How to Approach Delay Analysis in Construction Contract | EOT Claim

Extension of time is the method/ chance of avoid from the liquidity damages to contractor in the construction project, also we can submit claim for the extension of time. In construction project, there are lot of types claims are available, such as claim for variation, interim claim, etc.

In this article you will learn how to approach delay analysis in construction contract in extension of claim. Also you can get knowledge about EOT claims in construction contract.

So be sure to bookmark this article to check out future posts to learn valuable information on the other sources as well. Also you can share our valuable article with other professionals. By the end of the this articles, you will become familiar with extension of time. In the future I have to planned to publish article related with contractual letter writing.

Read more: Procedure of Contractual Claims in Construction Contract...

Generally, the construction industry is very complicated and with high unknown risk. Therefore, parties who am involved in the construction project have to make sure that the construction progresses are in a correct track if not it can lead to delay the construction projects.

There are many factors that can delay the construction project such as; Government regulations, Design errors or omissions, Planning errors, Accidents, Poorly written contracts, Execution errors, Variations in quantities, Delay caused by owner, etc. Subsequently, based on the delay contractor can entitled to claim the delay event from the employer/ client by authenticating the delay, or else contractor will face liquidity damages.

how to approach delay analysis in construction contract

There are the major types of Construction Claims in the industry such as; Contract Ambiguity Claims, Delay Claims, Acceleration Claims, Changes Claims, Extra-Work Claims, Different Site Conditions Claims, Damage Claims and Non-Performance Claims. According to the FIDIC 1999, Sub-clause 20.1, Contractor can submit his claim within 28 days after the incident occurs or else engineer can cancel the claim (Practical Law 2014).

Extension of Time (EOT) Claim

It is a very essential and commonly occurred in construction projects, particularly when a legal standard form of contract is applied. These will provide clauses for an extension of time because of allowable delay events in construction projects and it is practiced by contractors broadly to prevent from upcoming liquidated damages.

Read more: Most Common Types of Construction | Lum Sum Contract...

Standard contracts are a legal agreement which containing a lawful object entered into voluntarily by the parties, established with firm start and completion date (Anon 2012). On the off chance that the contractors couldn't complete on time due to his own particular problems, which will be deliberated as contractor's delay. At the point pre agreed liquidated damage amount should be compensated for delay of every day by the contractor to the client/ employer. Then again, sometimes contractor cannot be accountable when works get delayed because of employers or unforeseen natural disasters occurs on the site. If something occurs besides contractor's mistake, ultimately without no doubt the responsibility goes under client/ employer liability. This kind of situation the contractor can entitle to go for EOT Claim.

World widely FIDIC form contract is well recognized and it is mostly used form of contract in the construction sector. Below mentioned clauses are from some edition related to delay and related cost.

1. In FIDIC 1987 Edition, Clauses 44 & 53
2. In FIDIC 1999 Edition Sub-Clauses 8.4 & 20.1

Extension of Time Calculation & Preparation for a Surface Water Disposal Project

Scenario

Project detail's

Project Name; Surface Water Disposal Project
Client Name; Ministry of Irrigation & Water Resources Management Sri Lanka
Consultant Name; M/s. Central Engineering Consultancy Bureau
Contractor Name; M/s. Great Building Contractors Ltd.
Project Duration; Ten (10) Months
Project Start date; 03 March 2014
Project Completion Date; 12 January 2015
Contract Amount; 168,000,000.00 Rs (168 Million)
Contract Location; Lunavil East Chavakachcheri, Jaffna, Sri Lanka.

Breakdown of Contract Price

Breakdown of Preliminaries

Delay event

In this Surface Water Disposal Project, according to baseline program, construction work for pump house for concrete foundation activity is planned to complete within two week's time period. It is planned to start on filth week of the construction protect and planned to finish in the end of sixth, because of the "unusual climate condition as heavy wind and rain" activity is delayed by further three weeks and it is started on eighth week.
Read more: Common Factors for Construction Dispute...

Delay Notice

(This is first contractual letter)

Read more: Notice of Claims

------------------------------------------------------------------------------------------------------------
M/s. Great Building Contractors Ltd,
No. 213, Madduvil East, Chavakachcheri,
Jaffna, Sri Lanka.
Tel; +94 12 34567890
Fax; +94 12 34567890
07/ May/ 2014

M/s. Central Engineering Consultancy Bureau,
No. 123, Lunavil Road, Chavakachcheri,
Jaffna, Sri Lanka.
Tel; +94 12 34567890
Fax; +94 12 34567890

Attention;- Mr. R. Kaviraj (The Engineer)

Dear Sir,

Project: Surface Water Disposal Project at Lunavil East, Chavakachcheri, Jaffna.

Subject: Delay Event No. 01 - Exceptional weather condition - Notice of delay event No. 01

In evaluating the steps forward to date for the referenced project, we have noted that we have been kept from performing our work as planned cause of unusual climate as heavy rain and wind. This is to inform you that these activities were unanticipated and outside our ability to control.

