THE IMPORTANT OF NOTICE IN EXTENSION OF TIME (EOT) FOR STANDARD CONSTRUCTION FORMS

Whenever there is delay in the construction works, contractor always can exercise their right under the contract to ask for extension of time. However, before to exercise such right, the contractor must then fulfil the condition precedents stated in the standard form contract.

The article will primarily focus on the condition precedents envisaged under the following standard form contracts:

• PAM Contract 2006/2018;
• The AIAC Standard Form of Building Contract (2019 Edition) Red Book; and
• Malaysian Public Works Department’s standard form of contract with quantities (P.W.D. Form 203A (Rev. 2010).

NOTICE REQUIREMENTS UNDER THE PAM/AIAC/PWD CONTRACTS

1.PAM CONTRACT 2006/2018

Clause 23 of the PAM Contract governs the extension of time. Clause 23 of PAM contract is stated as follows:-

Extension of Time

“Clause 23.1:

“If the Contractor is of the opinion that the completion of the Works is or will be delayed beyond the Completion Date by any of the Relevant Events stated in Clause 23.8, he may apply for an extension of time provided always that:

23.1(a) the contractor shall give written notice to the Architect his intention to claim for such extension of time together with an initial estimate of the extension of time he may require supported with all particulars of the cause of delay. Such notice must be given within twenty-eight (28) days from the date of the AI, giving of such written notice shall be a condition precedent to an entitlement of extension of time; and

23.1(b) within twenty-eight (28) days of the end of cause of delay, the Contractor shall send to the Architect his final claim for extension of time duly supported with all particulars to enable the Architect to assess any extension of time to be granted. If the Contractor fails to submit such particulars within the stated time (or within such longer period as may be agreed in writing by the Architect), it shall be deemed that the Contractor has assessed that such Relevant Event will not delay the completion of the Works beyond the Completion Date.”

Loss & Expense

“Clause 24.1:

Where the regular progress of the Works or any section of the Works has been or is likely to be materially affected by any of the matters expressly referred to in Clause 24.3, and the Contractor has incurred or is likely to incur loss and/or expense which could not be reimbursed by a payment made under any other provision in the Contract, the Contractor may make a claim for such loss and/expense provided always that:

24.1(a) the contractor shall give written notice to the Architect of his intention to claim for such loss and/or expense together with an initial estimate of his claim duly supported with all necessary calculations. Such notice must be given within twenty-eight (28) days from the date of the AI, CAI or the start of the occurrence of the matters referred in to in Clause 24.3, whichever is earlier. The giving of such written notice shall be a condition precedent to any entitlement to loss and/or expense that the Contractor may have under the Contract and/or Common Law; and

24.1(b) within twenty-eight (28) Days after the matters referred to in Clause 24.3 have ended, the Contractor shall send to the Architect, complete particulars of his claim for loss and/or expense together with all necessary calculations to substantiate his claims. If the Contractor fails to submit the required particulars within the stated time (or within such longer period as may be agreed in writing by the Architect), it shall be deemed that the Contractor has waived his rights for loss and/or expense

It is clear that the notice requirements under Clauses 23 and 24 of PAM are expressly regarded as a condition precedent.  Meaning in order to apply an EOT, a notice is required.

2. The AIAC Standard Form of Building Contract (2019 Edition) Red Book

Extension of Time

“Application for EOT- Clause 23.1

23.1(b) As soon as practicable, but not later than twenty-eight (28) Days after the Contractor became aware, or should have become aware of the regular progress of the Works having been delayed by such Time Impact Events, the Contractor shall give written notice to the CA indicating his intention to claim for an EOT and describing the Time Impact Events giving rise to an EOT.                

i.give such written notice under Clause 23.1(b); or

ii. submit the required particulars within the stipulated twenty-eight (28) Days or such other period as approved by the CA under Clause 23.1(c), the CA is not obliged (until after the Practical Completion of the Works) to assess and grant any EOT in respect of the Contractor’s application for EOT. In that event, subject to the CA’s review under Clause 23.10, the Contractor shall not be entitled to any EOT, and the non-assessment and non-granting of the EOT due to the Contractor’s failure under this Clause shall not be a ground for challenging the validity of the Certificate of Non-Completion (if any) issued by the CA, or any deduction or claim or Liquidated Damaged made by the Employer under Clause 22.0

