Time extension in construction project

CONTRACTOR’S APPLICATION FOR AN EXTENSION OF TIME

NORHANA BINTI DANIAL

A project report submitted in partial fulfilment of the requirements for the award of the degree of Master of Science (Construction Management)

Faculty of Civil Engineering Universiti Teknologi Malaysia

JUNE, 2007

PSZ 19 : 16 (Pind. 1/97)

UNIVERSITI TEKNOLOGI MALAYSIA ♦

BORANG PENGESAHAN STATUS TESIS : CONTRACTOR’S APPLICATION FOR AN EXTENSION OF

JUDUL

TIME

SESI PENGAJIAN: PENGAJIAN:

Saya

2006 / 2007

_______NORHANA NORHANA BINTI DANIAL________________ DANIAL________________

:

(HURUF BESAR) mengaku membenarkan tesis (PSM/Sarjana/Doktor Falsafah)* ini di simpan di Perpustakaan Universiti Teknologi Malaysia dengan syarat-syarat kegunaan seperti berikut: 1. 2. 3. 4.

Tesis adalah hak milik Universiti Teknologi Malaysia. Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk tujuan pengajian sahaja. Perpustakaan dibenarkan membuat salinan salinan tesis ini sebagai bahan pertukaran antara institusi pengajian tinggi. **Sila tandakan ( √ )



SULIT

(Mengandungi maklumat yang berdarjah keselamatan atau kepentingan Malaysia seperti yang termaktub di d alam AKTA RAHSIA RASMI 1972)

TERHAD

(Mengandungi maklumat TERHAD yang telah ditentukan oleh organisasi/badan di mana penyelidikkan dijalankan)

TIDAK TERHAD Disahkan oleh

___________________________________ (TANDATANGAN PENULIS)

___________________ (TANDATANGAN PENYELIA)

Alamat Tetap: 51, JALAN BELIBIS 15, TAMAN PERLING, 81200 JOHOR BAHRU, JOHOR. Tarikh

CATATAN :

28 June 2007_

:

* **



PROF. DR. MUHD ZAIMI BIN ABDUL MAJID (Nama Penyelia)

Tarikh :

28 June 2007_

Potong yang tidak berkenaan. Jika tesis ini SULIT atau TERHAD, sila lampirkan surat daripada pihak berkuasa/organisasi berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebagai SULIT atau TERHAD. Tesis dimaksudkan sebagai tesis bagi Ijazah Doktor Falsafah dan Sarjana secara penyelidikan, atau disertasi bagi pengajian secara kerja khusus dan penyelidikan, atau Laporan projek Sarjana Muda (PSM).

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*I/We hereby declare that *I/We have this project report and in *my/our opinion this report is sufficient in terms of scope and quality for the award of the degree of *Master of Science (Construction Management).

Signature

:

Name of Supervisor :

Professor Dr. Muhd Zaimi bin Abdul Majid

Date

28 June 2007

* Delete as necessary

:

ii

I declare that this project report entitled “ Contractor’s Application for an Extension of Time” is the result of my own research except as cited in the references. The

report has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.

Signature

:

………………………………………

Name

:

Norhana Binti Danial

Date

:

28 June 2007

iii

To my beloved mother and father

iv

ACKNOWLEGEMENT

In preparing this project, I was in contact with many people, researchers, academicians and practitioners. Firstly and of course, I wish to express my sincere appreciation to my project supervisor, Professor Dr. Muhd Zaimi Abdul Majid for his encouragement, guidance and friendship during the writing of this project. Secondly, to my fellow postgraduate student and also practitioner in the construction industry, Aniza Abu Bakar, for her kind assistance, views and tips in this master project. My other fellow postgraduate students should also be recognised for their support. Thanks also due to my parents for their support, and all my colleagues past and present who have offered numerous helpful suggestions.

v

ABSTRACT

Invariably an evaluation of extension of time (EOT) will be made based on the information submitted by the contractor such as work programme and architect’s instructions. Lack of information of delay is one of the common mistakes by the contractor in the application of EOT and this can lead to obstacles in prompt settlement of claims for EOT. The objectives of this research are: to identify the information that needs to be considered in evaluating extension of time application; to identify the common mistakes by the contractor in the application of extension of time; and to identify the ways to reduce the mistakes by the contractor in the application of extension of time. The methodology of this study includes literature reviews, data collection and analysis.

Data is gathered from responses of

questionnaire survey with professionals involved in the construction project. The research findings indicate that insufficient quality of information and poor presentation of the application to show how the progress of the work has been delayed remained as the highest common mistakes. This research highlights the ways to reduce the mistakes to speed up the evaluation process in order to establish the contractor’s entitlement for EOT and also to avoid disputes about contractor’s entitlement for EOT. In conclusion, the mistakes could be best controlled or reduced by the implementation of a document management system.

vi

ABSTRAK

Penilaian lanjutan masa biasanya dibuat berdasarkan maklumat yang diserahkan oleh kontraktor seperti program kerja dan arahan arkitek. Kekurangan maklumat kelambatan adalah salah satu kesilapan biasa oleh kontraktor dalam permohonan lanjutan masa dan ini boleh membawa kepada halangan untuk penyelesaian segera tuntutan lanjutan masa.

Objektif-objektif kajian ini adalah:

mengenalpasti maklumat yang diperlukan dalam menilai permohonan lanjutan masa; menenalpasti kesilapan-kesilapan biasa oleh kontraktor dalam permohonan lanjutan masa; dan mengenalpasti cara-cara untuk mengurangkan kesilapan tersebut. Kaedah kajian ini termasuklah kajian literatur, pengumpulan data dan analisis.

Data

diperoleh daripada maklumbalas kajian soal selidik dengan professional yang terlibat dalam industri pembinaan. Penemuan kajian menunjukkan bahawa ketidakcukupan kualiti maklumat dan kekurangan dalam permohonan untuk menunjukkan bagaimana kemajuan projek menjadi lewat adalah kesilapan-kesilapan yang tertinggi. Kajian ini memfokuskan kepada cara-cara untuk mengurangkan kesilapan tersebut untuk mempercepatkan proses penilaian dalam memberikan hak kontraktor terhadap lanjutan masa dan juga untuk mengelakkan pertelingkahan tentang hak kontraktor terhadap lanjutan masa.

Kesimpulannya, kesilapan-kesilapan tersebut dapat

dikurangkan dengan melaksanakan sistem pegurusan dokumen.

vii

TABLE OF CONTENTS

CHAPTER

1

TITLE

PAGE

DECLARATION

ii

DEDICATION

iii

ACKNOWLEGEMENT

iv

ABSTRACT

v

ABSTRAK

vi

TABLE OF CONTENTS

vii

LIST OF TABLES

xi

LIST OF FIGURES

xiii

LIST OF APPENDICES

xiv

INTRODUCTION

1.1

Introduction

1

1.2

Background

2

1.3

Problem Statement

4

1.4

Research Aims and Objectives

5

1.5

Research Scopes and Limitations

5

1.6

Importance of the Study

6

1.7

Research Methodology

7

viii 2

PROVISION OF EXTENSION OF TIME IN CONSTRUCION CONTRACTS

3

2.1

Introduction

11

2.2

Contract Provision for Extension of Time

12

2.3

Purposes of Extension of Time

24

2.4

Benefits of Extension of Time

24

2.5

Procedures for Claiming an Extension of Time

25

2.6

Conclusion

28

THE REQUIREMENTS IN THE APPLICATION FOR AN EXTENSION OF TIME

3.1

Introduction

29

3.2

Proof of Entitlement

30

3.2.1

Information That Needs to be Considered in Evaluating Extension of

3.3

Time Application

32

3.2.1.1 Construction and Progress Records

33

Common Mistakes by the Contractor in the Application of Extension of Time

36

3.3.1

Major Mistakes

37

3.3.2

Lack of Proper Baseline Schedule

37

3.3.3

Lack of Proper Site Records and Insufficient Quality of Information

3.4

3.5

38

Practical Ways for Minimising Contractor’s Mistakes in the Application of Extension of Time

39

Conclusion

41

ix 4

RESEARCH METHODOLOGY

4.1

Introduction

42

4.2

Literature Review

43

4.3

Selection of Respondents

43

4.4

Research Design

44

4.4.1

44

4.5

4.6

5

Questionnaire Survey Design

Analysis Method

47

4.5.1

Frequency Analysis

48

4.5.2

Average Index Analysis

48

Conclusion

51

RESEARCH ANALYSIS AND DISCUSSION

5.1

Introduction

52

5.2

Data Analysis for Questionnaire Survey

53

5.2.1

Analysis for General Information of the Respondent

53

5.2.2

Analysis for Background of Project

56

5.2.3

Analysis for Information That Needs to be Considered in Evaluating Extension of Time Application

60

5.2.3.1 Information for Delays Relating to Reason of Architect’s/ Superintending Officer’s Instructions

61

5.2.3.2 Information for Delays Relating to Reason of Late Instructions, Drawings or Level

62

x 5.2.3.3 Information for Delays Relating to Reason of Delay by Nominated Subcontractors or Suppliers

64

5.2.3.4 Summary of Information That Needs To Be Considered in Evaluating Extension of Time 5.2.4

65

Analysis for Common Mistakes by the Contractor in the Application of Extension of Time

5.2.5

66

Analysis for Ways to Reduce the Mistakes by the Contractor in the Application of Extension of Time

5.3

6

Conclusion

68 70

CONCLUSION AND RECOMMENDATION

6.1

Introduction

71

6.2

Conclusion

72

6.3

Recommendations

73

6.4

Limitation of the Study

75

6.5

Recommendation for Further Study

75

REFERENCES

76

BIBLIOGRAPHY

79

APPENDIX

80

xi

LIST OF TABLES

TABLE NO.

2.1

TITLE

Reasons of delay that can entitle a contractor to claim extension of time and loss and/or expense

2.2

5.1

50

The classification of the rating scales in Section C of the questionnaire

4.4

50

The classification of the rating scales in Section B of the questionnaire

4.3

27

The classification of the rating scales in Section A of the questionnaire

4.2

15-23

Procedure for an extension of time under PAM 98 and PWD 203A standard form of contract

4.1

13

Relevant events causing delay which extension of time may be given

2.3

PAGE

51

The classification of the rating scales in Section D of the questionnaire

51

Respondent organization

54

xii 5.2

Respondent post

55

5.3

Respondent experience

56

5.4

Standard form of contract used in the construction project that the respondents have experienced

57

5.5

Reasons of delay which EOT may be given

60

5.6

Information that needs to be considered for the reason of architect’s/ superintending officer’s instructions

5.7

Information that needs to be considered for the reason of late instructions, drawings or level

5.8

65

Common mistakes by the contractor in the application of EOT

5.10

63

Information that needs to be considered for the reason of delay by nominated subcontractors or suppliers

5.9

62

67

Ways to reduce the mistakes by the contractor in the application of EOT

69

xiii

LIST OF FIGURES

FIGURE NO.

TITLE

PAGE

1.1

Research methodology

10

5.1

Respondent organization

53

5.2

Respondent post

54

5.3

Respondent experience

55

5.4

Standard form of contract used in the construction project that the respondents have experienced

57

5.5

Types of projects that the respondents have experienced

58

5.6

Application for extension of time in construction projects

59

xiv

LIST OF APPENDICES

APPENDIX

A

TITLE

Questionnaire form

PAGE

80

CHAPTER 1

INTRODUCTION

1.1

Introduction

Provision of EOT is made in building contracts for architects/ S.O to grant EOT for the completion of the work where delay due to certain specified causes has occurred. The contractor should be compensated with the time he suffers loss due to causes outside his control. The clause in the standard form requires the contractor to inform the architect/ S.O in writing of the delay fact when he realizes that the progress of the works is delayed.

A contractor should be required to supply

information about the delay, including identifying the event that led to the delay in order to take into account by the evaluator and to determine whether the contractor is entitle to EOT or not. Lack of information of delays is one of the common mistakes by the contractor in the application of EOT and this can lead to obstacles to prompt settlement of claims for EOT. Besides that, there are other common mistakes that need to be identified and after that knowing the ways to reduce the mistakes.

2 1.2

Background of the Study

The contractor’s obligation is to carry out and complete the works before or on completion date (Nor Ainah, 2001).

An employer could impose liquidated

damages for contractor’s failure to meet the completion date as a result of delaying circumstances. Such delaying circumstances can be of three types which are delays caused by the contractor, delays caused by neutral events and delays caused by the employer or his agents (Sundra Rajoo, 1999).

