Project Mangement

Builder & Engineer - 01/11/2008

Delayed – Sevenstone Retail Quarter Sheffield

The critical clauses for contractors to be aware of in the JCT Sub-Contract surround the relevant ‘events’ or ‘matters’ sections, which are listed much more comprehensively than under previous contracts. But what does this mean? Put simply, relevant ‘events’ are those circumstances in which a subcontractor is prevented from undertaking work and can therefore claim for extra time allowance, whilst ‘matters’ are outcomes such as a breach of contract by the contractor, which allow the subcontractor to also claim financial compensation.

What does this mean for a contractor?
Historically, contractors have been able to award a gross total of time to all the claimed events listed by a subcontractor. Under JCT, much more detail is required, with contractors expected to clearly identify the Extension of Time (EOT) that is attributed to each individual event. A more considered review of the circumstances is therefore required of the contractor prior to awarding any EOT.

Importantly, when assessing a subcontractor’s EOT claim contractors must ensure that any requests for information and programme analysis made against the subcontractor are wholly reasonable, taking into account the relative size of the subcontract against the value of the claim. In turn, the subcontractor must be able to demonstrate that the relevant ‘event’ for which they are claiming has had an impact on the work being undertaken and caused them a delay on the critical path for their section of works.

What are contractor’s obligations when receiving a claim for loss or expense?
Under the JCT sub-contract there is no obligation for contractors to agree the value within a fixed time period – unlike the EOT which must be granted within sixteen weeks. Contractors take note however – the final sum must be calculated eight months from the date when the subcontractor provides all the necessary information.

Notwithstanding the above a contractor has an ongoing monthly obligation to ascertain the value of a subcontractor’s work and any payment notice has to specify what the amount of payment relates to and how the figure was calculated. Failure to properly assess the amount of loss or expense properly applied for on a monthly basis could lead to adjudication.

Can a contractor discard a claim for being late?
In essence, the answer is no. The language used in the JCT sub contract only requires claims to be submitted ‘as soon as reasonably apparent’ and there are no fixed time scales within which the subcontractor must operate. The only time limit in place is the stipulation that subcontractors must provide details of all sums claimed four months after practical completion and this in itself is not a condition for entitlement. Any attempt to bar a claim on the ground of it being late is therefore unlikely to succeed.

My advice is simple: employ effective delay management provisions and ensure transparency from the beginning of a contractual process. An important part of both delay and contract management is in building relationships across the supply chain. Make sure you work closely with your suppliers from early on in the project to reach agreement on how a programme of works should be delivered. This will increase the likelihood that all parties are clear on what is expected of them and when it should be delivered. By routinely measuring and monitoring the programme of works against actual progress, any delays that do occur can be managed, thereby controlling additional delay costs and removing the element of surprise that often occurs when delays are announced by suppliers at a late stage of a project.

David Blake is the chairman of commercial and contract management consultancy Blake Newport.

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