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This edtion is led by

Stuart Connor
Chief Counsel
Gas Business
Alstom





















Law Firm Panel Chair

Doug Jones
Partner
Clayton Utz

 

Responsibility for delay in the global construction industry

In this edition of TalklawGlobal Stuart Connor, Chief Counsel, Gas Business of engineering and infrastructure giant Alstom in Switzerland, focuses on several of the many grey areas faced by lead counsel in project companies around the world. Chairing the panel of law firms is Doug Jones, Partner with Clayton Utz in Australia.

Claim resolution, concurrent delay, managing the float and time bars in combination, or as separate issues, frequently arise as headaches during the course of major international projects. While acknowledging the need for all parties to communicate more effectively, Stuart notes “Contractors in particular often feel that customers reject claims as a reflex action without properly engaging in their merits”.

As the technical legal debate about concurrent delay continues to cause uncertainty in UK courts, Stuart feels that the question of equity remains unaddressed. “Customers usually phrase the question along the lines “why should I give you an extension of time when you are in delay, just because you are lucky enough that I am in delay too”. Yet we contractors feel that an extension of time is not a Christmas present. The injustice we feel is more along the lines of “ why should you get liquidated damages in lieu of project revenue when you could never have earned revenue anyway due to your own delay, and you were just lucky that we were also late”.

Doug Jones of Clayton Utz comes at the question from a different perspective: “The original purpose of liquidated damages was simply to quantify likely loss following project delay, not to guarantee customer's revenue stream if the project runs late. Seen in this light, the question should simply be 'did the contractor's delay cause the customer any loss?'” Agreeing with this view point, Stuart concludes: “If the customer could never have earned revenue anyway due to its own delay, then the contractor has caused no loss, and there should be no question of applying liquidated damages.”

In terms of float, most construction contracts allocate ownership to the contractor. Yet in practice, points out Doug, customers rarely accept the plain reading of their contracts. “Perhaps naturally, customers find it difficult to justify an award of extension of time when the project is not yet running late. Legally correct or not, the proverbial 'project owns the float' approach, equivalent to a first-come-first-served allocation, is adopted and this tends to lead to a race to the bottom to accrue one's delay early. Likewise the contractor is incentivized to hide float at all costs. Neither are exactly contractual incentives tuned toward a best for project outcome”, he suggests.

On time bars, Stuart is adamant that the contractor community can and will accept the positive side of early and clear communication to the customer of project delays. Indeed in many cases, he points out, such transparency can and does empower the customer to help. But contractors make more principled resistance when time bars are used as a sword to cut down otherwise perfectly valid claims. “If a customer is already aware of the circumstances of a claim, including the likely impact, and particularly if the customer was perhaps even itself the source of the claim, can it rightly continue to argue that the contractor will be barred for failing to tell what is already known? Should the contractor be barred even if there was nothing the customer could have done and there is simply no prejudice?”


Stuart’s questions for each jurisdiction are:

Question 1) How can customers and contractors get quick and fair decisions on extension of time claims and avoid the culture of reflex rejection of claims?

Question 2) Is the law in your jurisdiction clear on whether contractors are entitled to an extension of time for concurrent delay? What do you think- should they?

Question 3) Who owns the float? Is this issue clear under your governing law, and how should the law treat it?

Question 4) In relation to Time Bars, in your country, can a contractor pay delay liquidated damages, even though the customer caused the delay, merely because it missed a notice requirement?



The legal experts joining Doug on his panel so far are:


Australia: Doug Jones, Partner, Clayton Utz (Panel Chair) 

Brazil: Pinheiro Neto Advogados (coming soon...)

Canada: Borden Ladner Gervais (coming soon...)

Chile: Oscar Aitken, Partner, Carey

Denmark:
 Peter Wengler-Jorgensen, PLESNER

England & Wales: Marc Hanson, Partner, Head of Construction, Engineering and Procurement, and Caroline Pope, Partner, Berwin Leighton Paisner 

France: Stanley Chaney, Partner, Ravet & Associés

Germany: Dr. Klaus Sachs, Partner, CMS  Hasche Sigle 

Hong Kong: Glenn Haley, Partner, Haley & Co.

Ireland:
 Jarleth Heneghan, Partner, William Fry  

Malaysia:
Vinayak P. Pradhan, Partner, SKRINE 

Singapore
: Philip Jeyaretnam, Managing Partner, Rodyk & Davidson

Switzerland: LALIVE (coming soon...) 

UAE:
Adam Balchin, Partner, Al Tamimi & Co.

