Introduction

A construction project is basically a temporary endeavor with specified time

& cost, initiated to create a unique product, service or result, tend to be limited
edition. The success or failure of a construction project depends largely on the
construction schedule and whether that schedule is met. However, delays in the
construction schedule negatively impact both owners and contractors.

Delays cause owners to absorb additional costs by not being able to use or
occupy their property for its intended purpose. Delays negatively impact
construction contractors by driving up the costs of construction resulting from having
to pay for a workforce and/or equipment that sits idly by as the delay continues.

Definition of Extension of Time (EOT)

EOT is defined as the additional time given by the Superintending Officer (S.O.)
to the contractor to complete the works beyond the original date of completion
with reasons allowed as in the contract

• Obligation of contractor to complete the work within stipulated time

• If the works are not completed within time:

i. S.O will issue CNC to the contractor
ii. The contractor must continue the works until completion

ii. The contractor will be charged LAD during the period of delay

• If no completion date is specified

i. The work must be completed within reasonable time

ii. Employer cannot impose LAD

• Most building contract contain express provisions for the contract period to
be extended under certain circumstances.

• Such provisions benefit the contractor – he will not be liable to pay damages
for the delay during the validity extended time
Public Work Department (P.W.D.) Form 203A (Rev. 1/2010)

As per clause 39.1, it is stated that the Contractor shall complete the whole f the
Works on or before the “Date for Completion” as stated in the Appendix or such
extended time as may be allowed under clause 43 hereof.

i. The contractor is required to complete the work within the original contract
period or within the extended time granted to him

ii. Contracts permits the period to be extended beyond the original date on
acceptable grounds

As per clause 43.1, it is stated that upon it becoming reasonably apparent that the
progress of the works is delayed, the Contractor shall forthwith give written notice to
the S.O. as the causes of delay and relevant information with supporting documents
enabling the said officer to form an opinion as to the clause and calculation of the
length of delay. If in the opinion of S.O the completion of the Works is likely to be
delayed or has been delayed beyond the Date for Completion stated in Appendix 1
or beyond any extended Date for completion previously fixed under this Clause due
to any or more of the following events

iii. Clause 43.1 gives the power to the S.O to grant the contract period

iv. S.O will substitute any reasonable completion date for the fixed date for
completion stated in Appendix

v. EOT can be granted only if the fault is not due to the contractor

vi. Contractor is liable to pay damages for delay which is due to his fault

vii. An E.O.T can be only validly granted if the procedures which the contract
lays down are strictly followed.
PAM Contract 2006

As per clause 23.1, “If the Contractor is of the opinion that the completion of the
Works is or will be delayed beyond the Completion Date by any of the Relevant
events stated in Clause 23.8, he may apply for an extension of time.”

i. The contractor shall give early written notice to the Architect regarding
his intention to claim for such EOT together with the estimated period of
EOT required. The notice shall be given within 28 days from the date of
AI or the commencement of the Relevant Events, whichever is earlier.

ii. As per clause 23.8, these are the Relevant Events referred to in clause
23.0, for example are Force Majeure, exceptionally inclement weather,
civil commotion, strike or lockout affecting any of the trades employed
upon the works and delay in site possession by the Employer.
Grounds of EOT

i. Defaults of contractor

ii. Defaults of employer/ S.O.

iii. Defaults of neither party

iv. Events which are not within the employer’s and contractor’s control

v. Entitled for EOT

vi. No claim for loss and expenses.

Events granting EOT

Delays by
NSC

S.O Force
instructions Majeure

Delay in Exceptionally
securing inclement
material weather

EOT

Delay in
executing Suspension
works by of work
others

Directions
Delay in regarding
giving site disputes
possession with
Contractor neigbours
not receiving
instructions
on time
Eligibility to claim EOT

They are provisions stating the conditions for the eligibility of the contractor to claim
for EOT- refer clause 43.1:

a) Delay not due to the fault of the contractor or his sub-contractors

b) The contractor has taken steps to avoid delay

c) Instructions given are not to remedy the contractor’s default

Procedures of Applying EOT

The contractor should initiate the EOT process by giving written notice to the S.O.

• Contractor notice includes :

a) Causes of delay

b) Information to support claims

c) Estimate of length of delay

• Notice in writing but no specified format

• Notice must be given when it is apparent that the progress is delayed

• Must apply before DOC

Ascertaining EOT

• Responsibilities of S.O. includes:

a) Decides on the validity of claim – claim must be based on one or
more events as per clause 43 (a)-(j)

b) Occurrence of the event is likely to delay completion.

c) Requests further information if necessary

d) Estimate length of delay

e) Issue Certificate of Delay and EOT

• The S.O is responsible to ascertain the application submitted by the

contractor and does it asap

• The disruption must give effect to the actual of the work

• Normally refer to the contractor’s work programme to assess the amount of

delay

Certificate of Delay and EOT

i. S.O to issue certificate if he decides to grant the EOT

ii. Certificate state the length of time extension granted and the new
completion date for the contract
Introduction

The obligation of contractor is to complete the works within a stipulated time

or within extended time granted. Otherwise he will be issued with Certificate of Non-
Completion

Contractor has to compensate the employer for the loss incurred due to the
delay in completion.

