Construction Law & Contract

B N V 7 1 2 7

B atc h 7 & 8

By Ch. QS Nilanka Pathirana

MSc Programme Leader/Senior Lecturer at
Horizon Campus
20.12.2025
Contract Administration

Construction Delays and Time

Time
“Time is the essence” is a term in
contract law which indicates that the
parties to the agreement must
perform by the time to which the
parties have agreed

Delay
A construction delay means the
project is not completed
within the planned time
Statistics
Prevalence: Around 90% of projects face delays/cost
overruns; 72% of projects are delayed globally by
about 38% of their duration, notes Associated
Schools of Construction.

North America: 98% of projects face delays,

extending duration by 37% on average, reports
Buildern.

Mega-Projects: Up to 98% of these run late or over

budget, according to McKinsey Global Institute.

Project Completion: Only 25% finish within 10% of

their deadline, per a KPMG report cited by ALICE
Technologies.
Time
Time is the period or limit in which contract is fulfilled.

If Time is not expressed in contract, a contract is to

perform within reasonable Time
Hospitality

When Time is essence in the contract and non

performance of contract in time would frustrate the
purpose which the parties
Healthcare have in mind
Education

If the project is not completed within prescribed time

period then EOT is required to complete it
Finance
 Clause 8.1 (FIDIC 1999)

The Engineer shall give the Contractor not less than 7

days’ notice of the Commencement Date. Unless
otherwise stated in the Particular Conditions, the
Commencement Date shall be within 42 days after
the Contractor receives the Letter of Acceptance. The
Contractor shall commence the execution of the
Works as soon as is reasonably practicable after the
Commencement Date, and shall then proceed with
the Works with due expedition and without delay.
 Clause 8.3 (FIDIC 1999)
The Contractor shall submit a detailed time programme to the Engineer within 28 days after
receiving the notice under Sub-Clause 8.1 [Commencement of Works]. The Contractor shall also
submit a revised programme whenever the previous programme is inconsistent with actual progress
or with the Contractor’s obligations.
Unless the Engineer, within 21 days after receiving a programme, gives notice to the Contractor
stating the extent to which it does not comply with the Contract, the Contractor shall proceed in
accordance with the programme, subject to his other obligations under the Contract. The Employer’s
Personnel shall be entitled to rely upon the programme when planning their activities. The
Contractor shall promptly give notice to the Engineer of specific probable future events or
circumstances which may adversely affect the work, increase the Contract Price or delay the
execution of the Works. The Engineer may require the Contractor to submit an estimate of the
anticipated effect of the future event or circumstances, and/or a proposal under Sub-Clause 13.3
[Variation Procedure]. If, at any time, the Engineer gives notice to the Contractor that a programme
fails (to the extent stated) to comply with the Contract or to be consistent with actual progress and
the Contractor’s stated intentions, the Contractor shall submit a revised programme to the Engineer
in accordance with this Sub-Clause.
 Programme

Although completion date is fixed, the rate

of progress is at the Contractor’s discretion,
as is how work is to be planned and
performed.
Contractor is only required to complete on
time

GLC v Cleveland Bridge & Engineering Co

Ltd 1984
Pigott Foundations Ltd v Shepherd
Construction Ltd 1993
English law a doctrine of prevention which might apply
if the Engineer has refused to award an extension of
time when he should have done so and the Employer
commits an act of prevention; a common example
would be failing to give access to the Contractor. In
such a situation the extension of time mechanism and
the damages for delay provisions fall away and the
Contractor must complete in a reasonable time.

Peak Construction (Liverpool) Limited v McKinney

Foundations Limited

The prevention principle operates by reason of implied

term and therefore an express term to the contrary will
override it.

North Midland Building Limited v Cyden Homes Limited

What if there isn’t a completion date?

If there isn't a specific completion date stated in a construction

contract, the situation can become more complex, but English law
provides guidance on how to handle it. In the absence of a fixed
completion date, the parties would generally rely on the concept of a
reasonable time for completion.

“Time at large” – Contractor must finish within a “reasonable” time.

Key points
Implied Obligation to Complete Within a Reasonable Time
Act of Prevention
No Liquidated Damages
Reasonable Time Determination
 Liquidated
Damages for breach of contract are intended to put the
Damages and innocent party in the position they would have been in had the
breach not occurred. When claiming general damages, the
General damages innocent party must prove that the other party’s breach of
contract caused the loss claimed
.

