Time and delay related provisions under JCT

In a construction contract, both the employer and the contractor may contribute to causing delay to construction contracts. Employers may cause delay by constantly changing the design and contractors may cause delay due to the lack of efficiency in planning. There are also delays that are caused by events which neither party has control over e.g. force majeure and adverse weather. To cater to these issues, most of the standard forms of contracts allows for extension of time. There has always been an assumption that the provision of an extension of time clause in a construction contract is solely for the benefit of contractors. However, in actual fact, the extension of time provision is primarily provided to protect the employer’s right for liquidated damages. Common law has established that in the absence of an extension of time provision, the liquidated damages provision may be unenforceable under contract.

In this chapter, the important time and delay related provisions under the JCT form of contracts will be examined. As described in chapter one, the JCT forms of contract was chosen due to the dominant usage of their contract in the United Kingdom construction industry. Additionally, the author intends to analyze the difference and common types of delay that is prescribed in the contract.

2.2 Time and Delay Provisions in JCT

The current JCT 2005 suite is more comprehensive compared to its predecessor especially with the inclusion of popular supplements such as sectional completion, collateral warranties, fluctuation and contractor’s design portion. The current contract has updated the issues from the previous suite and is more users friendly. It was drafted using simple English rather than the legalistic approach. One of the examples identified is the change usage of ‘determination of the Contractor’s employment’ in the previous contract to ‘termination of the Contractor’s employment’ in the 2005 version. The conditions of the contract have been restructured categorized into sections and schedules which replaced the ‘clause by clause’ format adopted in the previous suite.

Some of the key changes to the provision on time in the current JCT Standard Building Contract with Quantities (SBC/Q), JCT Standard Building Contract with Approximate Quantities (SBC/AQ) and JCT Standard Building Contract without Quantities (SBC/XQ) as follows: - (i) The heading of ‘extension of time’ in the previous contract has now been replaced with ‘adjustment of completion date’. The procedures in the provision however, still refer to the process of providing extension of time to the contractor. (ii) The listed Relevant Events has also been revised and reduced. Some of the reduced events were combined into a ‘catch all clause’ intended to cover defaults or omissions by the act of employer. This is to preserve the rights of the employer to the liquidated damages clause in the event of default or omission by the employer. (iii) The 2005 suite also saw the omissions of a number of provisions from the previous contract including provisions which were found redundant when compared with the existing legislation [1] . The omitted provision includes the provisions on Nominated Sub-Contractors and Suppliers, statutory procedural material which is the Construction Industry Scheme (CIS), the Value Added Tax (VAT) Supplemental Provisions and Construction, Design and Management (CDM) Regulations [2] .

The parties’ obligations relating to provisions on time and delay in the current JCT contracts have been structured well and are extensive. The provisions include clauses on time for possession of site, completion of the works or sections of the works, adjustment of completion date and identification of delayed events. These provisions will be examined in detail to evaluate the approach of JCT contracts in assessing extension of time and dealing with concurrent delay.

2.2.1 Possession of Site

This provision is linked closely to the administration of time clause. Delay in providing “...possession of the site..." as mentioned in clause 2.4 may lead to a claim for extension of time by the contractor under the Relevant Events clauses [3] . The terminology of “possession of the site" has been used since the 1963 Form [4] . The term was made clear by the court in the case of Whittal Builders v Chester-le Street District Council [5] where it was held that the contractor was entitled to the possession of the whole site which the judge refers to the ‘...18 dwellings at one time...’ as stated in the appendix of the contract [6] . The employer will be in serious breach if he fails to give full possession of the site to enable the contractor to perform his obligations under the contract unless stated in the contract otherwise.

Deferment of the provision of site possession is allowed up to six weeks under clause 2.5 of the current contract [7] . The employer is advised to notify the contractor in writing in advance about the intention to defer the site possession even though it is not required by the contract [8] . The contractor may entitle for an extension of time if the possession of site is defer by the employer.

2.2.2 Progress of the Work

In the current contract, the contractor’s obligation remains the same as in the previous contract. Upon receiving site possession, the contractor is obliged to proceed to conduct/deliver the work “…regularly and diligently..." It is interesting to note that, in the case of West Faulkner Associates v London Borough of Newham [9] Simon Brown LJ in Court of Appeal defined the words "regularly and diligently" in the following manner:

"Taken together the obligation upon the contractor is essentially to proceed continuously, industriously and efficiently with appropriate physical resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of work…"

As long as the contractor complies with all the authorities [10] required under the contract and Statutory Requirement, the contractor is free to plan their own methods for executing the contract and completing their obligations on time. The contractor must also not disregard the fact that all planned and execution must be `regularly and diligently’. The contractor is also under the obligation to use their ‘best endeavours to prevent delays in the progress of works’ [11] .

