In construction, time is money. An extra expense for both the client and the contractor can often lead to disputes. Joseph Bond of construction claims firm Kenzie Group pinpoints ways in which organisations can avoid common problems
With most construction contracts, when additional time is needed, and ultimately more money, it’s often obligatory to give notification to your client. The notice is given to allow the client time to consider the application for time and to give them the opportunity to make any necessary changes that could avoid the delay and the additional costs.
This is the most commonly adopted process in construction today, but from our experience it’s rare that an extension of time is agreed to. So what happens next? The contract is in dispute.
There are two common causes of dispute we are called to work on. The first is the more obvious delay notice not being issued, and the second is the delay notice being issued but in the wrong format.
As a contractor, it’s as dangerous to have a delay notice issued in the wrong format as it is having no delay notice issued. The wrong process followed and you’re entering the realm of putting your entitlement claim at risk in its entirety. You really need to ensure your delay notice is valid and timely. You need to be protecting yourself.
As a contractor, it’s as dangerous to have a delay notice issued in the wrong format as it is having no delay notice issued
Many contractors feel they are protected because they ensured their request was recorded in the site meeting minutes. We also hear things such as “We verbally told them” or “I texted him, so that’s protected us, right?”
Of course, every case is different because every contract is unique. It will depend on the wording of the contract, but experience tells us that it’s very unlikely you’re covered. Just as importantly, why would you take the risk of having to persuade the client it is?
Pprofit margins are tight. An unexpected delay has the habit of sucking all the profit out of a project. Our advice is always to take the time to study the contract. Familiarize yourself with the clauses relating to notice, what format of notice is accepted, what content needs to be referenced, what is the assessment processes and time schedule for any notification of delay, and what does the contract say about mitigating measures?
Recently, we worked with a client who was working on a large project in Dubai, UAE. They had some of the strictest notice requirements we’ve seen. Any notice had to be sent by letter, on headed paper, signed by a pre-specified signatory and sent to a specific address.
Such strict requirements are not necessarily negative. When you know exactly what’s expected from both sides there’s no ambiguity. A well-written contract is to protect both sides and that’s what this did.
One of the biggest pitfalls you can face is contractual ambiguity. You will (or won’t) be amazed how quickly a client can hide behind the contract when it suits their bank balance.
Such strict requirements are not necessarily negative. When you know exactly what’s expected from both sides there’s no ambiguity
Time extensions are just part of the construction process; a lot of variables which can’t always be factored in. This opens up the possibility for conflict with the client. Ensure that the contract is specific enough to protect both parties. Having clear stipulations when addressing notices is going to save you potential headaches later on in the project.
At the same time, when you need to request an extension, ensure that you adhere to the terms of the contract you’ve spent the time on ensuring are specific enough, don’t leave any wiggle room for the client to hide behind.
Don’t use logic or reason, and don’t assume your client will be reasonable either. Take the time to be au fait with the contract so you can allow it to protect you as well as it protects the client.