BUIDLING PERMIT DELAY

Rami,



I agree with Mike, best thread this year so far.

Hi Rami



Thank you for starting off one of the most interesting threads this year- this is what PP is all about.



Best regards



Mike Testro

Mike,



Wouldn’t be the first time on here would it. Maybe we should end posts with "donations welcome", my bank account details are.........!!!!!!!!!



Regards,



Andy

Hi Andrew



Or maybe we will just end up doing the entire delay analysis for the project - free of charge.



Best regards



Scrooge Testro

Hilal,



I agree the permit would often be on the critical path, but this is one of the interesting parts of the puzzle - as partial permission was given to continue, was the delayed part on the critical path or not?



If we keep plugging away at this someone may tell us the whole story!

Andrew;



Yes you’re right.



But I guess, a permit delay is always on the critical path (longest or sub-critical), unless some long lead item in delivery is dominating the longest critical path.



By the Way, Rami;



Does the contract we are talking about entails one completion date or different milestoens related some how to the partial permits.



BEst Regards;

H. Itani

Hilal,



In the scenario you state you are correct.



But isn’t Rami’s whole point that the contractor DIDN’T finish on time? From Rami’s post:



2) To start the super structure on day 100 they needed the BP on day 100

3) They actually needed the BP on day 150 since there was delays incurred on the project

4) The BP was issued on day 150 not causing the contractor any delay in concreting





Point 3. I assume those delays referred to were contractor delays

Point 4. I assume the concreting was to the podium only and some areas could not be progressed due to it being only partial permission. Hence some areas were delayed, but was this critical delay?



And we still aren’t 100% in the picture as to why the permit was for partial permission only or why it wasn’t issued until day 150..

Hi all;



From what is stated and particularly what Rami stated :" The application for the BP was made several times and was rejected several times. the predominant issue for rejection is due to an ongoing conflict between electricity power authority and the master developer on the development over electrical load allocation to plots."



Lets take this but-for scenario.



A. If the Contractor finished on time i.e. on day 100.

B. The permit is delayed till days 150.

C. Is’t the Contractor entitled for compensable EOT of 50 days?

D. Since the Contractor is already delayed, then a fair EOT would be non-compensable EOT of 50 days.

This is my opinion, if the permit is employer’s responsibility.



Best Regards;

H. Itani

Rami,



On what you have said, you are probably right, but if there is no entitlement under the contract for an eot, you don’t have to get into other agruments, the claim is dead in the water!



But from what has been said earlier and your last post, although the contractor could continue on the podiums on day 150, he could not continue on other parts of the work. So the effect of not being allowed to continue on the other parts may be claimable as an eot, (may not!), if any delay to those parts caused CRITICAL delay.



So there’s still the question of ascertaining the true cause of the delay and entitlement to claim an eot under the contract.



The lack of a permit to allow certain parts to continue is why the contractor could not progress, (except for podiums), so it’s going to be the reason behind the lack of the permit that is the cause of the delay and determine entitlement. ie, was it an employer/neutral/contractor event and what the contract says.



From what you have said today, it sounds as if it is most likely an employer event, (something to do with the design approval process), but as the history behind the lack of a permit hasn’t been explored, that’s only a guess at this stage.



If it is an employer event then the wording of clause 44 from obliges the Engineer to determine an eot that is "fairly" due. In assessing this you can take into account the contractors progress, (the API method used by the contractor I doubt does from what you say), but any analysis also needs to assess whether those parts of the work that could not continue did cause critical delay.



Just because the contractor could continue elsewhere, (podiums), doesn’t mean that those areas that were stopped and delayed, didn’t cause critical delay.



But, and it seems unlikely from todays posts, if the employer was not the cause of the late issue of the permit we are are back to all the previous arguments.



On what day was the permit in question granted?

Rami,



So what was the reason for the permit not being issued to allow concreting to continue, (except for the podiums)?



The process is not quite the same in the UK but similar.