2.2.3 Completion of Work

Under clause 2.4, the contractor is responsible to execute his work regularly and diligently and “... to complete the same on or before the relevant Completion Date"... The date of completion has a very significant effect to the contract [12] . Delay will be calculated starting from this point, in the event the contractor fails to complete the work by the completion date. A completion date for the whole work or (if necessary) a sectional completion date will be inserted in the contract particulars. A sectional completion date in a contract, distinguishes different completion dates for identified sections of work which is followed by different amounts of liquidated damages. Failure to complete the work before or on the completion date will result in the deduction of liquidated damages by the employer. In common law, if the employer is found to have hindered the contractor from finishing the work before or on the completion date, the date of completion specified in the contract will be ineffective. For example the employer may be instructing for an additional works without granting extension of time. Completed works or ‘Practical Completion’ [13] of a construction projects under JCT contracts is easier to be identified rather than defined. Different contract uses different terms to present completed works.

Liquidated damages are the genuine pre-estimate of loss to be suffered by the employer in the event of the contractor’s failure to complete his obligations under the contract before or on the date of completion. Without having to prove the loss, the employer will be entitle to the amount agreed even though the actual loss suffered is more or less than the liquidated damage amount inserted in the contract particulars.

2.2.4 Contractor’s Programme

The advantage of having a construction programme in a construction contract is to enable the employer to monitor and anticipate the contractor’s planning for the completion of the project. An efficient programme will normally consist of the identification of the critical path, the sequencing of activities, identification of the critical activities and other important particulars including the contractor’s obligation regarding to the contractor’s work programme under the current JCT which is limited to clause 2.9. The provisions require the contractor to submit a ‘master programme’ with the identified critical path and sequencing on the execution of the contract. Under the contract, updates on the programme were only required when the architect decided on fixing the completion date. However, the programme is only considered as a measuring tool and does not form part of the contract document. There are a lot of computer based programmes in the market to develop construction programmes. Nevertheless, Lord Drummond Young in the recent Scottish case, City Inn Ltd v Shepherd Construction Ltd [14] made a serious comment in raising doubt on the usage of computer in producing programmes. He said

“The major difficulty, it seems to me, is that in the type of program used to carry out a critical path analysis any significant error in the information that is fed into the programme is liable to invalidate the entire analysis. Moreover, for reasons explained by [one of the experts], I conclude that it is easy to make such errors. That seems to me to invalidate the use of an as-built critical path analysis to discover after the event where the critical path lay, at least in a case where full electronic records are not available from the contractor"

He further commented that a programme does not need to be produced by the latest technology or software. Traditional methods will still be valid as long as the information and details of the programme are accurate.

2.2.5 Notice of Delay

Under clause 2.27 of the current contract the contractor is obliged to serve a notice of delay to the Architect or Contract Administrator in the event “...works or any section is being or likely to be delayed..." Keating suggested that this includes all events even those not listed in the Relevant Events provision [15] . Under clause 2.27.2, it requires the contractor to submit particulars on the expected impact of the events listed in the notice. A notice would allow the parties to be prepared for the consequences of the likely event which obviously was not foreseen by the parties [16] .

A question arises on whether the submission of a notice on possible delay would give merit to the contractor claim for extension of time. Further, the issue arises as to what are the consequences if the contractor failed to issue such a notice. The wording of the JCT contract [17] in the early years was commented by Mr. Justice Vinelott in the case of London Borough of Merton v Stanley Hugh Leach Ltd [18] where it was held that the Architect should always consider whether an event may lead to delay and grant appropriate extension of time even though the contractor failed to submit a notice on the delay. In other words, it was held that a notice was not a condition precedent to extension of time back then. Nonetheless, Mr. Justice Vinelott added that failure to serve a notice is a breach of contract by the contractor and will have an effect on his entitlement of the extension of time had he served notice on the delay. Keating brings to light that under the current JCT Standard Building Contract 2005 it was provided that a notice ‘may well’ is required under the contract in order to obtain an extension of time throughout the contract [19] .

