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Standard building contracts usually include a mechanism to allow the adjustment of the date for practical completion due to delays during the building process. Delays can be the result of various causes, for example: inclement weather, latent conditions, variations or changes in the scope of work.
Building contracts normally state a date for practical completion, determined by either the client or the contractor at the beginning of a project. Given the extended periods generally involved in building contracts and the inherent uncertainty of construction, it is clear that the date for practical completion is a best-guess target date that then assumes significant value through its inclusion in the contract.
Generally, there will be delays in a project that will affect the date for practical completion. Some of these delays will entitle the contractor to an extension of time (EOT) with associated costs (EOT with costs, ie an adjustment to the date for practical completion and an adjustment to the contract price) and some will entitle the contractor to an extension of time only (EOT only, ie an adjustment to the date for practical completion only, and no additional payment).
A building contract should define which party will bear the contractual responsibilities and burdens arising from different types of delay and state how the delay and associated costs will be handled. These are clearly defined, for example, in Section L 'Adjustment of time' of the ABIC suite of contracts.
An EOT claim by the contractor needs to demonstrate that the delay affects the critical path of the construction program and be fully supported to allow assessment by the contract administrator. As a general rule, delays:
- involving inclement weather entitle the contractor to an EOT only
- caused by circumstances beyond the control of the contractor incur EOT with costs
- caused by the contractor do not entitle the contractor to any EOT or costs.
The likelihood of having a number of EOT notices with and without costs being issued during the contract period should always be made clear to the client. The nature of the project will determine the frequency of such notices and the costs involved. For example, residential alterations and additions with a high proportion of provisional sums and/or prime cost sums, and where the owner remains in occupation, could be expected to generate more EOT notices than an industrial project on a greenfields site.
Architects can have a role in minimising the risk of EOTs by managing and responding to contractor’s requests for information (RFIs) promptly and within the timeframes set out in the contract. Clients should be advised prior to signing any contract to make some provisional allowance in their program and budget for EOTs. A client who relies on the original date for practical completion as being the date on which occupation can occur has unrealistic expectations and is likely to be disappointed. Obviously, this applies to a client who does not anticipate some EOT costs as well.
Further resources
For issues related to COVID-19 related extension of time claims, refer Acumen note COVID-19 contract related FAQs.
Disclaimer
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