USA:
 Steven Stein, Partner, Stein Ray

DISCLAIMER: Any opinions, statements or other information expressed in TalklawGlobal by the respective author(s) do not necessarily state or reflect those of TalklawMedia, the chairperson or his employer, the firm to which the author belongs or other panellists. The information submitted by the legal experts is for educational purposes only and does not create an attorney-client relationship between the reader, their firm, or any lawyer in their firm, and does not prevent any lawyer in any firm on this panel, from representing a party in any matter or manner (including taking a different position to that which he/she might have expressed or endorsed in TalklawGlobal) or serving as arbitrator, mediator, dispute board member or in any similar position based on the expression of his/her opinions on the various subjects published on TalklawGlobal. No information published on TalklawGlobal may be quoted or reproduced elsewhere without the prior written consent of the author and TalklawMedia.






















Doug Jones
(biography)
Partner
Clayton Utz
Sydney, Australia
Tel: +61 2 9353 4120
djones@claytonutz.com





 

Australia:

Doug Jones, Partner, Clayton Utz (Panel Chair)


Answer 1) As construction lawyers we are routinely faced with disputes arising out of extension of time claims. Where assessment of extension of time claims is left to the parties or their appointed representatives, the subjective judgments made during the assessment are open to the criticism of lack of independence. If this subjectivity could somehow be removed, it is likely that many time-related disputes could be resolved more fairly and efficiently and avoid the risk of a wholesale rejection of claims.

One way of achieving this is to pass on the responsibility for assessing claims for extensions of time to an independent person or body such as an independent certifier or a Dispute Avoidance Board.  Where a dispute arises in relation to a claim for an extension of time, expert determination in accordance with a prescribed timetable is commonly used.  It is fundamental in all cases that the decision maker has, or has access to, appropriate expertise and experience in programming and design and construction of the Project in issue.

However, these processes by themselves will not universally provide efficient and accurate resolution of extension of time claims.  To my mind there are other factors which could significantly contribute to this goal.

It would also help if a greater degree of objectivity could be introduced to contractual tests for the assessment of extensions of time. The inclusion in a contract of a properly drafted, objective test for entitlement to an extension of time is an essential first step.  In some cases it may also be appropriate to specify the delay analysis or analyses to be adopted when making and determining claims for extensions of time. This would assist in overcoming one of the most
























Oscar Aitken
(biography)
Partner
Carey
Santiago, Chile
Tel: +56 2 2928 2223
oaitken@carey.cl

Juan Pablo Stitchkin
Associate

Juan Pablo Vuckasovic
Associate

 
 



Chile:
Oscar Aitken, Partner, Carey
 

Answer 1) Extensions of time disputes (“EOT Claims”) between the parties are common within the Chilean construction industry, and late resolution of the same (along with Client rejection “by default”) is an endemic problem, many times contributed by the owners’ generalized perception (sometimes unfair) that contractors exaggerate or present unsupported claims to cover up delays for events for which they are responsible (or have agreed contractually to bear such risk).

Frequently, EOT claims cannot be resolved quickly, or at all, due to the lack of updated contract schedules, detailed support and poor, or non transparent, CPM analysis.

Unfortunately, disputes review boards are rarely used in Chile, and when used are only under the form of a dispute review board. Dispute adjudication boards have no legal recognition and present important unresolved legal challenges. Likewise, expert determinations on issues of law (non factual) present the same problem. Therefore, from a contractual perspective, expert determinations and dispute review boards (with no final biding decisions) may be included only as an aid to expedite claim resolutions. Also, in some cases, “steering committees” with representatives of the parties and which meet on a weekly or monthly basis on the site, have been incorporated with the attempt to solve this issue. 

Finally, it is common, particularly in certain specific industries, such as commercial/residential/industrial developments, that an “Inspector Técnico de Obras”, which resembles an owner engineer, reviews EOT claims and recommend the Client to either accept it or reject it. In other industries (mining/energy), this task is usually given to the client contract administrator.

At the end of the day, although there are some ways to contractually handle the EOT Claim issues in a more efficient way as described above, owners are reluctant to include this mechanisms in their contracts and prefer to


 
 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Peter Wengler-Jorgensen
(biography)
Partner
PLESNER
Copenhagen, Denmark
Tel: +45 36 94 12 03
pwj@plesner.com

 
 
 
 
 



Denmark:
Peter Wengler-Jorgensen, Partner, PLESNER


Answer 1) Claims for extension of time, or the adverse - claims for liquidated damages in case of delay - are often handled too late in the building process. In practice it is seen that the Contractor (claim for EOT) or the Employer (claim for LD's) puts off the matter until a later time - hoping that a delay can be redressed, for fear of counterclaims or simply out of conflict averseness.

