PT Wijaya Karya - DSU Perpanjangan Waktu (Extension of Time EoT)

1 !"je#ti$es

1.1 Primary objective of this course is to: a. Provide a clear understanding & practical working knowledge of the FI I! !onditions "f !ontract For #uilding and $ngineering %orks designed by the $mployer 1st $dition& 1''' (hereinafter referred to as FI I!)''* together with the likely +default+ legal remedies , position in the event of %ika+s failure to comply with their contractual obligations regarding the determination of e-tension of time (hereinafter referred to as $".*. b. $nable each of you to recogni/e and understand e-tension of time claim events and present , defend them properly. c. Instill the knowledge& confidence and understanding necessary to enforce and protect , defend %ika)s rights with regard to $".. 1.0 .he above objectives will be achieved by e-plaining the following: a. 1ow the submission of claims should be correctly perceived. b. .he purpose of $".. c. .he FI I! events that give rise to an $".. d. .he FI I! notification procedures and submission re2uirements. e. 3epercussions of failure to comply with the notification re2uirements. f. 4ethod of 2uantification of delay. g. .he purpose of the programme& its contractual standing & obligation to follow it. h. .he ownership of float. i. j. .he scope of a !ontractor)s obligation to mitigate delay. .he effect of concurrent delay.

k. .he $ngineer)s obligations regarding the award of an e-tension of time.

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% W&at 's T&e (orre#t )in*set +egar*ing (,aim Su"mission-

0.1 .he submission of claim details by a !ontractor are : a* Inevitable , e-pected. b* 6 contractual obligation. 1ence& it is wrong that they should be perceived as a bad thing. 0.0 %hy 6re !laims Inevitable7 a. !onstruction !ontracts are notorious for being poorly drafted documents (riddled with inconsistencies& which can only be partly e-cused by the huge volume of documentation that constitutes a construction contract and the fact that each constituent is often prepared in parallel by disparate consultants over an unrealistically short period*. b. .he numerous factors that can affect the progress of the !onstruction process& itself& make it susceptible to change. 8ubmission of claims is the vehicle for managing each change in circumstance. c. .he $mployer has elected to bear the risk of some events and the !ontract re2uires that the !ontractor submit a claim to redress the affects. .herefore& compliance with the !ontract actually re2uires early and continuous submission of claim details. (If the $mployer wanted to eliminate all risk then the project should have been tendered on a lump sum& design & build basis*. 0.9 :otwithstanding the above& early notification of claims actually benefits the $mployer as it facilitates the ma-imum opportunity to manage the change in circumstances (change being inevitable in every construction project* and take the appropriate action i.e. instruction of acceleration or value engineering measures. 0.; 8ubmission of claim details (at least morally* prevents the < we dont have any budget defence= commonly stated by $mployer)s towards the completion of projects. 0.> FI I!& unlike some other standard forms& re2uires that the initial claim notification is copied to the $mployer. .herefore e-cuses regarding being unaware of a problem& or there no longer being sufficient budget should be unacceptable.

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. W&at 's T&e Purpose !f /n Extension !f Time

9.1 6n e-tension of time has on,y 0 purposes. 1. eferral of levying of li2uidated damages. 0. Prevention of time becoming +at large+. 9.0 %hat is time at large7 .he effects of time being at large are twofold: a* ?i2uidated damages cannot be levied. b* .he !ontractor is only obliged to complete within a reasonable time. .he above is obviously against the $mployer)s best interests (no $mployer would want such circumstances to arise on their project*. 9.9 .here is a common misconception in the construction industry that once an $". has been determined& there will be an automati# entitlement to additional payment. FI I! is not drafted on this basis (entitlements to e-tension of time and additional payment are dealt with separately in FI I! (and for that matter almost all of the other standard forms of contract*. .herefore 0&ere a (ontra#tor is a0ar*e* an extension of time t&ere is no automati# rig&t to a**itiona, payment