A delay in the building work may arise from a number of causes as mentioned before which may prevent completion by the agreed date. Some events are beyond the control of the builder and it is considered not to take into accounts would be unfair. Instead, the contractor should be compensated with the time that has been lost and this compensation is what is termed as ‘extension of time’ (EOT) in contract administration (Manson, 1968; Hashim, 2001).

Most building contracts contain express provisions for time extension to be granted by the architect in the event of delay that permitted in the contracts. Provision of EOT is stated in the standard form of contract, clause 23 PAM 98, and clause 43 PWD 203A. The operation of EOT provision modifies the obligation of the contractor to complete the works by the date for completion specified in the appendix, and his liability to pay liquidated damages for late completion. EOT is given with the view to extend the contract period and it is given solely to replace the time lost to the contractor. EOT will not be given if the delay is caused by the contractor. By this reasoning, EOT is not given on contractual ground to help the contractor to complete the work because EOT is a right in the building contract and not a privilege (Hashim, 2001). It imposes a duty on the architect to grant ‘a fair and reasonable EOT for completion of the works’ in specified circumstances.

3 EOT shall be exercised by the architect upon the concurrence of the event, upon knowledge of the contract programme and before the final certificate. However, because the EOT clause comprehends delays due t o causes of many kinds, it may not be necessary to grant an EOT before completion, in exceptional cases example a strike mean to last beyond the contract date and the extend delay could not be known until after the contract time had expired (Lim, 1998).

The evaluation to derive at the EOT entitlement can indeed be a complex subject especially when there is more than one delaying events (Entrusty Group, 2006). Invariably, an evaluation of EOT will be made based on the programmes submitted by the contractor (Kevin, 2005). Besides the programmes, the contractor is advisable to provide relevant information related to delays such as variations and architect’s instruction for references, towards consideration for EOT (Lim, 1998). The strength of the contractor’s case will depend on the quality of his information (Brian, 1997).

A contractor should be required to supply facts about the delay, including identifying the event that led to the delay. The contractor must also provide proof of the events that were allegedly responsible for the delay. The matter of proof is one frequently overlooked by potential litigants in their enthusiasm to formulate arguments as commented by Keith Pickavance (Nicholas, 2005):

‘Poor quality of project documentation leads to poor factual evidence and presents serious difficulties in identifying the rights of the parties’.

Poor factual evidence such as lack of information of delays is one of the contractor’s mistakes in the application of EOT and this can lead to obstacles to prompt settlement of claims for EOT.

4 EOT needs serious deliberation and consideration when it is applied to construction projects.

There are risks that failure to accurately assess delays to

completion of a construction contract will result in unnecessary extensions to the completion time, excessive delay-related costs, or disputes about a contractor’s entitlement to EOT or delays costs. Therefore, it is important by the evaluator to consider and refer all the information that related to delays, which can assist them in evaluating EOT application (BLR, 1985). It will be prudent to seek advice about the procedures and all the information that needs to be submitted for EOT application from an architect, engineer or a quantity surveyor, who act as an evaluator when a contractor wishes to apply EOT in relation to delays.

1.3

Problem Statement

The contractor’s duty is to give the architect as much information as he can about the cause of delays and so assist the architect in performing his duty, as mentioned in clause 23(1) PAM 98, ‘ the notice (for extension of time) shall contain sufficient information and reason why delay to completion will result’.

The

contractor’s failure to provide information if requested is one of the contractor’s mistakes in the application of EOT. No action would be taken by the employer if the contractor failed to submit such information unless the actions are stated in the contract.

The contractor’s failure to provide related information of delays puts

himself at a disadvantage on proof of entitlement to EOT.

The next mistake is the submission of work programme by the contractor is not detailed and unrealistic. In Malaysia, generally, the programme of works as prepared by the contractor is usually not detailed, not realistic or not have the activities properly linked to show the critical path. It is usually used for ‘show’ only more than anything else which is the cause of many incidents where EOT was not

5 granted even when the contractor rightly has its entitlement to EOT if a proper programme of works was presented and all the information related to delays was provided (Entrusty Group, 2006).

1.4

Research Aims and Objectives

The aim of this study is to identify and recommend the best way to reduce the common mistakes by the contractor in the application of extension of time. To achieve this aim, the following objectives have been identified:

1. To identify the information that needs to be considered in evaluating extension of time application.

2. To identify the common mistakes by the contractor in the application of extension of time.

3. To identify the ways to reduce the mistakes by the contractor in the application of extension of time.

1.5

Research Scopes and Limitations

Basically, this research project focuses on explaining provision of EOT in PAM 98 and PWD 203A standard form of contract. Furthermore, several common law cases related to EOT will be used to support explanation and arguments. The scope of this research also will be focusing on the study of the information that needs to be considered by the evaluator in evaluating EOT application. This research is

6 limited to professionals (evaluator) working in quantity surveying, architecture and civil engineering firm located in Johor Bahru area. Besides, the study would be made to determine the common mistakes by the contractor relating to t he information on the application for EOT. Hence, the view of the Quantity Surveyor, Architect and Engineer to reduce the mistakes is essential towards improving the current mistakes of the contractor in the application of EOT.

1.6

Importance of the Study

From the facts as mentioned before, it can be concluded that all the information related to delays are very important to assist the evaluator to recommend or grant EOT to the contractor.

The contractor needs to provide sufficient

information in order to assist the evaluator in the evaluation process. It is important to identify the information that needs to provide by the contractor in order to get ‘a fair and reasonable extension of time’. This research is not only focused to the information that related to the work programme, but it is also considered other relevance information (supporting documents) that caused delays to take into account by the evaluator and to determine whether the contractor is entitle to EOT or not.

One of the common mistakes that occurred in EOT application is when the information related to delay was not provided by the contractor. Besides, there are other mistakes that need to be identified to avoid risk of failure to accurately assess delays in the application of EOT and after that knowing the ways to reduce the mistakes. With this study, the contractor could indeed benefit from this study’s outcome and have more knowledge about the improvement of the preparation for EOT application in order to speed up the evaluation of the architect to establish contractor’s entitlement for EOT and to avoid disputes about contractor’s entitlement for EOT.

7 1.7

Research Methodology

A few stages of work need to be carried out in order to achieve the stated objectives. Implementation of the stages of work is arranged to ensure the research can easily be done and impressive.

This approach is to ensure that all relevant

information can be collected and precisely analyzed. Stages of work for this research are elaborated as follows:

1. Planning and pre-discussion

The process involved in this stage is survey need to be carried out to identify area of study, for example the study in the aspect of construction contract and all the relevant issues. Detail discussion with supervisor can assist to find out idea about the area of study to be done. Next process is to determine project topic and objectives and state the scope and limitation of project to achieve the objectives.

2. Pre-Study

Pre-study is carried out to get a clear description about the research. The literature reviews provide useful guidelines and information on EOT provision in construction contract. Those literature reviews were also used to guide the process of extracting the idea and relevant issues, and to easily prepare the research process.

3. Identify Data

Data that needs to be identified is primary data and secondary data to fulfil the research objectives.

8 4. Data Collection

This process is the most important process to do the research. All the data collected is arranged into a form that can be studied easily. Data collection for this research can be divided to two types:

a) Primary Data

Collection of primary data is an important process to get the source of information and for the purpose of analysis.

It has been obtained from

questionnaires of the quantity surveyor, architect and engineer as a practitioner, who has extensive experience and knowledge in evaluating EOT.

b) Secondary Data

Secondary data has been obtained from reading and studying from printed materials such as standard form of contract (PAM 98 and PWD 203A), books, journals, articles, previous study, and seminar papers to study the information of delay and EOT in construction contracts. Those literature reviews were also used to guide the formation of questionnaire design.

5. Analysis of Data

Primary data is analyzed in order to achieve the research objectives. Besides, summary and suggestion of the research are prepared based on the results from the analysis. The methods to analyse the data are detailed elaborated in chapter 4 to ease the process of analysing data.

9 6. Writing and Completion

All the information will be arranged to understandable form for the purpose of writing before submission to the supervisor. Next is correction process before documentation process can be done. Finally, the complete project is ready to be submitted on the submission date.

10 PRE-DISCUSSION

Detail review on thesis, articles and books

Detail discussion with supervisor

IDENTIFY AREA OF STUDY

SELECTION OF TOPIC

DISCUSSION WITH SUPERVISOR

LITERATURE REVIEW

IDENTIFY DATA & DATA SOURCES

1st Stage

……………………………………………………………………………………………………………………………………….

DATA COLLECTION

PRIMARY DATA

Questionnaire survey

SECONDARY DATA

Books, articles, seminar papers, journals, PAM 98 & PWD 203A Standard Form of Contract 2nd Stage

……………………………………………………………………………………………………………………………………….

ANALYSIS & INTERPRETATION OF DATA

RESEARCH WRITING

REVISION & CORRECTION

COMPLETION

3rd & 4th Stage

……………………………………………………………………………………………………………………………………….

DOCUMENTATION

SUBMISSION OF PROJECT

5th Stage

……………………………………………………………………………………………………………………………………….

Figure 1.1: Research Methodology

CHAPTER 2

PROVISION OF EXTENSION OF TIME IN CONSTRUCION CONTRACTS

2.1

Introduction

The legal prevention is of general application in contracts and is to the effect that one party cannot impose a contractual obligation on the other party where he has impeded the other in the performance performance of that that obligation. Given the complexity complexity of construction projects, the very real possibilities of variations, the difficulties of coordination and other unforeseen issues it is, unless some relief is available, almost impossible for the employer employer to avoid falling into the trap of prevention. Therefore, extensions of time clauses provide this relief (Lawrence, 2001).

Extension of time provisions preserve the contractor’s obligation to complete within a specified time and in doing so the provisions preserve the employer’s right to liquidated damages, when by prevention, he has delayed the contractor and is responsible in part part for late completion. It is common to provide an express power power for the EOT for completion and if an extension has been granted it operates wholly or partially as a defence to a claim for liquidated damages from the original completion date. If there is no express express power to extend for for a delay which which is not the fault of the employer, the contractor takes the risk of that delay and will not avoid liquidated damages (Lawrence, 2001).

12 A fundamental point is that the time for completion can only be extended where the contract contract permits, and strictly in accordance with with the contract provisions. If delay is caused by some event which the contract does not cover, then the contractor cannot claim an an extension (Murdoch (Murdoch and Hughes, Hughes, 1992). Time extensions extensions may be justified when the contractor experiences delay caused by b y the labour disputes, fire, extremely unreasonable weather conditions, acts or neglect on the part of employer or a nominated contractor, or other causes beyond the contractor’s control (Harold, 1976). Without an EOT clause, clause, the contractor is under a strict obligation to complete complete on time unless he is prevented from doing so by acts or breaches of the employer or by operation of the law (Vincent; Michael, 1984).

2.2

Contract Provision for Extension of Time

All construction contracts usually contain provisions for time extension and monetary claim in the event of delay. The relevant events causing causing delay which shall be the ground for the contractor to apply for an EOT are detailed and stated under PAM 1998, clause clause 23, PWD 203A 203A clause 43. 43. Any event event falling outside the listed listed events will not entitle the contractor to any EOT (Entrusty Group, 2006; PAM 1998, JKR 203A). The events for delay can be categorized categorized into three major groups, groups, which are the delays by the contractor, by the client, or by a third party or neutral events (other than contractor and client) (Hashim, 2001; Sundra Rajoo, 1999).

The delaying events that are entirely due to the contractor itself are commonly termed as culpable culpable delay. It is sometimes called inexcusable inexcusable or nonnonqualifying (for EOT) delays. delays.

Strictly, culpable delay is the situation where the

contractor has failed to complete the works on completion date and has no entitlement to an EOT let alone monetary compensation. compensation. Culpable delay is also sometimes used to describe the situation prior to the date for completion where the

13 contractor has fallen behind programme of schedule without cause for extension (Entrusty Group, 2006).

If the delaying events are due to defaults by the employer and/or his agents (compensable delays), the contractor will be entitled for both time and monetary claim (depends on the wording of the contract the parties have entered into). Compensable delays occur when the owner or consultant has delayed the contractor in the completion completion of the work. It entitles the contractor to additional additional compensation compensation and the contractor may be granted EOT and money. money. The examples for this event event are late decision or information of the Architect/Engineer/S.O, late site delivery, compliance with the Architect/Engineer/S.O, delay by the employer’s agents, delays by nominated subcontractors/suppliers, subcontractors/suppliers, etc. For the delays delays due to a third party party or excusable delays, the contractor is entitled for time extension but no monetary claim. The causes due a third party are those t hose affecting a delay by those other than contractor and the client, and by element of nature (Entrusty Group, 2006; Hashim, 2001; Abdul Rahman, 2006).