In many cases the parties do so for good reason; some problems do actually go away when one's head has been buried in the sand for long enough. However, when conflicts are not handled in time the parties risk losing their claims due to notice requirements or as it is more often the case in Denmark suffer from an aggravated burden of proof. Proving the particular facts required for EOT tends to complicate over time.

The Danish rules on EOT, liquidated damages and the notice requirements in con-nection with these claims are by some considered outdated compared to those im-plemented in other countries though other practitioners and commentators instead consider them pragmatic and flexible.

Danish construction law being largely unregulated by means of legislation, the var-ious stake-holders in the building industry have agreed on various sets of general conditions for the provision of works and supplies within building and engineering, known as AB 92 and ABT 93 (FIDIC terms are sometimes used, but primarily for larger projects where there is a need for international tenders). Contrary to FIDIC Clause 20.1's 28-day rule, AB 92 contains no specific deadline for when a notice must be given. Instead AB 92 Clause 24 states, that "the contractor must inform the employer in writing without delay if the contractor considers himself entitled to an extension of a time". Though not explicitly mentioned in AB 92, the same duty is imposed on








 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marc Hanson
(biography)
Partner, Head of Construction,
Engineering and Procurement
Berwin Leighton Paisner
London, UK
Tel: +44 (0)20 3400 1000
Marc.Hanson@blplaw.com





















Caroline Pope
(biography)
Partner
Berwin Leighton Paisner
London, UK
Tel: +44 (0)20 3400 1000
caroline.pope@blplaw.com




 



England & Wales:
Marc Hanson, Partner, and Caroline Pope, Partner,
Berwin Leighton Paisner


Answer 1) Customers and contractors in the UK have a statutory right to refer any construction dispute to an adjudication at any time (Part II of the Housing Grants Construction Regeneration Act 1996 (UK)).  Impartial adjudicators, typically construction lawyers, quantity surveyors, engineers or architects who can navigate the programming and technical fibre of extension of time claims, can determine claims quickly even while a project is underway. 

This means that contractors can immediately refer any claim for an extension of time that has been rejected by the contract administrator to an adjudication.  This allows contractors some interim certainty of the time they actually have to complete the works, without risking the application of liquidated damages in the meantime if successful in the adjudication.  They can do this rejected application by rejected application and bank the extensions of time awarded by the adjudicator as they go or take stock of unsuccessful claims and take all their applications to an adjudication at project completion.  Equally, customers benefit from the certainty of the time for completion and project spend.  Both will save time and money if they can avoid litigation.

Adjudicators often determine claims on the papers, although a hearing can be requested.  The Act provides for the adjudicator to issue his decision within 28 days of the referral of the dispute, although most adjudicators seek to extend the timetable, particularly in complex claims, to accommodate expert evidence or witness availability. 

Adjudicators’ decisions can be enforced immediately by the courts (and often are if there is a financial award in the decision which the opposing party refuses to pay).  The grounds for refusing to enforce are limited.  The adjudicator’s decision is binding unless or until the dispute is re-tried by the courts or in an arbitration.  While parties can go on to court/arbitration to hear the dispute if they are not satisfied with the decision, they often accept it as a good indication of how a judge/arbitral tribunal would decide the claim. 

To minimise disputes, contractual protocols for a contract administrator or a customer’s engineer to determine extension of time claims could be bolstered to change the culture of reflex rejection of claims.  The Society of Construction Law’s Delay and Disruption Protocol is an example.  It was produced to serve this purpose in 2002, although it has many critics.  

Some contracts, such as NEC, require active prospective programming and extensions of time to be assessed on a prospective basis.  However, in practice this often does not happen, or the results of such programming are not accepted by the customer’s administrator and their use does not seem to have resulted in any significant change of behaviour: reflex rejections by contract administrators continue. 


Answer 2) What do we mean by concurrent delay? The definition suggested by John Marrin QC more than a decade ago, describes “a period of project overrun which is caused by two or more effective causes of delay which are of approximately ‘equal causative potency’”.  This has been adopted by the leading UK text in the field, Keating on Construction Contracts (9th edition, 2012) and approved by the High Court in Adyard Abu Dhabi V SD Marine Services [2011] EWHC 848 (Comm) [277].

