Contractual Claims: Time

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Contractual ClaimsTime Money
6 September 2003 PQSL

• Prepared by Mr. Louis Lee
• LLB(Hons), MHKIS, MRICS, MCIArb, RPS(QS)

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1. Contract
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1. Contract

• Essential Elements of a construction contract
• 1. Product
• Drawings, Specification
• 2. Price
• Type of contract, remeasurement, firm
  quantity, variation
• 3. Time
• Duration or specific date, Sectional
  possession and/or completion

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Parties to the contract / parties concerned

• 1. Employer
• 2. Contractor
• 3. Architect/Engineer/Surveyor
• Relationships

Contractor
Employer
Architect/ Engineer/ Surveyor
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Aims of the Parties

• 1. Employer
• product (the Works), on time, in accordance
  with requirements
• 2. Contractor
• satisfactorily complete the Works and get
  paid such sums as appropriate
• 3. Architect
• satisfactorily discharge its duties under the
  contract and get paid

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Obligations of the Parties

• 1. Employer
• give possession of the Site, make payments
• 2. Contractor
• construct the Works in accordance with the
  requirements (quality and time)
• 3. Architect
• manage and supervise the project in various
  aspects (design, EOT, VO claim assessment)

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Contractual Claims

• 1. Situations
• 2. Variation
• 3. Time
• 4. Cost

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2. Contractual Claims Time
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Time

• 1. Timely completion of the Contract
• 2. If delay occurred, what do the parties want?
• - Compensation of time loss - to whom?
• 3. Nature of events causing delay
• - Caused by the Employer, Architect/ Engineer
• - Caused by the Contractor
• - Causes of neutral ground - e.g. caused by a
  third party, act of god, etc

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Time

• 4. Common law position
• - time at large, general damages
• 5. Mechanism in the Contract
• - Liquidated damages - genuine pre-estimate
  of loss
• - Extension of time

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Time

• Mechanism in the Contract
• 1) Notice of delay event
• 2) Time bar
• 3) Grounds for extension of time
• 4) Assessment and award of extension of time
• Standard forms of contract adopted
• i) HK Government GCC 1999 (for Building Works)
• ii) HKIA Form 1986 (with quantities)

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TimeNotice of Delay Event

• i) Under Government Form 1999
• - Clause 50(1)
• a) within 28 days after the cause of delay
• b) within 28 days after the Architect's
  instruction
• ii) Under HKIA Form 1986
• - Clause 23
• Upon it becoming reasonably apparent

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TimeTime bar

• Under both of the standard forms
• i) No extinction of rights if notification is
  served late
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• ii) Rights under common law

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TimeGrounds for extension of time

• i) Under Government Form 1999
• - Sub-clause 50(1)(b)
• (i) inclement weather and its effects
• (ii) tropical cyclone warring signal No. 8 or
  above
• (iii) Black Rainstorm Warning
• (iv) variation under Clause 60
• (v) substantial increase in quantity
• (vi) not being given possession of the Site

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TimeGrounds for extension of time

• i) Under Government Form 1999
• - Sub-clause 50(1)(b) (Contd)
• (vii) disturbance for which the Employer/
• Architect/Specialist Contractor responsible
• including but restricted to Clause 63
• (viii) suspension of Work (Clause 54)
• (ix) utility undertaking
• (x) Nominated Sub-Contractor
• (xi) special circumstance

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TimeGrounds for extension of time

• i) Under Government Form 1999 (contd)
• Causes not entitled for an extension of time
• Sub-clause 50(1)(c)
• (i) a suspension occasioned by circumstances
  under Clause 54(2)
• (a) otherwise provided for in the Contract,
• (b) necessary by reason of weather conditions
  affecting the safety or quality of work
• (c) necessary by reason of default on the part
  of the Contractor

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TimeGrounds for extension of time

• i) Under Government Form 1999 (contd)
• Causes not entitled for an extension of time
• Sub-clause 50(1)(c)
• (d) necessary for the proper execution of the
  Works or the safety of the Works or for the
  safety and health of any person of any property
  on or adjacent to the Site..
• (ii) a shortage of Construction Plant or labour

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TimeGrounds for extension of time

• ii) Under HKIA Form 1986
• Clause 23
• (a) force majeure
• (b) inclement weather or subsequent effects
  (gt20mm)
• (c) clause 20A or B
• (d) civil commotion, strike affecting the trades
• (e) Architect's instruction under clause 1(2)
  discrepancies, clause 11(1) variation
  clause 21(2) postponement

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TimeGrounds for extension of time

• ii) Under HKIA Form 1986 (Contd)
• (f) late instruction
• (g) delay by Nominated Sub-Contractors or
  Suppliers
• (h) delay on tradesmen or others engaged by the
  Employer
• (i) opening up for inspection for testing
• (j) (i) to secure essential labour
• (ii) to secure essential goods or materials
• Note only if so stated in the Contract Bills

