Extension of Time Notification and Application
This article summarises the general steps to be taken by a Contractor in issuance of delay notices and subsequent substantiation through preparation and submission of supporting particulars commonly referred to as an Extension of Time Claim.
Experience shows that many Contractors applications for an extension to the Time for Completion fail completely or in part due ostensibly to the documentation and accompanying detailed particulars failing adequately demonstrate the Contractors entitlement as a result of a delaying event.
There are a number of elements which are essential for the contractor to clearly identify and present in the justification an Extension of Time Claim. These are discussed later but let us first address the issue of notices.
PAM 2006 contains strict notice provisions when applying for extension to the Time for Completion as a result of a delaying event. Failure to give proper notice may lead to a delays in and extension being granted or in the worst case denied completely.
Sub-Clause 23.1(a) of the PAM Conditions states that the Contractor shall give written notice to the Architect of his intention to claim for an extension of time and that such notice must be given within twenty-eight (28) Days from the date of the Architects Instruction or the commencement date of the Relevant Event, whichever is the earlier and the giving of such a written notice shall be a condition precedent to an entitlement to an extension of time.
Failure to comply with the requirement for a notice may not be the end of the story. Sub-Clause 23.10 of the Conditions provides that the Architect may at his discretion give an Extension of Time after Practical Completion, whether any notice of delays has been given or not. It appears in Malaysia that this is a very common practice and that Architects undoubtedly under pressure from the Employer or as a matter of course, elect not to award an Extension of Time during the works fearing that this will incur the Employer in claims for prolongation or loss and expense from the Contractor. By denying or failing to grant an Extension during the works the Architect in effect forces the Contractor to mitigate exposure to LAD’s through what can be termed as constructive acceleration. And then has an easier task of awarding an Extension of Time to cover any over-run at the end, most likely on the basis of no associated costs.
It appear Contractors have become accustomed to this approach and have in-turn adopted the practice as being normal which has resulted in many Contractors failing to adhere to the requirement for notices and instead electing for the less confrontational negotiation after practical completion. Contractors would however be wise to comply strictly with the notice provisions rather than rely on Clause 23.10 as by doing so when they have justified entitlement does not remove the Architects ability to address the matter later but maybe on more beneficial terms to the Contractor.
The notice itself is fairly straight forward and would be presented along the lines of the following example if we remain with the PAM form of Contract.
Delay Notice Reference:
The progress of the works is being delayed due to Delay in the re-nomination of ABC Nominated Sub-Contractor following the failure of the first Nominated Subcontractor to enter into a subcontract agreement under the required Terms and Conditions of Subcontract all as our earlier notifications. We consider this to be a relevant event under Sub-Clauses 23.1 and 23.8 of the Conditions of Contract.
The delay began on 25th December 2011. We shall furnish you with our estimate of the delay in the completion of the Works and further supporting particulars within 28 days from the end of the delaying event in accordance with Sub-Clause 23.1(b) of the Conditions of Contract
In the event that the relevant event has a continuing effect exceeding 28 days we shall write under separate cover seeking your further instruction.
You may be assured that we are using our best endeavours to prevent delays and proceed with due diligence and expedition to complete the Works in accordance with Sub-Clause 23.6 of the Conditions of Contract
This notice is issued in accordance with Sub-Clauses 23.1(a) (delays) and Clause 24 (costs) of the Conditions of Contract.
After the issuance of a notice in a similar format as above the Contractor must keep all contemporary records he can to record his entitlement. Within 28 days from the end of the relevant event the Contractor must submit whatever detail particulars he has to support his entitlement to the Architect. This is what is commonly referred to as the Contractors extension of time claim.
Elements which are essential for the Contractor to clearly identify and present in his claim are:
The Relevant Event
It is essential that the Contractor identifies the relevant event and the circumstances which gave rise to delay which the Contractor considers entitles him to an extension to the time for completion. This should have been stated in the Notice above but may be expanded upon in the Contractors subsequent claim document.
Liability for the Relevant Event
Once the relevant event has been identified the Contractor now needs to attempt to establish the liability for that relevant event. This is normally as simple as proving the Contractor did not contribute towards the event which is stated in the Conditions of Contract as being one which entitles the Contractor to an extension of time. Generally where the responsibility rests with the Employer or it is a neutral event, such as force majeure or exceptionally adverse climatic conditions, the Contractor can normally establish the liability. However, this is dependent upon the terms and conditions of the particular contract and as stated earlier the Contractor demonstrating he is responsible for or contributed towards the event or its cause.
Typically, construction contracts contain provisions entitling the contractor to an extension of time on the occurrence of a particular relevant event provided the progress of the works or time for completion is delayed as a consequence. This is the situation with PAM 2006.
The Contractor needs to clearly state under which clause or Sub-Clause under the Contract he considers he is entitled to an extension to the time for completion and further and prolongation or loss and expense costs. Normally the Contractor will have highlighted these in his earlier notices and it is simply the case of repeating the same within his detailed particulars. It is common but not essential for the Contractor to reproduce the relevant Clauses and Sub-Clauses in the Claim document for ease of reference, this will also make a very the claim document a very useful document containing all the relevant information for review not only by the Architect but his advisors and perhaps also the Employer. The more complete the document the easier it will be for all to grasp the reasonableness of the same.
Compliance with Contract
Generally within extension of time clauses, the Contractor will be obligated to submit notice(s) and detailed particulars within a specified time frame or risk losing all or some of his entitlement and as noted above this is the case with PAM 2006 Condition of Contract.
The submission of notices and detailed particulars is expressed to be a condition precedent. The contractor’s failure to comply waives his entitlement to claim an extension of time and owner’s liability ceases. For this reason it is essential that the Contractor establishes clearly within his detailed particulars that he has complied with all the time constraints stated in the Contract and provided copies of all relevant correspondence between the parties including confirmation of receipt proof.
Cause and Effect
Contractors when demonstrating the cause and effect of a relevant event need to list in chronological order the pertinent exchanges of correspondence between the parties. In addition they need to incorporate this into a story which should be prepared based on the facts describing the effects of the relevant event upon the Works. This should include details of the planned works which were directly and indirectly affected, referring to the planned sequence, durations, and methods. Similarly it should include the status of the works in relation to that planned at the time of the event and a detailed description of the changes to that plan as a consequence of the relevant event.
A delay analysis to demonstrate the effect of the event on the contractor’s programme should be included within the claim document.
There are a number of industry recognised delay analysis methods. Ultimately, the choice of delay analysis method will be dependent upon such matters as level of records available; the robustness of the baseline programme and any updates; time available; degree of accuracy; and, level of proof required.
Statement of Claim
Every extension of time claim must contain a succinct statement of what the contractor is claiming.
The Contractor should extract and provide copies of documentary evidence comprising letters, method statements, instructions, progress reports and photos, minutes of meetings, programmes and schedules, statements of fact in support of the assertions made within the claim submission.
Where the Contractor claims for an extension to the Time for Completion adopting these main elements it should provide a sound basis for the Contractor in establishing his entitlement under the Conditions of Contract.
MALCONLAW will produce a separate template on the format of the Extension of Time Claim Document containing the elements as detailed which it is hoped will provide a checklist and template for Contractors Claims in respect of an Extension of Time under the PAM 2006 Form of Contract.