It is rare that two or more causes of delay will have “equal causative potency” on the facts. In cases of true concurrent delay, the English courts of first instance appear to be following the authority of Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd 70 Con LR 32 (TCC).  The Malmaison test takes the parties to have contemplated the possibility of there being more than one effective cause of delay of equal causative potency when agreeing the contractual terms for extensions of time.  This means that the contractor will still be entitled to an extension of time if one of the effective causes of delay for which the customer has taken the risk meets the contractual requirements.  The High Court recently endorsed this approach in

 
























Stanley Chaney
(biography)    
Partner   
Ravet & Associés
Paris, France
Tel: +33 1 44 29 31 62
s.chaney@ravet-associes.com



 




France:
Stanley Chaney, Partner, Ravet & Associés



Answer 1) As in most jurisdictions, problems arising out of delays in construction work are very common in France. There are different ways to deal with those under French law.

In principle, had the constructor not accomplished his work on time, he would be held liable entitling the employer to recover damages under article 1147 of the French Civil Code. The constructor has the possibility to be released from the payment of damages if he successfully demonstrates that delay was caused by a ‘force majeure’ event. The concept of ‘force majeure’ is well rooted into the French case law and has given rise to multiple decisions. According to French decisions on this issue, in order for an event to be qualified as ‘force majeure’ it has to present 3 main features: be unpredictable, irresistible and external. The party invoking the ‘force majeure’ bears the burden of proving that the delaying events possessed those 3 characteristics.

The parties could also incorporate in their agreement a list of events such as a strike, weather problems etc. which would exempt the constructor of the responsibility in case of their occurrence, even though they do not fall within the qualification of ‘force majeure’.

Another common practice in the contracts governed by the French law is a stipulation of ‘clause pénale’ (penalty clause). Pursuant to articles 1226 and 1229 of the French Civil Code a party not complyomg with some of its contractual obligations will have to pay liquidated damages to its contractual partner. Its application will be triggered automatically by the mere non-compliance of the defaulting party with contractual provisions, even though the non-conformity had an external origin. However,























Dr. Klaus Sachs
(biography)
Partner
CMS Hasche Sigle
Munich, Germany
Tel: +49 89 23807 109
klaus.sachs@cms-hs.com
 


Germany:
Dr. Klaus Sachs, Partner, CMS Hasche Sigle



Under German law contracts are classified into particular types: construction contracts are usually classed as contracts for works. The VOB/B is a standard set of regulations under German law, which are based on and modify the applicable statutory law on contracts for works specifically for construction contracts. The following comments assume that the VOB/B terms have been agreed between the customer and the contractor.

Answer 1) The issue of construction delays is a topical one, as shown by the increasing number of disputes in and out of court regarding problems arising in the construction process. A quick and fair decision on a contractor's extension of time claim is generally only possible where there is good documentation of the delaying circumstances and their consequences, since the courts require evidence in each case of the adequate causal connection between the disrupting events and its effect, in order to determine and evaluate delays and the claims arising as a result.

The courts require an adequate causal evidence for the calculation and valuation of delays and claims arising thereunder. The cause of the disruption has to be proven and also attributed to the party causing such; adequate means reasonable, i.e. the evidence must take into account the contractual constraints. The contractor must therefore describe the events on which he bases his claims as specifically as possible and in addition demonstrate which delays, for how long and to what extent were caused thereby.

However, processes can overlap or may be affected differently and therefore be delayed to differing extents. The speed of construction is not only affected by disruptions in the work schedule, but also by other external influences. In practice


























Glenn Haley

(biography)
Partner
Haley & Co.
Hong Kong
Tel: +852 3980 6866
ghaley@claytonutz.com.hk
 



Hong Kong:

Glenn Haley, Partner, Haley & Co.



Answer 1) Extension of time claims are notoriously rich in detailed factual analysis, knowledge of project history and complex expert analysis. A key to promoting quick and fair decisions is, therefore, that the parties practice proactive contract administration and keep aware of the circumstances on the ground so that all relevant details can be provided efficiently to the party charged with determining the extension of time.

The engineer or architect (or similar entity charged with determining extensions of time) needs to be similarly active. A fairer outcome is likely to be promoted where the certifier is genuinely independent of the parties and actively seeks to understand the circumstances giving rise to the claim and progress the claim efficiently.

It appears trite to say, but the claims culture is likely to also be significantly reduced where the parties have clearly agreed who is intended to bear the risk for delay and clearly reflected this in the contract drafting. Whilst similar comments occur in respect of most contractual disputes, it is particularly pertinent for extension of time claims where the outcome is highly dependent on the drafting of the particular contract.

