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In the world of construction projects, timely completion is of utmost importance. However, unforeseen circumstances often arise, leading to delays that can significantly impact project schedules and budgets.
Delays can occur as consequence of adverse weather conditions, design changes, unknown site conditions (i.e. soil contamination, geological conditions, etc.), material, equipment and/or labor shortage, and many other factors.
An Extension of Time (EoT) claim is a formal request initiated by one party, typically the contractor or builder, to the other party (client/ principal/employer), which aims to secure an extension for the specific dates outlined in the contract, including project milestones’ dates, substantial completion dates, completion dates, etc.
The grounds of EOT claims are usually underpinned by an excusable delay, which is events or circumstances beyond the control of the party responsible for the delay. For example, a contractor may attribute its delay to a client that did not provide site access as agreed under the construction agreement.
This blog post aims to shed light on the concept of EoT claims, their legal and contractual aspects, and the importance of accurately dealing with delays in engineering projects.
An extension of time (EOT) claim is a formal request presented by a contractor to the client or employer through which the contractor seeks an extension of contracted date(s) as a consequence of events beyond the contractor’s controls.
It is usually submitted when unanticipated circumstances or events are beyond the contractor’s reasonable control and not attributable to their default or negligence, in what is defined by some contracts as an excusable delay – in other words, a delay that the contractor can be excused for.
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To substantiate an extension of time claim, the claimant must furnish comprehensive documentation and evidentiary support, effectively establishing a causal nexus between the events or circumstances invoked and the resulting project delay.
To support the claim, the Contractor (Claimant) must provide extensive and detailed background, which includes photographs, formal communications with the Client (i.e. Contract Notices), site reports, and other relevant documents, which should rely on the correct contract mechanisms.
For example, imagine a Developer (Principal) contracts a Builder (Contractor) to deliver a tiny house under a construction-only contract. Both parties agree that the project must be delivered within eight months.
During the commercial negotiations, the developer retains the weather-related risks and is also in charge of providing the joinery elements to ensure material quality in accordance with its requirements.
The first setback came in the form of a relentless rainy season that hit just before the foundation works were set to begin, causing an unavoidable delay of 1 month.
The builder resumed the work as soon as the rainy season was finished and progressed with its work following agreed sequencing and within the pre-agreed timelines for each task (albeit it has already been delayed by one month in the foundation’s works).
Given the developer’s problems in procuring the joinery elements, these materials were delivered on-site two months after the agreed dates under the contract, pushing the completion date further, as detailed in program below.
Because under the contract, the Developer retained weather-related risks and was responsible for delivering the joinery material, the builder is entitled to claim an extension of time (EOT – highlighted in red below) for project completion of 3 months and should, therefore, follow the contractual procedures to do so.
We have prepared a generic 7-steps guide to help you how to draft and submit an extension of time claim. Each contract has specific provisions, and you should adapt this framework accordingly.
The 7 steps are:
Begin by carefully examining the construction contract, specifically the clauses related to claims for Extension of Time (EoT). For instance, look for provisions that clearly define the events or circumstances that may qualify for an extension, such as extreme weather conditions, unforeseen site conditions, or delays caused by third-party suppliers.
Additionally, take note of the notification requirements, such as submitting a written request within a specified timeframe or notifying the client/owner immediately upon identifying a delay.
Lastly, familiarize yourself with the documentation needed to support the claim, such as detailed records of the events leading to the delay, photographs, weather reports, or any other relevant evidence as outlined in the contract.
Proceed by determining the legitimate justifications for requesting an extension of time (in accordance with the contract). These may encompass various circumstances, such as modifications in project scope initiated by the owner, or disruptions arising from third-party actions, such as a client supplier.
Compile all pertinent details and supporting evidence to substantiate your claim, including comprehensive records, reports, and documented correspondence.
Ensure timely and compliant notification to the appropriate stakeholders as per the contractual notification timelines.
These days, it is very common in construction contracts include early warning mechanisms to help risk management. Through these dispositive, also known as Notices of Delays, the contractor is required to pre-warn the owner with regards to potential delays before submitting the claim.
Issue a written notice that explicitly describes the event or circumstance, its repercussions on the project timeline, and the expected necessity for an extension. Bolster your claim with comprehensive documentation, including daily reports, photographs, weather records, and any other pertinent records that validate the delay or disruption .
In evaluating the impact of an event or circumstance on the project schedule, critical path, resources, and costs, it is important to engage experts if needed to assist with the analysis. Employing established delay analysis techniques such as the critical path method (CPM) or retrospective analysis can help determine the causal link between the event and the resulting delay.
To effectively address the delay, it is crucial to quantify the extension of time required for compensation. This involves utilizing suitable scheduling tools and methodologies to accurately determine the additional duration needed.
Factors such as the project’s complexity, resource availability, and any concurrent delays or compensable time extensions should be carefully considered during this assessment process.
Thorough evaluation and analysis are key factors in preparing a well-supported EoT claim, enabling project stakeholders to address delays and disruptions in a comprehensive and informed manner.
Tip: Ensure time-related costs are easily identified from other costs to initiate discuss with the owner. For example, if your project will be delayed because of a Variation Order instructed by the Owner (i.e. change in design specification), make sure that you capture the costs of this variation order in one “pot” and extension costs in another “pot” (i.e. equipment staying on construction site longer than originally required).
