Extension of Time Request
In this issue
What is Time Extension?
Extension of Time (EOT) is a request to extend the construction time, to change the completion date specified in the contract which has Liquidated Damages (LD) imposed.
The LD may be applied when passing the final completion date, practical completion date, handover date, building permit or milestone dates written into the contract.
Why the Extension of Time Request is needed?
For a contractor, the EOT request is to prevent an LD fine that would normally be a maximum of 10% of the project value.
For the employer or owner, the EOT request or EOT grant will allow the employer more time to make design revisions, corrections or additions. Timely extension granted by the employer would help the contractor to manage their resource better and ultimately reduce the contractor’s cost and claim damages against the employer in the future.
Four types of construction delay
Construction project delays affect two main factors: money and/or time, and they can be divided into four types: non-critical, critical, excusable or compensable.
1. Non-Critical Delays are those that do not affect the overall project completion date. There is no need to request an extension of rime and no party has to pay extra money for the delay. For example, the employer instructs the contractor to change the bathroom tiles during the first month of building, when works are not on the critical path.
2. Critical and Non-Excusable Delays are those that affect the overall project completion date. For example, when a contractor’s insufficient manpower, poor management, or a subcontractor’s late delivery of materials, result in a project being pushed off schedule. These are delays that are on the critical path. Thus, “No Extension of Time (EOT) and Liquidated Damages (LD) is applied".
3. Critical, Excusable and Compensable Delays affect the overall project completion date and are where the controlling party, such as the employer, the employer's representative or the employer’s other contractors, should grant an Extension of Time and allow additional costs to the contractor. For example, if the employer issues change orders, design or material revisions, late work inspection, late site handover or late design approval in which the delayed works are on the critical path. Therefore, EOT and prolongation costs* should be granted.
4. Critical, Excusable and Non-Compensable Delays** are those that affect the project completion date, are excusable but do not entitle to contractor to additional costs. This kind of delay is caused by external factors, force majeures or exceptional factors which are specified in the contract. This delay type allows for a time extension but not additional monies. Thus, an EOT should be granted without prolongation cost.
* Prolongation costs are the expenses incurred during an extended period of works such as preliminary cost, office rental cost and management team wages.
** In the contract, these four types of delay should be clearly specified as a reference for when it is necessary to assess the delay.
Four things you should do for a successful EOT request
The very first thing is to have is a “positive mindset” to deal with the problems, challenges and obstacles causing the project delay. Even when a project completes on time, there are many delay events that occur during the construction period, but thanks to acceleration actions the completion date is not extended.
However, there were many projects that cannot be accelerated, causing construction to be delayed from the initial schedule. Therefore, we must have a positive mindset, preparing systems, procedures and the teams to expect an EOT claim.
For example, for a construction project worth 1,000 million Baht, liquidated damages of 10% (equal to 100 million Baht) is something that no one wants if they are not the cause of the delay.
In my experience of EOT requests, many project records and an extensive retrospective document searches are required in order to prove each delay event. The party with a well-prepared document management system and clear document evidence in writing baseline schedule submissions, delay notifications with causation, effects and actual installation dates, will be able to answer all questions clearly, quickly and accurately. That party has already won more than half the victory.
The four most important things when requesting an Extension of Time, which should be prepared at the beginning of all types of construction project, are:
1. The critical path baseline schedule
The baseline schedule specifies the work details, scope of works or activities, timing, sequencing, and persons responsible for each activity. A good baseline schedule must have the activities or scope of all works related to the parties involved in the project and identify the critical path. The critical path schedule helps all parties to be aware that their works are on critical path and if delayed will affect the project completion date. The baseline schedule along with the critical path has great benefits when proving project delays or time extensions.
A good master project schedule should include activities or the scope of work for all parties involved and should show the critical path to help remind each party whose works are on that critical path. If the critical activities or works on the critical path are delayed, it will affect the completion date of the project.
The critical path baseline schedule is very helpful in assessing the project delay and a time extension during construction period. Importantly, once the baseline schedule is established, it must be updated weekly throughout the construction period in order to monitor the delaying critical works or activities and then mitigate the project delay.
2. Resource planning
The good baseline schedule should be well planned with productivity rates of major activities. It should also know the number of working teams and the number of workers assigned within the planned duration in the baseline schedule.
Therefore, the submitted baseline schedule should always be submitted with the manpower plan, project management plan and equipment plan, along with the working constraints and limitations, such as:
- Restrictions on site entrance
- Limited working hours: some areas will not allow working on holidays or overtime.
- Productivity rates: for example, MEP installation on one floor takes two weeks.
- Number of installation teams: for example, according to the plan, there will be four teams, allowing for installation of four floors at the same time.
- Critical and essential work sequences that cannot be shifted or reversed.
3. Delay notice
- A delay is like a fire, if it is recognised early it can be managed, mitigated and eliminated on time.
- A good delay notice system itself is like a safety alarm system.
- Typically, the delay notice is specified in the contract to submit the delay notice within the specified period of five days to 28 days.