We’ll get to the bottom of this at some point!



Then we can consider concurrency and contractors progress, etc should there be an eot due.

Rami,



Things are a bit clearer, so would it be correct to say the true reason for the delay to the permit being issued is the agreement of the design, (client design I assume).

Hital,

Same in this country, so was the permit to start work on site? - the question arises as you said the permit was for the superstructure so it appears the substructure had started. ie, this is not a permit to start work on site.

Hi Andrew;



In my country, the Employer is the one who aquires the building permit to enable the contractor to commence with the building works, i.e. not a single pin can be placed prior the issuance of building permit.



The traffic permits, working outside working hours permit, working during holidays permit, and the like .... are the responsiblity of the contractor.



Hope that the above clarifiies the issue as deemed necessary.



Best regards;

H. Itani

Hilal,



What is the actual purpose of the permit? Is it a planning permit or some inspection done by the authority during the project to allow work to proceed? ie. some form of building control permit?

Mike,



But we are trying to decide if an eot is due,

Hi Andrew



The main purpose of concurrency is to allocate prolongation costs.



These occur between all parties involved - not just Client & Contractor but Contractor and Sub-Contractor.



Delay concurrency needs to be established even if no grounds for EOT are available under the Main Contract.



Best regards



Mike Testro

Hi Andrew,



Just for clarification;



You said it yourself; the Employer is required to obtain zoning and permission/planning. Therefore, and even though this issue is not under his control, i.e. under a 3rd party control, however, it remains the Employer’s liability under the FIDIC 87 contract to obtain such permissions/permits. Therefore, "Special circumstances" does not apply in this case. In my humble opinion, a special circumstance is an event that arouse suddenly, i.e. such as death of a political figure, and is not covered under the Employer’s Risks provisions.



Cl. 42 and 44.1 (d) impediment by the Employer is his "failure" to obtain the permit on time and consequently to grant the contractor the possession/access to proceed with the Works.



Nevertheless, I refer to my previous answer before regarding the issue of milestones or one completion date for either LAD’s or concurrency.



Best Regards;

H. Itani

Forgot to say, there is very little guidance on what "special circumstances" means. The most helpful, but far from definitive definition I have seen is along the lines that it must be something that would not ordinarily be in the parties contemplation, (Keating on Building Contracts).



Whether an issuing authority not performing on time comes under this is open to debate. Do issuing authorities generally perform on time or is it a generally known problem that they may be late?



It should also be remembered that if this is a neutral event, the eot is for the contractors benefit to protect him against LD’s rather than the employers benefit - extending time for an employers own delay.



Subtle but potentially important difference as any ambiguity may be construed against the contractor as it is the contractor relying on the clause for benefit.

All,



Doesn’t matter if the delay is concurrent or sequential, at least to start with. Unless the contract gives entitlement to an EoT for one of the causes of delay, there is no eot due. There could be 10 causes of delay, all concurrent, but concurrency does not enter the equation until it is established that one of those causes of delay actually gives rise to an eot. Then you consider the effect of concurrency.



If as appears to be the case, (as no one has said differently), the delayed permit is purely down to the issuing authority, then we have a "neutral" or "no fault" event causing delay. ie, neither employer or contractor are at fault.



A similar type of event is weather - there is entitlement to an EoT for exceptionally adverse weather in FIDIC because the contract says there is, without it being stated in the contract the risk would remain with the contractor and no eot would be due.



There may be other causes of delay, they may be concurrent, but that is all irrelevant unless there is at least one cause present that gives rise to an eot. Concurrency doesn not give rise to an entitlement to an eot, the contract does.



So back to what the contract says with regard to entitlement to an eot for the actions of the issuing authority, (assuming they are the only ones at fault).



Samer,



Are these "permits" merely inspections giving approval to proceed with further work?



From memory the employer is required to obtain planning and similar permissions/permits and any other permits to allow work to start on site but I can’t remember the employer being responsible for "approval to continue work" type permits. As these are dependent on the workmanship and progress of the contractor, I’d be very surprised if the contract laid this at the employers feet.



