Standard form construction contracts always include a mechanism for assessing whether and how the time for completion of works should be extended. An extension of time must be granted where a certain type of delay occurs. Justin Mendelle and Uzma Raja explain how these are dealt with in different ways under the JCT and NEC suite of contracts.

Under the JCT suite, the contractor must serve notice of a delay to the employer when it becomes ‘reasonably apparent that the progress of the Works or any Section is being or is likely to be delayed…’. The contractor may then be able to claim an extension of time for two types of delay:

  • delays caused by the employer; and
  • delays that under the contract are not the contractor’s responsibility.

Under the JCT suite, these delays are referred to as Relevant Events.

The contractor must state in its notice to the employer what it considers to be a Relevant Event; this may include:

  • variations;
  • a delay in giving the contractor possession of the site;
  • an impediment caused by the employer;
  • work carried out by a statutory undertaker;
  • exceptionally adverse weather conditions;
  • civil commotion or terrorism;
  • strikes;
  • changes in statutory requirements; and
  • force majeure.

Assessing a claim for an extension of time can be complicated as there may be concurrent delays, not all of which are the contractor’s fault.

In Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999)[1], the court held that where there are two concurrent causes of delay and only one is a relevant event, then the contractor is entitled to an extension of time for that period of delay caused by the relevant event. It is irrelevant that had the relevant event not occurred, there would still have been a delay as a result of the non-relevant event and that an extension of time would not have been granted. This reasoning was followed in the case of Adyard Abu Dhabi v SD Marine Services (2011)[2] where the court held that the contractor is entitled to an extension of time even if there exists a concurrent cause of the same delay.

In Walter Lilly & Company Ltd v Mackay and another (2012)[3], the court reinforced the judgment in Adyard Abu Dhabi v SD Marine Services by holding that City Inn v Shepherd Construction (2010)[4] was to be confined to Scottish law. In City Inn, the court held that there should be an apportionment of an extension of time between the different causes where there were concurrent delays. But the court in Walter Lilly said that the fact that the employer’s representative had to award a ‘fair and reasonable’ extension did not imply that such an apportionment was required. All that was required for an extension of time for the whole period of delay was the Relevant Event(s) to have delayed the works.

Thus, if the reason for the delay does constitute a Relevant Event and completion is likely to be delayed beyond the relevant completion date as a result, the employer must grant an extension of time. The employer must notify the contractor of his decision within 12 weeks (or sooner if the completion date is less than 12 weeks away) and state the time extension given. The aim is to allow for the issuance of an extension of time that is considered to be fair and reasonable, with a decision reached as soon as is reasonably practicable.

Whereas the JCT suite deals with time delays and associated increased costs as separate issues (Relevant Events and Relevant Matters respectively), the NEC suite amalgamates the two under the heading of compensation events. This means that the contractor potentially becomes entitled to a change in prices, the completion date or key dates as a result of the same compensation event.

Compensation events can be notified by the contractor or the project manager. Those that are notifiable by the contractor must be notified to the project manager within eight weeks of the contractor becoming aware of them. Otherwise, the contractor loses its entitlement to an extension to time. Once notified, the project manager must assess whether a compensation event has arisen and notify the contractor of its decision.

Compensation events under the NEC suite are process driven and dealt with in ‘real time’ as much as possible. Whereas the JCT requires the contractor to deliver a master programme for the execution of works, the NEC suite demands that updated programmes are delivered on a regular basis. This effectively means that the NEC operates on an ‘early warning system’ as the parties are obliged to notify each other at the earliest indication of any matter which could affect the time for completion.

References

[1] Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32

[2] Adyard Abu Dhabi v SD Marine Services (2011) EWHC 848 (Comm)

[3] Walter Lilly & Company Ltd v Mackay and another (2012) EWHC 1773 (TCC)

[4] City Inn v Shepherd Construction (2010) ScotCS CSH 68