The grant of an EOT does not carry any automatic entitlement to extra money. The test for granting EOT and the consequential consequential right to loss and/or and/or expense can be displayed in Table 2.1 (Basar, 1997). 1997). The clauses clauses which related related to relevant relevant events causing delay which EOT may be given, together with description and explanation are indicated in Table 2.2 (PAM 98; PWD 203A; Lim, 2004, Vincent, 1990; Sundra Rajoo, 1999).

Table 2.1: Reasons of delay that can entitle a contractor contractor to claim extension of time and loss and/or expense Reason of Delay

Extension of Time

Loss and/or Expense

Contractor’s fault (non-excusable) (non-excusable)

No

No

Employer’s fault (compensable)

Yes

Yes

Nobody fault (excusable)

Yes

No

15

Table 2.2: Relevant events causing delay which extension of time may be given Event

Clause

Description under PAM 98

Clause

Description under PWD 203A

Explanation

1. Force Mejuere

23.7(i)

Force Mejuere

43(a)

Force Mejuere

Force mejuere is a term derive from French law and is used with reference to all circumstances independent of the will of man and which are not in his power to control. It is unanticipated event or an event that one cannot reduce to control (e.g. earthquake).

2. Exceptionally inclement weather

23.7(ii)

Exceptionally inclement weather

43(b)

By reason of any exceptionally inclement weather

Inclement weather means severe stormy, harsh or merciless weather/ climate. The emphasis is on the exceptional nature of the inclement weather and the meaning has to be applied considering two factors. The first factor is the kind of weather that may be expected at the site at the particular time when the delay occurs and the second factor is the stage in which the works have reached. The reference to meteorological records of local weather over a considerable period of time may be helpful in showing that the weather is exceptional for that area exceeding what may on the evidence of past years be reasonably

expected.

16


Clause


Clause


Explanation

3. Insurance Contingencies

23.7(iii)

Loss or damage occasioned by one or more of the contingencies referred to in clause 20.A, 20.B.1 or 20.C.1 as the case may be.

43(d)

By reason of loss or damage occasioned by anyone or more of the contingencies referred to in clause 36 hereof (provided end to the extent that the same is not due to any act, negligence, default or breach of contract by the contractor or any subcontractor, nominated or otherwise, whether in falling to take reasonable steps to protect the works or otherwise).

This applies to extension of time granted for rebuild or repair of damages or loss to the works, caused by fire, storm, tempest, lightning, flood, earthquake, aircraft and other aerial devices or articles dropped therefrom, riot, civil commotion and in respect to claim from insurances.

4. Civil commotion, strikes, lockout

23.7(iv)

Civil commotion, strike or lockout affecting any of the trades employed upon the works or any of the trades engaged in the preparation, manufacture or transportation of any goods or materials required for the works.

43(h)

By reason of any action due to local combination of workmen, strike or lockout affecting any of the trades employed upon the works, provided the same are not due to any unreasonable act, neglect or default of the contractor or of any subcontractor, nominated or otherwise.

The events are limited to only local combination of workers, strikes, or lockout affecting the trade employed upon the works. Local combination of workers probably covers obstructive industrial activities short of a strike. It should be noted that the contractor must not have the local combination, strike or lock out, such as through a failure to pay the workmen’s wages.

17


5. Architect’s/ S.O.’s instructions

Clause

23.7(v)


Compliance of architect’s instructions under clauses 1.2, 11.2, 21.1 or 21.4.

Clause

43(e)


By reason of SO’s instructions issued under clause 5 hereof, provided that such instructions are not issued due to any default or breach of contract by the contractor or any subcontractor, nominated or otherwise.

Explanation

The instructions referred to are summaries in the stated clauses. The contractor’s entitlement to an EOT is subject to the proviso that the instruction is not issued due to any default or breach of contract by the contractor or by those for whom he is responsible.

18


6. Late instructions, drawings or level

Clause 23.7(vi)


Contractor not having received in due time necessary instructions, drawings, details or levels from the architect for which he had specifically applied in writing provided that the application was made on a date having regard to the date for completion was neither unreasonable close to the date on which it was necessary for him to receive them.

Clause

43(f)


By reason of the contractor not having received in due time necessary instructions, drawings, level or instructions, in regard to the nomination of subcontractors and/or suppliers provided in this contract, from the SO due to any negligence or default of the SO and for which he shall have specifically applied in writing on a date which having regard to the date for completion stated in the appendix to these conditions or to any EOT then fixed under this conditions, was neither unreasonably distant from nor unreasonably close to the date on which it was necessary for him to receive the same.

Explanation

The failure of the architect/ SO to provide the contractor with further reasonably necessary information to amplify the drawings or bill of quantities as and when necessary or in good time puts the employer in breach of contract. That notwithstanding, it is essential in order to sustain a claim for an EOT for the contractor to have made a specific written application to the architect/ SO for the information and this must have been done at the right time.

19


Clause

7. Delays on the part of nominated subcontractors or suppliers

23.7(vii)


Delays on the part of nominated subcontractors or nominated suppliers for the same reasons as set out in the sub-clauses 23.7(i) to 23.7(vi) and sub-clauses 23.7(viii) to 23.7( xii).

Clause

43(k)


By the delay on the part of the nominated subcontractors and/or nominated suppliers of their works and such delay shall be caused by the same reasons affecting their work as stated above in subclauses (a) to (f) inclusive (provided that the same are not due to any act, negligence, default or breach of contract by the nominated subcontractor and/or nominated supplier and/or the contractor, or any of the servants or agents of such nominated subcontractor or nominated supplier or the contractor).

Explanation

Delay on this ground is very common but it does not include a situation where the nominated subcontractor or nominated supplier has ceased work altogether, for example through receivership or liquidation. The contractor is allowed EOT on account of delays on the part of the nominated subcontractors or nominated suppliers for the same reason as set out in the clause 23.7, PAM 98 and 43, PWD 203A. Essentially, the contractor is entitled for an EOT if the delays of the nominated subcontractors or suppliers fall within the same relevant events for which the contractor himself if in delay would be given an EOT.

20

Table 2.2: Relevant events causing delay which extension of time may be given Description under PAM 98

Clause


Event

Clause

Explanation

8. Delay on the part of artists, tradesmen or others engaged by the employer

23.7(viii)

Delay on the part of artists, tradesmen or others engaged by the employer in executing work not forming part of this contract.

43(i)

By delay on the part of artists, tradesmen, or others engaged by the Government in executing work not forming part of this contract.

This provision permits the employer to carry out the work not forming part of the contract. The employer accepts responsibility for delay on the part of such people. This is however restricted to delay in the execution of their work and does not extend to delay caused by their returning to carry out remedial work after purported completion.

9. Delay in the supply of material and goods

23.7(ix)

Delay in the supply of materials and goods which the employer had agreed to supply for the works

-

-

It must be noted that there is no express provision in the conditions to allow for the possibility of the works being carried out using materials and goods which are to be supplied by the employer. But such circumstances do in reality exist and if there is a delay caused by the employer in supplying the materials and goods, the contractor should be entitled to an appropriate EOT. This could possibly include instances where the delay is caused by the employer having supplied the materials and goods on time but they proved defective either before use or after being built into the works. In such situation, the employer should indemnify the contractor.

21


Clause


Clause


Explanation

10. Testing and inspection

23.7(x)

Opening up for inspection any work covered up or the testing of any work, materials or goods in accordance with clause 6.3 (including making work in consequence of such opening up or testing) unless the inspection or test showed that the work, materials or goods were not in accordance with the contract.

-

-

This clause requires the contractor to provide test report and samples before commencing work. Generally, architect is reluctant to open up, unless there is high degree of suspect of the works and premature defects arising. The contractor can recover the cost and time of opening up, testing and making good, unless this has been provided for in the contract bills or unless the inspection or test shows that the works, materials or goods are not in accordance with the contract.

11. Act of prevention or breach of contract by the employer

23.7(xi)

Any act of prevention or breach of contract by the employer not mentioned in this clause 23.7.

-

-

This is a useful clause, because of employer’s agent, action of constant interruption, on large projects these days. If the contractor alleges that there has been an act of prevention or breach of contract by the employer, the architect can continue to administer the contract and grant EOT as and when he considers these appropriate.

22


12. Disputes with neighbouring owner

Clause


Clause

-

-

43(c)


By reason of directions given by the SO consequential upon disputes with neighbouring owners provided the same is not due to any act, negligence or default of the contractor or any subcontractor, nominated or otherwise.

Explanation

The delay must have arisen as a result of the direction given by the SO consequential to a dispute by the Government, or possibly the contractor, and the neighbouring owner, though not necessarily of the adjacent site. The commonest dispute here is over the boundary of the site as a result of the dispute, the delay could be occasioned by the reconstruction or suspension of the work or by a restricted method of working as directed by the SO. There is however the proviso that the dispute must not be due to any act, negligence or default of the contractor or for those whom he is responsible, the commonest being erroneous setting out resulting in boundary encroachment.

23


Clause


Clause


13. Delay in giving possession of site

-

-

43(g)

By reason of delay in giving possession of the site as provided under clause 38(d) hereof.

This is to be read in conjunction with clause 38(d), PWD 203A where the SO is empowered to issue and so issue, an instruction revising the date for possession due to the inability or failure on the part of the employer to give possession of the site on the date for possession fixed in the letter of acceptance.

14. Inability to obtain materials or goods

-

-

43(j)

By the contractor’s inability for reason beyond his control and which he could not reasonably have foreseen at the date of closing of tender of this contract to secure such goods and/or materials as are essential to the proper carrying out of the works.

This applies only if the securing of the goods or materials are beyond the contractor’s control, but the shortage must have been one that could not have reasonably been foreseen at the date of the closing of the tender. It should be noted that this clause is not applicable for shortage of labour even though essential for the execution of the works.

Explanation

24 2.3

Purposes of Extension of Time

The operation of EOT clause modifies the liability of the contractor to complete the works by the date for completion specified in the appendix and to LAD to the employer upon the failure of the contractor to meet the deadline. It imposes a duty on the architect/ S.O to grant a fair and reasonable EOT for the completion of the works in certain specified circumstances. The effect of extending the time for completion prevents the architect/ S.O from issuing the Certificate of Noncompletion until and unless the revised completion date has passed (Lim, 2004). Extension of time clauses, therefore have various purposes (Brian, 1997):

a) To retain a defined time for completion b) To preserve the employer’s right to liquidated damages against acts of prevention c) To give the contractor relief from his strict duty to complete on time in respect of delays caused by designated neutral events

2.4

Benefits of Extension of Time

The express provisions for EOT in building contracts obviously benefit the contractor who will not be liable to pay damages for delay during the period for which time is validly extended. In addition and less obviously, the power to extend time is also for the employer’s benefit, for the following reason (Murdoch and Hughes, 1992).

At common law, the contractor’s obligation to complete the works by the specified date is removed of the employer delays the contractor in the execution of the works. Thus if the contract administrator issues and instruction which increases

25 the amount of work to be done, or is late in giving the contractor necessary instructions, the specified completion date no longer applies. In this situation, time is said to be ‘at large’ and the contractor’s obligation is merely to complete the works within a reasonable time. In order to fix what is reasonable, all the circumstances of the particular project must be taken into account, but in many cases, it will simply mean that the amount of delay for which the employer is responsible will be added to the old completion date (Murdoch and Hughes, 1992).

The importance of losing the fixed date is that, a contractor who may be liable to pay damages for delay which is his fault, can no longer be made liable for liquidated damages. Even where the delay caused by the employer is a very small part of the overall delay, the employer cannot simply discount this and claim liquidated damages for the remainder.

The liquidated damages provision fails

altogether, and the employer can claim only for losses actually due to the delay. It is therefore very much in the employer’s interest to extend time for delays which are his fault, thus enabling claims for liquidated damages from the revised completion date (Murdoch and Hughes, 1992).

2.5

Procedures for Claiming an Extension of Time

In the usual course of events, the initiative for taking action under EOT clause will come from the contractor when he realises that the progress of the works is delayed. The contractor is not required to give notice of a delay which will be caused by some expected future event. He has only to give notice when it becomes apparent to him that the progress of the works is delayed. It seems clear that the contractor is bound to notify the architect/ S.O of all delays to the progress and not merely those caused by events listed in the clause (Brian, 1997). Nevertheless, the architect is not prohibited to give EOT without received any notice of delays from the contractor (Nor Ainah, 2001).

