FIDIC Lecture - EOT &Amp; Related Costs in Construction

7/26/2019 FIDIC Lecture - EOT &Amp; Related Costs in Construction

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Extension of Time (EOT) andRelated Costs in Construction

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Presented at theF!C "iddle East Contract #sers$ Conference

Fe%ruar& '* + !u%ai, #-E

&/halil T. 0asan

Construction 1olutions (www.cspk.org)


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Time is of Essence

!ela&s are ine2ita%le on construction pro3ects

The onl& pro3ect to ha2e completed on time is a "os4ue.

!i2ine inter2ention (or 5od$s help) was understood to

%e the force %ehind the timel& completion of this"os4ue.

Time and "one& go hand6in6hand. 7hen pro3ects get

late, additional costs are incurred.

This makes it imperati2e to take control of pro3ect

dela&s8 timel& and e9ecti2el&.


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"a3orit& of construction pro3ects worldwide are

administered %& the F!C forms of contract.

F!C recognises dela& and related costs and has

pro2isions related thereto. For example8

1u%6Clauses :.; < '. (F!C === Edition) Clauses ;; < >* (F!C =:? Edition)

FIDIC

FIDIC

FIDIC

FIDIC

FIDIC


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The F!C Pro2isions de@ne the conditions where dela&ma& %e claimed as the %asis for an Extension of Time(EOT). 1ome examples are8

Aate pro2ision of design or drawings

#nforeseea%le Ph&sical Conditions encountered on

1ite

nclement 7eather

Bariations instructed %& the Engineer (-dditional

7orks etc.)


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"eanwhile the principles of how dela& andrelated costs should %e calculated are notde@ned %& F!C. This leads to issues8

issues which are usuall& contentious due to2arious schools of thoughts and 2ariedinterpretations existing worldwide.

!isputes are the usual outcome.


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Contentious ssues in !ela&-nal&sisresulting in !isputes

Critical Path

7ho owns the FloatD

Concurrent (or Contractor) !ela&s and how thesee9ect Entitlement

EOT and its relation with Compensation for !ela&

7hich is the %est "ethod of !ela& -nal&sisD -s6Planned Bs. -s6uilt Comparison

mpacted -s6Planned

Collapsed -s6uilt ut6For

Time 1lice 1u%6etworks Time6mpact

Etc.

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n order to eliminate disputes or facilitatesettlement of disputes, there are now certainstandards used worldwide. The leading

standards are8

1ociet& of Construction Aaw$s!ela& and !isruption Protocol (1CA

Protocol)

--CE '=R6* (Forensic 1chedule -nal&sis)


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The 1CA Protocol was@naliGed in Octo%er

'' after se2eral &ears

of deli%erations andconsidera%le de%ate and

agreement %etween

experts from di9erent%ackgrounds


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The o%3ecti2e of the 1CAProtocol was to %ring

reasona%leness and fairness

into the dela& assessmentprocess and to eliminate

widespread manipulation of

complex dela& issues


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The 1CA Protocol tried to standardiGe

the issues such that disputes would %e

reduced or eliminated


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t is recommended that8

should %e adopted as a1tandard and should %e,

where possi%le,

incorporated in the


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The 1CA Protocol can %e

downloaded fromH

www.eotprotocol.com
http://www.eotprotocol.com/http://www.eotprotocol.com/


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The remaining slides of this lecture

will re2iew and discuss the %asicPrinciples suggested and

recommended %& the1CA Protocol


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asic Principlessuggested and

recommended %&the 1CA Protocol


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The Principles suggested %& the1CA Protocol are simple.

1ome of the ke& principlessuggested %& the Protocol are8


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R#AE O.

f there is an Emplo&er$s dela&, which is %e&ond theContractor$s control, and if this dela& impacts the

Completion !ate of the 7orks,

the Contractor should %e entitled to

recei2e an Extension of Time (EOT).IThis will e9ecti2el& result in an extended Time for

Completion and will relie2e the Contractor fromha2ing to pa& penalties for dela& (or !ela& !amages

under F!C)J


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R#AE O. '

For the case of reco2er& of dela& (or prolongation) costsincurred due to the Emplo&er dela&s, the Contractor must%e a%le to pro2e that there has %een no other dela&, which

is in his own control, and which is e4uall& (or partl&)contri%uting for dela&ing the Time for Completion.

