Bachelor of Quantity Surveying (Hons)

Professional Practice 2 [QSB 3614]

DELAYS

DEFINITION • Construction delays arise which leads to the prolongation of the completion time of construction.

Three broad categories of delays in completion of works:

• Delays caused by CONTRACTOR

• Delays caused by EMPLOYER

• Delays caused by NEUTRAL EVENTS

DELAYS BY CONTRACTOR

• Clause 21.1

– the contractor shall commence the execution of work and complete the same on or before the Completion Date.

• Reasons of delays:- not acceptable

– Insufficient labour

– Poor site management

Consequences

• Breach of contractual obligation by contractor

• No EOT granted to contractor

• No compensation for the loss and expense

• Employer can impose liquidated damages

• Termination of contract is applicable

DELAYS BY EMPLOYER

• Clause 23.8(l) – the opening up for inspection Eg. , the architect doubt that there is a missing rebar in the concrete column, the

contractor will need to hack off the concrete for AR. inspection. If the contractor complies with the contract, he will be granted EOT. If he does not comply, then EOT is not entitle.

• Clause 23.8(o) – AI in connection with the discovery of antiquities

Eg. , During excavation, the workers found that there is a tunnel underneath. The execution of work has to be stop immediately and report to the local authorities to check on whether it is an antique.

Consequences

• Breach of contractual obligation by employer

• EOT granted to contractor

• Employer is liable for the loss and expense

• Cannot impose liquidated damages

• Termination of contract is applicable

DELAYS BY Neutral Events

• Clause 23.8(a) – force majeure

Eg. Natural disaster or terrorist acts.

• Clause 23.8(b) – exceptionally inclement weather

Eg. , rainfall pattern is different from the past five years

• Clause 23.8(d) – civil commotion, strike or lockout affecting relevant trades

Eg., implementation of government laws whereby Indonesian workers are not allow to work in Malaysia.

Consequences

• Delays caused by neutral events

• EOT granted to contractor

• No entitlement of loss and expense

• Cannot impose liquidated damages

• Share the burden between employer and contractor

EOT ENTITLEMENT

LOSS AND EXPENSE REINBURSEMENT

LIQUIDATED DAMAGES IMPOSEMENT

TERMINATION OF CONTRACT

CONTRACTOR

EMPLOYER

NEUTRAL EVENTS

DELAYS CAUSED BY

CONTRACTUAL EFFECTS

SHARE BURDEN

Procedure (Contractor)

Step 1 : Send a Written Notice to Architect [23.1(a)]

• Send within 28 days of delaying event occurrence

• Estimated EOT required

• Cause of delaying event

Procedure (Contractor)

Step 2 : Send an Official Application to Architect [23.1(b)]

• Send within 28 days of delaying event ending

• Specify event of delay, it’s effect, steps taken to prevent delay, and number of days delayed

• Include reworked work schedule, and all supporting documents

To Claim, or Not to Claim? That is the Question.

Claim (23.1)

• Contractor should be in the opinion that there will be an actual delay in the works

• Delaying event must be covered under PAM Contract Clause 23.8

To Claim, or Not to Claim? That is the Question.

No Claim (23.1.b)

• Failure of contractor to claim within 28 days of delay event ending will be considered as dismissing their rights for EOT on that particular event

• Either by non-awareness of the time-frame or assessment of contractor that there will be no effect to completion date

Granting EOT (Architect)

Consideration

• Cause of delay is within provisions of contract (23.8)

• Reasonable steps were taken to avoid delay (23.6)

• Approved work program must be disrupted, causing completion date to be pushed back (23.1)

• Incomplete info, request from contractor (23.3)

Granting EOT (Architect)

Grant (23.4)

• Issue a certificate of EOT with a new completion date [Copy to NSC if affected (23.2)]

• Include number of days granted for the event/s, and the total days

• Include reasoning behind the number of days granted

• Must be issued within 6 weeks of final claim

Reject

• Reply contractor with reasoning

No reply? Never pick up phone?? Always in “meeting”???