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TimeAssessment and award of extension of time

• i) Under Government Form 1999
• - Sub-clause 50(2) Architect shall within a
  reasonable time determine, grant and notify in
  writing such extension
• ii) Under HKIA Form 1986
• - as soon as he is able to estimate the
  length of the delay make in writing a fair and
  reasonable EOT

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TimeOther points on extension of time

• Under Government Form 1999
• a) Sub-clause 50(3) Architect may require full
  and detailed particulars, if fails.
• b) Sub-clause 50(5) except as provided elsewhere
  in the Contract, EOT granted shall be deemed to
  be in full compensation and satisfaction for any
  loss or injury

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TimeEOT in application

• 1) Criticality
• For the completion of the Works or any section
  thereof
• 2) Causes of delay
• As specified under the provisions of the
  Contract
• 3) Guideline / base programme for assessment

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3. Contractual ClaimsMoney
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Money

• Mechanism in the Contract
• 1) Notice for additional payment
• 2) Time bar
• 3) Grounds for additional payment

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MoneyNotice for additional payment

• i) Under Government Form 1999
• - Clause 64(2) within 28 days after the
  happening of the events
• ii) Under HKIA Form 1986
• - Clause 24(1) written application within a
  reasonable time of it becoming apparent

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MoneyTime bar

• i) Under Government Form 1999
• No extinction of rights if notification is served
  late,
• however subject to
• Clause 59(9)
• if fails to submit written representation or
  any required information after the expiry of 90
  days from the date of service of the Bills of
  Variations, the Surveyor shall not obliged to
  take into account
• ii) Under HKIA Form 1986
• No explicit/strict terms

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MoneyGrounds for additional payment

• i) Under Government Form 1999
• A) Clause 48(2) - Involved in expenditure,
  progress of the Works having been affected by the
  failure of the Employer to give possession under
  Clause 48

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MoneyGrounds for additional payment

• B) Clause 54(2) - Involved in additional
  expenditure by reason of a suspension order given
  by the Architect under Clause 54, unless the
  suspension order is
• (a) otherwise provided for in the Contract
• (b) necessary by reason of weather conditions
  affecting the safety or quality of work
• (c) necessary by reason of default on the part
  of the Contractor
• (d) necessary for the proper execution of the
  Works or the safety of the Works or for the
  safety and health of any person of any property
  on or adjacent to the Site

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MoneyGrounds for additional payment

• C) Clause 63 - Involved in expenditure, progress
  of the Works having been affected by
• (a) late instruction from the Architect
• (b) variation
• (c) opening up for inspection
• (d) delay caused by any person or company, not a
  utility undertaking, engaged by the Employer
• (e) late delivery of material, plant or
  equipment by the Employer

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Money Grounds for additional payment

• D) Clause 21(4), excepted risks
• (a) - (e) outbreak of war, invasion of Hong
  Kong, act of foreign terrorist, civil war,
  commotion etc
• (f) occupation by the Employer, his agents
  employees
• (g) damage, loss or injury direct consequence
  of the Architect's design of the Works
• (h) neglect or default by the Architect or the
  Employer or their employees or agent in the
  course of their employment

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Money Grounds for additional payment

• D) Clause 21(4), excepted risks (Contd)
• (i) ionsing radiations or contamination by
  radioactivity from any nuclear fuel
• if instructed by the Architect, repair and make
  good the same at the expense or proportionate
  expense of the Employer valued by the Surveyor
  in the same manner as valuing variation

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Money Grounds for additional payment

• ii) Under HKIA Form 1986
• A) Clause 11(6) - loss and expense caused by a
  variation, provisional sum or prime cost sums
• - upon written application by the Contractor
• - would not be reimbursed by payment in made
  in accordance with the rules contained in 11(4)

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Money Grounds for additional payment

• ii) Under HKIA Form 1986 (contd)
• B) Clause 24 - loss and expense caused by
  disturbance of regular progress of the Works
• (a) late instruction
• (b) opening up for inspection
• (c) discrepancy in Contract Drawings and.or in
  Contract Bills
• (d) delay on the part of artists, tradesmen or
  others engaged by the Employer
• (e) Architect's instruction in regard to the
  postponement of work

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MoneyHeads of Claim

• a) Direct Cost of resources utilised, idling
  costs
• b) Loss of productivity
• c) General items or preliminaries - insurance
• d) Site overheads
• e) Head office overheads
• f) Profit
• g) Escalation of costs as a result of inflation
• h) Financial charges - for delayed recovery of
  fixed contributions, delayed recovery of the
  additional costs being claimed

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• Questions Answers