Definition of Non-Completion

Non- Completion is defined as the situation where the works do not reach practical
completion within the contractual completion date.

• The work is not completed by the completion date – it is called non-

completion and this leads to the delay in completion of the work.

• CCMGD

Contract period Delay

DLP

Consequences of delay

• Extension of time – if the delay is not due to the contractors faults

• Determination – if delay is serious and caused by contractor

• Liquidated and ascertained damages – if delay is caused by contractor

Certificate of Non- Completion

• The S.O. is to issue a Certificate of Non-Completion to certify that the

contractor has failed to complete the job on time.

• No exact date of issuance - normally issued on the completion date

• The Certificate of Non-Completion is a condition precedent to deduction for

L.A.D.

Effect Of The Issuance Of Certificate Of Non-Completion

• The employer is entitled to be compensated for all losses suffered by him for
the delay beyond the contractual completion date.

• The amount of L.A.D. to be paid to the employer is calculated based on the

rate stated in the Appendix.

• Damages cover any period between the completion date and the date of
C.P.C.

Liquidated Ascertained Damages

Contracts generally include a clause making provision for the contractor to pay
liquidated damages (LD, sometimes referred to as liquidated and ascertained
damages - LADs) to the client if the contract is breached. In building contracts,
liquidated damages usually relate to the contractor failing to achieve practical
completion (i.e. completing the works so they can handover the site to the client) by
the completion date set out in the contract. They are often calculated on a daily or
weekly rate.

The contractor is liable in LAD in the event of late completion. The types of amount
for LAD are as follows:

• A pre-determined amount
• An agreed amount
• A fixed amount
Liquidated damages are not penalties, they are pre-determined damages set at the
time that a contract is entered into, based on a calculation of the actual loss the
client is likely to incur if the contractor fails to meet the completion date. They might
include; rent on temporary accommodation, removal costs, extra running costs, and
so on. They are generally set as a fixed daily or weekly sum, although there may be
a more complicated formulae where the works are phased, where may be partial
possession and so on. It is important that the method of calculation is precisely and
formally documented.

Public Work Department (P.W.D.) Form 203A (Rev. 1/2010)us

As per Clause 40.0 under Damages for Non-Completion:

• Clause 40.1 has stated that If the Contractor fails to complete the Works by
the Date for Completion or within any extended time granted pursuant to
clause 43. the S.O. shall issue a Certificate of Non· Completion to the
Contractor. Prior to the issuance of the Certificate of Non-Completion, the
S.O. shall issue a notice to the Contractor informing the Contractor the
intention of the Government to impose Liquidated and Ascertained Damages
to the Contractor if the Contractor fails to complete the Works by the Date for
Completion or within any extended time granted.

• Apart from that, as per Clause 40.2, it is stated that “Upon the issuance of
the Certificate of Non-Completion, the Government shall be entitled to
recover from the Contractor Liquidated and Ascertained Damages calculated
at the rate stated in Appendix from the period of the issuance of the
Certificate of Non-Completion to the date of issuance of Certificate of
Practical Completion or the date of termination of this Contract. The S.O.
may deduct such damages from any money due or to become due to the
Contractor failing which such damages shall be recovered from the
Performance Bond or as a debt due from the Contractor. The S.O. shall
inform the Contractor in writing of such deduction.”
PAM Contract 2006

As per Clause 22.1, it is stated that “If the contractor fails to complete the works by
the Completion Date, and the Architect has the opinion that the same ought
reasonably so to have been completed, the Architect shall issue a Certificate of
Non-Completion. The Contractor shall pay or allow to the Employer a sum
calculated at the rate stated in the Appendix as Liquidated Damages for the period
from the Completion Date to the date of Practical Completion. The employer may
recover such sum from any monies due or to become due to the Contractor under
Contract or the Employer may recover such sum from the Performance Bond. The
Employer shall inform the Contractor in writing of such deduction or such debt due
from the Contractor.”

• This means that the Architect could issue a Certificate of Non-Completion if

found that the Contractor himself has breached the given period of project
completion.

• This debt, or sum of money to be paid to the Employer, can however be

deducted from the Performance Bond of the said project, but a written form
of deduction statement shall be presented by the Employer to the
Contractor.
EXTENSION OF
TIME (E.O.T.)
DAMAGES FOR
NON-
COMPLETION
(L.A.D)