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1 W&at E$ents 2i$e +ise To /n Extension of Time 2(( 1.' 0.1 ;.@ ;.10 ;.0; @.; B.; (a* B.; (b* B.; (c* B.; (d* B.; (f* B.; (c* B.> B.' E$ent ((ause) delayed drawings or instructions 3ight of access to the 8ite& Failure to give possession of site 8etting out Anforeseeable physical obstructions or conditions Fossils 6dditional tests (subject to the results identifying that the %orks are in accordance with the !ontract*. Cariation ($-tra or additional work* !auses of delay referred to within the !ontract !onditions $-ceptionally adverse climatic conditions Anforeseeable shortage in availability of Doods or personnel caused by epidemic or governmental actions elay& impediment or prevention by the $mployer. $-ceptionally adverse climatic conditions elays caused by 6uthorities !onse2uences of 8uspension of works (subject to the suspension not being attributable to the default of the !ontractor& climatic conditions& for the proper e-ecution of the %orks or for the safety of the %orks* 15.0 15.9 11.B 19.@ 1E.1 1@.; 1'.; .aking over of Parts of the %orks Interference with test on completion !ontractor to search 6djustment for change in legislation !ontractor entitlement to suspend %orks due to nonFpayment !onse2uences of $mployer)s risks !onse2uences of Force 4ajeure

;.1 .he table below identifies all of the events in FI I! that give rise to $"..

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1 % Pra#ti#a, Exp,anation !f T&e E$ents T&at )ost (ommon,y 2i$e +ise To E!T 1%1 Extra or /**itiona, Work .his heading is self e-planatory (typically variations* .he following would all also constitute additional work: a* 3epairs due to the $mployer)s 3isks (!lause 1@.9 refers*. b* Ancovering works and making openings& subject to compliance with !lause @.9. 1%% De,aye* Dra0ings to an $". by virtue of the late issuance of drawings or instructions by the $ngineer (!lauses 1.' (a* & B.; (b* refer*. ;.0.0.0 !lause 1.' re2uires the !ontractor to submit a notice to the $ngineer& with a copy to the $mployer& whenever any delay or disruption is ,ike,y (note prospective& not retrospective and only likely not definite* identifying the following ; things: a* etails of the drawing or instruction re2uired. b* %hy it is re2uired. c* %hen it is re2uired by. d* %hat delay and disruption will follow the $ngineer)s failure to provide the drawings or instruction by the re2uired time. ;.0.0.9 It is good practice for standard wording to be included within all 3FIs ensuring reference to !lause 1.' of the !ontract.

;.0.0.1 !ontractor)s compliance with !lause 1.' is a condition precedent to entitlement

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1%. Unforeseea",e (on*itions 3 !"stru#tions conditions on the basis of the +investigation+ obligations in !lause ;.15 regarding inspection of the site i.e. $ngineer)s commonly state the !ontractor should have undertaken his own site investigation (or& as an e-perienced !ontractor <should have e-pected the conditions= as has recently been the case at the #inh #ridge project*. ;.0.9.0 .he $ngineer)s rebuttal of entitlement on this basis should not be tolerated. ;.0.9.9 !lause ;.15 identifies that the !ontractor is responsible on,y for interpretation of t&e information pro$i*e* "y t&e Emp,oyer. :o reference is made to any obligation to verify this information (as is re2uired in other standard forms of contract e.g. the standard form used on public sector projects in 8ingapore (.he Public 8ector 8tandard !onditions "f !ontract For !onstruction %orks (055;* published by the #uilding & !onstruction 6uthority* e-pressly re2uires that the !ontractor should carry Gout his own investigation and / or search for existing and other additional geotechnical information relevant to the SiteG. ;.0.9.; .he !ontractor)s inspection obligation in !lause 11.1 e-tends only to extent which was practicable ( taking account of cost and time) ;.0.9.> .he FI I! Duidelines identify: a* In principle& it is envisaged that t&e Emp,oyer 0i,, un*ertake a *etai,e* site in$estigation and forward a,, of this information to each tenderer (as otherwise tenderers would have to transfer the cost of investigations for unsuccessful tenders to $mployers*. b* .enderers are given a limited period in which to prepare tenders and it is impracticable, and in many cases impossible, for them to carry out a full site investigation programme, particularly sub-surface exploration involving drilling and sub-seabed investigations for dredging in the time available. c* .he scope of works envisaged by !lause ;.15 i.e. the !ontractor)s obligations are he !ontractor should visit the Site and collect such further information as may be re"uired for the preparation of his tender. he !ontractor will be expected to have chec#ed upon the availability of the materials and the labour he needs to execute the $or#s. %e will also be expected to take samples of materials from borrow areas or make test pits &..he must chec# among other things the conditions for transportation to the site. .herefore& it is clear that there is no o",igation upon t&e (ontra#tor to