This categor& of dela& is called aKConcurrent$(or Contractor$s) !ela&

In order to win a !ela& Costs Claim, the Contractormust %e a%le to pro2e that he has not %een

responsi%le for Concurrent !ela&s to the Time for

CompletionJ


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R#AE O. *

Where Contractors Delay to Completionoccurs concurrently with Employers

Delay to Completion, the Contractors

concurrent delay should OTreduceanyExtension of Time (EOT), which is due.

IResult of Rule o. will not change and is irrespecti2e

of the result of Rule o. 'J


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The foregoing Rules proposed %& the 1CAProtocol are meant to %ring fairness and

reasona%leness into the dela& assessmentprocess.

IThe emphasis of the 1CA Protocol is that noone Part& should %ene@t from default of the

other Part&J


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The llustrations demonstrating the principlesof the 1CA Protocol are contained in the

following Figures - to 5


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Principles < Pro2isions of the 1CAProtocol

rele2ant to Figure

Core Principle o. ? 6 Float as it relates to time#nless there is express pro2ision to the contrar& in the contract, wherethere is remaining Loat in the programme at the time of an Emplo&erRisk E2ent, an EOT should onl& %e granted to the extent that the

Emplo&er !ela& is predicted to reduce to %elow Gero the total Loat onthe acti2it& paths a9ected %& the Emplo&er !ela&.

5uidance 1ection .'.f as a result of an Emplo&er !ela&, the Contractor is pre2ented fromcompleting the works %& the Contractor$s planned completion date(%eing a date earlier than the contract completion date), the Contractor

should in principle %e entitled to %e paid the costs directl& caused %& theEmplo&er !ela&, notwithstanding that there is no dela& to the contractcompletion date (and therefore no entitlement to an EOT), pro2ided alsothat at the time the& enter into the contract, the Emplo&er is aware ofthe Contractor$s intention to complete the works prior to the contractcompletion date, and that intention is realistic and achie2a%le.


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Core Principle o. ; 6 Procedure for granting extension oftimeThe EOT should %e granted to the extent that the Emplo&erRisk E2ent is reasona%l& predicted to pre2ent the works%eing completed %& the then pre2ailing contract completiondateM..The goal of the EOT procedure is the ascertainmentof the appropriate contractual entitlement to an EOT8 theprocedure is not to %e %ased on whether or not theContractor needs an EOT in order not to %e lia%le forli4uidated damages.

Core Principle o. > + E9ect of dela&For an EOT to %e granted, it is not necessar& for theEmplo&er Risk E2ent alread& to ha2e %egun to a9ect theContractor$s progress with the works, or for the e9ect ofthe Emplo&er Risk E2ent to ha2e ended.


rele2ant to Figure C


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Core Principle o. ; 6 Procedure for granting extension oftimeThe EOT should %e granted to the extent that the Emplo&erRisk E2ent is reasona%l& predicted to pre2ent the works%eing completed %& the then pre2ailing contract completion

dateM..The goal of the EOT procedure is the ascertainmentof the appropriate contractual entitlement to an EOT8 theprocedure is not to %e %ased on whether or not theContractor needs an EOT in order not to %e lia%le forli4uidated damages.

Core Principle o. > + E9ect of dela&For an EOT to %e granted, it is not necessar& for theEmplo&er Risk E2ent alread& to ha2e %egun to a9ect theContractor$s progress with the works, or for the e9ect ofthe Emplo&er Risk E2ent to ha2e ended.


rele2ant to Figure !


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5uidance 1ection .'.Man EOT should %e granted to the extent that the Emplo&erRisk E2ent is predicted to pre2ent the works %eingcompleted %& the then pre2ailing contract completion date.This process re4uires consideration of the a2aila%le LoatM

5uidance 1ection .;.'M7here there has %een Emplo&er !ela&, this ma& pre2entthe Emplo&er charging the Contractor with A!s for failure toachie2e a contract completion dateM


rele2ant to Figure E


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5uidance 1ection .;.:7here an Emplo&er Risk E2ent occurs after the contract completiondate, in a situation where failure to complete %& the contractcompletion date has %een caused %& Contractor !ela&s, the

principle set out in 1ection .;.? a%o2e should appl&, except wherethe Emplo&er Risk E2ent is a non6compensa%le Emplo&er RiskE2ent. n such an e2ent, no EOT (or compensation) should %e due.7here an EOT is due after the contract completion date, theEmplo&er Risk E2ent does not exonerate the Contractor for all itsdela&s prior to the Emplo&er Risk E2ent occurring. The e9ect of theEmplo&er Risk E2ent should %e assessed as descri%ed a%o2e andan& EOT found due should simpl& %e added to the contractcompletion date.