• Assessment of EOT claims are part of an Architect’s

duty as a professional, hence failure to do so would

result in a breach of contract

• Should this situation arise, the contractor has a few ways to work around it :-

(i) Re-apply for EOT

(ii) Appeal to the employer directly

(iii) Refer the matter to Arbitration, preferably after trying the above solutions (34.5.C)

Can EOT be granted Prospectively or Retrospectively?

Definition: Prospectively – In the future Retrospectively – Directed to the past

This situation can arise where:

i) Contractor’s late submission of his particulars under clause 23.1(b) or clause 23.3.

Contractor submits particulars/ provides

sufficient information HERE!

This situation can arise where:

ii) The contractor’s submission are made less than 6 weeks from the expiry of Completion Date.

Contractor submits particulars/ provides

sufficient information HERE!

4 weeks

6 weeks

Architect makes and

communicates his decision

HERE!

This situation can arise where:

iii) The actual extent of the entitlement may not be identified until after the Completion date has passed.

Example: Client ordered materials from oversea and it arrives only after the completion date, so the EOT can only be known after the completion date.

EOT after the Issuance of Certificate of Non-Completion (CNC)

After the Issuance of CNC…

Review of EOT after Practical Completion

• Clause 23.10: Architect may review and fix a completion date later than that previously fixed.

EOT

CNC CPC

Liquidated Damages

Architect to review and fix a new completion date within 12 weeks

• Final review of EOT is not allowed to cause any decrease in EOT that has already granted.

EOT

CNC CPC

Liquidated Damages

Decrease Increase

Review of EOT after Practical Completion

• The employer shall repay any surplus liquidated damages retained to the contractor.

EOT

CNC CPC

Liquidated Damages

EOT

Revised Extended Completion

Liquidated Damages to be returned to

contractor

Liquidated Damages employer entitled to

retain

Client Contractor

Review of EOT after Practical Completion

Certificate of Extension of Time

Certificate of Extension of Time

Significance of EOT Clause

If there are no EOT provisions:

New completion date cannot be set

Time for completion is “at large”

Contractor’s obligation is to complete in a reasonable time

Employer no longer has rights for liquidated damages. Contractor’s liability is limited to general damages which are hard to prove.

If there are EOT provisions:

Employer can set a new completion date

Prevents time for completion of works to become “at large”

Completion date can be extended if there is a delay

Preserves the employer’s contractual rights

Question

• The employer instructs the contractor to undertake additional work via change order, the contractor acknowledge the completion of project will be delayed because of extra work. However, at the time of carrying out the additional work, the contractor has reduced its labour resources for the reason unrelated to the variation but, in the event, compound the delay effect of the variation. The delay caused by the additional work and the insufficient resources run concurrently and delay the completion of the project.

Is the contractor entitle to EOT? Why?

Answer

• According to the case of HENRY BOOT CONSTRUCTION (UK) Ltd v MALMAISON HOTEL. The judgement was if there are two concurrent causes of delay, one of which is a relevant event [employer’s change order] and the other is not [contractor’s insufficient resources]. Then the contractor is entitled to EOT for the period of delay caused by the relevant event regardless the concurrent effect of the other event.

Question

• Scenario: Architect granted EOT including loss and expense to Contractor. Client proceeded to make payment to Contractor but later found out that the payment was overestimated by a fair amount. Architect refuse to admit fault and argued that Client should have consulted with QS before making payment, since the QS played a big part in calculating the cost.

• Question: What should be the clients’ next action?

• Answer: Based on the case law Chin Sin Motor Works v Arosa Development, it was ruled that the Architect owed a duty of care to the client when issuing a certificate and that it was reasonable for the client to rely solely on the certificate to conduct payment.

Question • Are EOT Provisions beneficial to employer or contractor, or

both? Why?

It benefits the both parties, because:

For employer:

it maintains a contractual time for completion.

it provides certainty as to how the completion date is to be fixed, and under what circumstances it may be adjusted.

it preserves the employer's right to liquidated damages.

it covers delays that are neither the fault nor the responsibility of the employer.

For contractor:

it gives the contractor certainty as to its financial exposure in the event of

delays.

it gives the contractor relief from its strict duty to complete the works on

time in the event that delays are caused by specified neutral events.

it covers delays that are neither the fault nor the responsibility of the contractor.