Will be back in the office again soon and can actually look at the 87 version.



Think we need a better description of what these "permits" are exactly for and why they were actually delayed.

Hi All



So it comes back round to concurrency.



Best regards



Mike Testro.

Dear Andrew,



The permit could be for casting the concrete for the superstructure. Usually, a member of the authority should come and inspect the works before casting is completed. Maybe this is the case here.



The Contractor is already at site and they are working to completet the works. As the originator said, they did not suffer actual delay. It is behind schedule, and the contractor was probably late at something else and trying to have an offensive strategy as his defense.



Best Regards,



Samer

Hilal,



Precisely, the Employer has an obligation to provide the permit but an entitlement under the contract to an EoT arises due to "any delay, impediment, or prevention by the EMPLOYER", (I asume there is the "special circumstances" clause also)



But the wording "any delay, impediment, or prevention by the EMPLOYER", does NOT cover any delay, impediment, or prevention by a THIRD PARTY, it has to be an act of the employer, (or his agents, representitives, etc).



Hence the ambiguity between the clauses and therefore the blurred area as to whether entitlement exists for an EoT.



Also the Contractor is obliged to comply with the requirenments of State bodies, law’s, etc, etc which is a relevant clause.





Access and permits - 2 clauses possibly for the contractor’s argument





EoT and compliance with law, regulations, etc clauses - 2 clauses suggesting the risk of time if the delay is the Authorities is with the contractor and therefore no eot.





Interesting!





I know which way I think it should go but arguable either way.



Third party acts - ie those which the Employer or contractor has no control over: examples could be:



A member of the public parks their car in front of the site entrance blocking it.

The site neighbour is fed up with the noise and gets an injunction to restrain certain site operations.

Protesters turn up and set up camp outside the site and cause mayhem.



All third party acts and all the contractors risk under the normal standard terms and conditions, (don’t think the standard 87 version specifically had force majeure in it except for acts of nature but could be wrong).



One last thing - does the lack of a permit actually deny access to the site, (or part of), or merely prevent the contractor from commencing work?



Bear in mind the above arguments are only relevant if it is the Permit Issuing Authority at fault here and not the Employer, ie, we have a scenario where neither the contractor or employer have actually done anything wrong.

Hi All;



I would refer the matter to Cl. 42 of the FIDIC 87 contract.



In fact cl. 42.1 (d) states that :



"Save insofar as the Contract may prescribe: such access as, in accordance with the Contract, is to be provided by the Employer as may be required to enable the Contractor to commence and proceed with the execution of the Works in accordance with the programme referred to in Clause 14....



The Employer will, from time to time as the Works proceed, give to the Contractor possession of such further portions of the Site as may be required to enable the Contractor to proceed with the execution of the Works with due dispatch in accordance with such programme or proposals, as the case may be."



Consequently, and since the time of issuing the permit is indicated in the consented programme, the Employer has to provide the acess and/or possession to commence the works by the date specified in the consented schedule.



Under the General conditions of the FIDIC 87, the Contractor’s obligations to acquire the permit are limited to traffic permits and such day-to-day stuff.



The delay in providing the permit resides unde rthe Employer’s responsbiltiy (unless other particualr conditions state otherwise). Conseuently, the failure in providing a permit, then the Contractor may be entitled to an extension of time under clause 44.1 (Extension of time for completion) under item (d) "any delay, impediment, or prevention by the Employer".



Not to forget cl.42.2 whihc states:



"If the Contractor suffers delay and/or incurs costs from failure on the part of the Employer to give possession in accordance with the terms of Sub-Clause 42.1, the Engineer shall, after due consultation with the Employer and the Contractor, determine:

(a) any extension of time to which the Contractor is entitled under Clause 44, and

(b) the amount of such costs, which shall be added to the Contract Price,

and shall notify the Contractor accordingly, with a copy to the Employer. "



Now, if there are different Completion milestones in the Contract, then the Employer may be entitled to LAD’s for the substrcutre, while the COntractor is entitled for compensable EOT for the Superstructure.



