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Contract Administration Time

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  Contents Aim   Learning outcomes  1. Introduction  2. Commencement and possession  2.1 Introduction 2.2 Possession and access 2.3 Failure to grant possession and/or access by the due date 3. Completion  3.1 Introduction 3.2 Practical completion or substantial completion 3.3 Section completion and partial possession by the employer 3.4 Acceleration 3.4 Works programme 4. Postponement  5. Extensions of time  5.1 Introduction 5.2 Reasons for delay 5.3  Force majeure  5.4 Processes and procedures 5.5 Typical problems © The College of Estate Management 2006 Paper 0489V3-0  Contract administration: Time  Contract administration: Time Paper 0489 Page 2 Aim This paper aims to:  Explain how the issue of time is dealt with under a range of contemporary forms of construction contract. Learning outcomes After studying this paper you should be able to:  Explain and comment on the contract provisions for controlling time on construction projects.  Discuss the roles and responsibilities of those involved in the management of time.  Explain what actions may be taken within the contractual framework in respect of delays to the work.  Contract administration: Time Paper 0489 Page 3 1 Introduction Time is an important factor to most clients and is often a major criterion upon which a  project is assessed. All construction projects require basic information concerning time to be included. At a minimum, we need to know when a project will start and when it should be completed and as projects grow larger and more complex, we need to know things like what happens if the contractor is delayed, if information is not provided at the correct time etc and what sanctions can be imposed by the employer if work is not completed at the proper time. 2 Commencement and possession 2.1 Introduction The date upon which negotiations between the employer and the contractor are finalised marks the point at which the contract comes into existence, and therefore the starting date for the parties’ obligations to each other under the contract. Although the contract is conventionally signed on or around this date, actual signature of the contract is not necessary. Provided that the parties have reached a true consensus on the key terms of the contract (the consensus ad idem ), the contract may actually be signed much later ( Trollope & Colls v Atomic Power Constructions  (1963)). We must however discriminate in construction projects between the date of commencement of the contract  , the date from which works  may commence and the date upon which the contractor is  permitted access to the site . These latter dates may  be affected by a number of factors eg issues relating to site ownership, access, pre-construction works by the employer, etc. Under the JCT 05 range of contracts the issue is dealt with by including in the contract a date for possession of the site  (although the Major Project Construction Contract (the Major Project form) uses the term ‘date upon which the contractor will  be given access to the site’). There may be more than one date for possession where a  project relates to construction on more than one site, or where a contractor will be allowed possession of different parts of the site at different times. This date(s) is generally given in the tender documentation (although it may occasionally be left ‘to  be agreed’), and the contract requires the contractor to ‘thereupon begin construction of the works and regularly and diligently proceed [until completion]’. Under the JCT forms then, the date(s) for possession and the date of commencement of the works are for all practical purposes the same, and other contractual provisions such as payment may be linked to this date. What this arrangement fails to acknowledge is that on major construction projects considerable work may be required by the contractor in respect of things like design,  pre-construction planning and programming, prefabrication, establishment of the contractual supply chain and the mobilisation of resources before work actually  begins on site. These activities carry a cost, and therefore some contracts recognise that the JCT arrangements may not always be fair and equitable. The NEC3 Engineering and Construction Contract (the NEC3 form) is a good example in that it defines three separate dates:  The contract date  is the date the contract comes into existence.  The starting date  is the date upon which work begins on the contract.  The access date(s)  is the date upon which the contractor will be allowed access to the site.  Contract administration: Time Paper 0489 Page 4 Payment provisions in this contract are related to the starting date, and both starting date and access date(s) are given by the employer in the tender documentation (NEC3 Contract Data Part 1). Similar arrangements are included in the 2005 edition of the Agreement and Schedule of Conditions of Building Contract for use in the Hong Kong Special Administrative Region (the HK form). Similar but subtly different arrangements are included in the ICE Conditions of Contract Measurement 7th edition (ICE 7th edition) and in the FIDIC Conditions of Contract for Construction (FIDIC Red Book). In the FIDIC Red Book the commencement date may be included in the tender documentation or alternatively must be set by the engineer within 42 days of receipt  by the contractor of the letter accepting his tender, giving the contractor at least 7 days notice (clause 8.1). In the ICE 7th edition the works commencement date must be either:  defined in the tender documentation;  fixed by the engineer as a date between 14 and 28 days of the notification of contract award;  a date agreed between the parties (clause 41 (1)). In both cases the employer is required to give possession of the site by dates stated in the contract, and the contractor is required to commence work ‘as soon as is reasonably possible’ after the stipulated commencement date. The PPC 2000 Standard Form of Contract for Project Partnering (PPC 2000) deals with the issue in a rather different way. Here, the contract explicitly and separately recognises ‘pre-possession’ activities as distinct from activities that occur from the commencement of work on site, and each is dealt with in a separate agreement annexed to the main contract. Under the pre-possession agreement  (Appendix 3 Part 1 of the main contract form) the employer and the contractor agree upon:  a list of pre-possession activities to be completed by the contractor;  a timetable under which they will be carried out;  the sums of money that the contractor will be paid for completing the pre- possession activities;  any other terms and conditions which the parties may wish to include. The commencement agreement  (Appendix 3 Part 2 of the main form) then sets out the data that will be required for the construction works. Unlike the pre-possession agreement, which is only signed by the employer and the contractor, this latter agreement is completed by all of the members of the wider partnering team who are signatories to the main contract. The commencement agreement includes:  Project timetable  Dates for possessions and completion  Any constraints on site use or access  Arrangements for deferred or interrupted possession  Health and safety plan  Project brief and proposals  Agreed maximum price and price framework
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