Extensions of Time – How do EoT Claims Work in Practice?

In an ideal world, projects would run on time, nothing unexpected would occur, and liquidated damages would be a thing of the past. 

Unfortunately, this isn’t an ideal world; construction delays are common, and so we have contracts to help sort things out. 

In this article, we’re going to explore the fundamentals  of extensions of time claims on construction projects in Australia, including: 

• Qualifying cause of delay. 

• Dealing with Time Bars 

• Delay Analysis 

 

Let’s get started  

What Are Extension of Time Claims and Why Are They So Important?

Almost every construction contract, whether under an Australian Standard, GC21 or similar standard form will include some requirement for when the works must be completed.  

This is commonly called the “date for practical completion”. 

They will also contain provisions about the events that will have to occur for the contractor to say that the project is practically complete. When these requirements are met is called the “date of practical completion”. 

Absent an extension of time (or “EoT”), if the date of practical completion is after the date for practical completion, then the contractor might have to pay liquidated damages (or may otherwise simply be in breach of the Contract). 

A valid EoT will extend the “date for practical completion” by the allowed delay period.

This means if the contractor reaches practical completion later, they will not have to pay liquidated damages to the principal (at least, not for the delay associated with the allowed claim).

They might (but might not) also be entitled to some costs associated with the delay. 

Do You Get Delay Costs with an EoT Claim?

While EoT claims are primarily concerned with extending the project deadline, they are also often used as a springboard to cost claims. 

Importantly, however, those cost claims are not automatically awarded. If a contractor wants to claim the costs related to an EoT they will need to separately . 

So, in some cases, where you can establish that there has been a qualifying cause of delay, your contract also allows you to claim delay costs. 

But it is certainly not the case that you should assume you will get the costs associated with a valid delay claim.

The Basics of EoT Assessment

In Australia, a typical Extension of Time (EoT) clause in construction contracts, such as AS4000, may read as follows.  

“The Contractor shall be entitled to such extension of time for carrying out WUC (including reaching practical completion) as the Superintendent assesses (‘EOT ’), if :

(a) The Contractor is or will be delayed in reaching practical completion by a qualifying cause of delay; and
(b) The Contractor gives the Superintendent, within xx days of when the Contractor should reasonably have become aware of that causation occurring, a written claim for an EOT evidencing the facts of causation and of the delay to WUC (including extent).…..”

Looking at this clause, you can see we need to establish that: 

1. There was a “qualifying cause of delay” (or QCD for short); 
2. The contractor complied with the “time bar” inside the clause, and 
3. The QCD actually delayed the contractor in reaching practical completion. 

 

It All Starts with a Qualifying Cause of Delay

So, what is a “qualifying cause of delay” (QCD)? 

In a construction contract, QCDs are events that justify an Extension of Time (EoT) claim. QCDs can include delays due to the principal’s breach, variations, insufficient site access, force majeure, and adverse weather conditions.  

 Importantly, there is no standard list here, so each contract must be read on its own terms. If the event isn’t in there, then it won’t be something you can claim. 

The first question to always ask yourself with an EoT claim is this: Do we have a qualifying cause of delay? If so, what do we say that is? 

Answering those questions involves a factual investigation. What actually happened, and did what happened fall within the express wording of the contract?

Understanding and Managing Your Contractual Time Bars

Time bars are an important and often overlooked aspect of construction contracts in Australia.

These clauses dictate strict timeframes for submitting EoT claims. Failure to meet or comply with these deadlines can result in the contractor losing their right to claim delays.   

Our starting advice is this: if your contract requires you to do something within a particular timeframe, then do that. 

This means it’s critical to: 

1. Inform your project team about the importance of communicating potential delay-causing events. 
2. Be aware of the timeframes in the contract for these notices 
3. Have a process of drafting, approving and sending the notices that functions well. 

 

This is good contract administration, of course, but it is often forgotten in the ebb and flow of project delivery. 

Of course, there are arguments that are often run about whether time bars in contracts are effective or not. The most common are (in very brief shorthand): 

• Waiver – the principal has clearly elected to abandon its rights to strict compliance with the contract 

• Election – the principal has chosen one right over another so that they cannot now rely on them both 

• Estoppel – where the contractor has relied on a representation or promise made by the principal, such that it would be unjust to now allow the principal to resile from that promise. 

