire and this method will show the frequency, percentage and in certain questions in number. Next method is average index and it is used in analysing Section B, C and D and this method will show the average index and rating scale. The feedback from questionnaires will be analysed through a computer program, Microsoft Excel. There are also other tools for

analysing technique such as SPSS, but the researcher used Microsoft Excel because

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this research only involved not more than 50 data to be analysed and it can use a simple computer program, Microsoft Excel.

4.5.1 Frequency Analysis

Frequency analysis is a method to decompose a function, wave or signal into its frequency components so that it is possible to have a frequency spectrum. The frequency analysis is used to represent results of data analysis of the number of frequency of response that the respondent gives to different variables in the questionnaire survey. The result will be tabulated in the form of frequency number and percentage according to total respondents. The frequencies can also be represented in the form of tables, pie charts and bar charts for graphic result.

4.5.2 Average Index Analysis

The average index analysis for each variable is calculated by using the formula as shown below (Al- Hammad, 1996):

Average Index =

Where,

a1 = constant expressing the weight given to i

x = variable expressing the frequency of response for i = 1, 2, 3, 4, 5,n

a1x1

xi

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Based on the assumed values stated earlier,

(Section A & Section C)

x1 = frequency of the Never and corresponding to a1 = 1 x2 = frequency of the Seldom and corresponding to a2 = 2 x3 = frequency of the Sometimes and corresponding to a3 = 3 x4 = frequency of the Often and corresponding to a4 = 4 x5 = frequency of the Very Often and corresponding to a5 = 5

(Section B)

x1 = frequency of the Not Considered and corresponding to a1 = 1 x2 = frequency of the Less Considered and corresponding to a2 = 2 x3 = frequency of the Moderately Considered and corresponding to a3 = 3 x4 = frequency of the Highly Considered and corresponding to a4 = 4 x5 = frequency of the Very Highly Considered and corresponding to a5 = 5

(Section D)

x1 = frequency of the Very Low Contributing and corresponding to a1 = 1 x2 = frequency of the Low Contributing and corresponding to a2 = 2 x3 = frequency of the Medium Contributing and corresponding to a3 = 3 x4 = frequency of the High Contributing and corresponding to a4 = 4 x5 = frequency of the Very High Contributing and corresponding to a5 = 5

Average index will be used in analysing each question in Section B, C, D, and one question in Section A (Abdul Majid and McCaffer, 1997). In section A, there is only one question that needs to use average index analysis. In order to determine the significance of reasons of delay, the questionnaire rating scale for reasons of delay in Section A can be classified as indicated in the following table.

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Table 4.1: The classification of the rating scales in Section A of the questionnaire

Rating Scale Average Index (AI) Never 1.00 AI < 1.50 Seldom 1.50 AI < 2.50 Sometimes 2.50 AI < 3.50 Often 3.50 AI < 4.50 Very often 4.50 AI 5.00

In Section B, the classification of the rating scales to determine the levels of consideration of information in evaluating EOT application are as follows.

Table 4.2: The classification of the rating scales in Section B of the questionnaire

Rating Scale Average Index (AI) Not considered 1.00 AI < 1.50 Less considered 1.50 AI < 2.50 Moderately considered 2.50 AI < 3.50 Highly considered 3.50 AI < 4.50 Very highly considered 4.50 AI 5.00

Next, in order to determine the common mistakes by the contractor (Section C), in this study, the similar classification of the rating scales as indicated in Section A have been used. The classification of the rating scales are indicated in table 4.3.

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Table 4.3: The classification of the rating scales in Section C of the questionnaire

Rating Scale Average Index (AI) Never 1.00 AI < 1.50 Seldom 1.50 AI < 2.50 Sometimes 2.50 AI < 3.50 Often 3.50 AI < 4.50 Very often 4.50 AI 5.00

There is also classification for ways to reduce the mistakes in order to determine the contribution of the ways in reducing the mistakes by the contractor as described in Section D of the questionnaire.

Table 4.4: The classification of the rating scales in Section D of the questionnaire

Rating Scale Average Index (AI) Very low contributing 1.00 AI < 1.50 Low contributing 1.50 AI < 2.50 Medium contributing 2.50 AI < 3.50 High contributing 3.50 AI < 4.50 Very high contributing 4.50 AI 5.00

4.6 Conclusion

In order to achieve the objectives of the study, the research methodology has been established. This study was carried out based on literature reviews and questionnaire survey.

CHAPTER 5

RESEARCH ANALYSIS AND DISCUSSION

5.1 Introduction

This chapter analyses the data collected from the questionnaires and the methods used to analyse are Frequency Analysis and Average Index Analysis. There are four sections from the questionnaires to be analysed which are general information (Section A), information in evaluating EOT (Section B), common mistakes by the contractor in the application of EOT (Section C) and ways to reduce the mistakes (Section D). The collected data from the questionnaires were tabulated and analyzed according to their ranking on relative index. Tables created from their rating scale shown to represent their ranking.

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5.2 Data Analysis for Questionnaire Survey

The collected data from

Time extension in construction project

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