rele2ant to Figure F


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5uidance 1ection .;.7here Contractor !ela& to Completion occurs concurrentl& withEmplo&er !ela& to Completion, the Contractor$s concurrent dela&should not reduce an& EOT due.

5uidance 1ection .;.?7here Emplo&er Risk E2ents and Contractor Risk E2ents occur

se4uentiall& %ut ha2e concurrent e9ects, here again an& Contractor!ela& should not reduce the amount of EOT due to the Contractoras a result of the Emplo&er !ela&.

Concurrenc& (-ppendix - + !e@nations and 5lossar&)True concurrent dela& is the occurrence of two or more dela&

e2ents at the same time, one an Emplo&er Risk E2ent, the other aContractor Risk E2ent and the e9ects of which are felt at the sametime. The term Kconcurrent dela&$ is often used to descri%e thesituation where two or more dela& e2ents arise at di9erent times,%ut the e9ects of them are felt (in whole or in part) at the sametime. To a2oid confusion, this is more correctl& termed theKconcurrent e9ect$ of se4uential dela& e2ents.


rele2ant to Figure 5 + 1lide '


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Core Principle o. = 6 Concurrent dela& + its e9ect on entitlement toextension of time7here Contractor !ela& to Completion occurs or has e9ectconcurrentl& with Emplo&er !ela& to Completion, the Contractor$sconcurrent dela& should not reduce an& EOT due.

Core Principle o. ; 6 Aink %etween extension of time and

compensationEntitlement to an EOT does not automaticall& lead to entitlement tocompensation (and 2ice 2ersa).

Core Principle o. 6 Concurrent dela& + its e9ect on entitlement tocompensation for prolongation

f the Contractor incurs additional costs that are caused %oth %&Emplo&er !ela& and concurrent Contractor !ela&, then the Contractorshould onl& reco2er compensation to the extent it is a%le toseparatel& identif& the additional costs caused %& the Emplo&er !ela&from those caused %& the Contractor !ela&. f it would ha2e incurredthe additional costs in an& e2ent as a result of Contractor !ela&s, theContractor will not %e entitled to reco2er those additional costs.


rele2ant to Figure 5 + 1lide ''


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5uidance 1ection *.'.*-lthough the programme should %e the primar& tool forguiding the C- in his determination of EOT, it should %eused in con3unction with the contemporar& e2idence toensure that the resulting EOT is fair and reasona%le. t

will also %e necessar& for the parties to appl& commonsense and experience to the process to ensure that allrele2ant factors are taken into account, and that an&anomalous results generated %& the programmeanal&sis are managed properl&.

/e& 5uideline, 1uggestion and -d2iceof the 1CA Protocol


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i!ure "o. #uestion $ #uestion % #uestion & #uestion '

(c) () (a) ()

C (a) () (d) ()

D (c) (d) (d) (c)

E () (a) (d) (c)

(a) () (d) (c)

* (c) (a) (a) ()

Correct Responses for Figures

to 5


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Con!ratulations weha+e come to the

end of the ecture.

-ou are now a

#ualied andCertied Delay

Claims /nalyst and

Expert.

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0D0C and Construction 1olutionsthan2 you for your attendance and

contriution.

We wish you all *ood uc2.

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7e urge all participants to re2iew the 1CA Protocol ontheir own. Construction 1olutions$ Claims "anagement

!i2ision (www.cspk.org)will remain a2aila%le for furtherdiscussions on the foregoing and an& other rele2ant

issue.

This Aecture was deli2ered %& the "anaging Partner ofConstruction 1olutions, "r. /halil Ta&a% 0asan. For an& 4ueries

and clari@cations, please feel free to contact "r. 0asan at8

khalilhasanNcspk.org

khalilhasanNhotmail.com

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=' *;> :>=>

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FIDIC Lecture - EOT &Amp; Related Costs in Construction