 

Raising these arguments is expensive, time-consuming and often difficult to prove.

The easiest path is just to comply with the time periods. 

Delay Analysis, Concurrent Delays, and Contractual Issues

It’s not just enough to say that there is a QCD – that QCD must also have actually delayed the Contractor. This involves reviewing the critical path and determining whether concurrent delays exist between qualifying and non-qualifying causes.  

To assess a delay, we need to look at the contract programme, critical path, float and concurrency. 

Programme and Critical Path

As you probably know, the contract programme is a series of events or activities, logically linked in a sequence, that need to be completed.  

The “critical path” is the sequence of activities that determines the shortest possible time to complete the project. Determining what is, or is not, on the “critical path” is the specialty area of building programmers, so we’re not going to dive too deeply into it here. 

But, for example, if items A, B and C need to take place in that exact order, then a delay in completing A will also affect items B and C. The delay affects the “critical path” because the entire project is impacted by the delay in completing A. 

Whereas, if activity G simply needs to be completed at some point, a delay to G not necessarily push back all the other activities and will not always affect the “critical path”. 

This, then, introduces the concept of “float”. 

How Does the Critical Path Affect Extension of Time Claims?

If a delay impacts the critical path, that will necessarily extend the time needed to complete the project as compared to the original programme. 

“Float” gets considered at this point, depending on the terms of the contract. The question is usually put as “who owns the float?”. This is how it works in big picture terms: 

• A contractor might be delayed and the critical path impacted without necessarily affecting its ability to complete the works under contract by the date for practical completion (i.e. the date of practical completion is delayed, but because the contractor is running ahead of program it can still meet the contractual date for practical completion). 
• In that instance, there are two ways of treating the delay (depending on the terms of the contract): 
  • In some cases, the contractor will be entitled to an extension of time even though it could probably still finish by the date for practical completion. In this case, the contractor “owns the float”; 
  • In other cases, the contractor will not be entitled to an extension of time unless it’s determined that the date for practical completion has actually been effected. In this case, the principal “owns the float”. 

 

Which scenario right in your case will ultimately depend on what your contract says. 

What is Concurrency and Why Does it Matter?

As we mentioned at the start, timing and delays aren’t always as simple as they sound. 

Concurrency within Australian construction projects commonly occurs when two or more delay events overlap, complicating the calculation of an Extension of Time (EoT) claim.

It is crucial to understand the contract’s treatment of concurrent delays to determine whether an EoT is warranted and the extent of the delay. 

For example, one of the delaying events might be a QCD, and one might not. So what happens then? 

This question ultimately comes down to what your contract says. Most construction contracts will have something to say about concurrent delays, and how they should be treated in assessing a claim for extension of time. 

Some of the most common treatments in construction contracts are: 

1. That in assessing the EoT claim, the superintendent should apportion the delay between the qualifying cause and non-qualifying cause; or 
2. That, to the extent there is overlap between a qualifying cause of delay and a non-qualifying cause, the contractor will not be entitled to an EoT to the extent the delays are concurrent (that is, you carve out the time where both types of delay were occurring). 

 

In every case, the first step is to know your contract, as that will govern the process. 

EoT In a Nutshell – Practical Advice

So, we’ve looked at qualifying causes of delay, time bars, float and concurrency. These form the fundamental elective elements of any extension of time claims. 

Effective management of Extension of Time (EoT) claims is critical to preventing costly delays in construction projects.

By understanding the contractual provisions, qualifying cause of delay, and delay analysis methodologies, contractors can ensure they are prepared to properly assess and substantiate their claims.  

In real terms, that means: 

1. Notify early of any possible delays and always follow the contract. 
2. Keep records that help to prove the:
   1. Qualifying causes of delay 
   2. Delays to the programme were actually caused by those QCDs.
3. Update your contract programme regularly, incorporating the impact of the critical delays.

 

If you need help establishing or disputing an extension of time claim in your next project, then you know where to find us.