26 The clause in the standard form requires the contractor to inform the architect in writing of the delay fact when he realizes that the progress of the works is delayed. Basically, the contractors need to give a notice in reasonable time that stated relevant causes that resulted to delays.

The contractor also needs to explain about the

expected impact, and estimation of time extension needed, with the notice or subsequently (Nor Ainah, 2001). The notice shall contain sufficient information and reasons why delay to completion will result. The contractor’s failure to provide such information can be a factor which the architect can consider in assessing the EOT (Sundra Rajoo, 1999).

On receiving the written notice from the contractor, the architect, if he satisfied that the cause of the delay comes within one of a number of ground listed, is to grant an EOT. The architect is to consider making an EOT independently in the light of his knowledge of the progress of the works and of other matters affecting or likely to affect its progress (Sundra Rajoo, 1999). The architect must then fix a new completion date which is fair and reasonable in the circumstances. The architect also has power to fix a new completion date after the date of practical completion of the building (Manson, 1968). If the architect/ S.O decides that the completion date will not be affected, he should notify the contractor of his decision, although this is not expressly stated. The contractor must seek recourse under clause arbitration if he wishes to challenge that decision (Lim, 2004).

The standards form of contract used in Malaysia include a procedure relating to the granting EOT. Variously, these procedures include the submission of an initial notice concerning the delay, submission of back up details to support the initial notice and further details to keep up to date the information previously submitted. Table 2.3 indicates the procedure for an extension of time under PAM 98 and PWD

203A standard form of contract (Michael, 2001).

27

Table 2.3: Procedures for an extension of time under PAM 98 and PWD 203A standard form of contract Clause

23.1

8 9 M 23.1 A P

A 3 0 2 D W P

Contractor’s Obligations

If and when it become reasonably apparent that the progress of the works is being or likely to be delayed, forthwith of the occurrence of such event notify the architect in writing identifying the relevant events causing the delays, giving particular’s of the expected effect and estimate of the EOT required. The notice shall contain sufficient information and reasons why delay to completion will result.

23.3

Submit to the architect his application for EOT complete with particulars and estimates in a reasonable time before the Date of Completion.

23.4

Constantly use his best endeavours to prevent delay.

43

Upon it becoming reasonably apparent that the progress of the works is delayed, forthwith give written notice of delay to the S.O.

43

Constantly use his best endeavours to prevent delay.

Clause

S.O’s / Architect’s Obligations

23.2

Upon receipt a contractor’s notice, consider events causing delay and by written notice to the contractor give a fair and reasonable EOT.

23.3

He regard to the sufficiency of the particulars and estimates submitted by the contractor, ascertain and fix such new date for completion within a reasonable time form receipt of the notice.

23.5

Not fix a date for completion earlier that the Date of Completion stated in the Appendix.

43

If in his/ her opinion the completion of the works is likely to be delayed or has been delayed by specified events so soon as he/ she is able to estimate the length of the delay.

28 2.6

Conclusion

The phrase ‘extension of time’ is common to most construction contracts. Simply, the phrase means the postponement of the date by which completion of the contract works is to be expected. One of the contractor’s obligations under the building contract being the completion of the works on time usually expressly specified within the contract terms.

The significance and effects of EOT provisions in construction contracts is two folds. First, the EOT affect the extent to which the contractor is liable for liquidated damages in the event of delays to the completion of the works within the stipulated completion date. Second, EOT is granted to the contractor due to delay by the employer. In addition, EOT provisions specified the events as grounds upon which the contractor may be entitled to an EOT and serve to streamline the role of architect/ S.O. in determining the contractor’s right to an EOT.

CHAPTER 3

THE REQUIREMENTS IN THE APPLICATION FOR AN EXTENSION OF TIME

3.1

Introduction

An EOT is granted if a contractor has been delayed and the cause of the delay is one that gives the contractor an entitlement under the contract. A contractor should be required to supply facts about the delay, including identifying the event that led to the delay. The contractor must also provide proof of the events that were allegedly responsible for the delay, including the actions or inactions of the architect/ S.O or other events beyond his control, and to demonstrate that the delay affected the critical path activities and hence delayed completion.

Invariably, an assessment or evaluation of EOT will be made based on the programmes submitted by the contractor. It may seem surprising therefore that while most contracts call for an as-planned programme, many do not expressly require them to be taken into account when evaluating EOT. However, the courts, in tune with practise, regularly make their decisions taking into account evaluation based on as-planned programme.

30 3.2

Proof of Entitlement

All claims whether for loss and expense, extra cost, or for EOT, should meet the legal requirement of linking damage with cause. A claim for loss and expense or extra cost is not effective without a cause and a claim for EOT is not effective without a relevant event.

Standard forms of contract display the principle by

requiring each and every claim to stand on its own merits (Brian, 1997).

Standard forms of contract usually require the contractor to give notice of delays or make his application within reasonable time of the happening of the delaying event and to provide such details and particulars information as are necessary to assist the architect/ S.O in making his decision (Brian, 1997).

The burden to prove the delays will directly rests on the contractor whether the application is made before or after completion and whether the delaying event is the employer’s fault or neutral. The contractor will have to produce evidence that delay occurred and that the cause of the delay gave an entitlement to an EOT if the contractor wishes to challenge liquidated damages by obtaining an EOT from the contract administrator or arbitrator. Consequently, it is up to the contractor to keep records as evidence of both delay and cause. The strength of the contractor’s case will depend on the quality of his records (Brian, 1997).

It is not only important to the contractor to keep the records. A similar burden rests with the architect/ S.O to protect the employer’s position. Ideally, both parties have the same mind as the contract progresses on the causes and extents of any delays.

There is probably no effective substitute for the monthly progress

meeting at which the parties make their own report, and they jointly agree by discussion what should be placed on record as the true state of affairs (Brian, 1997).

31 The records kept on construction projects will be the main source of information on which claim for time or additional payments will be established by the contractor or assessed by the contract administrator.

The importance of

producing adequate delay documentation has been recognized for many years. There is a multitude of different types of records including correspondence, meeting minutes, delivery notes, progress records, site diaries, day work sheets, photographs and invoices. However, if these are not related clearly to specific delaying events they are unlikely to provide the required clarity of evidence needed to substantiate a claim effectively. Therefore, separate and independent report will often be required which are specifically aimed at documenting and substantiating a delay (Stuart, 2006).

Besides delay records and monthly progress meeting as information needed to prove the delays, programme of work is also important as evidence to establish contractor’s entitlement to EOT. A delay to a contract activity will not necessarily cause delay to completion of the whole of the works or a milestone if the affected activity is not on the critical path.

However, instructing additional work to an

activity that was not on the critical path could change the programme relationship such that the activity becomes part of the critical path. Further, a contractor may claim that the variation instruction caused the contractor to take workers of f a critical activity and take longer time to construct the works.

The effectiveness of the contractor’s programme as a scale for the measurement of delays is depend on how frequently of the contractor update his programme. As the contractor updates the programme in regular basis to show actual start dates, durations and completion dates, and completion dates of significant activities, is at least a credible record of progress even if it says nothing on the actual causes of any delays. The programme can provide a detailed picture which should satisfy the tests of good evidence by referring to the programme indicators on when variations, revisions and the like were ordered, instructions were given, and other events were encountered (Brian, 1997).

32 The contractor who fails to produce an effective and realistic programme puts himself at a disadvantage on proof of entitlement to EOT. The contractor must show that he has suffered delay and that this delay has affected completion of the works. Then, he must show that the delay was caused by a relevant event and not his own deficiencies and difficulties (Brian, 1997).

3.2.1

Information That Needs to be Considered in Evaluating Extension of Time Application

Upon receipt of the contractor’s notice, the architect is to consider making an EOT independently in the light of his knowledge of the progress of the works and of other matters affecting or likely to affect its progress. As part of his duty owed to both the employer and the contractor, he should approach the task in a methodical and systematic way.

If necessary, he should explain how he has arrived at his

decision and the weight he has given to the various factors involved. Amongst the sources of information which he may utilize to monitor and assess the delay are:

a) the contractor’s notice of delay and particulars (application letter) b) the works programme c) as-built works programme d) records of when operations and activities actually began and finished e) site progress meeting minutes and records f) contractor’s day-work sheet g) site staff reports and diaries h) contractor’s progress reports i) contractor’s method statements and working cycles

33 The information that needs to be submitted by the contractor in the application of EOT is detail elaborated in the following topic.

If the architect

concludes based on the sufficient information received from the contractor that the cause of the delay is within the relevant events as listed in the contract, he must decide whether completion of the works has been or likely to be delayed beyond the current date for completion. The architect must then give a fair and reasonable EOT subject to clauses 23.3, 23.4 and 23.7, PAM 98 and fix a new date for completion.

3.2.1.1 Construction and Progress Records

There are a multitude of different types of records kept on construction projects, which are documented with varying degrees of rigour depending on who is responsible for their completion, as well as being dependant on project management effectiveness from one project to the next.

Progress records are commonly kept by the contractor and the architect/ S.O. independently.

If at all possible, these records should either be jointly taken or

agreed at the time of compilation. The following list of records should be considered a minimum to be kept by the contractor that can be used as the main source of information in quantifying delays (Michael, 2001; David, 1984).

1. A master programme together with subsequent updates A programme should be updated on a regular basis to provide good contemporaneous evidence of what happened in the project, in case of dispute.

2. A comparison of master programme with actual records The contractor’s programme could be of relevance in considering rates of progress and if there was a question of determination of the contractor’s

34 employment for lack of progress, under express terms or at common law, it could be some interest as evidence.

3. Site diaries in a standard format A daily diary should be maintained by each member of the field staff. The book is a quasi-legal document and should be neatly and accurately recorded. An entry should be made everyday, whether or not work was performed.

4. A drawing register kept up to date as new drawings are issued and incorporating issue dates Drawings of clarification or change, or drawings that contain supplemental information should be filed at the field office, in addition to a complete set of all contract drawings as bid. The evidence of a drawing is often crucial. If revisions have taken place, the date and nature of the revision should be noted on drawing. The drawings provide clear evidence of architect’s instructions to the contractor.

5. A weekly log of activities commenced and completed

6. A weekly log of those areas which were considered problematic

7. Progress meetings Minutes meetings may provide a vast resource of information for claims preparation. In order to have credibility the minutes must be approved by the other various parties involved in the meeting who probably had no hand in the preparation of the minutes contractor.

Other documents which are not listed from the previous list such as project daily reports and tests of materials can also be used as information in quantifying delays (David, 1984).

1. Project daily reports A daily construction report containing a description of the work commenced, new work started, status of work in progress, manpower and equipment at the

35 site, weather, and visitors to the site. If no work was performed at all, a daily report should still be filed, stating ‘no work’.

On projects where several

inspectors are involved, this report is compiled from each inspector’s daily record of work progress.

2. Tests of materials A record should be kept of all material samples sent out to laboratory for testing as well as those tests performed at site. The report should include space for later inclusion of the test results as well as the location of the structure where the particular material was to be installed.

3. Correspondence Correspondence, written by one person for the eyes of another, is potentially the best sort of evidence save only for documents (such as the contract) agreed and signed by both parties. Copies of all correspondence concerning the project that have been sent to the resident project representative should be maintained and filed by date.

Letters are an extremely valuable source of evidence because they indicate intentions and attitudes at the time of writing. Letters must be read with care and always in the context of other letters and documents. Written evidence is always useful provided that it is clear. A letter from the contractor asserting that a particular situation exists (for example, lack of drawings) is persuasive in the absence of a letter from you refuting the assertion.

Records should be kept as to when particular works activities have been carried out and what resources were used to carry the works. In situations where the employer or his agents have breached the contract or instructed variations or taken other actions that could entitle a contractor to additional time, the ‘marked up’ copy of the contractor’s program maintained by the architect/S.O must clearly show when such events occur, what work activity is affected, what effect the events may have on the critical path, and whether the terms of the contract, the contractor has an entitlement to an EOT.