Liquidated damages are a pre-determined and

agreed measure of damages which a party is entitled
to recover in the event of defined breaches of
contract.

In the construction industry, liquidated damages are

commonly used to compensate employers for a contractor’s
failure to complete the works by the contractual completion
date, or a contractor’s failure to meet specified performance
requirements.
Liquidated Damages
Liquidated amount of damages is the agreed-upon compensation owed to one
party (most often the client) when the other party (often the contractor) doesn’t
meet the timeline requirements.

Liquidated damages are based on a forecast of estimated real costs and losses
the first party would likely incur

Provision for liquidated damages will be regarded as valid, and not a penalty
when three conditions are met
(1) the damages to be anticipated from the breach are uncertain in amount or
difficult to prove,
(2) there was an intent by the parties to liquidate them in advance, and
(3) the amount stipulated is a reasonable one, not greatly disproportionate to
the presumable loss or injury
Liquidated Damages
If the liquidated damages clause is breached, the employer can determine the
damages without the long and costly process of proving actual damages.

In this way, it acts as a form of insurance for the employer.

Contractors can use the liquidated damages clause to calculate the risk involved in
delaying a project and may limit the damage claims from the owner

The main benefits of a liquidated damages clause include:

Increased security and assurance for the owner that every effort will be made
to complete the project on time
Reduced risk for contractors breaching the contract by negotiating for realistic
timelines, especially when backed by historical benchmarks
Preferable over a lengthy and costly litigation process to calculate actual
damage
Liquidated Damages
Are liquidated damages an exclusive remedy, or can you claim general damages too?

Liquidated damages provisions relate to a specific breach (commonly delay/failure to meet

specified performance requirements) and will operate as an exclusive remedy in respect of that
breach (Biffa Waste Services v Maschinenfabrik Ernst Hese GmbH).

In England and Wales it has been held that if parties agree liquidated damages for delay of “nil”,
that will effectively limit the contractor’s liability for delay to “0” by way of liquidated damages and
(subject to how the contract is drafted) leave the employer with no entitlement to claim general
damages in the alternative

Although, this point has been decided differently in Australia

The Australian case of Silent Vector Pty Ltd t/a Sizer Buildings -v- Squarcini also considered the
different scenario in which the parties inserted “N/A” next to “limit of liquidated damages”. In that
case, the arbitrator found that the use of “N/A” indicated that the clause did not apply.
Consequently, whilst the employer could not claim liquidated damages, it could claim general
damages.
Clause 8.4 EOT (FIDIC 1999)
Clause 8.4
The Contractor shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims]
to an extension of the Time for Completion if and to the extent that completion
for the purposes of Sub-Clause 10.1 [Taking Over of the Works and Sections] is or
will be delayed by any of the following causes:
(a) a Variation (unless an adjustment to the Time for Completion has been
agreed under Sub-Clause 13.3 [Variation Procedure]) or other substantial change
in the quantity of an item of work included in the Contract,
(b) a cause of delay giving an entitlement to extension of time under a Sub-
Clause of these Conditions,
(c) exceptionally adverse climatic conditions,
(d) Unforeseeable shortages in the availability of personnel or Goods caused by
epidemic or governmental actions, or
(e) any delay, impediment or prevention caused by or attributable to the
Employer, the Employer’s Personnel, or the Employer’s other contractors on the
Site.
If the Contractor considers himself to be entitled to an extension of the Time for
Completion, the Contractor shall give notice to the Engineer in accordance with
Sub Clause 20.1 [Contractor’s Claims]. When determining each extension of time
under Sub-Clause 20.1, the Engineer shall review previous determinations and
may increase, but shall not decrease, the total extension of time
Notice
A failure to comply with the mandatory requirement to give notice
within a prescribed period of time will result in the loss of the right
to claim an EOT. The underlying logic is that notice of delay and
claims for EOT should be given within such time as will allow the
Employer/Engineer to take some remedial action while the events
are still taking place.
Australian Development Corporation (ADC) v White Constructions
(ACT) Pty Ltd (1996)

It has been suggested that the Employer/Engineer may have an

implied obligation to act in good faith and to extend time even if
there has been a failure on the part of the contractor to issue a
notice or make a claim for an EOT. This has occurred because of the
obligation expressed in some contracts that the contract
administrator act fairly, as well as having an express discretion to
extend time for any reason.
Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002]
 Float
Float is the total extra time, beyond what the contractor actually needs,
which it will typically add to the end of its construction programme

Most contractors’ programmes will have some float included (the

difference in time between planned and actual completion – not usually
declared!). If a project is in delay and the float time gets used up does it
matter who caused the delay?

