Projects delivered on time, within budget and to high standards are an employer’s dream.
Yet projects have a tendency to generate disputes that destroy otherwise lucrative commercial relationships across the supply chain.
The Technology and Construction Court exists to resolve these disputes. But what causes them and how can they be avoided?
Of the three pillars of time, cost and quality, time is the hardest to control and is the cause of many disputes.
A vital tool in project management is a well-resourced, time-sequenced and logic-linked contract programme that defines the critical path of the construction activities, identifies key milestones and locks in the completion date.
But, as sure as night follows day, every contract programme is guaranteed to be disrupted between commencement and completion.
The standard forms of contracts and other bespoke forms recognise employers risk events for which the contractor is entitled to an extension of time (EOT) and compensation for prolongation.
There are also non- compensable employer risk events, for which the contractor may be entitled to EOT but without compensation, and there are contractor risk events for which the employer is entitled to liquidated and ascertained damages (LAD).
Save for timely payment, the employer in construction contracts is silent.
“Contractors must assist the CA by flagging every delaying event, along with an objective assessment of the impact on the critical path and completion”
The contracts administrator (CA), who could be the architect, engineer or project manager does almost everything else.
Thus, the burden of preventing disruption and delays degenerating into a dispute falls on the CA. They must determine whether the contractor is entitled to EOT or liable to pay LAD.
In doing so, the CA must not consider themselves partisan as the employer’s hired hand and should discharge this function objectively and expeditiously.
They should notify contractors of any employer risk event and invite their earliest response.
Contractors must assist the CA by flagging every delaying event, along with an objective assessment of the impact on the critical path and completion.
While it appears to be counterintuitive, it is almost always to the contractor’s credit when, notwithstanding an employer risk event for which they could claim EOT with compensation, they nevertheless produce a revised construction programme that protects the completion date.
The CA and the contractor should always be prepared to deal with disruptions contemporaneously, rather than let them fester in the hope that the completion date is still achievable or that EOT issues are best addressed at the end.
When this approach is adopted, a dispute requiring the attention of expert contentious lawyers whether in adjudication, arbitration or litigation often becomes inevitable.
Produced by 4-5 Gray’s Inn Square in association with Construction News. Samuel Okoronkwo is a barrister at 4-5 Gray’s Inn Square. He specialises in planning, construction and engineering law and can be found at samuelokoronkwo.com, by calling 0207 534 5828, or contact his clerk at firstname.lastname@example.org