Contractor woes

by Jeffrey Badman

Hill International director Jeffrey Badman.The contractor has submitted his extension of time claim, some months have passed but no award or response has been forthcoming from the engineer – an all too familiar scenario experienced by most contractors at one time or another.

So what can the contractor do next? There are some initial practical avenues that can be taken in an attempt to secure an award:

After a reasonable time following the submission of final detailed particulars (6-8 weeks depending on the complexity of the claim) the contractor may wish to write to the engineer asking if he has had the opportunity to assess the claims.

Whilst the contractor may be tempted to ask the engineer if he needs any further particulars in order to assess the claim, this should be resisted as it gives the engineer a reason for delaying his determination.

Try to arrange a consultation with the engineer to discuss the claim.

Having attempted to obtain a response from the engineer, the contractor may wish to write directly to the employer requesting that he instructs his engineer to determine the claim.

This course of action may have greater effect where the conditions of contract stipulate a timeframe for the engineer’s determination, such as contained in Fidic 99.

In the absence of an award the contractor faces a dilemma; on the one hand he wants to avoid liquidated damages and penalties, but on the other he does not want to spend substantial extra sums of his own money accelerating the works to finish on time.

It’s about this time that you hear cries of “time at large” from those who have experience of working in certain common law jurisdictions.

For those who are not familiar with this principle, time is said to have become “at large” when the obligation to complete within the specified time for completion is lost; that obligation then becomes to complete within a reasonable time.

However, the law in the UAE is entirely different and this principle is unlikely to have any application.

So what options are available to the contractor? The contractor may:

Choose to continue in the hope that in the future he will be awarded the full extension of time claimed and decide not to implement any measures to mitigate the delays.

Consider pursuing his claim through the contractual dispute resolution mechanism: arbitration or litigation. However, the decision or judgment will take some time, during which the resources will be tied up in the dispute resolution process rather than focusing on the progress of the project.

As a first step if the contractor elects to follow this course of action, consideration needs to be given to whether a dispute has crystallised allowing the dispute resolution mechanism in the contract to be initiated.

Implement measures to recover the delays in part or whole.

The option selected will depend on how confident the contractor is about the success of his claim.

If the third option is chosen, another cry is likely to arise from those from common law jurisdictions – constructive acceleration.

The Society of Construction Law’s delay and disruption protocol defines constructive acceleration as “acceleration following failure by the employer to recognise that the contractor has encountered employer delay for which it is entitled to an EoT (extension of time) and which failure required the contractor to accelerate its progress in order to complete the works by the prevailing contract completion date.

This situation may be brought about by the employer’s denial of a valid request for an EoT or by the employer’s late granting of an EoT.” Even in common law jurisdictions there have been very few successful constructive acceleration cases.

Again, the law in the UAE is completely different and this principle is unlikely to have any application.

In the event that a contractor considers he needs to take action to reduce his exposure to damages being imposed by the employer for delays to the project, despite having submitted a claim for extension of time, we suggest that the contractor:

• Arranges for an independent review of the contractor’s claim to objectively assess its strengths and weakness, and likely magnitude of the award.

• Updates the works programme to include the effects of all identified delays; employer’s as well as the contractor’s own delays.

• Identifies activities along the critical path to completion. It is false economy to just throw additional resources at works, especially those which are not critical.

To maximise the effect of any acceleration measures and minimise the contractor’s expenditure, the contractor should look at re-sequencing and/or reducing the durations of the activities on the critical path.

Before implementing any acceleration measures the contractor should first attempt to obtain the employer’s written agreement.

This applies both to requested acceleration and constructive acceleration, as most forms of contract do not empower the engineer to instruct the contractor to accelerate the Works.

This agreement should include, inter alia, the associated costs and an allowance for any additional risks connected with the acceleration measures. For example, a contractor had intended assemble a steelwork frames on site section-by-section.

To accelerate the works the contractor proposed to pre-assemble the frames in the fabrication yard off-site, transport them to site on low loaders, and lift them into place using a tandem lift with two cranes. The proposed method is significantly riskier than the original method and the contractor should be allowed to include for this in his price.

In this example, the magnitude of this risk will diminish as the works proceed.

If there is no agreement and the contractor implements his acceleration measures, the employer will receive the benefit of the contractor’s increased risk, however, once the works are completed it is almost certain that employer will not recognise and pay for that increase in risk.

It is essential that the contractor keeps the employer fully informed at each step, advising him of the proposed and implemented measures, the related costs and their effects on the programme delay.

The contractor should maintain, where possible, separate records for the acceleration measures.

It should also be remembered that as the delays are recovered by implementing acceleration measures, the actual delay reduces and so does the contractor’s entitlement to recover extension of time.


Discover more from CMGuide

Subscribe now to keep reading and get access to the full archive.

Continue Reading

Scroll to Top