24-05-2022
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 delayed or delivered late, a construction dispute will arise.
Imagine the Client procuring a building where they will lose £30,000 per week
in lost revenue when they do not get the building on time, and likewise the
builder who claims the client has been the cause of delay and, as a result, 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 they
are late. If our example runs on for six months, the difference between the
parties can be huge and run into millions of pounds.
If a
Construction Delay Occurs
If construction delays occur, to satisfy the burden of proof, 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 their representative. Care should be taken by the Employer to deal
with construction delays seriously as it can lead to huge liabilities later 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, so creating what is
known as “contemporaneous evidence”, many complications can occur, and the
contract mechanism must be adhered 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 cases
where both parties are to blame, often known as concurrent delays.
Delay
analysis in construction and time assessments can be a very complex science,
the contractor must be alive to good record keeping, factors and risks which
can impact on time or result from delay, including:
- Mitigation
of delays
- Critical
paths
- Programmes/progress
reports
- Notices
of delay
- Completion
and non-completion notices
- Common
law rights
- Time
at large
- Float
- Disruption
- Design
delays
- Procurement
of time
- Relevant
events
- Third
parties
- Instruction
delays
- Antiquities
- Condition
precedents
- Milestones
- Key
dates
- Section
completions
- Subcontractors
- Variations
to construction works
- Acceleration
- Site
attendance records
- Photographic
dated records
Careful
management, record keeping and an understanding of all these factors and risks
must be considered in managing any construction project effectively.
The
Importance of Records
As work proceeds, it is important to manage the time with record, 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, a clear chronology of
events recorded and all the risk factors that can arise be appreciated to avoid
unnecessary losses and disputes.
Arbicon are experts in dealing with Delay and Extension of Time issues. Arbicon can prepare or defend quantum time claims using Delay Analysis and dealing with any time issues in adjudication proceedings. If you require advice, please use our contact form or call our offices below:
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