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When does a delay event start?

16 replies [Last post]
Mon, 2009-06-08 14:18
Mike Testro
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Hi All Expert Planners

I am involved in a situation where there is a potentially overwhelming event that will adumbrate all the others.

It involves extra work to the contract - no arguement there - it is apparent that the contract works could not be commissioned without these extra works - they were just forgotten in the tender documents

The issue is when does the event begin?

My thoughts are that the event starts when the employer instructs investigation and design submissions - it was design and build and there were five design revisions before an instruction to commence was issued.

An alternative view is that the event starts when the instruction to commence was issued.

It is a bespoke form of contract that is as wide as a barn door for different rulings.

I would just like to know - am I on the right track?

Best regards

Mike Testro
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Replies

Fri, 2009-06-12 06:21
#1
Samer Zawaydeh
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Dear Mike,

Usually the event starts as soon as one party notifies the other in written. The effect on the other hand is noticed as ken stated, maybe on day 20.

It seems that the correct answer to this question lies within the conditions of contract that you have.

With kind regards,

Samer
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Thu, 2009-06-11 03:43
#2
Andrew Flowerdew
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Hi Mike,

The world makes more sense now!

Contractor Design and build - design and build are part of the contract therefore design and build are both parts of the event that can be taken into consideration.

Currently working on a similar dispute with both design and construction delays. The effect of design delays on the construction is enormous and all and everything is being taken into account.
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Thu, 2009-06-11 03:52
#3
Mike Testro
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Hi Andrew

Thanks for your assistance - I feel more comfortable now.

Best regards

Mike Testro
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Thu, 2009-06-11 03:18
#4
Andrew Flowerdew
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Ken,

I’m guessing there’s a disagreement over when notice of the Eot entitlement should have been given. Probably a time bar clause in the contract.

Maybe something like - It is a condition precedent that the contactor shall give notice within XXX days of the start of the event or the contractor shall not be entitled to an EoT....

But it’s only a guess.
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Thu, 2009-06-11 02:42
#5
Ken Sadler
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Hi Mike,

Regardless of the D&B status, its a variation as you say that will attract EOT. You dont need advice relating to D&B valuation rules, right?

So, when the event starts depends on what you are considering, though in any case it starts when the change in requirements becomes apparent.

For the purposes of EOT, I dont see it matters when the event starts, so long as you can establish the effect. That is to say, the instruction to design the variation is not necessarily the date on which the event started to impact the progress. You could receive an instruction on 1st day and commence design on the 3rd day. The variation, as designed, might not affect the progress until the 20th day as work was proceeding normally while the design was carried out in parallel. The effect of the event will only be felt from day 20 so technically that would be the day the event started.

However, from the cost recovery perspective, design and other costs will start to be incurred from the day of the instructon, if not significantly before (if meetings were required to establish what solution was required). The event as far as loss/expense is concerned is therefore earlier that that for EOT.

It would be tempting to try and establish that both EOT and L&E events started on the same day to keep it neat although you appreciate the two are not connected.

Does this help???

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Wed, 2009-06-10 15:02
#6
Andrew Flowerdew
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Mike,

I’ll keep it simple - design development instruction as it is design & build. The contractor can hardly say he didn’t know it was going to affect and how it would affect the works until he started to build it if he’s also designing it.

Employer design, contractor build - instruction to do work usually.
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Wed, 2009-06-10 14:47
#7
Mike Testro
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Hi Ken - Hi Andrew - Hi all of you.

Thank you all for your time and advice.

Because of the confidentiality issues it is impossible for me to set out the true conditions in detail in this forum.

Maybe I listed too much information at the beginning and I should have kept it to basic principles.

Will you let me try once again setting aside the original thread and all the other responses.

Does an event start when an instruction is given to design a new and unforeseen element of work.

The new element is essential for the completion and comissioning of the contract work.

It is agreed between the parties that the new element of work IS an extra to the contract and the time for execution of the new work is agreed. (No arguement here it IS an extra and attracts EOT)

Now does the event start from when the instruction is given to start the design development or from when the instruction is given to start the work.

Answers on a postcard please.

Best regards

Mike Testro
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Wed, 2009-06-10 12:03
#8
Ken Sadler
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Hi Mike

I cannot believe it but I agree with Samer (but only just!)

The event surely starts when the contractor deviates from his planned intent.

So if the client instructs preparation of design options, and the contractor does this whilst still progressing as normal, then there is no impact on progress. If o te other hand it is necessary to have stopped work to undertake the design, then the event has already begun to impact.

Cheers

Ken
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Wed, 2009-06-10 07:10
#9
Andrew Flowerdew
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Mike,

Thanks, but still not convinced the problem is not down to the contractor:

You said:

"The contract included connections between the old inflow unit and the old outfow unit" - Contractor responsibility

"Very soon after the commencement of works it was discovered by the Employer that the intended gravity connection to the outflow unit had to be replaced by a pumped system" - again, if this new configuration is due to the new design, contractor responsibility. Doesn’t matter that the Employer realised this first, if the work is needed to be done to make the contractors proposed design work, then it’s in the contractors camp.

"The design - by the contractor’s consultant - went through 5 evolutions before the instruction to commence refurbishment was issued." - could complicate the issue depending what the changes were but the starting point, contractors consultant, contractors design therefore in the contractors camp.

If the Employer instigated design changes were for new things, additional things, then it would probably be down to the Employer, but if they amount to no more than things to make the contractors design work properly, were necessary changes to make it work, then most probably the responsibility for the work stays in the contractors camp.
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Wed, 2009-06-10 04:20
#10
Mike Testro
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Hi Andrew

I am sorry that I cannot be expilicit because this is an ongoing situation and I am concerned about confidentiality.

