How to Deal with Delay Caused by a Nominated Subcontractor
Many years ago when I used to regularly deal with the JCT forms of contract. Back then, if a nominated subcontractor delayed the works, the contractor could use this as a legitimate reason to claim an extension of time. Either things have either changed since then, or not all forms of contract take this view.Read more
Extension of Time Claims - 4 Key Elements to Include
A previous Top Tips Paper, The Preliminaries to the Claim, covered the preliminaries to the claim and explained how essential information should be presented at the front end of the claim. This ensures that a reader with no prior knowledge of the project or circumstances leading to the claim may gain an understanding of the project, the parties, the contract and brief details of the claim, before studying the essential matters of the claim itself.Read more
Claiming Prolongation Costs when there is no Entitlement to an Extension of Time | Can it be done?
It is generally accepted that, in a situation where a contractor is entitled to an extension of time, they are also entitled to claim for time-related costs for the additional time they were obliged to remain on site. Such costs are usually referred to as prolongation costs.
Are there situations, however, where a contractor may legitimately claim for the payment of costs when an extension of time is not warranted? Well, yes, there are. Consider the following example:
The contractor is constructing a high-rise building and has a tower crane on site, which their programme shows is to be removed on a certain date. The contractor, however, receives a variation order to change the specification of the air-conditioning chiller, which is located on the roof of the building and needs to be hoisted into position by the tower crane. The change to the chiller requires modifications to be made at the factory where the chiller is being manufactured, and this will delay the delivery of the chiller to a date later than the date by which the contractor had planned to remove the crane.
The contractor will therefore incur additional costs for keeping the tower crane on site from the time that they should have been able to remove the crane, to the date that they were able to hoist the chiller into position.
Such costs would be claimable.
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‘Thickening’ of Preliminary Items
It is generally accepted that when a contractor is entitled to an extension of time, they are also entitled to claim for time-related costs for the period of delay. Time-related costs include expenses for providing site management, site establishment, plant and equipment, insurances, additional financing costs, head office costs, and similar items, which are usually priced in the preliminaries section of the bill of quantities.
However, are there situations where a contractor may legitimately claim for additional resources, as opposed to simply extending the existing resources for a prolonged period? The answer is yes, and this is known as ‘thickening.’
Consider a situation where the Employer has instructed the Contractor to carry out a substantial amount of additional work, but still needs to meet a completion date that is earlier than what would be achieved with the extension of time to which the Contractor would otherwise be entitled. In such a case, it would be necessary to deploy additional labor, plant, and machinery to carry out the work, for which the Contractor would receive payment under the contract rates and prices when evaluating the additional work. However, if the Contractor deploys additional resources, they may also need to mobilize additional site supervision, management, administration staff, and the like. Mobilization and demobilization of both productive and non-productive resources will probably cause the Contractor to incur additional costs. The staff may also require supplementary site facilities in order to carry out their duties, but such costs would not be recovered through the rates and prices. This is what is referred to as thickening, and it is claimable by the Contractor.
If it were not for the requirement to accelerate in order to meet the Employer’s desired completion date, the Contractor would be entitled to an extension of time, for which the Employer would incur prolongation costs. The savings from avoiding prolongation may therefore possibly offset or contribute towards the thickening costs.
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Inadequately Expressed Claims | How Not to Write One!
The object of any claim is to convince the party responsible for providing a decision or determination that the claimant has the right to be compensated in either time or money for the event from which the claim arose.
The claimant has the obligation to prove that their claim is justified, and the standard of proof required is based on the ‘balance of probabilities.’ If the claim does not fulfill these requirements, there is a very good chance that it will fail because the claimant has simply not adequately demonstrated their case.
I recently produced an assessment on behalf of the Employer for a Contractor’s claim for an extension of time arising from the late nomination for the supply of interior lighting fixtures, which were included as a provisional sum in the Contract. This claim is a very good example of an inadequately expressed claim. I will explain why by using some specific examples.
The claim narrative repeats the same points in several different ways in various parts of the document. While this repetition is just tedious to read, the only negative aspects here are that it shows the Contractor does not have a good understanding of how to present their claim, lacks professionalism, and this sort of redundancy does not elicit much sympathy from me. My advice here is to make your point well, make it clearly, and make it only once.
The narrative does a decent job of ‘telling the story’ and is well substantiated by the inclusion of exhibits from the project records. However, it relies purely on the facts demonstrated by quotations and extracts from the records and offers no explanations or conclusions as to what these facts mean. This leaves me to draw my own conclusions, which is risky because my conclusions may not align with the Contractor’s intentions. While records should certainly be used to establish the facts, my advice is to offer additional explanations, summaries, and conclusions to guide the reviewer and communicate what they should be thinking at each stage of the narrative.
The Contractor cites several clauses from the Contract to demonstrate their entitlement when only two clauses are actually relevant. Again, providing that the Contractor has at least referred to the correct clauses that do provide entitlement, this falls into the “annoying rather than dangerous” category. My advice is: if it is not relevant, then don’t include it.
The delay analysis programme included with the claim to demonstrate the effect of the late nomination on the Time for Completion seemed, to me as a non-expert delay analyst, to be fundamentally incorrect. Additionally, the narrative offered no information as to the logic behind the analysis or how it had been created. Presumably, the Contractor believed that it made sense, or they would not have submitted it. But without the benefit of some form of explanation, I certainly could not see how it could work, and it is not my job as the respondent to go searching for evidence to support the claimant. My advice here is to ensure that any supporting document, such as calculations, programmes, and the like, are clearly explained in the narrative.
Although, based on experience, I had a strong gut feeling that the Contractor was entitled to some additional time, it is certainly not my job as the respondent to prove their case for them. My conclusion was that yes, the nomination was late, and yes, in such circumstances, the Contractor is entitled to an extension of time if the late nomination delayed the Time for Completion. However, because the Contractor had not adequately proven that the delay actually affected the Time for Completion, my recommendation was that no extension of time should be awarded, as the claimant had not proven their case.
The moral of this story is to ensure that your claims are presented in such a way that they convincingly prove your case on the balance of probabilities.
Time is of the Essence for Claim Submissions
The consultancy side of our business has just been appointed by a contractor to prepare an extension of time claim. The contractor exceeded the completion date 3 months ago and although there are many employer-caused delays, they have not so far submitted any claims for extensions of time.Read more