10 BUSINESS AND TRAINING
Uwe Putlitz is a registered professional Architect and Construction Project Manager, a Fellow of the Royal Institute of Chartered Surveyors( RICS) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand. Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee( JBCC) he specialises in the avoidance of construction disputes by way of lectures, technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standardform Contracts including the Federation Internationale des Ingenieurs-Conseils( FIDIC), the General Conditions of Contract( GCC), the JBCC or the New Engineering Contract( NEC) to find an acceptable settlement without resorting to legal processes, where possible.
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“ The employer
may instruct changes and / or additional work, even the omission of some work.”
The consequences of delays, time extensions and additional costs
By
Uwe Putlitz
A‘ contract’ is defined as a‘ written or spoken agreement intended to be enforceable by law’( SA Concise Oxford Dictionary), typically recording the critical project performance criteria of‘ cost’,‘ time’ and‘ quality’ by the Contractor, as defined by the Employer who makes payment as the works progresses.
Typically, all Standard-form Construction Contracts( SfCC) and Standard-form Subcontract Contracts( SfSC) include similar wording as … the( sub) contractor must give notice to the Principal Agent / Contract Administrator( PA / CA)( or the SC to the PCr) on becoming aware of event( s) that may delay completion of the( subcontract) works and / or incur additional expense – failing which, the opportunity to claim is forfeited. A second notice, a substantiated claim detailing the event( s), action taken by( sub) contractor to minimise or avoid delays, and / or costs must be issued within a stipulated period after the event can be quantified.
A subcontractor’ s claim is generally assessed by the PCr.
A subcontractor’ s claim may form part of the PCr’ s claim to be assessed by the PA / CA – in which case, assessment of the subcontractor’ s claim is delayed until the PCr’ s claim is resolved.
Additional work The employer may instruct changes and / or additional work, even the omission of some work. This is not a desirable situation but may be unavoidable and may also involve some appointed subcontractors.
The employer and the PA / CA must timeously consider the implications on the programme, and the costs of the project if substantial changes to the scope of work are proposed:
• Construction teams create a methodical pattern and rhythm to carry out sequential tasks – if this rhythm is disrupted by suspension or significant changes, the time lost is never recouped!
• In practice it is often less disruptive and cheaper to complete the original scope of work and subsequently undertake the additional work – preferably with a different team.
• To demolish work is a demotivating experience for team who have complied with performance specifications and are now expected to complete new work to a high-quality standard … again!
Note: The employer cannot omit work only to award it to another contractor( 1899 USA Gallagher v Hirsch).
Agreed changes must be transmitted to the PCr and subcontractors following the procedures in the SfCC and SfSC. The PA / CA must issue a“ Contract Instruction” to the PCr describing such work – who, in turn, must issue a“ Contractor’ s Instruction” to each involved subcontractor.
• Neither the PCr nor a subcontractor is obliged to carry out additional work after the date of practical completion.
• Should the PCr or a SC fail to implement an instruction after following the procedure in the SfCC / SfSC, the employer may appoint others to do so at their cost.
• The PCr and each subcontractor remain liable for defective work from the date of commencement of the subcontract-works until the expiry of the Defects Liability Period stipulated in the SfC-CD / SfS-CD used.
Delays and claims
• Claims generally have their origin in a change of scope, or as the work progresses.
• As the works progress the subcontractor may become aware of‘ events’ that could delay the subcontract-works or result in additional expenses or possible savings( or faster or better methods of construction).
• Where authorised changes to the scope of the subcontract-works are instructed during the execution phases, the SC may be entitled to a revision of the date for interim completion and / or an adjustment of the subcontract value – without the SC having to apply for such adjustment!
• If the PCr( and subcontractors) are behind
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