- In order that the notifications can be done quickly and in the same direction, the delay notice form should be accepted by all parties from the beginning of the construction work. To avoid project delay, it needs to prepared for handling alongside the delay. You should be aware of it early and discuss solutions before it is out of control.
- The Employer must be willing to listen and consider the notification as a good thing. If there is any notification, smile and consult the contractor for a solution. In a case where it cannot be solved, for example you need to revise the design that’s already approved or installed, the employer will have to expedite the work or accept the delay and allow for an extension of time.
4. Electronic document management systems (EDMS)
“95% of project memory is in project records”
Construction documents are very essential for proving the critical delays to the project completion date, whose causes the project delays and the responsible party(ies).
The most common cause of delay is late design revisions. This may not have a negative impact at all if they are made during the first month. Costs may be higher for the additional work or lower for reduced works.
On the other hand, if such revisions take place much later, after the construction project has started, materials are ordered and installed, design revisions are likely to have not only a time impact but additional repair and material costs as well.
Example documents needed for proving delay events are:
Delayed design issuance with instructions from an authorized person, generally called “Site Instruction”
Material Purchase Order if materials were ordered
Material Delivery Form when materials were delivered to site
Work Acceptance Form if the works were installed
Request for Design Information if design information or questions were replied late
Photos if the installation is in progress
Daily reports for proving the in-progress installation works were disrupted or facing obstacles
A construction project may have thousands of pages of documentation submitted over the course of the build including replies transmitted among all parties. If lucky, the documents may be found in physical storage. Otherwise, the documents can be easily lost or untraceable or kept in the wrong place.
When proving project delays or requesting a time extension, it often involves searching for historic documents kept in storage. We recommend that project documents are well kept in the same way you would keep cash or cheques, knowing that they may be needed in case of events such as a request for an Extension of Time and additional costs.
A good document management system, like a customized cloud-based system, with easy access from anywhere anytime is therefore best.
Questions to ask prior to an EOT request
The contractor’s project manager should answer the following three questions prior to request for an EOT.
Is that delay excusable? Is the delay caused by the employer, their representative(s), other direct contractors or external factors? If the delay was caused by the contractor, do not request an EOT or send any delay notice to damage the good relationship with the employer.
Is the delay critical or impacting the project completion date? If the delay does not affect the critical path there is no need to request an EOT.
In some cases, a contract document may require the submission of a delay notice within five days. If many instructions or design revisions are given, and you cannot determine the time impact yet, a delay notice should be submitted first.
Is the delay notice submitted in according to the contract requirement? If the delay notice is not submitted in this way, other means of notifications such as email, meeting minutes or monthly reports may be used. It is best to follow the contract specification strictly.
If the answer to all three questions is ‘yes’, an EOT request is likely to succeed.
This month’s Q&A ConTime tips
Q: If a baseline schedule has been revised several times and cannot be used to monitor the project is it useless?
A: The baseline schedule, or planning schedule, should not be considered a "static" document, it will be updated to reflect the changing conditions of the project.
The baseline schedule is an initial planning document that is based on the conditions at the beginning of construction. After that, it must be updated with the actual start date and finish date with the percentage completion every week. In addition, durations and sequences of remaining works can also be updated according to the present situation.
For example, materials selected may be unique and therefore take a long time to procure. The contractor should adjust and extend the durations required for procurement of materials, accordingly, including an explanation for the reasons for the schedule update.
Since construction is dynamic, it’s common for many incidents or problems to occur. Therefore, a good schedule should also be dynamic and adjusted to suit the changing conditions throughout the project period.
We suggest that good construction management update the scheduling documents and adjust them for the remaining works on a weekly basis.
About the author
Dr. Apirath Prateapusanond or Dr. Mew, is a consultant for Extension of Time Requests for construction projects, a forensic delay analyst, and Managing Director of Quantum PPP Consulting Co., Ltd. She has more than 20 years’ experience in analysing construction delays and determining Extension of Time claims for over 300 projects worldwide.
They include projects like Big Dig Project in Boston, USA, Hong Kong Subway project, WAGP gas pipeline construction project in Africa, Klong Dan wastewater treatment plant project, Suvarnabhumi airport phase 1 construction project, and the Mahanakorn building construction project in Thailand.
Dr. Mew holds a Ph.D. in Civil and Environmental Engineering (Construction Management) from Virginia Polytechnic Institute; a Masters in Business Administration from the University of Maryland; a Masters of Operations Research from The George Washington University; and a Bachelors in Industrial Management from Thammasat Business School in Thailand.
To prevent and resolve disputes from the beginning of a construction project, Dr. Mew has introduced a modern construction document management system to the industry in Thailand. The system should be used by all parties in the construction project, including owners, consultants, design consultants, contractors and manufacturers, in order to reduce costs, increase accuracy, avoid unnecessary delays and to maintain a good relationship amongst all parties in the construction project. This is called the QConZol document management service (the ConZol system provided by Quantum PPP).
|Quantum PPP Consulting Limited||2010 – present|
|PPP Consultants, Bangkok, Thailand||2005 – 2010|
|Hill International, Inc., Washington, DC||1998 - 2005|
|S.P. Electric Industry Co., Ltd.,||1992 – 1993|