If this is not the case, i.e. one completion date, then as Mike said, concurrency analyis has to be conducted.



I hope this has helped.



Best Regards;

H. Itani

Rami,



I’m interested in whether it was actually the Employer that delayed the contractor or the Issuing Authority, ie an independent third party.



If it was the Issuing Authority then the contract is not clear as to whether there is any entitlement to an extension of time and or money.



Hence my last post



The Employer may be responsible for obtaining the permits but if the Employer applied on time, followed all the correct procedures, etc, etc - did nothing to cause to delay and it was purely the Issuing Authority that was late in issuing the permits, then the question of entitlement is a bit blurred. ie, it was not an EMPLOYER ACT but a THIRD PARTY ACT that caused the late issue of the permits.



Need to know the true CAUSE and what the contract says.

Dear Rami,



You will need to concentrate on the Contract and what the Contractor has presented to you.



1. Kindly review the Contractor’s analysis of the 73 days and ask for more information / or submit your analysis by presenting the ACTUAL activities that were going at site and prove that the delay in the BP did ACTUALLY delay his works.



2. The Program of Works that was later approved at the start of the works was not representing the actual works. This issue you need to work on and modify by issuing the Contractor a letter to modify his program of works to represent the actual progress at site.



3. Check the Contract about the BP issuance. Try to find any general information the Contractor must have know about the status of issuance of the BP in two or more stages and not 1 stage.



4. If the Contractor is LATE in the substructure. Why don’t you start issuing him official letters clearly showing all areas that are behind schedule.



5. Try to understand why the Contractor is claiming for the 73 days. The really reason behind the claim. Money, wasting your time to distract you, or need for more time in the future.



Best Regards,



Samer

Also out of interest as I only have the 1992 version on my laptop to look at right now, under what clause wording does entitlement to an EoT for this arise?



I ask as the 1992 version, (which I think is the same more or less to the 87 version), is not clear to whether there is entitlement or not.

All



From post below:



"This might have affected their strategy in prioritizing the completion of deliverables (shop drawings, subcontracting, coordination, etc.)."



It might, and it might not - and it’s not enough just to say it might have. The contractor should attempt to demonstrate or provide sufficient information to allow the Engineer to determine that it DID affect these things and hence cause delay, (bearing in mind that the standard of proof is on the balance of probabilities and not beyond reasonable doubt).

Rami,



" 2)The LOA lists the BP (as one all inclusive permit) as a one of the conditions to commence the works."



This is an initial point of the EOT claim since issuance was delayed by the Authorities, and being issued partially rather than as one as you mentioned. This might have affected their strategy in prioritizing the completion of deliverables (shop drawings, subcontracting, coordination, etc.).



" 3)The BL schedule is not part of the contract documents but the practice here to have it approved by the engineer."



BL schedule forms part of the Contract, Cl. 5.2, Cl. 6.1, Cl. 14 of FIDIC ’87.



Best regards,

R. Catalan

Yep -Mike nailed it in post # 2.



If BD was granted on same day as the final (contractor’s responsibility) predecessor was completed, then EOT but no cost



If BD was granted 1 or more days earlier, no EOT, no cost.

Hi Rami



Go back to my first response and apply the rules of concurrency.



It would appear that they would support your position.



Best regards



Mike Testro

Hi everyone,

In addition to all the excellent presentration, please allow me to add the following:



Rami (on the client side) gave us many clues;

We have a program, and the Building permit is shown on the program. Actually, the Contractor was not delayed. But he is claiming that he is delayed.



Plan of Action:

Make sure that all your actual activities are reported and updated in the program. It seems that the relationship between the Building Activity and the subsequent activities is not correct. You can submit your counter claim by saying that the Program of Works does represent the actual progress at site and ask to update the program as per actual progress which must indicate that the Contractor was ACTUALLY not delayed.