In his article, Birkby questioned the obligation of the contractor to give notice on concurrent delay due to the omission of the wording of concurrent delay from the current contract in respect of the submission of a delay notice [20] . The previous 1998 contract clause specifically mentioned “...with or not concurrently with delay resulting from any other relevant event..." Taking consideration of his opinion, he stated that even though a subtle language redrafting has been made to the clause, the obligation of the contractor should remain. Any event foreseen to affect the progress of the work and causing delay should be informed to the Contract Administrator or the Architect with the approximate estimation of the effect, regardless of whether the delay is concurrent or otherwise.

2.2.6 Adjustment of Completion Date

The ‘Extension of Time’ heading in the previous contract has been redrafted and provided under ‘Adjustment of Completion Date’. The procedure of applicable for this provision is still similar to the procedure for an on extension of time even though the wording has changed [21] . As mentioned before, the extension of time clause benefits both parties to the contract, the employer and the contractor. It is a duty for the contractor to complete his obligations before the date of completion. Failure to complete before or on the date stated in the contract will entitle the employer liquidated damages agreed. The current JCT 2005 allows the Contract Administrator to reduce the completion date earlier and also extend the date of completion fixed before. In order to fix the date of completion to an earlier date, there must be a justifying reduced or omission in the scope of work through variation under clause 2.28.4. Certain strict procedures have to be followed by the employer before reducing the date of completion to an earlier date.

Like any other modern standard forms of contract, JCT provided the extension of time clause to preserve the rights of deducting liquidated damages in the case of an employer’s delaying event. Under clause 2.29, there are lists prescribing the ‘Relevant Events’ which will give the contractor entitlement to an extension of time. The number of Relevant Events has been reduced from the previous contract. The Relevant Events listed have been organized well to reflect and apportion all types of delays which can be anticipated including delay caused by employers as well as neutral delays [22] . Laing also identified clause 2.29.1-2.29.6 of the current contract which considers the delay caused by employers and neutral events which are not caused by either yet still entitles the contractor to claim for an extension of the contract date of completion.

2.2.6.1 Relevant Events

Relevant Events terminology has been used since the 1980 form. Relevant Events is the terminology and provision used in JCT contracts to describe grounds to be considered by the contract administrator for an extension of time. Compared to the previous JCT standard forms, the Relevant Events has been reduced in the latest JCT standard forms. Below are the grounds for extension of time or Relevant Events under the latest JCT standard forms. Some of the common grounds for claims will be discussed in more detail.

Variations

Like other standard forms of contract, JCT include variations or instructed change as one of the grounds for extension of time. The variation clause in JCT includes addition, omission or any changes to the obligations of the contractor as long as it is still within the scope of contract. The specific definition of variations in the JCT can be found in reference to clause 5.1.

Variations regularly come from the employer or his team due to various events which may include error or unforeseen mistakes due to time limit before a tender. [23] By providing the provision of extending the date of completion due to variation, the employer should be able to accommodate changes for justified reasons without breaching the contract and allows the contractor to be reimbursed for additional works.

The variation provision is also provided to accommodate error in the contract bills and other causes of variation which was classified as ‘deemed’ variation [24] 

Deferment of site possession

As described earlier in this chapter, delay in giving possession of site to the contractor by the employer will entitle the contractor to an extension of time. In the event that delay occurs in giving possession of site to the contractor, the deferment provision ensure that the employer is not in breach of contract and would still be able to claim liquidated damages from the contractor.

Suspension of work by the contractor

Parallel with the Housing Grants, Construction and Regenerations Act 1996 [25] , clause 2.29.5 refer to clause 4.14 allows the contractor to suspend his performance of his obligation under the contract if the employer fails to make payment due before or on the final date for payment under the contract.

All Inclusive Clause

To ensure that there is an additional provision to protect the employer and his agents or persons he is contractually responsible to, JCT contracts provide all inclusive kind of clause which stated “... any impediment, prevention or default..." to accommodate almost any defect for which the employer and his men is contractually liable for delay. The clause inserted to cover a wide range of employer’s caused events. The clause is identified to include some of the clauses omitted from the previous form of contract [26] . The includes all clauses like failure by the architect to provide information and drawings, execution of work by person employed by the employer or executed by himself and some other grounds to be considered for extension of time under the clause.

Statutory Undertaker

The clause described the event of the contractor’s scope of carrying out work pursuant to their statutory obligation. It is defined clearly in clause 1.1 of the JCT contract.

