What are you missing in your Extension of Time claim?
The Insight
Within projects, contract Extensions of Time are one of the least understood matters. The ins and outs of the criteria for claiming and provision of evidence are rarely fully understood.
Simply lodging a claim for an Extension of Time (EOT) does not entitle the Contractor to an extension.
EOTs can have an impact on both the Contractor and the Principal.
Amongst other things, the Contractor may be exposed to costs for being late in the delivery while the Principal may be disadvantaged by a loss of business.
The contractual requirements surrounding any claim must be assessed and understood. Claims and responses must be within the timeframes of the contract, which may vary dependent on the contract’s conditions. It is the responsibility of the Project Manager to act fairly and reasonably to all parties.
The Impact
Extensions of time occur in almost every contract.
According to the Project Management Survey conducted by AIPM and KPMG in 2020, only 42% of projects are likely to be delivered on time. This indicates that at least 58% of projects are impacted by EOT claims, while others may still be implemented without affecting the overall completion date.
Let’s clarify some common misconceptions around the EOT claim submission process.
There must be an evidenced basis with supporting information to justify a claim.
Each claim must include a documented program detailing how the delay will impact the project. This program only allows for normal workdays unless the extension is set to run past an RDO or public holiday, then they are counted as part of the claimed days.
Under normal circumstances, claims the Contractor makes that have a cost entitlement in correlation to the EOT should be made as one claim.
It’s also important to understand what situations may impact the assessment of an EOT claim.
If the delay is related to a non-critical path item that could easily be completed in isolation from the rest of the project, the claim may be rejected.
If there is another delay happening on the project within the same time period, the claim should be rejected as the Contractor is only entitled to one extension at a time.
The Contractor must identify the actual days they are delayed. Non-working days, RDO’s, and public holidays within the original contract timeframe are inadmissible as delayed days in the assessment. If an EOT runs past one of these days, it must be passed over as they are non-workdays.
When recommending an EOT claim, it is the responsibility of the Project Manager to be satisfied it is valid for both the Principal and the Contractor.