this will help

https://bibloteka.com/extension-of-time-eot-and-related-costs-in-constru...

sure,
but what is the problem with the traditional approach???
why should we searech for such approaches?
is this approach getting international recognition? not upto my knowladge at least.

shouldn’t we stick to legality of the method proved?

anyway, searching new approaches is always benifical, for sure.

Nice subject,

regards

Okay, now I have the picture. Lets use shamail’s symbols.
What (I) believe is fair is as follows:
Firstly, the contract must be extended by X duration, as it was occurring no matter what happened by the Contractor. This has caused damages to the contractor the amount of Y.
The contractor’s performance caused Z delay and damages to the (Employer) of M

The contractor is liable to pay the amount of M1 = M – Y (X/Z)
The Employer is liable to pay the amount of Y1 = Y – M (Z/X)

Net payable to the contractor is Y1-M1
Net Payable to the Employer is – (Y1-M1)

As I told you before it is my first time to encounter such a principle, so maybe using the above formulas I based it on the costs, right, it is interesting. But it is also difficult to say that this delay caused Y damages by the Employer because of the wide spectrum of damages types, and you will not have the sufficient time to make all the cost analysis each time a concurrency occured.

actually, i can not decide if this is a correct principle

Dear Shamail,

Actually, we are talking on the same wave length but with different perspectives, please help me here, I do not understand why you are keep linking the EOT to be determined at the Original Completion Date with the Event subsequent delays made by the Contractor???

From my perspective, making the final determination over EOT at the original completion date is only to obtain more confidence about the correctness of the analysis. The amount of EOT to be granted is to have a retroactive effect.
EG: To make it clearer; the project starts on 01-01-2006 and the original completion date is 01-01-2007, say on Jun 2006 the Contractor requested EOT and it is determined that he is entitled to 30 days, using the project updates and the final determination on 01-01-2007 it is found that the real effect is 24 days only. The new contract completion date is 25-1-07 so this date is applied with retroactive effect starting from Jun – 06,

My point is that the Subsequent delays after JUN-06 must be studied against the prevailing time for completion that should have been granted (i.e. 25-01-2007) not against the original completion date (01-01-07).
What I mean is simply that:
If it is found by using the TIA, that the contractor is entitled to an EOT the subsequent delays (by the contractor) will not affect the validity of his right, the same applies for the Employer (his delays after JUN will be studied against the new completion date, not the original).

I used this example as it will help demonstrating my answer to the voting question:

I came across this voting question, it is really strange, and it is my first time to hear about this proportional method. Things do not go this way, instead, each delay event will be analyzed against the prevailing contract completion date at the time of impaction. The result (the Cost Engineers name it as the Final Entitlement Schedule) will automatically be divided between parties. EOT that the contractor is entitled to, must be granted no matter what were the subsequent delays he made, and the actual completion date will be recorded, the difference will be the contractor caused delays.

The time related costs will be generated from this final entitlement schedule (taking concurrencies into consideration, where the contractor will be entitled only for EOT).


It is really hard to explain all the aspects of this analysis in this short space, but shamail I would be welling to forward you an article that will make your life easier, please give me your email.

Again, your question (the question of the vote) can not be answered unless crucial data was provided especially (Timing of delays, classification of delays, concurreny)
as these data items will affect the legal entitlements and enforcement of LD. proprtioning the risponsibility and the cost in this manner will not make and will not give even close fair determination.

or do you have another openion???


Best regards,

Shamail,

Very good points, it is a fruitful discussion. I agree on many of your inputs. But due to my painful experience I can not agree on one thing. “Postponing determination over EOT to commence to the original completion date”.

It is a recommended practice in claims management to claim (not to reserve your right to claim) during the performance time.

Reserving your right to claim will put you in a situation where you might:

1. Loose all your claims based on incompliance with procedural clauses in the Contract.
2. Furthermore it will give the Engineer the opportunity (which he will never miss, believe me) to leave determination on some of your clear claims, which is very important reference point, to others (courts, arbitrators, …etc) remember you have no contractual relationship with the engineer.
3. In conclusion I would like to say that you do not have to reserve the right to claim, your right to claim is maintained and reserved under the law governing the contract.

In addition to the differences in contracts types and experiences, there are differences in duties related to the planning engineer role in claim preparation, ranging from preparation only the analysis (retrospective or otherwise) to fully managing the delay claim. In the second (farthest) extent the legal knowledge or background is of the same or more importance than the correctness of the analysis itself.

To fully understand my point, I will give you the following horrible example:

At some point in time, the Engineer delayed the provision of drawings, a clear failure on the part of the Engineer entitles the Contractor to an EOT and cost. At this stage the issue of establishing entitlement is done and it is not negotiable.

