They say ‘time is money’, and nowhere is this more apparent than in large-scale construction projects. Costs can be incurred quickly and delays can cause significant challenges for a high-value build.
Projects typically have a set timeline, as usually stipulated in the contract. Therefore, completing a project within the agreed timeframe is not just a matter of meeting client expectations but also often a contractual obligation.
However, delays do happen and sometimes cannot be avoided. However, this doesn’t stop costs from spiralling and clients becoming frustrated.
The good news is that there are steps in which a contractor can take to minimise the fallout of this contractual breach if the delay is not their fault.
What is an Extension of Time claim?
An Extension of Time (EOT) claim is a formal request made by a contractor to adjust the completion date of a construction project due to delays caused by events outside of their control.
These events can include, but are not limited to:
- Adverse weather conditions
- Changes in the scope of work
- Delays caused by the client or other stakeholders
- Licencing delays
- Force majeure events, such as natural disasters
EOT claims exist to protect the contractor from incurring financial penalties which may be outlined in their initial contract, such as liquidated and ascertained damages (LADs).
These are typically only payable for at-fault delays on the part of the contractor. However, EOTs are important as a way of formally adjusting the initial contract terms and providing legal protection for the contractor.
When are EOTs claims used?
EOT claims are typically used when delays occur that were not foreseeable at the time the contract was signed.
These delays must be significant enough to affect the project’s overall timeline and must be clearly linked to events that are recognised by the contract as to justifying an extension.
For this reason, it’s vital for contractors to spend time reviewing and negotiating this clause.
Minimising the impact on working relationships
The submission and approval of an EOT claim can significantly impact a construction project through the working relationship between the contractor and their client.
EOT claims can prevent damages being claimed by the client against the contractor due to delays.
While this is fair and legal within the scope of a contract for the contractor, it can leave the client out of pocket and lead to disputes around culpability for the delay.
Additionally, claims themselves can lead to disputes, typically over their validity or the length of time claimed. This can result in:
- Legal costs
- Ongoing delays
- The breakdown of a working relationship
The approval of an EOT claim can also have a ripple effect on the project’s timeline, potentially delaying other dependent activities and impacting the overall schedule.
This can increase costs for the client, as longer projects invariably run up higher costs for site management, security, and other ongoing expenses.
To mitigate these risks, it is essential that EOT claims are well-documented, clearly justified, and submitted in accordance with the original contract.
All parties involved should seek to negotiate and reach a mutual agreement to minimise the risk of litigation further down the line.
For guidance on EOT claims and managing a construction project timeline, please contact our specialist Construction Law team today.