I believe we can all agree that when things are going well early on in a project, no one really cares about delays, but what about when things start going wrong?
It has become apparent to me in the last few weeks that many Subcontractors are not aware of contractual recourse available to them when they fall behind on their programme due to no fault of their own.
Under the JBCC subcontract agreement, a Subcontractor (nominated or selected) is entitled to a revision of the date for interim completion (i.e. completion of the subcontract works) in the following defined circumstances:
- Without an adjustment to the subcontract value as a result of the following defined events, which include but are not limited to: adverse weather conditions, force majeure or an inability to obtain materials and goods, where the Subcontractor has taken reasonable steps to avoid or reduce the delay; or
- With an adjustment to subcontract value as a result of the following defined events, which includes but is not limited to: delayed access to the subcontract works, contractor’s instructions not occasioned by the subcontractor’s default, late or incorrect issue of subcontract construction information or execution of additional work for which the quantity of the subcontract bills of quantities is not sufficiently accurate; or
- Further circumstances for which a Subcontractor may be entitled to a revision of the date for interim completion with an adjustment to the subcontract value where delays to interim completion arise that are beyond the Subcontractor’s reasonable control that could not have reasonably been anticipated and provided for. It is important to note that under this category of claim, the Principal Agent shall adjust the subcontract value where the delay is due to the Contractor, the Employer or the Principal Agent and / or other agents.
It is of fundamental importance to do the following as a Subcontractor, if you suspect that you may have a valid claim for an extension of time to do the following:
- Take reasonable steps to avoid or reduce such delay (i.e. do not sit back and let a delay manifest). It is important to note that if a Subcontractor fails to take active steps to achieve the aforesaid, the Contractor may be entitled, upon determining the validity of the extension of time claim, to either dismiss a Subcontractor’s claim, alternatively, proceed to reduce the number of days awarded (if any).
- Within 15 working days of becoming aware or ought reasonably to have become aware of such delay including delays due to the Employer’s action or inaction, give notice to the Contractor of the intention to submit a claim for a revision to the date for interim completion, failing which the Subcontractor shall forfeit such claim.
The importance of the above two steps, especially the latter, cannot be emphasized enough – given that a failure to adhere to the 15 day time period, will result in a Subcontractor being automatically prevented from claiming given the time barring provisions unless, (i) the delay occurred before the Subcontractor commenced with its work, or (ii) the Contractor was granted a revision of the date for practical completion under the Principal Building Agreement, for the particular circumstances causing the delay.
The third step – within 20 working days of service of a notice of intention to claim, the Subcontractor shall deliver its fully substantiated claim for an extension of time with or without a revision of the subcontract value. A fully substantiated claim, must address:
- The relevant clause on which the Subcontractor relies in support of its claim.
- The cause and effect of the delay on the current date for interim completion, and where appropriate, illustrated by a change to the critical path on the most current subcontract programme.
- The extension period claimed in working days and the calculation thereof.
The Subcontractor is liable to the Contractor for damages in relation to penalties that a Contractor has to pay an Employer as a result of it failing to reach practical completion on time, if that delay is as a result of the Subcontractor. If, however, you have put in your claim for an extension of time correctly, you will not be liable to pay penalties, your programme will be extended and in certain circumstances you will be entitled to an adjustment to the subcontract value.
To sum up, if you suspect that you may have a claim under any of these circumstances, I would advise you to contact a specialist construction attorney to guide you through the steps in the process of lodging a claim for an extension of time They will be able to assist you in correctly drafting and submitting your notices as they are experts in dealing with these processes and protecting your best interests.