Understanding Entitlement and Preparing Extension of Time and Prolongation Cost Claims

For contractors, understanding entitlement and preparing extension of time and prolongation cost claims are crucial aspects of managing complex contractual arrangements. These processes require attention to detail, thorough documentation, and an understanding of the contractual terms and applicable laws. In this post, we will provide guidance to contractors on how to identify entitlement and effectively prepare extension of time and prolongation cost claims.

Identifying Entitlement

Identifying entitlement involves recognizing the circumstances under which a contractor is entitled to claim for additional time and costs due to delays or disruptions in the project. Here are some key steps to help contractors identify entitlement:

1. Review Contract Documents: Carefully review the contract documents, including the terms and conditions related to extensions of time and additional costs. This will provide clarity on the entitlement provisions.
2. Document Delays and Disruptions: Maintain detailed records of any delays or disruptions encountered during the project. This should include causes of delay, impact on the project schedule, and associated costs.
3. Understand Contractual Entitlements: Familiarize yourself with the specific events or circumstances outlined in the contract that entitle the contractor to claim for extension of time and additional costs. This may include variations, delays by the employer, or unforeseen site conditions.
4. Seek Legal Advice if Necessary: If the contractual language is complex or if there is uncertainty regarding entitlement, seek legal advice to ensure a thorough understanding of your rights and obligations.

Preparing Extension of Time and prolongation Cost Claims

Once entitlement has been identified, preparing extension of time and prolongation cost claims requires a systematic approach and comprehensive documentation. Here are strategies to effectively prepare these claims:

1. Thorough Documentation: Compile all relevant documentation, including daily reports, correspondence, change orders, and any other records that support the delay and cost impact claims.
2. Quantify Delay and Costs: Quantify the delay in terms of the impact on the critical activities in the project schedule and identify the additional costs incurred as a result of the delays or disruptions.
3. Cause-and-Effect Analysis: Conduct a cause-and-effect analysis to clearly demonstrate how the identified delays or disruptions have impacted the project timeline and increased costs. This analysis should establish a direct link between the events and their consequences.
4. Compliance with Notice Requirements: Ensure that all notice requirements specified in the contract are strictly adhered to. Timely and comprehensive notice is essential to preserving the contractor’s entitlement to claim for extension of time and additional costs.
5. Professional Presentation: Present the extension of time and prolongation cost claims in a professional and organized manner. Clearly articulate the basis of the claims, supported by factual evidence and analysis.

Example Scenario

For example, if a contractor experiences significant delays due to late issuance of design drawings by the employer, the contractor should firstly serve a notice within the time prescribed in the contract then meticulously document the impact of the delays on the project schedule and quantify the additional costs incurred, such as extended labor and equipment expenses. The contractor should then prepare a comprehensive claim supported by evidence of the delays, their effects, and the associated costs. If the contract is silent about the delay damages per day, make sure you provide a calculation for the costs of running preliminaries (site overhead) as well as head office overheads using one of the common formulas such as Hudson Formula.

In conclusion, identifying entitlement and preparing extension of time and prolongation cost claims require a proactive approach, attention to detail, and a thorough understanding of contractual provisions. By following the outlined steps and strategies, contractors can navigate these complex contractual arrangements with confidence and assert their rights effectively.

Remember, seeking professional advice from legal and contractual experts can further strengthen your position when dealing with entitlement and claims. Ultimately, clear communication and comprehensive documentation are key to successfully asserting your entitlement and preparing effective claims.

We hope this guidance proves valuable in your endeavors as a contractor. If you have further questions or need additional assistance, feel free to reach out for more detailed advice tailored to your specific situation.