Rather like referees, contract administrators aren’t infallible. So what can you do if one of them wrongly awards your contractor an extension of time?
Awarding extensions of time under a construction contract ought to be easy. If the form is part of the JCT family, the contractor notifies the delay and the reason for it. The contract administrator reviews the application and if they believe it to be the result of a “relevant event” they award a fair and reasonable extension of time and fix a later completion date. The NEC contract has a more structured compensation event procedure and is specific about the programme information that has to be provided, so should achieve an answer more easily. Both aim for a revised completion date for the contract works.
Most of the time these processes are applied fairly well, although there are often difficulties when contract administrators do not comply with the timescales for making the awards set out in the standard contracts: 12 weeks for the JCT, usually two weeks with the NEC. Also, too many use blunt tools – a wet finger in the air and a quick guess at what they can get away with – to assess the time due, rather than applying programming and planning techniques such as critical path analysis.
A less common problem is when the contract administrator grants an extension of time for a delay even though it is not one of the matters for which the contract allows an extension. It may be difficult to accept, but this does happen occasionally. Once such a wrong extension has been granted, the contractor naturally feels fully entitled to the extra time while the contract administrator tends to be reluctant to admit to the mistake.
It seems logical that the contract administrator should simply be able to correct the error, but there may be no contractual provisions that allow it. JCT and NEC contracts take the position that decisions made by the contract administrator on extensions of time cannot be altered (ignoring dispute resolution provisions for the moment), although there are a couple of small loopholes.
The JCT allows a 12-week period after completion for the contract administrator to revise the completion date to grant a longer extension of time, or to reduce the extension of time to allow for the effect of work omitted from the contract since the original extension was granted. Clearly, neither of these reasons would allow the withdrawal of a wrongly granted extension.
Too many use blunt tools – a wet finger in the air – to assess the time due, rather than programming techniques
The NEC allows the project manager to make assumptions about a compensation event if the effect of the event is too uncertain to predict during the short time they are given to make their assessment. Extensions granted in this way can be corrected later. Incidentally, it is worth contrasting this approach with the JCT, where no extension is normally given until all the information and proof is with the contract administrator. The NEC approach has much to commend it as it gets an answer of sorts out in the open and keeps the wheels of the project turning until a more accurate decision can be made. Again, however, the NEC approach would not allow the correction of an error.
So what can be done if the contract does not allow correction and the contract administrator is reluctant to act without express powers?
The employer might be tempted to refer the matter to adjudication so that an adjudicator could open up the decision and correct it. Think carefully before doing this, though, as apart from paying costs and the adjudicator’s fees, you may not get the result you want. Although I love them all, adjudicators can sometimes come up with strange decisions.
Reflect instead on the nature of the contract and the position of the contract administrator. The contract sets out the reasons for which extensions can be granted. The contract administrator is appointed to administer the terms of the contract and can act only within those terms. Where they act outside those terms, they cannot by definition have issued a valid extension. Without validity under the contract, the decision should not have to be withdrawn. All you need now is to get the contractor to agree!
Andrew Hemsley is managing director of consulting at Cyril Sweett. Email email@example.com