;.0.9.1 6ttempts are often made to reject !ontractor)s claims for unforeseeable

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un*ertake a**itiona, "ore&o,es. 6llocation of the risk for adverse physical obstructions or conditions to the $mployer is justified in .he FI I! Form "f !ontract& .he Fourth $dition "f .he 3ed #ook& on the following grounds: a. 's a large proportion of wor# in civil engineering construction is usually carried out underground, the ris# of encountering unforeseeable physical obstructions or physical conditions is "uite high. b. $hilst it may be possible to investigate and establish the properties of the subsoil at certain locations and extrapolate from that an overview of the whole site, the actual ground conditions for the whole of the works can only be established when the contractor excavates. c. !lause (.)* allocates the ris# to the +mployer as it is he who, ). *. -. Selects the site and the precise location of the wor#s. %as control over the design of the wor#s and the timing of commencement and construction. !an and has the opportunity to carry out whatever investigations he thin#s necessary to safeguard himself against the un#nown. .dentification of the ha/ards and ris#s inherent in the ground conditions of a particular site is to a large extent under the control of the employer. 0nce identified the ha/ards and ris#s, if unacceptable, can be mitigated or eliminated by the employer either directly through selection of an alternative site or indirectly by changing the design of the pro1ect. d. !ontractors tendering for a particular pro1ect have neither the time nor the certainty of benefit to initiate expensive sub-soil investigation for a pro1ect for which they are participating in a tendering exercise. e. he concept of clause (.)* is based on the criterion that should the unexpected happen, then the cost of, and the time re"uired in dealing with it would be paid to the contractor by the employer. 4any $mployer)s and $ngineer)s try and e-ploit the wording <foreseeable by an experienced contractor= in !lause ;.10 in defence of claims made on the above basis. %hilst of no contractual merit& my advice is to respond this defence by stating: 1. If the conditions could have been foreseen by an e-perienced contractor& then they should have been foreseen by the engineer.

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0. Diven 1& the engineer)s design should have catered for this risk eventuating. ;.0.9.E It is highlighted that the above is based on the standard FI I! form. 6 preF tender risk assessment should be undertaken to identify if the risk allocation has been amended in the particulari/ation of the !ontract. ;.0.9.@ .he risk allocation and !ontractor obligations described above are entirely different in esign & #uild !ontracts& and $P! .urnkey. For both !ontract the !ontractor bears all of the risk for errors in the information made available at .ender (e-cept where the $mployer has warranted information as being true*. 1%1 Suspension

8elf e-planatory 1%4 5ate Possession

8elf e-planatory

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1%6 Ex#eptiona,,y /*$erse (,imati# (on*itions

;.0.E.1 6n adverse climatic condition i.e. a typhoon& does not& in itse,f& necessarily give rise to an $".. +easona",y 7pre*i#ta",e7 a*$erse #,imati# #on*itions are *eeme* to "e in#,u*e* 0it&in t&e (ontra#tor7s programme 't is on,y after un*ertaking a #ross #omparison of t&e #on*itions experien#e* against &istori#a, meteoro,ogi#a, *ata for t&e ,o#ation of t&e proje#t for t&at parti#u,ar time of year t&at a #,imati# #on*ition #an "e *etermine* as "eing 7ex#eptiona,7 ;.0.E.0 It is good practice to record both the actual climatic conditions and any delays due to these conditions on a daily basis and to agree such records on a periodic basis (weekly or monthly* with the $ngineer. .his will be vital in establishing the validity of any claim for adverse climatic conditions. ;.0.E.9 !lose analysis of the wording can be important. It should be noted that <adverse= and <inclement= do not mean the same thing. $-ceptionally good weather can cause delays to a project i.e. by causing a drought. 8uch conditions have been held to constitute an <adverse= condition but not an <inclement= condition i.e. in#,ement &as a narro0er s#ope t&an a*$erse . It is for this reason that the wording of many of the standard forms was revised to include for <adverse= in lieu of <inclement= conditions. ;.0.E.; .he actual versus planned timing of the %orks is irrelevant in determining $".. 6ttempts are often made to rebut a !ontractor+s claim for e-ceptionally adverse climatic conditions on the grounds that had the %orks been carried out at the time originally indicated in the programe& the conditions would not have affected the progress or completion of the works i.e. if the !ontractor+s progress had been in accordance with the programme then foundation works would have avoided the wet season. ;.0.E.> .he above argument is not valid. ;.0.E.E 't &as "een &e,* t&at t&e effe#ts of ex#eptiona,,y a*$erse #,imati# #on*itions s&ou,* "e assesse* regar*ing t&e time at 0&i#& t&e 0orks affe#te* are exe#ute*8 rat&er t&an at t&e time in*i#ate* on t&e programme (if any) for t&eir exe#ution. ;.0.E.@ .he above principle is not limited to adverse climatic conditions and would be valid in defence of any rebuttal on such grounds by the $ngineer& the $ngineer has wrongly contended that there is no $". on the basis that if the works were e-ecuted at the time stated in the original programme& there would have been

