The three fundamental essential elements of any construction contract are PRICE, TIME and SCOPE. Price and Scope are often only perceived as required by contracting parties, without any serious consideration for TIME.
How long will it all take to construct? Between what dates will the construction be done? In what order will it need to be built to achieve these dates?
Time is money, so on any construction project it is little wonder that often when a project is late a fight will start. Imagine the Client procuring a building where he will lose say £30,000 per week in lost revenue when he does not get the building on time and likewise the builder who claims the client has delayed him and, as a result, he is losing £30,000 per week. Immediately, you have a £60,000 per week dispute. If the Client has agreed liquidated and ascertained damages (LAD's) with the builder in the contract the onus or burden of proof is on the builder to prove why he is late. If our example runs on for six months the difference between the parties can be huge and run into millions of pounds.
If delays occur it is essential for the contractor to notify the Client and keep good records of the impact each event has on the programmed construction works. The contractor should make an "Extension of Time" claim as works proceed and the substantiation behind this process is called 'Delay Analysis'.
Under the Standard Form of Contract there are normally "mechanisms" in place to extend time and the responsibility for assessing this is with the Employer or his representative. Care should be taken by the Employer to deal with construction delays seriously as it can lead to huge liabilities later on in adjudication. It is common practice for Employers to amend the construction contract provisions and contractors should be aware of the implications of these, particularly if they claim to be a, "condition precedent".
The delay analysis should not just be procured after the works are complete but should be deployed throughout the construction process, many complications can occur and the contract mechanism must be adhered to in order to reduce the risk of loss or dispute. In simple terms, delays can be caused by either party, the offender paying for it, however there are "neutral events" where nobody is to blame and also cases where both parties are to blame, often known as concurrent delays.
Delay analysis and time assessments can be a very complex science, with factors and risks which can impact on time or result from delay, these include:
- Mitigation of delays
- Critical paths
- Notices of delay
- Completion and non-completion notices
- Common law rights
- Time at large
- Design delays
- Procurement of time
- Relevant events
- Third parties
- Instruction delays
- Condition precedents
- Key dates
- Section completions
- Variations to construction works
Careful management and understanding of all of these risks must be considered in managing any construction project.
Ask the Experts
Arbicon are experts in the preparation of, or defending, time claims using Delay Analysis and dealing with the same in adjudication proceedings. It is important to manage the time with records as work proceeds and to understand how an Adjudicator is likely to deal with the claim, whether by a critical path analysis or otherwise.
Although common sense may prevail it is recommended that a clear understanding of the concept of time management for any construction project and all the risk factors that can arise be appreciated to avoid unnecessary losses.
If you need any advice on a construction delay analysis, please use our contact form or call any of our offices.