Progress Clause in Contracts

If the Contractor bids a project that requires that he complete within a certain time but “he knows that he cannot,” then either the Contractor has made a fraudulent claim (promising more that he knows that he can deliver) or he has factored the damages for late completion into his bid. If fraud, then indict. If it was an economic decision, then let him complete the contract. This isn’t a ‘tough dilemma.’

Buy the way, this idea of “cannot be completed in the time allotted” is something that many tell themselves to justify the acts that follow. Most any project can be completed in the allowable time; sometimes with extraordinary effort or costly construction techniques. This phrase is often used with the assumption of normal working plan. Did it ever occur that the Owner may not want a normal, most effective cost plan?

Look to your assumptions first for the answer. Bidding low on a project because ‘everyone else will’ is a major reason that Contractors go bankrupt. Not every Expert Carpenter is qualified to be a General Contractor. There is no universal power to keep bad businessmen for entering a business that they do not understand.

Ronald,

Thanks for your post. I was referring to a situation whereby the Contractor realizes he can not complete the Works by the Date for PC after he started (let’s assume that because of his own delays).

I would like to clarify: I’ve asked what should the Contractor do in regards to his statused Contract Programme, and its completion date (be it the date for or the date of PC).

Uri,

If the contractor has made an honest mistake he could do two things:

1, Talk to the client very very nicely and try and resolve the issue!

2, Assuming the client won’t play ball, weigh up the cost of accelerating versus LD’s (if they exist) and do whichever is cheapest.

There are other options but I’m not going to suggest them!!!

Uri,

I would suggest that the Contractor has an obligation not just to plan to achieve completion as required, but must actually reach completion by the due date.
If he finds that his planned completion date is inconsistent with the due contractual due date, then he has an obligation to re-schedule and reallocate his resources such that the due completion date can be attained. Failure to do so would probably put him in breach of Contract.

You ask what should the Contractor do if he realises that realistically the due completion date cannot be reached. The answer to this will depend at which stage the Contractor realises this situation. Is it once the ink is dry on the Contract? Is it after he gets possession of the site? Is it after he has completed the foundations? Etc etc…

If the due date for completion has come and gone and he is not completed, the Contractor should research for excusable delays during the execution of the project, and submit a claim for EOT accordingly (though if he waits until after completion of the project, he may well be out of time!!).

If the Contractor has no excusable causes for the delay – in other words, if he himself has caused the delays to completion – there is little else he can do other than bite the bullet and pay up his liquidated damages!! And of course, learn from his mistakes!!

Cheers,

Stuart

www.rosmartin.com

Stuart,

You’re 100% correct to say the contractor has an obligation to finish on time and should plan accordingly and we shouldn’t encourage anything else.

However, commercially it may not be so straight forward and depending on the circumstances (company reputation, prestige, repeat work, etc)the contractor may elect to follow the course of action which dents his bank account the least.

Hi to all.

I think it is better to let the flow of the approved status Contract Program run its own course. If the completion dates show different dates than the PC dates, then there must be a justifialbe reason on why it happen. It may not be properly assess during the concurrent of construction activities considering the impacts that cause delays are on-going, but somehow this kind of phenomenon should be look at by the contractor.

The best the contractor can do is to hire specialist in contracutal claims including forensic planners. Re-evaluate all documents and look for ways to get out of the mess since generally contact documents protect the interest of both parties. Somewhere along the construction timeline changes are bound to happen that will impact on the completion dates that contractors should use to protect their interest.