36 3.3

Common Mistakes by the Contractor in the Application of Extension of Time

Most contracts do not require the contractor to do more than give notice of delays, maintain records and provide particulars. Provided that the contractor has provided details of all events, dates, what work was affected and the like, it appears that the contractual provisions have been satisfied and the obligation is then on the architect to decide what extension is reasonable on the basis of the particulars provided and/ or on the basis of further information obtained from other sources. Many contractors only provide information (often insufficient) and rely on the architect to make a reasonable EOT. This tactic can be successful, but there is a risk that the extension made will be insufficient. Not all is lost, as the contractor can always present his case at a later date, hoping to persuade the opposition that more time is justified. The problems with this approach are (Thomas):

a) It is usually more difficult to persuade someone to change their mind after they have made a written EOT unless there is additional evidence which can be used to explain a change in the period of the extension.

b) There will almost certainly be a period of protracted discussion during which the current (extended or otherwise) completion date and the progress of the works are inconsistent with a realistic programme and a subsequently revised extended completion date.

Claims for EOT probably cause more disputes than any other contractual or technical issues. There are several mistakes done by the contractor in the application of EOT which elaborated below.

37 3.3.1

Major Mistakes

Major mistakes which can lead to obstacles to prompt settlement of claims for EOT applications are (Thomas):

a) Late, insufficient or total lack of notice of delay on the part of the contractor b) Failure to recognise delay at the appropriate time or failure to describe the cause of delay c) Poor presentation of the application to show how the progress of the work has been delayed

3.3.2

Lack of Proper Baseline Schedule

The first contractor’s mistake is the non-availability of proper programme reflecting the actual site progress at the time of the event of the claim. It is common fact that there is often a lack of a proper as planned baseline construction schedule with which to aid comparison with an as-built construction schedule in times of delay analysis or assessment or evaluation of EOT. Very real project pressures ‘to get the work done’ usually result in the as-built construction schedule (if any in the first place) not being updated periodically. Procedures of acceptance of the baseline asplanned construction schedule are also not formalised as there is a tendency for employer’s agent to request for several revisions of the contractor’s as-planned schedule. Constant revisions of the baseline as-planned programme may sometimes continue even though actual works may have commenced on site. This prevents any meaningful analysis form being carried out.

38 3.3.3

Lack of Proper Site Records and Insufficient Quality of Information

Proving the extent of delays, especially delays which overlap to a delay which is continuous and causes slowdown in the overall project progress is a constant issue. Disputes over the calculation of time and the validity of the formulae used in the calculation are the main reasons for prolonged negotiation. Records to substantiate any calculations are usually not kept or not updated.

Records or

information of the master programme, critical path networks, resources allocation, site diaries and correspondence are given insufficient attention.

The production of information in proving delay is often of insufficient quality to enable an effective investigation into issues of delays and disruption to be undertaken in retrospect, as observed by Major and Ranson (1990):

‘ It is all to common, when seeking to establish what actually happened on a project, to find that even a considerable amount of investigation will produce only an incomplete picture. It will often be necessary to analyse minutes of progress meetings, valuations, diaries, and various charts and programmes which neither individually nor collectively enable an actual progress chart to be produced or a detailed history of the project to be written. This is a common and substantial area of failure in site and head office management ’.

The quality and rigour with which records are kept varies widely between different organizations. Many have different procedures for keeping records and on many jobs quality procedures for record keeping are not implemented effectively.

Inadequate records as information to delays can

lead to delays in assessment of EOT claims (Stuart, 2006).

39 3.4

Practical Ways for Minimising Contractor’s Mistakes in the Application of Extension of Time

Contracts conditions are clearly and unambiguously drafted to identify the exact factors which constitute valid delays to the project.

The procedural

requirement for applying EOT is set out clearly. Before signing the contract, the contractor should fully comprehend what events the contact considers claimable in terms of time. The contractor should also be aware of the notice requirements for submitting claims for EOT (Lawrence, 2001).

There must be an agreement and acceptance of the baseline programme . There should be in place a procedure for formal acceptance of the final as-planned schedule. This schedule will serve as that all-important baseline, a record of the contractor’s intent in carrying out the works. Subsequent evaluation or assessment of EOT and delay will be facilitated with the baseline as-planned programme finalised and accepted (Lawrence, 2001).

The contractor is considered investing in computerised scheduling systems such as the Primavera Project Planner or Microsoft Project. The contractor need to updated their work programme by using such software because such software speed up the calculations and are versatile tools in comparing as planned and as-built schedule (Lawrence, 2001). The contractor is required to regularly update work programme to reflect project progress and changes. Then, the contractor should keep reliable and accurate progress and programme records to assist

contemporaneous assessment of the cause and effect of project changes (Stuart, 2006).

In addition, the contractor can refer previous common law cases which

related to entitlement to EOT to get an idea about the effective preparation of EOT claim to eliminate their mistake. The judge in the English case of Balfour Beatty Construction Ltd v The Mayor and Burgess of the London Borough of Lambeth

(2002), gave a good summary of the information a contractor should provide to establish its entitlement to EOT:

40 a) A reliable original programme b) The establishment of valid critical paths initially and at every later material point in time c) Sound revisions on the occurrence of every event to demonstrate cause and effect d) A means of demonstrating the effect of concurrent or parallel delays

The contractor also needs to implement a proper claim administration system.

An effective administration of the contract is of utmost importance in

minimising EOT disputes. The voluminous backload of data required to substantiate a point claims clearly to the need for an established and efficient contract administration system (Lawrence, 2001).

Besides, the implementation of a document management system must be considered and done by the contractor . The key to effective documentation is that

the crucial data required are highlighted clearly and simply for recording.

The

contractor’s management must identify the information pertinent to the substantiation of claim for time due to the employer’s delay. As effective documentation is a key principle of the ISO 9000 Quality Management Standards, contractor should consider implementing the ISO Quality Standards for their company if they have.

This

documentation system must also be extended to include the subcontractor’s to ensure the timely documentation and furnishing the essential data to substantiate any claims for time extension (Lawrence, 2001).

41 3.5

Conclusion

Where the notice form the contractor was clear and well supported with relevant documents to demonstrate a possible or actual delay to the progress of the works due to the particular events, not only was the assessment of the architect/ S.O will sped up to establish contractor’s entitlement for EOT, the architect/ S.O was i n a position to quickly advice the employer and initiate pro-active measures to minimise delays and ensure the timely progress of the works. It is therefore advisable for the contractor to retain the information pertaining to work programme, which are a master programme together with subsequent updates and a comparison of the programme with actual as-built records. In addition, the contractor is also advisable to keep the project’s factual record such as variations, correspondence, minutes of meetings and progress reports.

CHAPTER 4

RESEARCH METHODOLOGY

4.1

Introduction

This chapter outlines a methodology that can be used to guide the research. The information needed for this research was obtained from two principal sources which are literature reviews and questionnaire survey. The method to analyse the data also detailed elaborated in this chapter to ease the process of analysing data. The questionnaires were analyzed in two methods, which are frequency analysis and average index analysis.

43 4.2

Literature Review

For the second type of data in this study, it is based on comprehensive literature review on the contract provision for extension of time in the standard form of contract and text books.

In addition, information related to the problem was

obtained from reliable sources which in this case were from the internet for recent journals published and articles, and from the seminar paper on matters related to delay and extension of time. The information was help in resuscitating the problem at hand. Text books related to construction contract were used as well and the books were available from the university library. The books were to give the general overview of delay and extension of time and were to enhance the researcher to be focused on the problem statement. The literature reviews in this study were also used to guide the formation of questionnaire design.

4.3

Selection of Respondents

The targeted respondents were professionals from consultant organization including quantity surveying, architecture and engineering consultants located in Johor Bahru. Addresses of consultants for the survey are selected randomly from The Professional Journal of The Institutions of Surveyors, Malaysia and list of respondents in previous study.

In this study, the questionnaires were handed over manually to 50 respondents. This is to ensure that the questionnaire form will be received by the target person and it is much easier to collect. The hand manual method is also target to pass to the respondents such as the director and also those higher management level person or project executive, who are more experienced to response the matter of evaluating extension of time application.

44 4.4

Research Design

A questionnaire survey form has been prepared for this research as shown in appendix A.

It was base on the literature reviews from journal papers, seminar

papers, previous study, standard form of contract and also articles from internet. The questionnaire survey is aimed to get the answer or opinion regarding to EOT application from the construction practitioner who has experience in evaluating EOT. The questionnaire survey will include the information in evaluating EOT application and the common mistakes by the contractor in the EOT application. The ways to reduce the mistakes by the contractor in the application for an EOT are also stated in the questionnaire. The details of the preparation of the questionnaire survey are discussed in the following section.

4.4.1

Questionnaire Survey Design

The steps required to design and administer a questionnaire include defining the research objectives, determining the sampling group, writing the questionnaire, administering the questionnaire and interpretation of the results. The discussion will concentrate on how to formulate the questionnaire design for this research.

The questionnaire survey design were intended to be as simple as possible but to be full of table in information gathering in 12 pages, double sided of paper. There are rating scale technique and also fill in the blanks method for optional if the respondents have any views or opinions to add for this research. The respondent are oblige to tick at the appropriate box and the appropriate rating scale for each section.

45 The questionnaire has divided to four sections, which are Section A for generally, Section B for information, Section C for common mistakes by the contractor, and Section D for ways to reduce the mistakes. Section A is aim to get general information of the respondents such as respondent’s name, post, year of experience, and representing firm/ consultant. From this section, we may know the view from variety consultants, different post and total experience of respondent. Section A also aims to get the background of projects that have experienced by the respondents such as standard form of contract that used in the project, type of project, whether their project usually need application for EOT or not, and significance of the reasons of delay which EOT may be given. The significance of the reasons of delay needs to be answered with five rating scales as follows.

1

-

Never

2

-

Seldom

3

-

Sometimes

4

-

Often

5

-

Very Often

Section B will state the information that needs to be considered in evaluating EOT. There are 13 information summarized form the literature reviews and also form the previous study, which are application letter (notice of delay), as-planned schedule, as-built schedule, weather record, drawings, site diaries, site memo, project daily report, variation order, architect’s instructions, minutes of meeting, test of materials or operating test, and correspondence. The respondents can also add any information in the provided space if they have any additional views. There are five rating scales to be selected for this section as shown below.

1

-

Not Considered

2

-

Less Considered

3

-

Moderately Considered

4

-

Highly Considered

5

-

Very Highly Considered

46 Next, the common mistakes by the contractor in the application of EOT are described in Section C. There are 8 mistakes in this section that have to fill in. The question is about the common mistakes by the contractor in the application of EOT and the mistakes are simplified from the literature reviews and listed in the following point.

a) Late or lack of notice from the contractor b) Failure to recognise delay or failure to describe the cause of delay c) Failure to stated the exact contractual provision which is being relied upon d) Failure to stated the date when the delay commenced and the period of delay e) Poor presentation of the application to show how the progress of the work has been delayed f) Lack of proper baseline schedule g) Lack of proper site records and particulars relied upon h) Insufficient quality of information (information is not kept and not updated)

The question in Section C needs to be answered with rating from scale 1 to 5 as shown below.

1

-

Never

2

-

Seldom

3

-

Sometimes

4

-

Often

5

-

Very Often

Last Section, Section D is aims to identify the ways to reduce the mistakes by the contractor as listed in Section C. The ways to reduce the mistakes are listed as follows.

47 a) Be aware of the notice requirements for submitting application for EOT b) Fully comprehend what events the contract considers claimable in terms of time c) There must be an agreement and acceptance of the baseline programme (or formal acceptance of the final as-planned schedule) d) Keep reliable and accurate progress and programme records e) Implement a proper claim administration system f) Implementation a document management system

There are 5 rating scales for question in this section to know the degree of contribution toward each of the way as listed above. The question in Section D also needs to be answered with rating from scale 1 to 5 as shown below.

4.5

1

-

Very Low Contributing

2

-

Low Contributing

3

-

Medium Contributing

4

-

High Contributing

5

-

Very High Contributing

Analysis Method

There are two methods that will be used in analysing the collected data which are frequency analysis and average index. Frequency analysis is used in analysing general information in Section A of the questionnaire and this method will show the frequency, percentage and in certain questions in number. Next method is average index and it is used in analysing Section B, C and D and this method will show the average index and rating scale. The feedback from questionnaires will be analysed through a computer program, Microsoft Excel.

There are also other tools for

analysing technique such as SPSS, but the researcher used Microsoft Excel because

48 this research only involved not more than 50 data to be analysed and it can use a simple computer program, Microsoft Excel.

4.5.1

Frequency Analysis

Frequency analysis is a method to decompose a function, wave or signal into its frequency components so that it is possible to have a frequency spectrum. The frequency analysis is used to represent results of data analysis of the number of frequency of response that the respondent gives to different variables in the questionnaire survey. The result will be tabulated in the form of frequency number and percentage according to total respondents.

