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Construction Law/Late handing over of work area

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Question
Dear Sir,
We are a roofing contractor and have enter a fixed lump sum sub-contract with the main con on 22 Apr 2013, to supply, delivery and installation of metal roofing.
Type of contract: Main con in-house form of agreement.
In accordance with the agreement, the Sub Contract Rate shall be firm and remain unchanged throughout the duration of the Contract.
Sub Contract Period is as follows:
1) The main contract period is 19 months commencing from 15 Sept 2012 and contract completion date is 15 Apr 2014. Our installation works at site is target to commence in Dec 2013, subject to further instructions by main con.
2) We are to schedule the works in accordance with main con works program or as direct by/liaise very closely with their PD regarding the site matter and deliver in accordance with Main Con requirement and work program laid on site.

Progress:
1) We have submitted all samples and drawing and have been approved.
2) To-date, the main con still could not handed over the work area for our works and was 2 months behind contract schedule now.
3) Main con have not give us any written notification and revise program schedule.
4) We have not procure any material.

Question.
1)The contract completion date is about to lapse in a month time and we still did not received any notification from main con or EOT. Please advise how to deal with this situation.
2) The price of materials and workers levies has increased since beginning of Feb this year. This will incur additional cost to us due to the delay. Moreover, new regulation on safety to work at height will be imposed by the authority from April 2014. This will then incur additional prelim cost to us due to the delay.
Could you advise whether we can claim the loss due to the delay, note that to-date we have not start work yet.

Thank you
Raymond

Answer
Dear Raymond,

Thank you for this question.

Without knowledge of the particular form of contract governing your works I can give only general advice, which must be interpreted in accordance with your contract terms.

Taking each of your questions in turn:

1) The contract completion date is about to lapse in a month time and we still did not received any notification from main con or EOT. Please advise how to deal with this situation.

Whether or not your contract specifies a completion date I suggest that you write to the Main Contractor asking for formal notification of a commencement date, stating also the period of notice required to allow you to procure materials.

2) The price of materials and workers levies has increased since beginning of Feb this year. This will incur additional cost to us due to the delay. Moreover, new regulation on safety to work at height will be imposed by the authority from April 2014. This will then incur additional prelim cost to us due to the delay.

I note that you were due to commence in December 2013. I presume that you were one of the4 final trades and would then continue to approximately April 2014. At this time you have been prevented from commencing for  period of 2-3 months.

As the increases you complain of arose in February 2014, they would have occurred within your work period. Could the increases have been envisaged, even if the extent of the increase was unknown? If, for example, the increases are an annual event I consider your price would be deemed to include the risk. They additional may, however, be recoverable if they are a Government tax or consequence upon a change in legislation. Here exact terms of for contract will be important.

On the subject of the new regulation related to work at height, it is likely that this would not have impacted your works previously; or the effect would have been minimal. In view of the delay, it appears that the impact will be substantially greater. On the facts as you have explained them, I consider you will be able to claim all or most of the additional costs in this respect.

3) Could you advise whether we can claim the loss due to the delay, note that to-date we have not start work yet.

If you can prove that any additional costs you are incurring are a consequence of the delay to completion, you will be able to make a claim. Considering, for example, the workers levies discussed above, under the original schedule there is a likelihood that you would have incurred the increase for 60% of your contract period; i.e. February - April 2014, 3 months of a 5 month duration (December-April). In consequence of the delay it seems that you will incur the additional costs for the entirely of your works duration. Notwithstanding my comments at 2) above, this being the case you will be able to claim for the costs incurred for the 40% of the duration that runs behind the original completion date.

It is likely that you will be able to claim other costs also. For example any costs you incur as a consequence of completing after April 2014. Indeed yo may be able to claim compensation for any costs that you have incurred in waiting on the instruction to commence. Again the exact terms of your contract will be highly important.



I hope that this assists you.

Kind regards,
John Dowse

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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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