The contractor as it is the old-bad-practice in our part of the word did not claim the EOT / Cost, instead he notified and “Reserved his right to claim”. Things seem okay till now

Under clause 14 of the FIDIC the Engineer requested the contractor to provide a recovery schedule. And the Contractor complied.

Then the Contractor was delayed (due to his own problems) in meeting the scheduled recovery plan.

You know what happened? He lost the golden card of establishing entitlement by giving the employer a gift, the employer now can allege that the overall delay in meeting the original contract time for completion was NOT due to the issue of the Late drawings, but it is due to the failure on the part of the Contractor to meet his schedule dates (of the revised activities in the recovery plan).

See my friend, interim determinations over EOT are of great importance they do not necessarily result in the same EOT amount granted at completion, actually these determinations are the only REAL reservation of the claimant’s right.

Another issue is that if the project is delayed, then at the original date for completion there would be remaining activities (their number and scope depends on the magnitude of delay suffered) that have not been completed and your determination would also carry some inaccuracy (but sure it would be more precise), so why not to carry the analysis at the event date? And obtain approval over the most likely delay due to that event, with periodic review? Actually FIDIC requested that, implicitly.

Besides, shamail, any change in the original schedule (in case of delay) will, as a matter of fact, result in change at least to the contractor’s cash flow (reduced billings with constant overheads) and the consequent change in the finance requirements (magnitude) to do the same job. These changes are claimable and are a legitimate right to the contractor why to lose them? Their name is not “Extra profits” they are DAMAGES.

When requesting the contractor to increase resources, you have ignored a very important point in the THEORY OF CONTRACT; “The intent of the parties” at the time they entered in to the contract. If the Employer consumed time originally agreed and planned for to be available to the Contractor then the contractor should be compensated and allowed SOME time to perform its obligations under the contract. I agree that it is an implied duty on the Contractor to mitigate losses; however it is not the right (legitimate right) of the Employer or the Engineer to criticize what the contractor can do or could have done.

Finally, I do agree that the contract must be detailed to include procedures for this matter, and not only to include them implicitly. .

Hi Shamail,

Bravo.

That was a brilliant understanding of claims.

I wish you will continue to expound your overall understanding in project management not only in the area of claims but in other fields.

Personally, it helps me a lot. Thank you.

Cheers,

charlie

Shamial,

Can’t disagree with anything you’ve said.

Jawad,

Some good points there.

Another spin-off from this topic is the requirement (under all contract forms that I know) for the Contractor to give recovery programmes when his progress is showing late on the original critical path.

When negotiating contract terms, I always argue that the Contractor is only obliged to give a recovery programme if it is agreed by both parties that the Contractor is solely responsible for a critical delay. However, consider the situation where the Contractor is, say, one month late on the critical path yet has submitted a two month delay claim that is disputed by the client. In this scenario, arguably no such recovery programme is due because the Contractor should have had an EoT and be monitoring progress against a two month delayed completion date.

This always raises a spirited debate during tender negotiations, but so far I have always managed to include adequate wording to cover the Contractor’s position. So, sensible do recognise that the Contractor does not have an open-ended obligation to meet the original date. They just need reminding of the fact.


John

Shamail,

That’s one way of doing it but why not view an interim EoT award as provisional, subject to revision by other interim reviews and later the final review.

Haven’t got the FIDIC documents to hand as I write this so I’m not going to be specific in case I get the various versions mixed up.

Shamail,

I do agree with a comprehensive analysis at completion, I just also believe that there should be interim assessments as well.

You are correct that the contractors time related costs should be covered up to the original completion but that’s not 100% of the story.

1. The Contractors contractual entiltement to an EoT will have accrued earlier (assuming he’s due an EoT) and therefore he should have the benefit of that entitlement as I’m sure the Employer would like the benefit of any entitlement he’s due, when it’s due.

2. Leaving it all to the end creates uncertainty, both for Contractor and Employer as discussed previously.

3. If the Contractor is entitled to an EoT and it is withheld then as discussed below, he has two choices.

(1) to unilaterally accelerate to hit the existing date or at least minimise his exposure to LD’s if the date can’t be met.

(2) to carry on regardless and in anticipation that an EoT will be awarded later.

If he accelerates, except maybe in the USA, any claim for constructive acceleration will not be recogised and he’s stuck with these costs unless he’s prepared for a difficult and risky fight. Trying to seperate out and prove acceleration costs is as hard as trying to prove disruption. In your example of a bricklayer, your assumption may be right but it may often be the case that 1 gang = 100% production, 2 gangs = 180% production, not 200%. Therefore by doubling the resource, the time is not halved and the overall cost is not the same - it increases. But you try agreeing these sorts of things with the CA, more often than not you may as well be talking to the site cat!