The ability to refer the claims to an efficient and clear-tiered dispute resolution process, also enables the parties to obtain fair and quick decisions, or review of decisions. E.g. the standard form Agreement & Schedule of Conditions of Building Contract for use in the Hong Kong Special Administrative Region (Institute of Construction Managers, Hong Kong; 2005 edition) provides for a preliminary referral to “designated representatives” of each party, who must meet within 7 days of a dispute notice, to seek to resolve issues. Where parties are motivated to achieve a quick and amicable solution, this step may provide for an efficient and acceptable outcome. Of course, if parties are



























Jarleth Heneghan
(biography)
Partner
William Fry
Dublin, Ireland
Tel: +353 1 639 5000
jarleth.heneghan@williamfry.ie   
 



Ireland:

Jarleth Heneghan, Partner, William Fry



Answer 1)
 Most of the Irish standard form construction contracts in both the public and private sectors incorporate extension of time clauses. Examples include the Royal Institute of Architects of Ireland (RIAI) Building Contract (With Quantities and Without Quantities versions), Engineers Ireland Conditions of Contract, and the suite of Public Works Contracts (GCCC Contracts). These clauses generally provide that if certain events as set out in the contract occur, the date for completion is extended.

Under the RIAI Contract, the Architect certifies such extension of time as is ‘fair and reasonable’ and the Employer (hereafter the Customer) extends the time for completion. In the Engineers Ireland Contract the Engineer makes an assessment of time and grants it by notice in writing. The Employer’s Representative carries out a similar role within the GCCC Contracts.

Throughout all of the Irish standard form construction contracts there is a certain reliance on the named certifier in the relevant contract being independent and competent. There are further contractual obligations on the Contractor to comply with any notices, information provision and timelines set out for applications of extensions of time, including minimising any delay. In making the assessment of an extension of time, the Architect/Customer’s Representative/Engineer will typically look at what is happening on site. In certain of these contracts, the Contractor will have an obligation to provide programmes which can assist the certifiers.

Where a dispute arises in relation to whether or not there is valid extension of time claim, under the Irish standard form construction contracts in both the public and private sectors there is generally recourse to conciliation as a first step in the dispute resolution process. Conciliation is a prevalent prescribed form of alternative dispute resolution used in the Irish construction industry.

Conciliation is similar to mediation, although a conciliator can be seen to be more pro-active than a mediator and will propose the terms of a settlement to the dispute or,










 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vinayak P. Pradhan
(biography)
Partner
SKRINE
Kuala Lumpur, Malaysia
Tel: +603 - 2081 3999
vp@skrine.com
 


Malaysia:

Vinayak P. Pradhan, Partner, SKRINE


Answer 1) There is no hard and fast solution to this issue. As to whether or not customers and contractors would get quick and fair decisions on extension of time would depend, to a large extent, on the independence and competence of the certifier, including his understanding of the contractual obligations of the parties and his duties as a contract administrator, the presence of employer’s ‘influence’ on the decision making process by the certifier, and the ability of the contractor to make timely applications and to furnish adequate information in respect of its application for EOT. These are common factors in the Malaysian construction industry which normally contribute to the delay in the EOT certification process, and sometimes outright rejection, of EOT claims. Perhaps one way of avoiding this problem is to agree, at the very outset of the contract, on a delay evaluation/analysis method or programme for EOT, which can be used immediately to assess/ evaluate any application for EOT made by a contractor. With this, the parties including the certifier would be clear from the beginning as to what information and data are required for the purpose of the evaluation of an application for EOT and this would certainly reduce the time and potential risk of uncertainty (and at times, disagreements between the contractor and the certifier) in the certification process. We note that in jurisdictions such as the United States and Australia, the mechanism of a Dispute Adjudication/Avoidance Board (“DAB”) has been proven to be an effective means in managing project disputes including disputes relating to EOT applications, especially in large construction projects. It is unfortunate to note that it is not gaining popularity in Malaysia. This may be due to the fact that its effectiveness has not yet been sufficiently tested in the industry for the players to be convinced that the added costs to the contract in employing the DAB are likely to be justified. 