The answer in this instance is no – the contractor is bound to finish on the

completion date so even if employer delays use up the float then the
contractor cannot claim.

What if the initial delay was Employer caused but there is a period beyond
the completion date for which the contractor is responsible – can the
contractor claim an EOT? The answer is STILL NO.

In reality however, it is often hard to distinguish the order in which delays

occurred and so an EOT may be given.
Float However,
The benefit of the float and the manner in which the float
can be applied will depend on the contractual position.
Hence the drafting on this issue must be carefully
considered.
In circumstances where a contract provides that an EOT
will be granted only if the delay affects the achievement
of completion by the contract completion date, then the
effect is that the float has to be used up before an EOT
will be due.
Alternatively, if the wording of the clause is that an EOT
may arise whenever a qualifying delay causes a delay in
completing the works, then the float would not be
available for the benefit of the Employer.

Glenlion Construction Limited v The Guinness Trust (1987)

 Delays
1 3 5

Delays caused Delays caused Delays caused by

by Contractor by Employer Natural Events

Not entitled for EOT Entitled for EOT Entitled for EOT
Not entitled for compensation Entitled for compensation Employer not entitled to claim
Employer may claim liquidated Employer not entitled to claim liquidated damages
damages liquidated damages Both may bear the burden
Employer may Terminate. Contractor may Terminate.
 What happens if there are delays
Two options for the Employer
1. Extend the Time for completion
2. Instruct to Accelerate the Project

If delays caused by the Employer and does not Extend the Time
• Time become at LargeHospitality
• Contractor only required to complete within reasonable
time period, not contract time
What is reasonable depend
•Healthcare Educationon the circumstances (Robert v
Bury improvement commissioners)

Contractor can be liableFinancefor general damages for not

completing within reasonable time (Lian soon construction Pte
Ltd v Guan Quian realty Pte Ltd)
• Concurrent delay happens when two or more causes of delay events overlap in time
• There are different approaches to deal with concurrent delays
1. Approach one: What is the dominant cause ( Leyland Shipping Co Ltd v Norwich
Union Fire insurance Society Ltd)
2. Approach two: The “but-for” approach (Quinn v Burch Bros Builders Ltd)
3. Approach Three: The apportionment/allocation approach (Tennant Radian Heat
v Warrington Development Corportaion)
• Which approach to be applied very much depend on the facts and the judge of each
case
Delays and disruptions

Delays and disruptions are actually separate issues

that must be identified and addressed individually

Delay occurs when one party fails to perform its obligations under the contract by
the agreed-upon time or within the prescribed period. Essentially, it refers to a
failure to meet a deadline or time frame.

Disruption, on the other hand, refers to an event or series of events that interfere
with the performance of a contract but doesn't necessarily result in a failure to
meet a deadline
 Delays and Disruption

Delay or disruption costs can only be recovered at common law if they can
be proven to be damages resulting from a breach of the contract.

In this case, the contractor must show that the loss it suffered arose naturally
from the Employer’s breach, or may ‘reasonably be supposed to have been in
the contemplation of both parties’ at the time the contract was entered into

Hadley v Baxendale (1854)

Acceleration
• Acceleration is an increase in the rate of progress of a contractor above that initially contemplated in
the contract.
• In some cases a contractor may accelerate because …………….
• In other cases, a contractor may make a commercial decision to accelerate……………...
• Standard form of contracts permits Engineer to give instructions and if Contractor reasonably comply,
he must do. If this results in the contractor incurring more or less cost than it otherwise would have,
the difference is valued as for a variation
Damages for acceleration in mitigation of breach of contract

A contractor may be able to successfully recover its acceleration costs as general damages if
the principal’s refusal to grant an extension of time amounts to a breach of contract and the
contract has expended additional costs in meeting an un-extended date for completion in order
to avoid liability for liquidated damages.

Perini Corporation v Commonwealth of Australia [1969]

Questions and Answers