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EXTENSION OF TIME GRANTED BUT NO COST IMPLICATIONS

11 replies [Last post]
Ernesto Montales
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Good day planners...

We have just been granted an extention of time for 90 calendar days in a condominium fit-out project. The owner insisted that the extension is conditional, no cost implications. The basis of the claim for EOT is the late issuance of the complete construction plans. My question is.. is this fair? what are the alternatives?

Regards

E. Montales

Replies

Ernesto Montales
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Fellow planners,

thanks for your reply. It has indeed shown me great insight on the subject. This will eventualy be useful for our up and coming projects.

More power to you all..

Regards

E. Montales
Stuart Ness
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Ernesto,
I don’t think that is much dispute amongst those of us that have posted on this thread, in that we all seem to agree that you are entitled to something by way of recovery of addition costs for the EOT that you have been granted.

We do, however, seem to come down to a matter of what is "fair and reasonable". We all assume that we are the reasonable party and that it is the other side that is being wholly unreasonable!

Provided that you are contractually secure in your entitlement to additional costs, the next real difficulty in agreeing how big the bag of money should be, is a matter of presentation of your claim.

Your claim must have credibility - that is paramount - and in order to be so, it needs to be three things:
 It needs to be accurate;
 It needs to be convincing; and
 It needs to be organised in its presentation.

If your claim fulfils these criteria, then it will make your job of negotiating a suitable settlement much easier, and it will be easier to overcome any “unreasonable” behaviour by the other side.

Negotiate softly, and if that doesn’t work, beat the other side around the head with the Contract!!

Jaco –
I would suggest that it isn’t a case of asking for what is “fair”; it should be more a case of asking for what the Contract entitles you to!

I appreciate your comment about the winner being the one (who can afford) the best lawyer; but the party with the best Claims Consultant will keep the case out of court or arbitration and negotiate an even better result!! ;-)

Cheers,
Stuart

www.rosmartin.com
John Whitney
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Jaco, you said:

"...the majority of clients are open for discussion when it come to these matters..."

I have been in this claims game for over 34 years (and it is a game). My experience is that the majority of clients are not open to reasonable discussion when it comes to talking time and money! They frequently stonewall and use every trick in the book to delay and/or reduce your entitlements! By fair means or foul seems to be their motto.

As I mentioned before, unless the EoT is expressly denied in the contract, or is for neutral events like force majeure, you are entitled to compensation for the other party’s breach. No question about it.

John
Jaco Stadler
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Ernesto

A subject that you can spend hours discussing.

Always ask yourself what is fair.

What cost did you really incurred due to the late issue of AFC dwg. (Did you had people sitting around doing nothing / did you had material in storage which you had to pay storage fees / where your contract suspended for a period of three months).

The majority of clients are open for discussion when it come to these matters due to them realizing that this will not be their last project and that in future project they would like to get a fair price from contractors again.

From a contractual point you need to prove that

The DWG was on your critical path and that no work could proceed without it.

You must also be able to prove that you was ready for to proceed with the work.

The norm in contracts is that you have 7 to 14 Days to inform the client of a potential cost impact due to a delay after the delay has started.

Also was the issue of AFC dwg a milestone in the contract.

Saying all the above the last thing to remember in a court of law it is the person who can the best Lawyer that wins.


John Whitney
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Ernesto,

Unless your contract explicitly states that there are no costs or loss and expenses to be reimbursed for extension of time for which the employer is responsible (which seems to cover your case, assuming the employer is responsible for issuing the drawings), then you most certainly are entitled to your money claim, as Stuart Ness has suggested.

Ask him to show you the clause that says you’re not entitled to be paid the money for his breach!


John
Ernesto Montales
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Thanks,,,

To my fellow planners thank you very much for sharing your views on the subject matter. It was a great help. We are now in the process of negiotiating with client perhaps we come up with win win sitiuation.

Regards


E. MOntales
Shahzad Munawar
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Your client granted EOT with no cost implications. It means that cost implications are avoided by your Client due to his intention of applying liquidated damages. He may apply Liquidated damages for delaying the project under the Contract. If you insisted on cost implications, he may do it . But to compensate the loss at both ends he only granted EOT not any cost implication.
Stuart Ness
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Ernesto,
It should always be remembered that an EOT does not automatically bring any additional costs related to it; best example of time with no costs is an EOT granted in respect of "Force Majeure".
In your case, however, with a substantial EOT of 3 months, I would suggest that direct additional costs do flow from the EOT as granted.
The first thing that comes to mind is the additional disruption costs (standing/waiting times etc) by the engineering guys that must have been inevitable if there was Client-induced delays in approving drawings.
Second, if the Contract period is being extended for reasons of an excusable delay (which it appears to be), then you will incur additional time related overheads, such as site running costs (offices/stores/transport/project management staff etc.) and Head Office overheads, all of which are valid heads of claim.
It appears to me that your Client has taken a very hard cavalier attitude, and is very condescending in that he thinks he has done you a favour in giving you an extra three months of time - in fact, he has made your life more expensive if he refuses to consider the cost implications. It sounds to me as if you have a very good case to claim for your rights under the Contract!

Stuart
www.rosmartin.com
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It depends on the provisions within the contract.
there should be a clause regarding LOSS AND EXPENSE.
This is linked to the EOT granted.
Some not-so-smart contract advisors altered the clause to suit the Client - by excluding VO works for loss and expense claims, well they are not protected. The contractor (in this particular contract) could still claim for additional money under late information that prolongs the contract duration.
.
So, read your contract first, you might still entitle for pesos.

Abdullah Haji Hukum
David Watters
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Well, I supose your client reckons its fair !!

Despite the fact that your client is not paying for the additional time - take into consideration what the costs to your company would have been had the EOT not been granted. Liquidated damages for example - if indeed such a clause exists in your contract. And then again, your companirs credability in the market place if it is seen to deliver a project "Late". Future Revenue?

In my mind, I am wondering if it is fair or not is not really that an big issue. The key is have you now minimised the commercial exposure on schedule you currently face in terms of potential future claims against your company by the client. All boils down to how good a contracts manager you have, and if you can slip a the hours in under numerous small changes. Hee Hee Hee !!
David Watters
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