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no delay due to newly introduced legislation which affected the foundation works. 1%9 De,ay 3 'mpe*iment :y T&e Emp,oyer

8elf e-planatory. .his !lause is for the $mployer)s benefit& as it prevents time becoming +at large+. 1%; Spe#ia, (ir#umstan#es

8elf e-planatory. 4 <otifi#ation = Su"mission +e>uirements

4 1 Pro#e*ures >.1.1 :otice is to be submitted <within *2 days of the delaying event first arising=. >.1.0 Interim particulars are to be submitted < within *2 days, or such other reasonable time as may be agreed by the +ngineer = (for ongoing events& for ease of administration this can be achieved on a global basis i.e. make a global submission every 0B days& this can be merely a list& subject to the best available particulars having been previously submitted*. >.1.9 Final particulars must be <within 0B days of the end of the effe#ts resu,ting from the event= (therefore final particulars are not re2uired within 0B days of the cause itself ending& but& rather& within 0B days of it)s effects ending*. >.1.; It is submitted that the above conditions must& at the very least& be mirrored in subcontract conditions.

4 % ?ormat for <otifi#ations >.0.1 FI I! !lause 1.9 identifies that all notices& unless otherwise specified& < shall be in writing=. >.0.0 / minute of meeting 0i,, not "e #onstrue* as #onstituting a notifi#ation of #,aim.

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4 . (ontent of <oti#e = Parti#u,ars >.9.1 Anlike other standard forms of !ontract& FI I! does not make e-press reference to information that must be included within a notice or claim particulars i.e. an obligation to cite the cause of the delay& the !ontract provision giving rise to $".& the probable e-tent of the delay& identification of programme activities or key dates that will likely be affected etc. >.9.0 >.9.9 .herefore an $mployer #annot rebut a claim on the basis of inade2uate notice by virtue of the absence of the above information from the claim notification. :otwithstanding the above. For clarity and evidential reasons (note the <best evidence= rule in litigation* it is generally considered to be in the !ontractor)s best interests to submit the best level of information that it can. 41 >.;.1 (omp,ian#e Wit& <otifi#ation Pro#e*ures .he !ontractor shall not be entitled to an $". in the event that the !ontractor has failed to comply with the submission re2uirements regarding claim notifications and interim particulars. >.;.0 !onse2uently %ika should make every effort to comply with the !ontract re2uirements.

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4 4 ?ai,ure To (omp,y Wit& T&e (ontra#t <otifi#ation = Su"mission

+e>uirements is ?ata, 441 (omp,ian#e 0it& t&e notifi#ation an* su"mission re>uirements is a #on*ition pre#e*ent to E!T in ?'D'( >.>.1.1 6 condition precedent is something which makes the rights or duties in a contract depend upon the happening of an event. .he right or duty does not arise until the condition is fulfilled. >.>.1.0 FI I! does not use the wording +condition precedent+ nor a derivative thereof. >.>.1.9 For a clause to constitute a condition precedent it is e-pected that it should state the precise time within which the notice is to be served and contain e-press language warning that unless the notice is served within the time prescribed the !ontractor will lose its rights under the clause. 44% Defau,t 5ega, +eme*y (T&e Pre$ention Prin#ip,e) :otwithstanding any dispute regarding conditions precedent to entitlement& by virtue of the +prevention principle+ (one cannot benefit from one)s own errors , wrong* it is submitted that it is a,0ays in the $mployer)s interests to award an e-tension of time in respect of any $mployer caused delay as entit,ement 0i,, ,ike,y exist $ia t&e go$erning ,a0 (:ote: .his rule must be observed by %ika staff in the administration of subcontracts*.