Loss & Expense

“Application to Ascertain Loss and/or Expense- Clause 24.1

24.1(a)       If the regular progress of the Works or any section of the Works has been materially affected by any of the Employer’s Events set out in Clause 23.8(c), and the Contractor has incurred direct loss and/or expense which could not be reimbursed by a payment made under any other provision in the Contract, the Contractor may make a claim for such direct loss and/or expenses subject always to the following provisions:

the Contractor shall within twenty-eight (28) Days of the occurrence of such event, give a written notice to the CA of his intention to claim for such direct loss and/or expense together with an initial estimate of his claim duly supported with all necessary calculations and particulars; and

within twenty-eight (28) Days after such event has ended, the Contractor shall send to the CA relevant particulars of his claim for the direct loss and/or expense together with all necessary calculations and particulars to substantiate his claims;

if the Contractor fails to submit the required written notice in Clause 24.1(a)(i) or the particulars in Clause 24.1(a)(ii), or within such longer period as may be agreed in writing by the CA, it shall be deemed that the Contractor has waived his rights under this Contract and/or the law to any such direct loss and/or expense;

If the CA is of the opinion that the particulars submitted by the Contractor are insufficient to enable him to decide on the claim for such direct loss and/or expense, the CA shall within fourteen (14) Days from the date of receipt of Contractor’s particulars, inform him of any deficiency in his submission and require the Contractor to provide such further particulars within such period of time as may be stated by the CA in writing. If the Contractor fails to submit the required further particulars within the time as instructed by the CA, the CA may value the Contractor’s claim for such direct loss and/or expenses based on whatever information which is available to them and ascertain the amount (if any) entitled by the Contractor within forty-two (42) Days thereof.”

Clauses 23 and 24 of AIAC Contract clearly stated the mandatory need of issuance the notice within the stipulated period and failing will render the application of Extension of time and Loss and Expenses fatal.

3. Malaysian Public Works Department’s standard form of contract with quantities (P.W.D. Form 203A (Rev. 2010).

Extension of Time

“Delay and Extension of Time- Clause 43.1

43.1 Upon it becoming reasonably apparent that the progress of the Works is delayed, the Contractor shall forthwith give written notice to the S.O. as to the causes of delay and relevant information with supporting documents enabling the said officer to form an opinion as to the cause and calculation of the length of delay. If the opinion of the S.O. the completion of the Works is likely to be delayed or has been delayed beyond the Date for Completion stated in Appendix 1 or beyond any extended Date for Completion previously fixed under this clause due to any or more of the following events…”

Loss & Expense

“Claim for Loss and Expense- Clause 44

44.1     If at any time during the regular progress of the Works or any part thereof has been materially affected by reason of delays as stated under clause 43.1 (c), (d), (e), (f) and (h) and the Contractor has incurred direct loss and/or expense beyond that reasonably contemplated and for which the Contractor would not be reimbursed by a payment made under any other provision in this Contract, then the Contractor shall within 30 days of the occurrence of such event or circumstances or  instructions give notice in writing to the S.O. of his intention to claim for such direct loss or expense together with an estimate of the amount of such loss and/or expense, subject always to clause 44.2 hereof.”

44.2     As soon as is practicable but not later than 90 days after practical completion of the Works, the Contractor shall submit full particulars of all claims for direct loss or expense under clause 44.1 together with all supporting documents, vouchers, explanations and calculations which may be necessary to enable the direct loss or expense to be ascertained by the S.O. The amount of such direct loss or expense ascertained by the S.O. shall be added to the Contract Sum.”

44.3        If the Contractor fails to comply with clauses 44.1 and 44.2 above, he shall not be entitled to such claim and the Government shall be discharged from all liability in connection with the claim.

For clause 43 of the PWD Contract, there is no timeline stipulated for the issuance of a notice within the date of the delay event. Further, there is nothing to suggest that failure to issue such notice would render the application fatal. Therefore, the notice requirement under Clause 43 of the PWD Contract is merely directory and not mandatory.

For clause 44, the issuance of the written notice is mandatory for the application Loss and Expenses.