The frequencies can also be

represented in the form of tables, pie charts and bar charts for graphic result.

4.5.2

Average Index Analysis

The average index analysis for each variable is calculated by using the formula as shown below (Al- Hammad, 1996):

Average Index

=

∑ a1x1 ∑ xi

Where, a1 = constant expressing the weight given to i x = variable expressing the frequency of response for i = 1, 2, 3, 4, 5,……n

49 Based on the assumed values stated earlier,

(Section A & Section C)

x1 = frequency of the ‘Never’ and corresponding to a 1 = 1 x2 = frequency of the ‘Seldom’ and corresponding to a 2 = 2 x3 = frequency of the ‘Sometimes’ and corresponding to a 3 = 3 x4 = frequency of the ‘Often’ and corresponding to a 4 = 4 x5 = frequency of the ‘Very Often’ and corresponding to a 5 = 5

(Section B)

x1 = frequency of the ‘Not Considered’ and corresponding to a 1 = 1 x2 = frequency of the ‘Less Considered’ and corresponding to a 2 = 2 x3 = frequency of the ‘Moderately Considered’ and corresponding to a 3 = 3 x4 = frequency of the ‘Highly Considered’ and corresponding to a 4 = 4 x5 = frequency of the ‘Very Highly Considered’ and corresponding to a 5 = 5

(Section D)

x1 = frequency of the ‘Very Low Contributing’ and corresponding to a 1 = 1 x2 = frequency of the ‘Low Contributing’ and corresponding to a 2 = 2 x3 = frequency of the ‘Medium Contributing’ and corresponding to a 3 = 3 x4 = frequency of the ‘High Contributing’ and corresponding to a 4 = 4 x5 = frequency of the ‘Very High Contributing’ and corresponding to a 5 = 5

Average index will be used in analysing each question in Section B, C, D, and one question in Section A (Abdul Majid and McCaffer, 1997). In section A, there is only one question that needs to use average index analysis. In order to determine the significance of reasons of delay, the questionnaire rating scale for reasons of delay in Section A can be classified as indicated in the following table.

50 Table 4.1: The classification of the rating scales in Section A of the questionnaire Rating Scale

Average Index (AI)

Never

1.00 ≤ AI < 1.50

Seldom

1.50 ≤ AI < 2.50

Sometimes

2.50 ≤ AI < 3.50

Often

3.50 ≤ AI < 4.50

Very often

4.50 ≤ AI ≤ 5.00

In Section B, the classification of the rating scales to determine the levels of consideration of information in evaluating EOT application are as follows.

Table 4.2: The classification of the rating scales in Section B of the questionnaire Rating Scale

Average Index (AI)

Not considered

1.00 ≤ AI < 1.50

Less considered

1.50 ≤ AI < 2.50

Moderately considered

2.50 ≤ AI < 3.50

Highly considered

3.50 ≤ AI < 4.50

Very highly considered

4.50 ≤ AI ≤ 5.00

Next, in order to determine the common mistakes by the contractor (Section C), in this study, the similar classification of the rating scales as indicated in Section A have been used. The classification of the rating scales are indicated in table 4.3.

51 Table 4.3: The classification of the rating scales in Section C of the questionnaire Rating Scale

Average Index (AI)

Never

1.00 ≤ AI < 1.50

Seldom

1.50 ≤ AI < 2.50

Sometimes

2.50 ≤ AI < 3.50

Often

3.50 ≤ AI < 4.50

Very often

4.50 ≤ AI ≤ 5.00

There is also classification for ways to reduce the mistakes in order to determine the contribution of the ways in reducing the mistakes by the contractor as described in Section D of the questionnaire.

Table 4.4: The classification of the rating scales in Section D of the questionnaire Rating Scale

4.6

Average Index (AI)

Very low contributing

1.00 ≤ AI < 1.50

Low contributing

1.50 ≤ AI < 2.50

Medium contributing

2.50 ≤ AI < 3.50

High contributing

3.50 ≤ AI < 4.50

Very high contributing

4.50 ≤ AI ≤ 5.00

Conclusion

In order to achieve the objectives of the study, the research methodology has been established.

This study was carried out based on literature reviews and

questionnaire survey.

CHAPTER 5

RESEARCH ANALYSIS AND DISCUSSION

5.1

Introduction

This chapter analyses the data collected from the questionnaires and the methods used to analyse are Frequency Analysis and Average Index Analysis. There are four sections from the questionnaires to be analysed which are general information (Section A), information in evaluating EOT (Section B), common mistakes by the contractor in the application of EOT (Section C) and ways to reduce the mistakes (Section D). The collected data from the questionnaires were tabulated and analyzed according to their ranking on relative index. Tables created from their rating scale shown to represent their ranking.

53 5.2

Data Analysis for Questionnaire Survey

The collected data from the questionnaires were analyzed in two methods. There are frequency analysis and average index. Frequency analysis is used in analysing general information in Section A of the questionnaire and this method will show the frequency, percentage and in certain questions in number. The frequencies are represented in the form of tables, pie charts and bar charts. Next method is average index and it is used in analysing Section B, C and D and this method will show the average index and rating scale. The researcher used Microsoft Excel in order to generate the result.

5.2.1

Analysis for General Information of the Respondent

Analysis of the respondent for questionnaire survey will be divided in three main categories, which are respondent organization, post, and experience. The total number of respondents that completed and returned the questionnaire sets was 30.

Engineering, 5, 17%

Quantity Surveying, 15, 50%

Architecture, 10, 33%

Figure 5.1: Respondent organization

54 Table 5.1: Respondent organization Respondent Organization

Frequency

Percentage

Architecture Firm

10

33%

Engineering Firm (Civil & Structural)

5

17%

Quantity Surveying Firm

15

50%

30

100%

Total

Figure 5.1 and table 5.1 show the respondent organization for questionnaire survey. Most of the respondents was from quantity surveying firm, 50%, followed by architecture firm, 33% and engineering firm (civil & structural), 17%.

The

professional men from consultant or firm usually have experiences in evaluating EOT especially those from Quantity Surveying firm because normally quantity surveyor will act as an evaluator to evaluate EOT for government project and architect for private project. Other than that, engineering firm (Civil & Structural) may give their advice to S.O. or client about contractor’s entitlement for an EOT.

Project Executive, 5, 17%

Quantity Surveyor, 10, 33%

Manager/ Director, 4, 13% Engineer, 2, 7%

Architect, 9, 30%

Figure 5.2: Respondent post

55 Table 5.2: Respondent post Respondent Post

Frequency

Percentage

Quantity Surveyor

10

33%

Architect

9

30%

Project Executive

5

17%

Manager/ Director

4

13%

Civil and Structural Engineer

2

7%

30

100%

Total

Variable post represent by the questionnaire survey as shown in figure 5.2 and table 5.2 where the highest were quantity surveyor, 33% because Quantity Surveyor is usually administrate the contract and evaluate EOT.

30% of the

respondents were Architect and they also have experience in evaluating EOT especially for private project which used PAM 98 standard form of contract. The next highest respondents by post were the Project Executive, 17%, followed by Director 13%, and Civil Engineer, 7%. Project Executive is the post that manages the duties in the construction project for the firm.

Director from the quantity

surveying and engineering firm which have extensive knowledge and experiences also participate in answering the questionnaire. The other post is civil and structural engineer which usually monitor the progress of work in construction site, and can identify the causes of delay in the project.

More than 10 years, 8, 27%

Less than 5 years, 13, 43%

5 to 10 years, 9, 30%

Figure 5.3: Respondent experience

56 Table 5.3: Respondent experience Respondent Experience

Frequency

Percentage

Less than 5 years

13

43%

5 to 10 years

9

30%

More than 10 years

8

27%

30

100%

Total

Year of experience of the respondents can be classified to three categories as shown in figure 5.3 and table 5.3.

From the pie chart and table, 43% of the

respondent having less than five years of experience. Because of time constraints, the researcher can only get more feedback from the respondents who have less than five years of experience. Nevertheless, 30% of the respondents have five to ten years of experience, and 27% of respondents have more than 10 years of experience. This reflects that the answer is still reliable because most of the respondents have five and more years of experiences which make the total value 57% from respondents which having five to ten years and more than 10 years of experience.

5.2.2

Analysis for Background of Project

Analysis of the project which have experienced by the respondents can be divided to four categories which are standard form of contract, types of project, application for EOT and reasons of delay which EOT may be given.

57

30 25 s t n 20 e d n o p 15 s e r f 10 o . o N 5

26

10

12 3

0 PAM 98

PWD 203

PWD 203A

Others

Standard form of contract

Figure 5.4: Standard form of contract used in the construction project that the respondents have experienced

Table 5.4: Standard form of contract used in the construction project that the respondents have experienced Standard Form of Contract

Number of Respondents/ User

PAM 98

26

PWD 203A

12

PWD 203

10

Others

3

Figure 5.4 shows the standard form of contract used in the construction project by the respondents. The reasons of delays as stated in the next questions are based on PAM 98 and PWD 203A standard form of contract. So, it would be easier for the respondents to answer the questions when they have experienced in using the contracts because of their knowledge and experienced. Most of the respondents have experienced in using PAM 98 standard form of contract with 26 of the respondents as indicated in table 5.4. This was followed by PWD 203A, 12 respondents, PWD 203, 10 respondents, and others 3 respondents. Basically, PWD 203A and PWD 203 have same provision for EOT and almost same with provision in PAM 98. Other

58 standard form of contract used in the construction project that the respondents have experienced is FIDIC.

30 25 s t n20 e d n o p s 15 e r f o . o10 N

27

26 Residential

22

Commercial building

19

High storey building Office building

14 12

Factory 9

School Mosque 4

5

Others

0 Types of project

Figure 5.5: Types of project that the respondents have experienced

Figure 5.5 shows the types of project that the respondents have experienced. In general, it can be seen that there was a building project to be selected by the respondent in the questionnaire. It is because all those building project as listed in the questionnaire can be considered as a complex project and most probably can lead to delay and thus application for an EOT by the contractor. 27 of the respondents have experienced in residential project and this was followed by commercial building with 26 respondents. High storey building and office building are also experienced by more than half of the respondents with 22 and 19 of the respondents. It was followed by factory and school project, with 14 and 12 of the respondents. Only 9 of the respondents have experienced in mosque project. clubhouse, landscape and infrastructure.

Others project include

59

No, 7, 23%

Yes, 23, 77%

Figure 5.6: Application for extension of time in construction projects

77% of the respondents said that most of their construction projects usually need application for EOT as shown in figure 5.6 and 23% said no application for EOT. This reflects that the actual construction projects usually need application for EOT and it means the project usually cannot be completed at the time originally scheduled.

Next analysis is reasons of delays as stated in the standard form of contract. There are 14 reasons of delay have been identified from PAM 98 and PWD 203A standard form of contract. Table 5.5 shows the reasons of delay which EOT may be given, ranked in order of average index.

The data collected indicated that the

extremely often reason of delay which EOT may be given was architect’s/ superintending officer’s instructions.

This was followed by late instructions,

drawings or level, and delay on the part of nominated subcontractors or suppliers, under same category or rating scale. The findings indicated that the most often delay usually come from the employer and this may result in the application for an EOT by the contractor. The extremely seldom reasons of delay is force mejuere and this shows that the contractor was rarely apply for an EOT based on reason of force mejuere.

60 Table 5.5: Reasons of delay which EOT may be given Rank

Reasons of delay

Average Index

Rating Scale

1

Architect’s/ S.O’s instructions

3.77

Often

2

Late instructions, drawings or level

3.63

Often

3

Delay on the part of nominated subcontractors or suppliers

3.60

Often

4


3.10

Sometimes

5

Delay in the supply of materials and goods by the employer

2.87

Sometimes

6

Delay in giving possession of site

2.77

Sometimes

7

Delay on the part of artists, tradesmen and others engaged by the employer

2.73

Sometimes

8

Inability to obtain materials or goods

2.70

Sometimes

9

Testing and inspection

2.30

Seldom

2.17

Seldom

2.17

Seldom

10 11

Act of prevention or breach of contract by the employer Insurance contingencies (loss and damage the works)

12

Disputes with neighbouring owner

1.80

Seldom

13

Civil commotions, strikes, lockout

1.67

Seldom

14

Force mejuere

1.60

Seldom

5.2.3

Analysis for Information That Needs to be Considered in Evaluating Extension of Time Application

There are a lot of related documents or supporting documents which can be used as information of delay or information to verify the delay that needs to be considered by the evaluator in evaluating EOT application. Different reasons of delay have different level of consideration for information in evaluating EOT.