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6 (ontra#tua, 5anguage8 Term8 Definition E.1 6ppendi- 6 of the 8ociety of !onstruction ?aw (hereinafter referred to as 8!?* elay & isruption Protocol provides a glossary of the technical terminology commonly used in contractual correspondence regarding $". . E.0 Hou should endeavour to become familiar with this language and try to use these terms within outgoing %ika correspondence (for primacy and to add an air of professionalism to your letters* E.9 .he table below identifies some of the more commonly used terms: $mployer 3isk $vent !ontractor 3isk $vent !ulpable elay $-cusable elay :onFe-cusable Float Free float elay 6n event or cause of delay which is at the risk and responsibility of the $mployer. 6n event or cause of delay which is at the risk and responsibility of the !ontractor. elay due to the act , omission of the !ontractor. 6 delay that gives rise to an e-tension of time. 6 delay that does not give rise to an e-tension of time. .he time available for an activity in addition to its planned duration. .he amount of time that an activity can be delayed beyond its early start,finish dates 0it&out *e,aying t&e ear,y start or ear,y finis& of any imme*iate,y fo,,o0ing a#ti$ity .otal float .he amount of time that an activity may be delayed beyond its early start , early finish dates 0it&out *e,aying t&e #ontra#t #omp,etion *ate

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9 +e#or*s

@.1 .he purpose of records is to maintain an accurate and comprehensive record of project conditions and problems such that their impact may later be used to assist in: a* b* ispute avoidance. ispute settlement. arbitration& litigation etc. @.0 8ite management must ensure that there is written evidence of e$ery instruction from the $ngineer. FI I! !lause 9.9 identifies how verbal instructions should be managed. @.9 %ika+s site staff must be stringent in following the obligations in !lause 9.9. @.; In making any claim it is important to keep in mind the following 2uestion& how do you know that you have a claim if you cannot demonstrate entitlement7

c* Proof of liability and damages in formal dispute resolution proceedings i.e.

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; Programme

B.1 Prior to considering the programme it is important to note the !ontractor)s general obligations with respect to the completion of the %orks. a* It is the obligation of the !ontractor to proceed with the %orks so as to complete on or before the !ontract completion date. b* 1owever& t&e met&o*8 spee* an* timing of t&e a#ti$ities forming t&e (ontra#t s#ope are genera,,y ,eft to t&e (ontra#tor@s *is#retion8 su"je#t to any stipu,ate* a##eptan#e of met&o* an* 3 or programme B.0 .he interim determination of $". by the $ngineer should be a precursor to the submission of any revised programme re2uired pursuant to FI I! !lause B.9. B.9 6 properly detailed programme is vital (as this is the key document used to demonstrate entitlement to $".*.

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A W&o !0ns T&e ?,oat 'n T&e Programme-

'.1 6ll prudent contractors allow some form of contingency within their programme to cater for !ontractor risk events and !ontractor errors. '.0 .here is no guaranteed rule regarding the ownership of float. .here are 0 schools of thought. '.0.1 Float belongs to the !ontractor. his ris# items which cannot be accurately predetermined in terms of time involvement, and also to provide time for correcting mista#es, then the float belongs to him and the employer or architect / engineer cannot ob1ect if later programming by the contractor absorbs it. '.0.0 Float belongs to the project (and hence is shared between both parties* and is used up on a first come first served basis. '.0.0.1 !lose analysis of the wording of the !ontract is important as& by inference& this can identify who will own the float i.e. if the wording only provides for an $". in the event that the delay actually affects the !ontract completion date then this infers that the Project owns the float. 3.*.).) 's a contractor will normally include float in his programme to accommodate

