Provisional periods for delay

There are two basic alternatives:

1. Provisional period for delays that do not attract costs
2. Provisional period for delays that attract costs

In the ABIC suite of contracts, the Schedules provide for allocation of a selected number of working days to be added to the contract period to arrive at an initial date for practical completion that includes time for certain types of delay. The purpose is to give the owner a more realistic date for practical completion, as research has indicated that this issue is of particular concern to clients (the reason it is a common requirement of domestic building legislation).

All claims for extension of time (EOT) and EOT with costs are still required to be made by the contractor. After assessment by the architect, however, if the claims are found to be valid and are identified as being subject to provisional delay allowances, the provisional period of delay is reduced rather than the date for practical completion extended. This occurs until all the provisional period is consumed, and then further valid EOT or EOT with costs, extend the date for practical completion.

The contract deals with inclement weather as an EOT but it also allows the owner to stipulate other causes peculiar to the project and circumstances that will not extend the date for practical completion until the provisional period has been used.

Precautions

Obviously, tenderers will allocate costs in their tenders to cover the perceived risks that are stipulated in the contract schedule. It may be counterproductive to stipulate 'catch-all' events as these will just inflate the tender, as will highly unlikely events which really could be dealt with as valid claims in the event that they occur.

When nominating potential causes of delay to be incorporated by the owner in the schedule, the architect should consider the nature of the construction project for which the contract documents are being prepared. Consideration should be given to the following:

• Prevailing climatic conditions in the area in which the project is to be constructed
• Whether there is a requirement for staged practical completion
• The relevance of the delay provision to the type and complexity of the project
• Current and predicted short- and mid-term industrial relations
• Availability of special materials and other matters

Be aware also that:

• The effect of over-generous provisions for delay may only serve to inflate the tenders as noted above
• Provisional periods do not make contract administration any easier

It follows that the inclusion of provisional periods for delay may not be in the client's best interest, particularly if the client is experienced and has accounted realistically for likely delays to their own program and budget independent of the building contract. The delay contingency of time and cost remains entirely with the client and is not divulged to the contractor. The pressure of maintaining a minimum contract period with the contractual threat of liquidated damages for late completion is seen by some as a way to focus the contractor on completing the work as soon as possible.

One reason for this position is that in the ABIC contracts there is no contractual mechanism for redeeming unused provisional periods of delay. The concern in this case is that the contractor has the possibility of relaxing control of the project especially towards the end if some provisional time still remains, as the date for practical completion is not brought forward if the provisional period is not fully used.

This view, however, is contrary to the general understanding that it is always in the contractor's best interest to complete a lump-sum project in the quickest time, and the stated desire of the ABIC contracts to be transparent and equitable.

At all times and irrespective of any provisional periods allocated, the architect should administer the contract diligently to ensure that the client understands its true contractual position in relation to the date for practical completion.

The inclusion (if any) of provisional periods for delay in a contract (and the need or otherwise for them) should be discussed with the client at the time of preparing the documentation and before proceeding to tender.

Finally, note that for domestic building in some states and territories, the mandatory special conditions require that provisional delay periods are stipulated, and the contractor must, under the legislation, warrant that the number of days allowed is reasonable in all the circumstances. The effect of this is that the contractor may face independent legal action by an owner to recover the cost of any delays judged to be those that should have been allowed at the outset. The consequence is that delay allowances set in isolation by architect and client may not be agreed to by the contractor in domestic projects.