Extensions of Time D39PZ: Procurement and Contracts 2 Time and - PowerPoint PPT Presentation

...last week (or things you should now understand) • the purpose of a Gross Valuation, its role in an interim valuation and how it is documented in an Interim Certificate • the purpose of Interim Certificates and the information they document • the purpose and management of the Rectification Period • the purpose of the Final Certificate, and the events leading up to the CA’s ability to issue it • the situations in which the Contract Sum may need to be changed during construction D39PZ: Procurement and Contracts 1

Unit 9: Contract Administration: Extensions of Time D39PZ: Procurement and Contracts 2

Time and delays Extension of Time: Principles Extension of Time: Practice Liquidated Damages Summary D39PZ: Procurement and Contracts 3

Definitions of time in SBC/Q SBC/Q defines how time is to be managed using: • The Contract Particulars, that:  define the agreed Date of Possession [of the site]  define the agreed Date for Completion [of the Works]  define agreed dates for sectional possession and completion, if required. • Clause 2: “Carrying out the Works” D39PZ: Procurement and Contracts 4

Definitions of time in SBC/Q • The rights and obligations of the parties associated with the management of time are defined by cl. 2. • cl. 2.4 “Date of Possession”  Obliges the Employer to give the site to the Contractor for the duration of the Works. • cl. 2.5 “Deferment of Possession”  If agreed, the Employer can delay the Contractor’s possession of the site for up to six weeks after the Date of Possession. D39PZ: Procurement and Contracts 5

Definitions of time in SBC/Q • cl. 2.9 “Construction information and the Contractor’s master programme”  Obliges the CA to provide the Contractor with all the information required to construct the Works.  Obliges the Contractor to provide the CA with a programme of works, to be updated as a ‘live’ document. • cl. 2.26 “Adjustment to the Completion Date - Related definitions and interpretation”  Defines the circumstances that may create a need to adjust the Completion Date agreed in the Contract Particulars D39PZ: Procurement and Contracts 6

Managing time using SBC/Q • cl. 2.27 “Notice by Contractor of delay to progress”  Obliges the Contractor to notify the CA when the progress of the Works are likely to be delayed, and to inform the CA regarding the cause of the delay. • cl. 2.28 “Fixing Completion Date”  Defines how, and under what circumstances, the CA can set a new Completion Date, which (if set) supersedes the Date for Completion agreed in the Contract Particulars. • cl. 2.29 “Relevant Events”  Defines the events that can be used to justify superseding the Date for Completion (or a Completion Date, if issued). D39PZ: Procurement and Contracts 7

Managing time using SBC/Q • cl. 2.30 “Practical completion and certificates”  Defines the situations in which the CA can decide that the Works are complete and issue a certificate to signify this • cl. 2.31 “Non - completion certificates”  Defines what the CA must do (issue a certificate) if the Contractor does not complete the Works by the agreed Date for Completion (or Completion Date). • cl. 2.32 “Payment or allowance of Liquidated Damages”  Defines the procedure the CA must follow so that the Employer can recover damages from the Contractor for late completion D39PZ: Procurement and Contracts 8

Time generally • When a contract is formed requiring the Contractor to do something that takes time to complete:  Time is “ at large ” if the Employer doesn’t care how long the Contractor will take o The Contract does not define the time available for the Works o The Works must be completed in a “reasonable” time  Time is “ of the essence ” if the Employer must have the Works completed by a specified date o The Contract will specify a date by which the Work must be completed D39PZ: Procurement and Contracts 9

Delays - in essence • In contract law, the “prevention principle” states:  A party cannot benefit from its own breach of contract to the detriment of the injured party. • e.g. The Employer cannot oblige the Contractor to keep a Completion Date if the Employer’s actions (or inactions) have caused the delay.  In this situation, time becomes “ at large ”  The Contractor’s express obligation to complete the Works by the Completion Date is replaced with an implied obligation to complete them within a “ reasonable ” time. D39PZ: Procurement and Contracts 10