61 This section analyses the data collected in Section B from the questionnaire survey. Generally, there are 14 reasons of delay were listed in the questionnaire form but only three reasons were selected to be analysed, which are architect’s/ S.O’s instructions, late instructions, drawings or level, and delay on the part of nominated subcontractors or suppliers. The reasons of delay to be analysed were selected because all of the respondents have experienced in facing such reasons and they fully answered these three reasons, and the reasons are always happened in construction project or directly said it is under ‘often’ category of the rating scale. Not all of the respondents answered the other reasons of delay because they said that they never experienced for such reasons and not able to answer the questions. They skipped from answering the reasons of delay that they never experienced. In order to maintain the uniformity of 30 respondents, the rest of the reasons have not been analysed by the researcher.

5.2.3.1 Information

for

Delays

Relating

to

Reason

of

Architect’s/

Superintending Officer’s Instructions

The result in table 5.6 shows that the architect’s/ S.O’s instructions was the most highly considered in evaluating EOT application.

This was followed by

variation order, minutes of meeting and other information as indicated in the table. Architect’s/ S.O’s instructions can be used as a good information in verifying the delay. Usually, the instructions are related to a variation. Therefore, the variation order was in the second ranked of mean score for highly considered.

Test of

materials and weather records are least considered in evaluating EOT application because such information was not related and not provided any good information of delays relating to reasons of architect’s/ S.O’s instructions.

62 Table 5.6: Information that needs to be considered for the reason of architect’s/ superintending officer’s instructions Rank

Information

Average Index

Rating Scale

1


4.37

Highly Considered

2

Variation Order

4.27

Highly Considered

3

Minutes of Meeting

4.10

Highly Considered

4

Drawings

4.07

Highly Considered

5

Correspondence

3.97

Highly Considered

6

Application letter

3.90

Highly Considered

7

As-planned schedule

3.80

Highly Considered

8

Site memo

3.77

Highly Considered

9

As-built schedule

3.73

Highly Considered

10

Site diaries

3.70

Highly Considered

11

Project daily report

3.67

Highly Considered

12

Test of material/ operating test

1.83

Less Considered

13

Weather records

1.73

Less Considered

5.2.3.2 Information for Delays Relating to Reason of Late Instructions, Drawings or Level

In general, drawings are the highest ranked for highly considered in evaluating EOT due to reason of late instructions, drawings and level as shown in table 5.7. The evidence of a drawing is often crucial. If revisions have taken place, the date and nature of the revision should be noted on drawing.

The drawings

provide clear evidence of architect’s instructions to the contractor which also put together the architect’s/ S.O’s instruction under highly considered.

Other

information also highly considered in showing that the contractor has specifically applied in writing to the architect/ S.O for the necessary instructions, drawings or

63 levels. Variation order is moderately considered in this reason of delay in showing that the late instruction or drawings is caused by late confirmation in writing for the instructions that requiring a variation and also time to provide new revised drawings. Test of materials and weather records are least considered because such information was not related to this reason of delay.

Table 5.7: Information that needs to be considered for the reason of late instructions, drawings or level Rank

Information

Average Index

Rating Scale

1

Drawings

4.17

Highly Considered

2

Application letter

4.10

Highly Considered

3

As-planned schedule

4.10

Highly Considered

4


4.07

Highly Considered

5

As-built schedule

3.93

Highly Considered

6

Site memo

3.80

Highly Considered

7

Minutes of Meeting

3.77

Highly Considered

8

Site diaries

3.73

Highly Considered

9


3.63

Highly Considered

10

Correspondence

3.57

Highly Considered

11

Variation Order

3.33


12


1.63

Less Considered

13

Weather records

1.53

Less Considered

64 5.2.3.3 Information for Delays Relating to Reason of Delay by Nominated Subcontractors or Suppliers

As-planned schedule, as built schedule, application letter, project daily report, site memo and site diaries were found to be the information that highly considered in evaluating EOT due to reason of delay by nominated subcontractors or suppliers as indicated in table 5.8. As-planned and as built schedule remained as the highest and second highest ranked of highly considered because the schedule or work programme is very important to show how the delay by nominated subcontractor or suppliers can affect the work progress and cause delay to completion of the whole of the works. Correspondence, minutes of meeting, architect’s/ S.O’s instructions are moderately considered in evaluating EOT for this reason. This could be due to the facts that such information is not the best sort of evidence for this reason. But it can be used to indicate the intentions and agreement by both parties which can cause delay on the part of the nominated subcontractors or suppliers. Drawings, weather records, and test of materials are not really helpful in evaluating EOT for reason of delay by nominees, and therefore in can be categorized under less considered of the rating scale.

65 Table 5.8: Information that needs to be considered for the reason of delay by nominated subcontractors or suppliers Rank

Information

Average Index

Rating Scale

1

As-planned schedule

4.03

Highly Considered

2

As-built schedule

4.00

Highly Considered

3

Application letter

3.90

Highly Considered

4


3.67

Highly Considered

5

Site memo

3.60

Highly Considered

6

Site diaries

3.53

Highly Considered

7

Correspondence

3.43


8

Minutes of Meeting

3.40


9


2.93


10

Variation Order

2.63


11

Drawings

2.47

Less Considered

12

Weather records

1.83

Less Considered

13


1.50

Less Considered

5.2.3.4 Summary of Information That Needs to be Considered in Evaluating Extension of Time

The findings indicated that there was a lot of information that needs to be considered in evaluating EOT.

Amongst the source of information which the

evaluator may utilize and highly considered to assess or evaluate the delay for all three reasons as mentioned previously are application letter, as-planned schedule, asbuilt schedule, project daily report, site memo and site diaries. This could be due to the fact that such information can provide useful and best evidence in presenting the causes of delay in construction project.

66 A clear pattern which emerged from the study was the level of consideration for information of delays is different relating to different reasons of delay. For example, drawings are highly considered and remained as the highest ranked of information for reason of late instructions, drawings or level, whereas drawings are less considered for reason of delay b y nominated subcontractors or suppliers.

5.2.4

Analysis for Common Mistakes by the Contractor in the Application of Extension of Time

Insufficient quality of information and poor presentation of the application to show how the progress of the work has been delayed remained as the highest common mistakes by the contractor in the application of EOT. Both mistakes are related to information of delays and this could most probably be due to poor document management system. Late or lack of notice from the contractor remained as the third ranked of the common mistakes. Lack of notice of delays from the contractor reflects that there have been some tendencies for contractors to apply for EOT nearing the completion of the works. This was followed by lack of particular site records, failure to state the exact contractual provision, lack of proper baseline schedule, and finally, failure to state when the delay commenced.

The findings indicated that all the common mistakes by the contractor were ‘often’ in the application of EOT as indicated in table 5.9. Both mistakes are related to information of delays and this could most probably due to poor document management system to keep and updated all the relevant information of delays. In addition, it could also be due to poor organisation and lack of awareness of contractors on the importance of presenting the evidence in EOT application.

67 Table 5.9: Common mistakes by the contractor in the application of EOT Rank

1 2 3 4 5 6

Common Mistakes By The Contractor

Insufficient quality of information (information is not kept and not updated) Poor presentation of the application to show how the progress of the work has been delayed Late or lack of notice from the contractor Failure to recognise delay or failure to describe the cause of delay Lack of particular site records and particulars relied upon Failure to state the exact contractual provision which is being relied upon

Average Index

Rating Scale

4.00

Often

4.00

Often

3.97

Often

3.90

Often

3.90

Often

3.83

Often

7

Lack of proper baseline schedule

3.80

Often

8

Failure to state the date when delay commenced and the period of delay

3.70

Often

Other than common mistakes as indicated in the table, there are also additional views from the respondents about the common mistakes by the contractors. First, the application is lack of supporting documents such as purchase order and delivery order. Second, the contractor always submitting inappropriate progress report and information given such as labour, material and machineries schedule are not detailed and not updated.

Nest mistake is submitting late

application with irrelevant information. The information provided by the contractor in the EOT application usually not related to the cause of delay. Final view from the respondents about the common mistakes by the contractor is normally the contractors apply for EOT more than the actual or realistic EOT because they expecting that the architect or consultant will reduce the time requested by the contractors.

68 5.2.5

Analysis for Ways to Reduce the Mistakes by the Contractor in the Application of Extension of Time

Table 5.10 shows the ways to reduce the contractor’s mistakes in the EOT application, ranked in order of average index. Main way ranked by the respondents was implementation of a document management system. Keep reliable and accurate progress and programme record was the second highest ranked way which contributed in reducing the mistakes. This was followed by two ways in the same ranked: fully comprehend what events the contract considers claimable in terms of time, and implement a proper claim administration system. Be aware of the notice requirements for an EOT and agreement of the as-planned schedule also tend to highly contribute in reducing the mistakes. Be aware to give notice of delays is often crucial because standard forms of contract usually require the contractor to give notice of delays or make his application within reasonable time of the happening of the delaying event. In short, the findings indicated that the respondents felt that all those ways as listed in the questionnaire survey form were highly contributed in reducing the mistakes.

As we know, the highest and second highest common mistakes by the contractor were related to information of delay. Therefore, the highest and second highest way to reduce or minimise the mistake also related to information system which are document management system and keep accurate progress and programme records.

Both ways can justify application for an EOT to the contract due to

disruption of work progress.

69 Table 5.10: Ways to reduce the mistakes by the contractor in the application of EOT Rank

1 2 3 4 5

6

Ways To Reduce The Mistakes

Implementation of a document management system Keep reliable and accurate progress and programme records Fully comprehend what events the contract considers claimable in terms of time Implement a proper claim administration system Be aware of the notice requirements for submitting application for extension of time There must be an agreement and acceptance of the baseline programme (formal acceptance of the final as-planned schedule)

Average Index

4.37 4.30 4.13 4.13 4.03

4.03

Rating Scale High Contributing High Contributing High Contributing High Contributing High Contributing

High Contributing

There are also other additional suggestions by the respondents in reducing the contractor’s mistakes.

First, it will be much easier to submit the application to

architect in report format with cover letter. Therefore, all the supporting documents will be incorporated and can avoid further inquiry and longer time to evaluate EOT. Next, the application must be submitted earlier with complete and relevant supporting documents and information.

Early submission of the application can

avoid longer time in evaluating EOT. Relevant information is necessary to assist the evaluator in making his decision.

Last view from the respondent is the

implementation of a proper site management in order to keep accurate delay information and can identify the exact delay problems at construction site.

70 5.3

Conclusion

Based on the analysis presented in this chapter, it can be concluded that all the information listed in the questionnaire survey form were considered in evaluating EOT application but the level of consideration is different relating to different reasons of delay. Insufficient quality of information in the EOT application is one of the common mistakes by the contractor. This common mistake and other common mistakes as listed in the questionnaire survey form were frequently happened in the application of EOT. The mistakes can be reduced by applying ways as raised in the questionnaire and comments given by the respondents. All those ways are highly contributed in reducing the mistakes by the contractor in the application of EOT.

CHAPTER 6

CONCLUSION AND RECOMMENDATION

6.1

Introduction

This chapter is the last chapter of the study and it includes the recommendations based on the findings and conclusions. The aim of this study is identify and recommend the best way to reduce the common mistakes by the contractor in the application of extension of time.

Recommendations will be

described on how to reduce the mistakes in the application for an EOT. The study has also help in identifying the most effective way of reducing mistakes in the application of EOT.

72 6.2

Conclusion

Basically, it can be concluded that all objectives stipulated in Chapter 1 have been successfully achieved.

There are three objectives that had been set at the

beginning of this study. These three objectives are: to identify the information that needs to be considered in evaluating extension of time application; to identify the common mistakes by the contractor in the application of extension of time; and to identify the ways to reduce the mistakes by the contractor in the application of extension of time.

For the objective number one, the information that needs to be considered in all three reasons of delays as mentioned previously are application letter, as-planned schedule, as-built schedule, project daily report, site memo and site diaries. To sump up, the findings for the objective number two indicated that insufficient quality of information and poor presentation of the application to show how the progress of the work has been delayed remained as the highest common mistakes. For the objective number three, it can be concluded that the contractor’s mistakes in the application of EOT could be best controlled or reduced by implementation of a document management system and properly keep the accurate information for the reasons of delay. In addition, the findings indicated that the respondents felt that all the ways to reduce the mistakes by the contractor in the application for EOT were highly contributed in reducing the mistakes.