Answer 2) There have been various approaches suggested by both academicians and the courts in



























Philip Jeyaretnam
(biography)
Managing Partner
Rodyk & Davidson
Singapore
Tel: +65 6885 3605
philip.jeyaretnam@rodyk.com



 


Singapore:

Philip Jeyaretnam, Managing Partner, Rodyk & Davidson

Answer 1) In the construction industry in Singapore it is usual for EOT claims to be made to and assessed by contract administrator appointed by the owner to determine such claims. In the public sector, the contract administrator is typically an employee of the government department or agency that is undertaking the project. In the private sector, the contract administrator is more usually employed by one of the consultant’s to the owner, typically the project architect.

Thus, while the contract administrator is at law required to make decisions relating to EOT independently of the owner, exercising his own judgment, in practice he is often perceived as likely to be more closely aligned to the owner’s interests. It may often be the case as well that some alleged delaying events are potentially the responsibility of the contract administrator, such as late instructions or even design changes, so that he is a ‘judge in his own cause’.

When it comes to sub-contracts, it is typically the main-contractor who assesses EOT claims, without recourse to any independent contract administrator. However, sub-contractors, and especially nominated sub-contractors, should seek to adopt a standard form that incorporates assessment by an independent party such as the project architect or the specialist professional engineer.

It is not common for projects within Singapore to institute a dispute board to which disputes can be referred during the course of a project. This is unfortunate, as it would ensure a greater degree of independence in the determination of claims while a project is in progress.

Where an EOT claim has been granted, the contractor can advance a claim for prolongation costs incurred arising from EOTs under the Singapore Building and Construction Industry Security of








 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adam Balchin
(biography)
Partner
Al Tamimi & Co.
Dubai, UAE
Tel: +971 (0)4 364 1641
a.balchin@tamimi.com






 


UAE:

Adam Balchin, Partner, Al Tamimi & Co
.

Background comments) The legal system in the UAE is codified (primarily derived from Egyptian law which, in turn, is heavily influenced by the French legal system). All commercial activities in the UAE (including building and/or construction activities) are regulated by Federal Law No. 18 of 1993 or the UAE Commercial Code. The UAE Civil Code has a specific chapter entitled “Muqawala” that contains provisions governing the relationships between participants in a construction project. Custom is also a particularly relevant (albeit nebulous) source of law in constructed related endeavours and disputes. Importantly, decisions of courts are not binding on subsequent judgments.

As a large number of common law trained lawyers practice in the UAE, many common law concepts find their way into construction contracts. The consequence of this is that practice does not always reflect black letter law and the issues raised by the questions below are usually determined (in the first instance at least) by a contract administer or Engineer(under FIDIC forms of contract), who may or may not be aware of the true position under UAE law.

Most construction contracts are procured under FIDIC forms of contract which are subject to differing
degrees of amendment.


Answer 1) We are unaware of any provision or principle of UAE law that expressly lends itself to procuring expeditious and fair decisions on extension of time claims.

In our view, this is best achieved by proactive practical steps being taken, primarily by contractors
providing sufficiently detailed and well presented particulars that essentially demonstrate



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Steven Stein
Partner
Stein Ray
Chicago, Illinois, USA
Tel: +1 (312) 516-2000
sstein@steinraylaw.com  
 
 
 
 
 

USA:
Steven Stein, Partner, Stein Ray
 

Answer 1) In considering this question, it may be helpful to first identify why extension of time claims are not quickly and fairly resolved at the project level, in contrast to disputes over other issues. There are three factors which cause the extension of time claims to fester and to reach the dispute resolution process rather than being resolved early, efficiently, and fairly.  First, the complexity of large projects makes an easy determination of the causes and effects of purported delays difficult to ascertain.  In contravention, defective work claims are generally more discrete and the responsibilities of the parties more clear.

Second, the cost impact on the owner and contractor is significant whether damages are liquidated or based on actual costs and losses.  With so much riding on the outcome of an extension of time claim, it is understandable that the parties have difficulty reaching a conclusion.  And it's a zero sum game.  It is a winner-takes-all dispute where the success of one party usually precludes the other from recovery. 

Third, damages arising from delay are less likely to be shifted to third parties through insurance. Although efficacy coverage does exist, parties rarely purchase the insurance even where it is available.  In contrast, many risks on projects can and are commonly insured. 

Two commonly considered methods for resolving extension of time disputes are the "cultural" approach and improved dispute administration. 

Cultural approaches include "teaming," "alliancing," and "partnering," and now in their most current guise, "Integrated Project Delivery."  These efforts, though laudable, have not yet proved the solution.  It may very well be that some extension of time disputes which would have otherwise resulted in lengthy disputes were obviated by the good will created through these cultural devices.  Objective studies have yet to prove that to be true and subjectively it appears the problem remains unresolved based on the number of EOT claims which