Delays - in essence • SBC/Q considers three types of delay:  Delays caused by the Contractor The Contractor bears its own costs and the Employer’s. o  Delays caused by the Employer The Employer bears its own costs and the Contractor’s. o  Delays caused events that neither the Employer or Contractor can control These are known as “shared risk events” or “ neutral o events ” o Neither party is liable - so both bear their own costs D39PZ: Procurement and Contracts 11

It is critical that you understand... • Date for Completion The date for completion of the Works agreed when executing the contract and, accordingly, entered in to the Contract Particulars • Completion Date The date for completion of the Works agreed during the progress of those Works in response to practical situations (i.e. Relevant Events). If present, the Completion Date supersedes the Date for Completion • Practical Completion The date when the CA actually considers the Works to be complete and issues the Practical Completion Certificate D39PZ: Procurement and Contracts 12

Time and delays Extension of Time: Principles Extension of Time: Practice Liquidated Damages D39PZ: Procurement and Contracts 13

Extension of time: principles • Most construction contracts lie somewhere between time “at large” and time “of the essence.” • They define a time period for completion of the Works by establishing:  the Date of Possession (of the site by the Contractor)  the Date for Completion (of the Works by the Contractor) • The time between the Date of Possession and the Date for Completion is the “contract period” D39PZ: Procurement and Contracts 14

Extension of time: principles • If a delay occurs, the SBC/Q provides for ...  Extension of Time;  Loss or Expense  Liquidated Damages; and • ... which determine where the loss caused by the delay will lie. D39PZ: Procurement and Contracts 15

Extension of time: principles Situation 1: • If the Contractor (or someone working for it) delays the Works:  The Contractor is in breach  The contract period will not be extended  Contractor bears its own additional costs  Contractor may have to pay Liquidated Damages to the Employer to compensate for its breach of Contract upon late completion D39PZ: Procurement and Contracts 16

Extension of time: principles Situation 2: • If the Employer (or someone working for it) delays the Works:  The Employer is in breach  The contract period will be extended  Employer bears its own additional costs  Employer pays damages to reimburses the Contractor for any Loss and Expense caused by the delay D39PZ: Procurement and Contracts 17

Extension of time: principles Situation 3: • If the Works are delayed by an event that neither party can control:  Neither party is in breach  The contract period will be extended  Contractor pays its own additional costs  Employer pays its own additional costs  No damages are paid by either party D39PZ: Procurement and Contracts 18

The “master programme” • The Contractor must proceed with the Works “regularly and diligently” (cl. 2.4). In addition: • cl. 2.9.1.2 obliges the Contractor to issue a “master programme”  as soon as possible after execution of the contract; and  as soon as possible after adjusting the completion date • The master programme is not part of the Contract Documents  It is a statement of the Contractor's intent only  The Contractor can use it to support a claim for Loss and Expense D39PZ: Procurement and Contracts 19

Time and delays Extension of Time: Principles Extension of Time: Practice Liquidated Damages Summary D39PZ: Procurement and Contracts 20

Adjustment of the Completion Date • “Adjustment of the Completion Date” (JCT2011) = “Extension of Time” D39PZ: Procurement and Contracts 21

Adjustment of the Completion Date • JCT98 only allowed for an Extension of Time to lengthen the contract period • JCT05 and JCT 2011 accommodate shortening and lengthening of the contract period and therefore allows for “Adjustment of the Completion Date”  Adjustment of the Completion Date is governed by cls. 2.26 to 2.29  The contract period cannot be shortened below that first agreed (cl. 2.28.6.3). D39PZ: Procurement and Contracts 22

Adjustment of the Completion Date • Three critical dates must be understood: • Date for Completion  The date inserted in the Contract Particulars as the initially-agreed date by which the Works must be completed by the Contractor. o “the date stated as such date in the Contract Particulars (against reference to clause 1.1) in relation to the Works or a Section” (cl. 1.1) D39PZ: Procurement and Contracts 23