Last Updated on July 7, 2022 by Admin
Construction duration is the amount of time needed to finish a project within the parameters established by the client, according to standard working procedures. However, projects frequently experienced time overruns, necessitating the use of contractual remedies like Extension of Time (EOT).
On practically every construction job, delays occur. Time and money are lost by contractors when they wait for project owners or deal with uncontrollable circumstances. Contractors may request an extension of the contract time if the reason for the delay was beyond their control.
A claim for an extension of time, or EOT claim, is what this is. Most of the time, contractors will just get a schedule extension and won’t get paid for extra expenses, but every circumstance is unique.
The contractor is given advice on a specific course of action to take in order to demonstrate the delays and develop a solid case for a time extension. The suggested strategy was built on a foundation of both theoretical knowledge and real-world experience.
Table of Contents
What is the EOT claim?
An extension of time clause is an express clause in a contract that allows for the modification of the contract’s completion date under certain conditions, such as when an excused delaying event has impeded the progress of the work.
The Extension of Time (EOT) provision offers the client protection as well as a method for adjusting the completion date of a building project (if NECESSARY).
A delay that could not have been reasonably anticipated at the time of contract signing is known as an extension of time (EOT). The contractor is released from responsibility for damages such as liquidated damages from the initial date of contract completion for the duration of the claim upon the granting of an extension of time.
Frequently, the contract between the owner and general contractor specifies the procedure for submitting an EOT claim. The conditions of the subcontractors‘ contract with the GC are binding. These conditions typically call for a formal claim with supporting documentation, which is reviewed by the owner or GC, and a written notice of delay. A modification order is issued if the extension is approved.
General reasons for the delay in work (and Extension of Time in Construction Contracts is required)
The following are a few causes of construction project delays for which the contractor team may be eligible for EOT:
- The Employer’s delay in turning over the job site to the Contractor is due to a variety of problems, including difficulties with land acquisition.
- Delay in the project’s legal permits and government clearances.
- Delay in the architects’ and structural design engineers’ release of building plans.
- A delay in the contractor obtaining the necessary materials.
- The approved manufacturers’ suspension or delay in producing crucial materials.
- A delay in the material’s transit.
- Delayed due to unavoidable circumstances
- Unusual natural disasters, riots, or other forms of unrest, conflicts, pandemic conditions, etc.
- Delayed payment release to Contractors by Employers.
- A lack of qualified labor in sufficient numbers.
- Ineffective completion timetable planning
- Not taking into account practical work methodologies for tasks, results in the inadequate assessment of resources
- An expansion of the contract’s scope after the project has started.
Pre-Planning tasks after awarding project which helps in EOT situation
Once the project is accepted, the project management team must complete the pre-planning tasks listed below:
- The definition of the project’s scope and, if applicable, any contractual deadlines or sectional completion dates;
- Outlining the project’s goals;
- Establish a project-specific risk register that lists every risk that could arise;
- Assign a project team that can accomplish the specified goals and specify the important duties and obligations of each team member;
- identifying all project stakeholders and establishing the necessary approaches to deal with them in light of their influence, power, and areas of interest;
- creating a project budget;
- creating a project management plan;
- creation of a project risk management strategy;
- creation of an execution strategy for the project;
- creating a logistics strategy; and
- creating a procurement plan for the project with a defined definition for any long-lead items;
The contractor can generate an accurate baseline program, which is thought to be the strong foundation for any subsequent claim, based on the pre-planning processes described above. The baseline program shows how the contractor intends to carry out the contract’s terms before the project’s start date. It also serves as the benchmark that won’t be altered by any potential claims in the future.
How to make a successful EOT Claim?
Contractors must present evidence to support any additional expenditures they are asking for reimbursement for in order to submit a successful EOT claim. Here are a few pointers that may be helpful:
Study your contract.
It’s crucial that you read the contract carefully, comprehend it, and be familiar with the clauses governing claims for extensions of time. These rules may stipulate a deadline for sending notices, failing which you can forfeit your ability to make a claim. You should be aware of the legitimate justifications for making a claim.
Promptly deliver notices
Notice of delay and the actual extension of time claim are the two notices that must typically be sent in the case of an EOT claim.
Notification of delay is fairly easy to understand. It describes the event that has happened and the anticipated length of the delay and can be communicated as a letter or email. Once all expenses have been calculated, an extension claim is sent along with documentation of the incident and how it affected the project.
The contractor may forfeit the opportunity to make additional extension claims or sue for event-related damages if the EOT claim is not submitted by the deadline.
Record every document.
Documentation of the reason for the delay, how it affected the project, and any expenditures associated with it are required before submitting an EOT claim.
Contractors should provide any supporting documentation for their claims of delay and expense, such as images, updated schedules, emails, weather reports, and other documents. The adage “the person with the most documentation wins” is accurate in the case of an EOT claim.
Maintain a current schedule
You may demonstrate how a delay would affect the project’s critical path by monitoring the project timeline. When submitting an EOT claim, this documentation is crucial. Software used for scheduling displays delays and their effects on the overall schedule simply and plainly.
submission of a change order
Send the GC or owner a change order request that details the reason for the delay and any costs incurred once the extent of the delay and damages are determined. This can be included with the EOT claim and makes sure that it is handled quickly.
Follow up after an extended delay
More than one EOT claim may need to be lodged during a protracted delay. If so, it’s crucial to keep in touch with the owner or GC to inform them of the consequences of the delay and whether any more claims will be made.
What we can claim under Extension of time claims?
Generally speaking, these three categories of costs are admissible as extensions of time claims:
Site office expenses
We have a number of direct costs listed under site office expense. such as rent for office cabins, utilities, stationery, etc. In addition to these direct expenses, the contractor may deduct the cost of the instruments utilized by the site management team, such as computers, printers, scanners, and other office equipment.
Head Office overheads
The managerial and administrative costs of the contractor’s head office are referred to as head office overheads. Expenses like office rent, office supplies, the wages of the estimating and account departments, etc. It can be a little difficult to claim head office expenses under an EOT claim. due to the fact that head office overhead expenditures are tough to demonstrate and present. Due to this, some experts have developed a few methods to estimate and report head office overhead (impacted due to delayed events).
Sample EOT request letter
This is just a sample Letter that should be prepared and submitted according to your (project’s) contract.
[Date] Attention [ Receiver name/designation]
[Address]
Project [Name/ detail]
Subject- Request for extension of time
Dear Sir,
Referring to the project mentioned above; We enclose herewith our [interim/ Final] extension of time submission for your kind review and approval. The delaying events identified herein are concerned with excusable and compensable delays arising out of the actions of “others” in relation to the delays associated with [contractor’s name]. Especially we have been delayed in the following areas and ways,
[Detail of delay event 1]
[Detail of delay event 2]
All relevant documents and communications related to this request is attached along with this submittal. If you need more clarifications, please do not hesitate to contact us.
Thank you
Yours sincerely
[Name and designation]
[Contractor name]
Final Thought
A contractor must do a complete delay analysis and be fully aware of their eligibility requirements in order to submit a valid EOT claim. A contract’s time extension clause has two functions. In the event of a delay, it gives the contractor more time to finish the project. It safeguards the client’s ability to demand liquidated damages in cases when the contractor causes project delays. Therefore, thorough research on the lengthening of time can preserve both your relationships with the content and your project’s profit margin.