However the Design and Build contract was a new installation in a process cycle that replaced an old unit in the middle of the system with a new one.

The contract included connections between the the old inflow unit and the old outfow unit.

Very soon after the commencement of works it was discovered by the Employer that the intended gravity connection to the outflow unit had to be replaced by a pumped system

This was instructed as a variation and costs were agreed and a period of time for the works.

Other delays occurred on the new construction works which are now the subject of an EOT claim.

These mostly involve instructed extra works but some may be Contractor’s design development - the concurrency issue will be a bit complex but manageable.

The installation of the pumped connection finished later than the delayed work on the new unit and the work started about halfway through the new units construction period.

The design development for the pumped connection started as soon as the order was given - before any other delay events started.

The design - by the contractor’s consulant - went through 5 evolutions before the the instruction to commence refurbishment was issued.

Please take it as a given that the design evolutions were down to the Client.

My opinion is that the pumped connection extra work event starts at the original instruction to commence design development. and ended at the end of the refurbishment works.

If I am right then this one event adumbrates all the others as far as EOT is concerned.

There will be concurrency issues to address as far as recovery of costs is concerned.

If however the event starts after the design is approved and work on the pumped connection commences then I have a problem with the Balfour v Chestermount - dot on - ruling if some of the other delays are found to be Contractor Culpable.

Best regards

Mike Testro
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Tue, 2009-06-09 18:44
#11
Andrew Flowerdew
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Mike,

Although it’s a bespoke form of contract which may alter things, the starting position is (UK):

"it was design and build" - therefore if both are completely done by the contractor the contractor has included EVERYTHING required to build the works, whether mentioned in the contract documents or not, (Is it a lump sum or re-measureable contract, re-measurable may complicate things a bit?).

"It involves extra work to the contract" - more work than anticipated, yes, but may be it is, may be isn’t extra work to the contract.

"It is apparent that the contract works could not be commissioned without these extra works - they were just forgotten in the tender documents" - if at tender stage it was reasonably obvious that the work was needed, the starting point is that the contractor included for it.

From the starting point, i.e 100% in the contractors court, (especially if lump sum), you turn to the contract to see how that changes things.:

Lump sum / re-measurable
Timing of design changes - pre / post contract formation
Variation clauses - is there one or not?
Scope of an allowed variation - does new work fall within the variation clause or was it necessary whatever the case? (sounds from your comment it may be the latter and therefore may not be a variation even if it is "extra" work).
If it is a proper variation, then we get back to your question!!!!

Sorry to complicate things but you said:

Design and build and;
Apparent that the contract works could not be commissioned without these extra works - they were just forgotten in the tender documents;

which points in the direction of the work not being claimable.
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Tue, 2009-06-09 09:24
#12
Samer Zawaydeh
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Dear Mike,

Usually, the contractor has to give notice promptly of any delaying event. It will start when it activities are affected by it.

Question; it is stated that the Contract is a design-build, and the issue is with commissioning. It seems that the Contractor has the responsibility in this case. Can the Contractor claim for time if they are responsible for the design as well.

With kind regards,

Samer
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Tue, 2009-06-09 07:14
#13
Gary Whitehead
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Hi Mike,

I’m no expert as you’re aware, but my 2p worth:

Oviously a bespoke contract so different rules may apply, but I would have thought some form of delay event notification would have been submitted by contractor when it first became apparant that commissioning could not be completed without this extra work. -I assume this wasn’t the case?

Presumably if a revised schedule had been issued at that point, the design activities would have appeared on the critical path along with construction & commissioning, so it would seem appropriate to begin the delay event with start of design, as you suggest

Cheers,

G
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Tue, 2009-06-09 05:50
#14
Samer Zawaydeh
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Dear Mike,

After reading the Contractor documents, to determine the variation procedure, we need to check the approved Program of Works.

For sake of arguement, lets say that the client forgot to design the Ground Floor of the building. Its a special design with double volumne and the other floors are repetitive, hence it was forgotten. You have a contract for the construction of the building. You submitted the program of works and it was approved.

At excavation, client find out that the Ground Floor is missing. Hence, issues a variation order with drawings and BOQ. It depends on the time of issuing the variation. Did it really delay the works? The building had a GF from the beginning. But, if the drawings were not ready at the time the Contractor wanted to prepare the shop drawing for the fabricatio of the steel for the GF, then you have a delaying event.

Also, if the Quantities increased in a significant amount and the Program of works was designed depending on the BOQ amounts, then the duration of the project need to be revised or resources increased.

Several questions need to be answered before the title question can be answered. We start with the approved contract documents, move towards the approved schedule of works, then start studying and analyzing the delaying event. From Material Submittals, Shop Drawings, Procurement, Construction, and testing and commissioning.

I hope that I can be of more assistance.

With kind regards,

Samer
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Tue, 2009-06-09 01:36
#15
Sajid Balma
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Hi Mike
Alteough, you asked for opinions from the "EXPERT PLANNERS" that effectively filtered me out. But, nothing wrong in throwing some novice thoughts on the subject.

It is apparent that the design that was established to commence the works was not sufficient & eventually the works as a whole was not fit for the purpose it was intended for.

So, for me the old contract is in-effective to deliver what it was asked to & a brand new contract has to be defined with added scope of works from the day the design inception was requested first.

Regards
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Mon, 2009-06-08 18:02
#16
Safak Vural
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Dear Mike,

I faced a ******** worse situation in my latest project (doing 2 years of HUGE work without a contract ammendment pretending there are). But i am not in a position to answer. I just want to be notified from the answer (this is the reason of post really).

Personally (from CONTRACTOR’s side) there should be no delay if the extra work is logically related to the defined scope and DO NOT enter in any construction schedule revisions.

Regards,

Safak
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