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1B (on#urrent De,ay 15.1 !oncurrent delay is the occurrence of two or more delay events at the same time, one an +mployer 4is# +vent, the other a !ontractor 4is# +vent and the effects of which are felt at the same time. 15.0 $ngineer)s commonly try to rebut !ontractor)s claims by virtue of some coF e-istent default on the part of the !ontractor i.e. a concurrent delay. 6n e-ample would be to state that there is no ground for an e-tension of time by virtue of late possession of the site as consent had not been given to subcontract works and hence the !ontractor could not have progressed with the %orks. 15.9 .he above practice is wrong. In concurrent delay a !ontractor should a,0ays be awarded an e-tension of time& irrespective of his own default& for the $mployer risk event. .he dominant cause approach to assessment should only be applied when determining entitlement to additional payment. 15.; 1owever& the law is more stringent for additional payment. .he !ontractor must separately identify and substantiate the costs flowing from the compensable event from those which are at his own risk in order to be entitled to payment for this delaying event. .f the !ontractor incurs additional costs that are caused by both +mployer 5elay and !ontractor 5elay, then the !ontractor should only recover compensation if it is able to separate the additional costs caused by the +mployer 5elay from those caused by the !ontractor 5elay.=

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11. S#ope !f / (ontra#tor7s !",igation To )itigate De,ay 11.1 It is common for standard forms of contract to be particulari/ed (amended by the $mployer prior to tender* such that the !ontractor is obliged to constantly use his best endeavours to mitigate delay i.e. avoid& overcome or reduce delay. 11.0 In such circumstances the $ngineer might issue an instruction insisting that the !ontractor reprogramme the %orks to comply with this contractual obligation. 11.9 %hen complying with such an instruction the !ontractor+s obligation does not e-tend to either increasing resources or working outside of planned hours.

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1% Timing !f Engineer@s /ssessment 10.1 .he award of an e-tension of time is a matter of entitlement rather than need i.e. the +wait and see+ attitude commonly accepted in the construction industry is wrong and should not be tolerated. .he $ngineer should make an initial determination of e-tension of time immediately upon receipt of sufficient particulars (not final particulars* from the !ontractor. 10.0 FI I! !lause 1.9 identifies that any consent, approval, certificate or determination shall not be unreasonably withheld or delayed. 10.9 In view of the foregoing it is evident that the $ngineer should determine an $". as soon as it is apparent that by virtue of an $mployer elay $vent it will not be possible to achieve the .ime for !ompletion of the %orks. .his rationale is supported by reference to the FI I! guidelines which state: <.t is important that the events which may give rise to an extension of time are dealt with as and when they occur=.

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1. )anner !f Engineer@s /ssessment 19.1 .he $ngineer must consult with the !ontractor prior to making any determination of entitlement to $".. 19.1.1 It is often the case that an $ngineer)s immediate response to a !ontractor)s notification is to issue a letter stating that there is no entitlement. .his practice is wrong. .he $ngineer)s determination of an e-tension of time& if any& shall only be made after due consultation with the .Contractor. .his point is emphasi/ed in the Duide .o .he Ase "f FI I! !onditions "f !ontract For %orks of !ivil $ngineering. 19.1.0 Diven 19.1.1& it is e-pected that there will be a flow of information between the !ontractor and $ngineer. .his point is also emphasi/ed in the FI I! guidelines which make e-press reference to the necessity of good communication and understanding between the +mployer, the +ngineer and the !ontractor (how often does this happen7*. .his may seem obvious but it is evident from the recent final account negotiations for the #inh #ridge project that& for one reason or another& two years after the original submission of claim particulars the $ngineer still doesn)t understand the !ontractor)s claims. For this reason& the benefit of holding <without prejudice= monthly review meetings to progress resolution of contentious issues cannot be overstated. 19.1.9 %ith respect to the e-tent of the $ngineer)s obligation to consult with the $mployer and !ontractor prior to determining an e-tension of time& the FI I! Duidelines identify the following: .n a number of !lauses in the !onditions the +ngineer is re"uired to underta#e due consultation with the +mployer and the !ontractor before ma#ing his determination. he extent of such consultation will be at the discretion of the +ngineer. .herefore& it is clear that the $ngineer must consult with the !ontractor& but it is the $ngineer)s decision when sufficient consultation has place. 19.0 FI I! !lause 9.1 identifies that the $ngineer act for the $mployer. accordance with the !ontract& taking due regards of all circumstances. 19.0.1 1owever FI I! !lause 9.>& the $ngineer shall make fair determination in

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