According to FIDIC 1987 instruction under "Exceptionally adverse climate conditions (clause 44.1)", any expenses related with these activities will not be included to our account. Further we request a 3 weeks of extension of time according to affected program and also we request payment for any speeding up, extended overhead or other impact costs that result.

We request your written instruction on how we are to carry on regarding this subject.

Thank you,

Yours faithfully,
For Great Building Contractors Ltd
.........................................
Senior Quantity Surveyor
Copies 01) The Employee
02) The Engineer's Representative
------------------------------------------------------------------------------------------------------------

Delay Analysis

Normally delay analysis is done by several methods, according to this Surface Water Disposal Project, it is carried out by baseline program and affected program in the construction contract.

Because of heavy wind, rain, construction of concrete foundation activity is affected for Pomp House building in the Surface Water Disposal Project, according to the baseline program and affected program, concrete foundation activity is planned to complete within two weeks time period. It is planned to start on fifth week of the construction project and planned to finish in the end of sixth, because of the "unusual climate condition as heavy wind and rain" activity is delayed by further three weeks and it is started on eighth week and other chain of activities also affected.

Read more: FIDIC Forms of Contract and Their Application...

Mitigation action

Concrete foundation activity is affected for Pump House building gets delayed due to heavy wind and rain, also the site is become flood, even though we minimized the effect water coming to the excavation area especially for the foundation by doing dewatering function and providing plastic sheets and other protection covers to cover the particular area. As a result, it helps to protect the excavated foundation area from collapse, hut it was a large storm rainfall and heavy force wind, was not able to manage and control the flooding over the next days.

If the Engineer instructed to finish the works in planned time, below points are carried out to mitigate the problem and help to finish works in planned time.

• Increase in number of workers
• Increase in machinery and plans
• Increase working hours

Contemporary Records

As a contemporary records the contractor has given data focused about the project method statement, planned program (baseline program), built a program (affected program), rainfall records (daily records and data from February 2014 to May 2014 from Sri Lankan Meteorological Department and Evidence Photographs), Inspection records, Day work records, Site Diary, and Minutes of Meeting.

Read more: Various Types of Contracts | Type of Civil Engineering Contract...

EOT claim

(Contractor's Profit - 6%, Contractor's Overhead - 9%)
Duration of Contract - 315 days/ 45 weeks
Extended day - 21 days/ 3 weeks

Extended Site Overhead Cost

Time related preliminaries con including (Overheads & Profits) = Rs. 7,245,000.00

Time related preliminaries cost excluding (Overheads & Profits) = Rs. 7,245,000.00 x 100
⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻
[Overheads & Profits- 15%] 115

= Rs. 6,300,000.00

Therefore, Cost per day = Rs. 6,300,000.00
⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻
315

= RS. 20,000.00

Cost for extended 21 days = RS. 20,000.00 x 21

Amount of extended Site Overhead = Rs. 420,000.00 //

Extended Head Office Charges (Hudson Formula)

Initial Contract Price is = Rs. 168,000,000.00

Overhead percentage is = 9/ 100 = 0.09

Duration of contract = 315 days

Then Amount of Day Rate is = (168,000,000.00 x 0.09)/ 315 = Rs. 48,000.00

Extended days = 21

Therefore the amount of extended head office overhead = 48,000.00 x 21
= Rs. 1,008,000.00

Final Claim

Total EOT claim = Extended Site Overhead + Extended head office overhead
= Rs. 420,000.00 + 1,008,000.00
= Rs. 1,428,000.00

Final Claim Letter (This is final contractual letter for the extension of time claim)

------------------------------------------------------------------------------------------------------------
M/s. Great Building Contractors Ltd,
No. 213, Madduvil East, Chavakachcheri,
Jaffna, Sri Lanka.
Tel; +94 12 34567890
Fax; +94 12 34567890
07/ May/ 2014

M/s. Central Engineering Consultancy Bureau,
No. 123, Lunavil Road, Chavakachcheri,
Jaffna, Sri Lanka.
Tel; +94 12 34567890
Fax; +94 12 34567890

Attention;- Mr. R. Kaviraj (The Engineer)

Dear Sir,

Project: Surface Water Disposal Project at Lunavil East, Chavakachcheri, Jaffna.

Subject: Delay Event No. 01 - Application for an Interim Extension of Time for Completion of works of Surface Water Disposal Project.

This is to inform you that delay occurred due to unusual climate condition as heavy wind and rain, for concrete foundation activity require more 21 days. As a result, we are getting delay to complete the project on time. Therefore we kindly convey you our intention to claim EOT. As mentioned below we claim Rs.1,428,000.00 as well as extra time to avoid liquidated damage.

Thank you,

Yours faithfully,
For Great Building Contractors Ltd
.........................................
Senior Quantity Surveyor
Copies 01) The Employee
02) The Engineer's Representative
------------------------------------------------------------------------------------------------------------

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Friday, October 25, 2019