With kind regards,



Samer

Indeed. As always: Know Thy Contract.



Something else I’d like to know before passing judgement would be:



Was the contractor aware in advance that the Superstructure permit would be late, and rescheduled his preceding works accordingly?

OR

Can it be demonstrated that the contractors preceding works would have delayed start on the superstructure even if the permit had been available as per orginal schedule?



I’m assuming it’s the latter, but worth checking.





PS: Being classified as an expert amongst such planning luminaries has made my day! -Or were you refering to another Gary, who I should now apologise to for usurping?

True, but has anyone said we’re dealing with FIDIC?



Possibly are, possibly an amended FIDIC, possibly not FIDIC at all, we await to find out.

If I may add that delays caused by Authorities is on the Employer as per Clause 8.5 of FIDIC 99.



Thanks,

R. Catalan

Bottom line, the contractor may have a case for something, he may not!!!!



Ok, not the most helpful of answers but without knowing what the EoT clauses say about entitlement and the sequence of events having regard to the contractors actual progress, that’s about as definitive as you can get.



For example, normally as stated in the post below, a delay by the issuing authority would be a valid cause for an EoT - but not in all contracts. As the delay was caused by a third party, (ie not the Employer himself), there may entitlement to an EoT but not money, but there may be to both depending on what the contract says!!!!!!!!



Eg, With ECP or Turnkey contracts often the risk of delay by authorities is with the contractor, more traditional standard forms tend to put it on the Employer.......

Dear Rami,



Normally the application of Building Permit (BP) is under the responsibility of the Lead Designer, and once approved by the Authorithies and the contract for construction was awarded, the Contractor shall apply for the release of the Building Permit where in takes about 2 weeks.



Now, if the delay is caused by the Authorities upon which the Contractor has diligently followed the procedures, then this delay will be considered for EOT determination by the Engineer.



If the Contractor receives the BP the day he should start the Superstructure as per contract programme, then this affects advance planning of the works (delivery of materials, availability of labor and equipment and coordination on site), and definitely slow down their intended rate of progress on site.



There’s a valid reason for the Contractor to be entitled for an EOT (to be determined by the Engineer), if he has given notice in accordance with the Contract.



A possible win-win solution is to allow revision of the programme (increase working hours and days, replanning, etc.) to catch up with the delay, but to approved Contractor’s claim for variation in costs due to acceleration of the works.



Hope the above helps,



Best regards,

R. Catalan

Further to Mikes post:



You said the contractor claims:



1)LOA states that receiving the building permit is a pre-requisite to start the work. Does it / doesn’t it???



2)He is entitled to have the building permit on the date shown on the schedule to allow him to plan and execute the works!!! No, the contractor is entitled to have the building permit on a date that allows him to comply with his obligations under the contract. If he is late, so can the building permit issue be late. Unless the programme is formerly part of the contract, ie an actual contract document, then things maybe different, but it appears the thing missing from his IAP analysis is the progress at the time the permit was issued, (that’s most likely why he has chosen an IAP).



BUT: what does the EoT clause say. Does it talk of actual delay, future or likely delay?????? This will determine the point at which an entitlement to an EoT, if any, arises.

Hi Rami



This appears to be a case of concurrent delay.



Where there are two causes of delay one by the Client and another by the Contractor that start at the same time and affect the same activity then it is as close as you can get to a true concurrency situation.



The test is which delay event caused to most delay on the project.



If both events end on the same date then that would be true concurrency.



The current situation in English Law is that in such a case the Contractor gets EOT and no prolongation costs.



If the Client delay event is longer then to Contractor gets EOT and some proportion of his prolongation costs.



If the Contractor delay event is longer then no EOT and no costs.



You have to impact both delays onto the same baseline to ascertain the concurrency situation.



It gets more complex when there are multiple events all in different sequences and all affecting different activities.



I hope this helps.



Best regards



Mike Testro