If he carries on regardless, it often ends in an ever increasing feeling of frustration on all sides, blame being levelled in all directions, with all the associated bad feeling, soured relationships, etc, and hey presto, we have a dispute. Lets spend lots more money and time in sorting it out!

It could all be avoided, or at least substantially avoided, if the EoT was assessed and awarded on an interim basis as the project went along. I’m sure there would still be disagreements, some leading to full blown disputes, but the numbers would be significantly less.

And if for no other reason, both Contractor, Employer and Consultants would have a better of idea of what’s happening, what’s expected of them and when - and that can only help the project.

I’m actually a big supporter of dispute avoidance believe it or not, and I believe that ongoing interim assessments of EoT’s is one of the most significant ways to reduce time related disputes.

Shamail,

You raise some very relavent points but I still disagree that it it should all be left to the due date of completion. The interim EoT’s should (and can only) be awarded on the knowledge at the time. If that knowledge changes so can the EoT awarded.

Forgeting the contractor, the Employer in my experience wants the answer to two questions above all else:

1. How much is it going to cost?
2. When’s it going to be finished?

The CA’s obligation to the Employer is amongst other things, to advise the Employer on these two matters. He can not do this properly unless he makes some form of assessment on the time for completion and the liability attached to it as the contract progresses.

We always hear Contractors moaning and forget about the Employer not knowing where he stands and how much it’s going to end up costing him. Whether not being able to suitably advise the Employer on these matters would amount to a breach of the CA/Employer contract depends on the terms of the CA’s employment, but I would guess in general that it would. The same arguments that are leveled at Contractors for not notifying delay such the Employers loss of a chance to mitigate would be equally applicable.

I therefore maintain that it is in all the parties interests that the situation is monitored and assessed at regualr intervals during the contract and not left until later.

John,

Totally agree, and people wonder why there’s so many disputes over time. Certainly in the UK there’s virtually no legal recognition of constructive acceleration and that just plays into the hands of the Client in not awarding an EoT when one is due - it was the case before statutory adjudication that this course of action by the Client had the effect of forcing the Contractor to either try and meet the often impossible completion date or take the risk that he would be awarded an EoT at arbitration and carry on regardless.

The right to Adjudication "at any time" has now given Contractors the possibility of getting an interim (binding if the parties agree) decision on such things but the downside is that the 28 day timescale is often hopelessly inadequate for anything but the simplest of time related questions. If the Contractor spends the proper amount of time preparing his claim before issuing a notice of referal to adjudication so as to stay in the time limits, the claim is often likely to be out of date before he starts, so what then. Another adjudication and another until the end of the contract. All just to resolve what should be resolved by the CA doing his job in an independant, fair and impartial manner in the first place.

Although the above said, I do have some sympathy for the CA as "independant, fair and impartial" in theory is great - in the real world maintaining that stance is often difficult or nigh on impossible if he want’s to keep his job, not be sued, etc, etc.

Probably the best reason for using an independant "Dispute Review Board" with no ties to either side that I can think of, especially if where it’s available, the board/person has the power of adjudication.

Shamail,

I agree the final EoT is determined at or after the completion date but I also believe that the EoT should be awarded progressively during the contract as and when it reasonably obvious that one will be due. The final determination of the EoT should be no more than a review of the EoT already granted during the contract.

Andrew,

Again my friend :-) what you said is right but the problem it only applies when there is such a phrase in the Contract, the phrase “POSSIBLE DELAY" & "ACTUAL DELAY" are both not used in FIDIC, and the Engineer’s interpretation for the meaning of the word "DELAY" as if its the actual delay (then he should adopt a retrospective method) or theoretical (interim EoT awarded) is totally dependant on the Engineer in my part of the world, some of them would award, others would not. I was on the Contractor side once, and now i’m the Client Rep., on both cases i believe that the time whereby an EoT should be considered final should not be before the Original Contract Completion date has already been exceeded.



Cheers

Jawad,

Welcome to the forum. You have identified some relevant points:

a. It depends on the case, EOT is claimed during or after the project “time for completion”

To this I would add it also depends whether the contract talks of "likely" delays or "actual delays", ie is the EoT based on the contractors theoretical entitlement to a possible delay or only that for actual delays.

b. Did the analyst consider the varied durations of all the OTHER activities not affected by the delay event or not.