73 6.3

Recommendations

Based on the findings, the recommendation to all contractors is to improve the preparation of a proper EOT application for the consideration of the architect/ engineer/ quantity surveyor/. In any application for an EOT, and whether or not there is a requirement to give details and particulars, it is good practice to i nclude the following:

a) A description of the cause of delay b) The contractual provision which is being relied upon c) The date when the delay commenced and the period of delay (giving details of intermittent effects if appropriate). d) The date of notice of delay, specifying the reference of the relevant document e) A summary of records and particulars relied upon f) A description of the event and effects on progress g) A diagrammatic illustration showing the status of the programme, progress and current completion date prior to the commencement of the delay

The main key to effective ways in reducing the contractor’s mistakes is a proper documentation system in order to identify and properly keep the accurate information for the reasons of delay.

From the findings, implementation of a

document management system is a best way to control or reduce the common mistakes by the contractor in the application of EOT. Procedures of ISO 9001:2000, Quality Management System Requirement could be implemented in order to keep accurate information of delays and identify the exact causes of delay. A documented procedure can be established through the implementation of ISO to ensure that the information is readily identifiable and retrievable.

Electronic Document

Management system (EDM) can also be implemented by the contractor. The aim of EDM is to create an environment within which disparate forms of information can be linked together in the context of project to achieve easy access and control.

74 Computer systems keep track of revision and record to which documents have been issued. These systems store and retrieve structured and unstructured information electronically as well as updating as required. Proper documentation of information can avoid the information from not being kept and not updated.

Other than documentation system, it was recommended that the application for EOT must have been made by the contractor at the correct time in order to avoid late or lack of notice of delay from the contractor. The contractor needs to submit the notice earlier or when the delay becomes apparent to the contractor that the progress of the works will be delayed.

Next recommendation is request must be made officially in order to keep all site records and particulars related to delay. For example, in order to found an application for EOT relating to reason of late instructions and drawings, the contractor must have specifically applied in writing’ to the architect/ S.O for the necessary instructions, drawings, details or levels. All requests for information from the contractor shall be made officially and clearly specifying the details with deadline of expected information required. Lack of particular site records can be avoided by made the requests officially.

From the recommendations, we can concluded that notice, contemporary records and programme are all practical matters which can only be addressed by ensuring that adequate contract administration procedures are being followed from the date of commencement of the works. Whilst the architect, engineer, or quantity surveyor must do their best to evaluate the length of any EOT which may be due, irrespective of the lack of notice and particulars given by the contractor, contractors cannot complain if the extension made on the basis of inadequate information does not live up to their expectation. Therefore, it will be prudent to seek advice from a consultant who specialise in evaluating EOT when the contractor wish to apply EOT in relation to delays.

75 6.4

Limitation of the Study

The research done has several limitations such as the information that needs to be considered by the evaluator in EOT application is only focused on the reasons of delay for architect’s instructions, late instructions, drawings or levels, and delay on the part of nominated subcontractors or suppliers. Although this research only focused to those three reasons of delay, it has reached and fulfilled the objective as to identify the information that needs to be considered in evaluating EOT application.

6.5

Recommendation for Further Study

The contractor’s duty is to give the architect as much information as he can about the cause of delay as so assist the architect in performing his duty. Other than contactor’s duty, there is also architect’s duty to deal with requests for an EOT. There is an issue about an architect/ engineer duty in exercising a duty to deal with request for an EOT, whether he can reduce the period of time to which the contractor is already entitled to reflect omissions which have reduced the work content on the critical path. Clause 24.3(d), CIDB standard form of contract requires the S.O to consider the effects of omissions or decrease in the provisional quantities when deciding on any EOT. It does not, however, mention any entitlement to reduce the contract period or any extended period already granted. It was recommended that one study should be prepared about an architect’s/ engineer’s/ a quantity surveyor’s duty to deal with request for an EOT in giving a fair and reasonable EOT to the contactor. This research could indeed benefit the employer and contractor to gain more knowledge about an architect’s/ engineer’s duty in exercising his power to extend time in order to speed up the evaluation of the architect to establish contractor’s entitlement for EOT and to avoid disputes about contractor’s entitlement to EOT.

REFERENCES

Nor Ainah Abdullah (2001). Pengenalan Kepada Kontrak Binaan . Shah Alam: Unit Penerbitan Akademik Universiti Teknologi Mara.

Manson, K. (1968). Building Law For Students. London: Cassell Ltd.

Murdoch, J.; Hughes, W. (1992). Construction Contracts: Law and Management . London: E & FN Spon.

Haji Hashim Sikan (2001). Delay and Extension of Time In Construction Contract. rd

The Malaysian Surveyor . 3 Quarter: 34-40.

Lim, P.K. (1998). Evaluation of The Contractor’s Claim For Extension of Time. PAM Continuing Professional Development Course. 25 April 1998; 1-21.

Entrusty Group (2006). Is The Contractor Still Entitled To Extension of Time When th

There Is Concurrent Delay ?. Master Builders Journal . 4 Quarter: 101-103.

Kevin, R. (2005). Analysing Extension of Time: What The Courts Have To Say. st

Master Builders Journal. 1 Quarter: 74-75.

Duncan Wallace, I.N. (1995). Hudson’s Building and Engineering Contract . Volume 2. London: Sweet & Maxwell.

Vincent, P.S. (1990). The Malaysian Standard Form of Building Contract . Kuala Lumpur: Malayan Law Journal Sdn Bhd.

77 Vincent, P.S and Michael Furmston (1984). A Building Contract Casebook . Great Britain: BSP Professional Books.

Lim, C.F. (2004). The Malaysian PWD Form of Construction Contract . Petaling Jaya: Sweet & Maxwell Asia.

Brian, E. (1997). Liquidated Damages and Extensions of Time. UK: Blackwell Science Ltd.

Martin, R. (2005). Delays and Extension of Time. 52 Contractual Issues Relevant To Malaysia and Their Resolution. 27 January 2005. Kuala Lumpur: James R.

Knowles; Lecture 2, 13-16.

Harold, D.H. (1976). Building Contracts For Design and Construction. 2nd Edition. USA: John Wiley & Sons, Inc.

Lawrence, T. (2001). Effective Measures For Minimising Disagreements Concerning Extension of Time. Conference On Avoiding & Resolving Disputes In Construction Contracts. 17 – 18 January 2001. JW Marriott, Kuala Lumpur: The

Asia Business Forum.

Michael, C. (2001). Formulation, Preparation & Presentation of Claims. Conference On Avoiding & Resolving Disputes In Construction Contracts . 17 – 18 January

2001. JW Marriott, Kuala Lumpur: The Asia Business Forum.

Stuart, M. (2006). Record Keeping For Contemporaneous Delay Analysis: A Model For Effective Event Management. Construction Management and Economics. October – December 2006. 1007-1018.

Basar Juraimi (1997). Time Delays, Claims Procedures and Documentation. Continuing Professional Development Course On Contracts . 12 – 13 August

1997. Crystal Crown Hotel, Petaling Jaya.

78 Abdul Rahman; Berawi, M.A; Berawi, A.R.; Mohamed, Othman and Yahya (2006). Delay Mitigation in the Malaysian Construction Industry. Journal of Construction Engineering and Management . February 2006. 125-132.

David, M.C. (1984). Contractor’s Claims: An Architect’s Guide. London: The Architectural Press.

Sundra Rajoo (1999). The Malaysian Standard Form of Building Contract (The PAM nd

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Assessing

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of

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http://www.managingprocurement.commerce.nsw.gov.au. 1st April 2007.

Availbale: Last

accessed:

79

BIBLIOGRAPHY

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Dennis, F.T. (1984). Standard Contracts For Building. New York: Longman Inc.

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APPENDIX A

Questionnaire Survey Form

QUESTIONNAIRE FORM

RESEARCH SURVEY

CONTRACTOR’S APPLICATION FOR AN EXTENSION OF TIME

This questionnaire form consists of four sections: Section A: Generally Section B: Information Section C: Common Mistakes by the Contractor Section D: Ways to Reduce the Mistakes

Research Objectives: 1. To identify the information that needs to be considered in evaluating extension of time application. 2. To identify the common mistakes by the contractor in the application of extension of time. 3. To identify the ways to reduce the mistakes by the contractor in the application of extension of time.

PREPARED BY:

NORHANA BINTI DANIAL MASTER OF SCIENCE (CONSTRUCTION MANAGEMENT)

82 SECTION A: GENERALLY

1.0

RESPONDENT

NAME OF RESPONDENT : _________________________________________ POST

: _________________________________________

YEAR OF EXPEREINCE

: _________________________________________

NAME OF COMPANY

: _________________________________________

ADDRESS

: _________________________________________

SIGNATURE

: _________________________________________ COMPANY’S SEAL

2.0

BACKGROUND OF PROJECT

1. Standard form of contract used in the construction project that you have experienced (Please tick (√) ALL option applicable) PAM 98

PWD 203A

PWD 203

Others: ___________________

2. Type of project that you have experienced (Please tick ( √) ALL option applicable) Residential

High Storey Building

School

Mosque

Commercial Building

Factory

Office Building

Others: ___________________

83 3. Most of your projects usually need application for extension of time (Please tick ( √) one option applicable) Yes

No

4. In your opinion, please rate the significance reasons of delay which extension of time may be given (Please ( √) where applicable according to the appropriate scale)

No.

Reasons That Could Justify Extension of Time

1.

Force mejuere

2.


3.

Insurance contingencies (loss and damage to the works)

4.

Civil commotions, strikes, lockout

5.


6.

Late instructions, drawings or level

7.

Delay by nominated subcontractors or suppliers Delay by artist, tradesmen and others engaged by the employer Delay in the supply of materials and goods by the employer

8. 9. 10.


11.

Act of prevention or breach of contract by the employer

12.


13.


14.


Never

Seldom

Sometimes

Often

Very Often

(1)

(2)

(3)

(4)

(5)

84 SECTION B: INFORMATION

This section of the survey aims to identify the information that needs to be considered in evaluating extension of time application. Please tick (√) where applicable according to the appropriate scale.

5. Based on your experiences, what are the documents which can be used as the main source of information relating to different reason of delays that needs to be submitted by the contractor in the application for an extension of time, and needs to be considered by the evaluator in evaluating extension of time application?

No. 1.

Reasons Force Mejuere

Documents As The Main Source of Information In Evaluating EOT

Application letter As-planned schedule As-built schedule Weather record Drawings Site diaries Site memo Project daily report Variation order Architect’s/ S.O’s instructions Minutes of meeting Tests of materials/ operating test Correspondence Others:

Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

85

* Cont’d. Please tick (√) where applicable according to the appropriate scale

No.

Reasons

2.




3.

Insurance contingencies (loss and damage to the works occasioned by contingencies as stated in the contract)


Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

86


No. 4.

Reasons Civil commotion, strikes, lockout



5.



Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

87


No. 6.

Reasons Late instructions, drawings or level



7.

Delay by nominated subcontractor or suppliers


Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

88


No.

Reasons

8.

Delay by artists, tradesmen and others engaged by the employer



9.

Delay in the supply of materials and goods by the employer


Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

89

* Cont’d. Please tick (√) where applicable according to the t he appropriate scale

No.

Reasons

10.




11.

Act of prevention or breach of contract by the employer


Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

90


No.

Reasons

12.




13.



Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

91


No.

Reasons

14.




Not Considered

Less Considered


Highly Considered


(1)

(2)

(3)

(4)

(5)

92 SECTION C: COMMON MISTAKES BY THE CONTRACTOR

This section of the survey aims to identify the common mistakes by the contractor in the application of extension of time.

Please tick (√) where applicable according to the

appropriate scale.

6. Based on your experiences, what are the common mistakes by the contractor in the application of extension of time?

No.

Common Mistakes

1.

Late or lack of notice from the contractor

2.

Failure to recognise delay or failure to describe the cause of delay Failure to stated the exact contractual provision which is being relied upon Failure to stated the date when delay commenced and the period of delay Poor presentation of the application to show how the progress of the work has been delayed

3. 4. 5.

6.

Lack of proper baseline schedule

7.

Lack of proper site records and particulars relied upon Insufficient quality of information (Information is not kept and not updated)

8.

Never

Seldom

Sometimes

Often

Very Often

(1)

(2)

(3)

(4)

(5)

Others (please specify) ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

Time extension in construction project

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