Exceptionally Adverse Weather

Clause 2.29.7 list exceptionally adverse weather conditions as a Relevant Events which allows for extension of time. However, the contractor needs to prove that the weather on that day was exceptionally adverse compared to at least a number of significant years. Recorded data should be available from the local MET office. There is also a need to show that the adverse weather on the day was the cause of the delay. In Walter Lawrence v Commercial Union Properties [27] the judge said that the weather itself must be exceptional and cause the delay and not the magnitude of the delay is exceptional. Entitlement for extension of time will be analyzed for the weather condition on the time the work is carried out instead of planned.

Loss or damage by Any of Specified Perils

Grounds covered under clause 2.29.9 are defined referring to clause 6.8. The specified perils in JCT cover for

“fire, lightning, explosion, storm, flood, escape of water from any water tank, apparatus or pipe, earthquake, aircraft and other aerial devices or articles dropped there from, riot and civil commotion, but excluding Excepted Risks"

In the insurance industry, these are known as ‘acts of god’ [28] 

Civil commotion

The clause provided to accommodate events such as riots or similar disturbances, any threats of terrorism and/or the activities of the authorities in dealing with the issue [29] .

Force Majeure

The French origin term has been used since in JCT since its 1963 form. It was introduced in the classic English case of Lebeaupin v Crispin [30] the court upheld the usage of the term. The judge refer the term

“...to all circumstances independent of the will of man, and which is not in his power to control"

JCT made no definition on the terminology in its contract. Keating suggested that the way the JCT was drafted provides a narrow meaning for Force Majeure as compared to how it has previously been interpreted. Some of the matters thought to be under the terms such as strikes, fire and adverse weather have been covered in a different clause [31] .

Nevertheless, in the occurrence of a Relevant Event in JCT is not sufficient enough for the Contract Administrator to award extension of time. The event must be the cause of the delay and affect the date of completion of the contract.

2.3 Types of Delay

Different terminology may be used by different authors. The SCL Delay and Disruption Protocol used Employer or Contractor’s Risk Event. In more plain English, the author opted for terminology of employer’s and contractor’s caused event. Delay events in United Kingdom construction industry is categorized through the principle of causation and apportionment of the risk of the contract parties.

Different approaches have been used by the courts in United States of America (USA), the court categorized the delay by the effect of the delay such as compensable delay, excusable delay and non excusable [32] . These terms has also been used and established in the UK construction industry

2.3.1 Contractor’s Cause Delay

The contractor will not be able to claim extension of time for delay caused by him. Liquidated damages shall be payable to the employer in the event of the contractor caused the delay affecting the date of completion. The term culpable delay is also widely used to illustrate the similar description. Contractor caused delays generally arrive from the risks taken by the contractor once he agrees to undertake the obligations the contract. The contractor’s slow progress, poor management and lack of resources are some of the most often used basis that leads to delay. These causes are under the control of the contractor and could be eliminated by the contractor with good planning and management in order to achieve the best results in executing the contract

2.3.2 Employer’s Cause Delay

Employer’s cause delay can arise from the act of the employer or the person hired by him and have a contractually responsibility on him. Most of the causes anticipated have been included in the JCT contract. In addition, to cover up for all other employer caused grounds for an extension of time, JCT contract included a ‘catch all’ provision starting in JCT 98 through amendment 4 2002 [33] 

2.3.3 Neutral Events

A neutral event is the events which are out of the control of the parties. The employer and the contractor shall share the risk for a neutral event. In the occurrence of neutral events, the contractor will normally be entitled for an extension of time but not damages for the delay. JCT listed adverse weather, civil commotion, force majeure and strikes as the neutral events which may entitle the contractor for an extension of time.

2.4 Chapter Summary

The second chapter significantly identify types of delay and analyze clauses in the JCT standard forms of contracts regarding administration of time and delay. The chapter was intended to give knowledge for the new kids on the block on administration of time and delay in JCT contracts and a simple revision for the pros. These are very significant to be understood before one can undertake with the difficulties of concurrent delay in the next chapter. In term of reputation, there is no doubt that JCT is the main leaders in producing standard forms of construction contract for the United Kingdom construction industry. The provisions in the JCT contract for granting extension of time may have gone through a lot of changes since its debut. However, the latter version of JCT contracts still did not seem to come out with a solution for the prolonged issues of concurrent delay. It was observed that only minimal changes on the surface of the contract have been made to the manner of JCT in dealing with delay and concurrent delay. There are still lacks of guidances in JCT contract on method to assess concurrent delay.

The next exciting chapter will discuss further on the concept and legal principles regarding concurrent delay and may answer the entire ambiguity on dealing with concurrent delay.