Correct, it is not only the new impacted events that require consideration but also delays to existing events. The qtiming of when this delay was actaully known about though is often hard to pin down.


c. Did the analyst consider the varied logic caused by nothing but poor prepared schedule or not.

Obvious errors in the as planned baseline schedule should be amended (noted and justified as to why it was changed) but changes in "good" logic will be reflected by rescheduling using progress overide mode, ie the logic is ignored if progress dictates it is incorrect, eg there is an FS link between two activities but in reality the second activity was started before the first activity finished. In progress overide mode the link will be ignored and the progress will take precedence and be reflected in the analysis.

Shamail,

FIDIC (depending on which version) has probably the word "actual" attached to it.

If the clause talks about "...taking into account THE DELAY caused" then it is arguable that it is talking about the "actual" delay caused - therefore the arguement follows that an Engineer can’t award an EoT until he knows the actual delay and an award has to be done retrosoectively.

If the clause talks about "...taking into account THE POSSIBLE DELAY caused" (or likely delay, etc) then the arguement follows that an Engineer can award an EoT based on a theoretical forward looking entitlement. ie the EoT can be awarded prospectively.

Personally, if it is reasonably apparent to the Engineer that the Contractor is entitled to an EoT then I think he should award one "taking into consideration all the circumstances" or whatever the contract calls for him to do.

Given that most contracts call for a 2 or 3 stage process for the award on an EoT, ie (1) interim, (2) review (may be final) at completion date and often a (3) final review at a given period after the completion date then my belief (not shared by everyone) that read as a whole, the intent is the Engineer should give EoT’s as the contract goes along and not wait until the end to do it.

It is this play on words that give many the excuse not to award an EoT until the end of a contract(as they can’t possibly know the full extent of a delay until it’s all over!!!!! - ie, the actual delay caused) of a contract and therefore inhibit the proper management of a contract and cause disputes.

There are however many other factors that come into play, Engineers worried about being sued by the Employer if they give an excessive EoT, the belief that an EoT once given can not be reduced, etc. (I’ll wait for the questions on that last point!!!!)

But that’s the world we live and work in .

Charleston,

Alittle bit more:

How to treat the situation when the Contractor / Employer are both causing delay at the same time - most contracts are silent on this matter but more and more are expressly stating what to do in this situation. If yours does, follow it, if not then it will be the law of the contract that prevails - eg in UK, a breach by the Employer is sufficient to award an EoT even if the Contractor is also in delay. (At least for JCT contracts)


Is TIA compliant with the contract conditions and therefore the correct method to use - normally yes. TIA is a forward looking analysis, does your contract require or at least empower the CA to award interim EoT’s on a forward looking basis? If so TIA will normally be compliant.


How to apply TIA in accordance with the contract? The main point here is who is awarding the EoT. Again, usually the CA and therefore the programme should be updated and impacted using what the CA knew or reasonably should have known at the update date. Eg the Contractor may have ordered an important piece of equipment and knows the delivery date - but did the CA know this? If not then the update shouldn’t use the delivery date but what it is reasonable to expect the CA’s knowledge at the time.

The NEC familly of contracts uses TIA as its chosen method of programming but it is updated from the Contractors point of view because the contract requires the Contractor to update and submit the programme, not the CA.

Hope this helps, TIA will work on a short term, long term or any term contract, just a case of getting your head round the finer points like those above in order to use it.

Kuma,

Firstly progress is updated to the update date (often coincides with the monthly progress meeting or similar), programme rescheduled and baselined.

Then each event is put in ONE AT A TIME and the programme rescheduled after EACH event is added/updated and baselined. NOTE BOTH CONTRACTOR AND EMPLOYER EVENTS THAT MAY CAUSE DELAY NEED TO BE INCLUDED, NOT JUST THE EMPLOYER EVENTS.

Therefore for each update date you will have a number of baselines corresponding to:

Progress update
Event 1
Event 2
Event 3
etc,etc.....

Each baseline will show the separate effect on the programme of progress / each event, on the completion date. ie you have cause and affect.

eg say the progress update moved the completion date back 1 wk and the lack of progress was down to the contractor - no EoT is awarded. Event 1 was a potential Employer delay but only reduced float and had no effect on the completion - no EoT. Event 2 was an Employer delay and moved the completion back a further week - 1 wk EoT is awarded. The 1wk is added to the current completion date, the new completion date it is not the date shown on the baseline.

There are a number of other things to think about depending on the terms of the contract - such as how to treat the situation when the Contractor / Employer are both causing delay at the same time, is TIA compliant with the contract conditions and therefore the correct method to use, and if it is, how to apply TIA in accordance with the contract.

The above is a very short and general overview but by no means exhaustive, but hope it helps.