Contractor's Extension of Time - FIDIC Red Book 99 - Clause 8
Posted on January 27, 2020 | ⌚ 4 min read
It is inevitable that a Contractor will suffer delays while executing and completing the Works, and more often than not, finish the Works after the Time for Completion.
This means that the Employer is entitled to deduct delay damages (liquidated damages) from the Contractor due to such delays. These delay damages are pre-agreed and calculated damages that should accurately represent the damages the Employer will bear due to the Contractor's delays.
However, it is never that easy. To avoid paying the delay damages, and perhaps claiming additional payments, the Contractor will either assert that the events causing delay to the Time for Completion are caused by the Employer.
In such case, the Employer is not entitled to the delay damages, and the Contractor is entitled to an Extension of Time for Completion (EOT). The effect of this EOT is that the reasonable time for completing the Works is increased and the Contractor shall not pay delay damages for the period of delay caused by the Employer, and will only pay for any delay beyond that.
FIDIC Red Book 99 discusses this issue in the appropriately named Sub-Clause 8.4 [Extension of Time for Completion]. The Sub-Clause begins by stating that to be entitled to an EOT, the Contractor:
- should comply with the provisions of Sub-Clause 20.1 [Contractor's Claims], and
- is entitled to EOT 'if and to the extent that completion for the purposes of Sub-Clause 10.1... is or will be delayed by the following causes...’.
The second point clearly state that a delay to completion as provided for by Sub-Clause 10.1 [Taking Over of the Works and Sections] (which provides for the taking over procedures by the Employer) by reason of the causes mentioned below, which is to be compensated for by the EOT, not any mere delays.
Simply put, the Sub-Clause provides that the Contractor is entitled to an extension of time that is caused on the critical path of the project and directly affects the TFC of the Works.
The causes of delay that entitles the Contractor to an EOT are:
Variation, or substantial change in the quantity of an item of work
The Contractor is entitled to an EOT for a Variation ordered under Sub-Clause 13.1, given that the varied works actually delay the TFC. Since not any additional quantities of an item of work could be considered a Variation under remeasured contracts, the Contractor is also entitled to an EOT due to a substantial change in the quantity of an item of work.
A cause of delay giving an entitlement to an EOT under a Sub-Clause
Several Sub-Clauses entitle the Contractor to an EOT. A list of these Sub-Clauses are found here.
Exceptionally adverse climatic conditions
The Contractor is entitled to an EOT for exceptionally adverse climatic conditions. The wording of this sub-paragraph states that the said climatic conditions should be exceptionally adverse, no exceptionally and adverse. That said, if the Site region regularly face heavy rains/floods during the period of the execution of the Contract, exceptionally heavy rains/floods could entitle the Contractor to an EOT under this sub-paragraph.
Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions.
Unforeseeable is defined in the Red Book 99 as 'not reasonably foreseeable by an experienced Contractor by the date of submission of Tender'. An outspread of disease or an unexpected governmental actions causing shortages of personnel or Goods could entitle the Contractor to an EOT under this sub-paragraph.
Any delay, impediment or prevention caused by the Employer
Quite simply, the Contractor is under obligation to complete the Works within a limited time, and if he is prevented from completing his obligation, the Employer should not be entitled to claim delay damages. This is known as the 'prevention principle' in the common law.
That last sub-paragraph brings up the hot topic of extension of time debates, concurrent delays. Concurrent delay happens when two or more delays resulting from independent causes, usually one caused by the Employer and the other by the Contractor, overlap during the same time period.
Concurrent delays give rise to three very important questions:
- Is the Contractor entitled to an extension of time for concurrent delays?
- If yes, to what extent shall he be granted extension of time?
- Is the Contractor entitled to additional payments (prolongation costs)?
There are many contrasting views and theories, many of which is supported by case law.
My personal view generally is the one supported by Akenhead J in the case of Walter Lilly & Company Ltd v Mackay & Anor. The judge stated that the following in para. 366 - 370, excerpt of which is below:
In any event, I am clearly of the view that, where there is an extension of time clause such as that agreed upon in this case and where delay is caused by two or more effective causes, one of which entitles the Contractor to an extension of time as being a Relevant Event, the Contractor is entitled to a full extension of time. Part of the logic of this is that many of the Relevant Events would otherwise amount to acts of prevention and that it would be wrong in principle to construe Clause 25 on the basis that the Contractor should be denied a full extension of time in those circumstances. More importantly however, there is a straight contractual interpretation of Clause 25 which points very strongly in favour of the view that, provided that the Relevant Events can be shown to have delayed the Works, the Contractor is entitled to an extension of time for the whole period of delay caused by the Relevant Events in question. There is nothing in the wording of Clause 25 which expressly suggests that there is any sort of proviso to the effect that an extension should be reduced if the causation criterion is established.
Disclaimer: The content of this website is not legal advice, and is intended for educational purposes only. You should always consult a suitably qualified professional regarding a particular legal issue.
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