Time is an important element in any contract, but it is especially crucial when it comes to construction contracts. Construction delays are extremely common. In many instances, there is a very reasonable reason for the delay to occur. However, sometimes these delays are a result of poor planning or unexpected issues affecting the subcontractors. Examples include:
Delays in getting the materials required
A shortage in the materials that were ordered
Labor shortage issues
Construction buyout/subcontract issuance delays
It’s important to consider the likelihood of construction delays when you start to negotiate a construction contract with a general contractor. Here are some of the items related to scheduling within a standard industry construction that you should take into account.
All contracts should include a date of commencement. In the construction industry, this generally refers to the contractor beginning the construction works, for example, the point at which site clearance, demolition, or construction begins. This date is often defined, based on factors including:
a Notice of Commencement to be issued by the Owner (at a future date)
once financing of the project has been procured
once permitting has been obtained to commence construction
In many contracts, each of the noted items has to occur for the Date of Commencement to be set.
It’s worth noting that the commencement of construction works will be proceeded by activities such as design, procurement, and mobilization, and there may be legal requirements that need to be satisfied too, such as planning permission. These approvals should be sought before the date that works will commence.
The date of completion is usually set as a certain number of days or weeks from the commencement of works. The time for completion doesn’t usually mean the end of all work, but rather the point of substantial completion. Substantial completion is defined by AIA Document A201-2017 (which provides general conditions that become part of the owner/contractor agreement) in Section 9.8 as follows:
Substantial completion is the stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use. This reflects the fact that owners can often utilize or occupy part of all of the construction, thus receiving benefits of the construction contract before every single item of work is complete.
Parties and their lawyers may choose to define substantial completion more specifically, such as by making the issuance of a certificate of occupant a condition precedent to substantial completion. In this instance, the contractor will need to make sure that the event specified is within the control of their company. E.G certain landscaping may be required for a certificate of occupancy. However, if the owner is contracting with a different party for landscaping, the actual substantial completion may be delayed through no fault of the general contractor.
All construction contracts allow the programmed duration of the works to be extended in instances where there is a delay that is not the Contractor’s responsibility. This adjustment is described as an extension of time (EOT) or ‘adjusting the completion date’. Some of the reasons why an EOT may be requested include:
the employer deferring possession of the site
exceptionally adverse weather conditions
the employer preventing or impeding the works in any way
variations to the contract
suspension of the works
If an EOT is approved, an additional period of X days or weeks will be added to the duration of the project program to prolong the works and defer the completion day.
For more information about navigating construction timelines, please don’t hesitate to speak to our knowledgeable team.