PSZ 19:16 (Pind. 1/97)
UNIVERSITI TEKNOLOGI MALAYSIA
BORANG PENGESAHAN STATUS DISERTASI
JUDUL : EFFECT OF WORK PROGRAMME IN EXTENSION OF TIME
ENTITLEMENT
SESI PENGAJIAN:
Saya
2005/2006
NOR JALILAH BINTI IDRIS
(HURUF BESAR)
mangaku membenarkan tesis (PSM/Sarjana/Doktor Falsafah)* ini disimpan di
Perpustakaan dengan syarat-syarat kegunaan seperti berikut:
1. Tesis adalah hakmilik Universiti Teknologi Malaysia
2. Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk
tujuan pengajian sahaja
3. Perpustakaan di benarkan membuat salinan tesis ini sebagai bahan pertukaranantara
institut pengajian tinggi
4. **Sila tandakan (4)
SULIT
(Mengandungi maklumat yang berdarjah
keselamatan atau kepentingan Malaysia yang
termaktub didalam AKTA RAHSIA 1972)
TERHAD
(Mengandungi maklumat TERHAD yang telah
ditentukan oleh organisasi/badan dimana
penyelidikan dijalankan)
TIDAK TERHAD
(TANDATANGAN PENULIS)
(TANDATANGAN PENYELIA)
(Assoc. Prof. Dr. Maizon Hashim)
Alamat Tetap:
23 Jalan 74/26, Taman Sri Rampai,
53300 Setapak, Kuala Lumpur
Malaysia.
Tarikh:
5th April 2006
CATATAN:
* Potong yang tidak berkenaan
** Jika tesis ini SULIT atau TERHAD, sila lampirkan surat daripada pihak
berkuasa/organisasi berkenaan dengan menyatakan sekali sebab dan
tempoh tesis ini perlu.
Tarikh:
“I hereby declare that I have read this thesis and in my
opinion this thesis is sufficient in terms of scope and quality for the
award of the degree of Master of Science in Construction Contract Management”
Signature
:
Name of Supervisor I
: Assoc. Prof. Dr. Maizon Hashim
Date
:
Signature
:
Name of Supervisor II
: En. Norazam bin Othman
Date
:
EFFECT OF WORK PROGRAMME IN EXTENSION OF TIME
ENTITLEMENT
NOR JALILAH BT IDRIS
A project report submitted in partial fulfillment of the
requirement for the award of the degree of
Master of Science in Construction Contract Management
Faculty of Built Environment
Universiti Teknologi Malaysia
APRIL 2006
ii
I declare that this thesis entitle “Effect of work programme in extension of time
entitlement” is the result of my own research except as cited in the references. The
thesis has not been accepted for any degree and is not concurrently submitted in
candidature of any other degree.
Signature
:
Name
:
NOR JALILAH BT IDRIS
Date
:
5th APRIL 2006
iii
To my best friend..Zuraimi Johari
..and my twinkle little stars, Zahirulhaq and Zulaikha.
iv
ACKNOWLEDGEMENT
In preparing this thesis, I was in contact with many people, researchers,
academicians and practitioners. They have contributed towards my understanding
and thoughts. In particular, I wish to express my sincere appreciation to my
supervisor, Associates Professor Dr Maizon Hashim, for encouragement, guidance,
critics, and friendship. Also not forgotten to the other lecturers Dr. Rosli,
En.Jamaludin Yaacob and En.Norazam for being so helpful and understanding.
I
am so very thankful to all my family especially to my beloved husband, Zuraimi
Johari for always be with me to light up my spirit and motivation, also to the most
beautiful kids Husni Zahirulhaq and Husna Zulaikha, having both of you makes me
feel complete. Without their continued support and interest, this thesis would not
have been the same as presented here.
I am also indebted to librarian at UTM Skudai and Jln Semarak, librarian at
Perpustakaan Negara, for their assistance in supplying the relevant literature and
helping to conduct the laboratory testing.
My fellow postgraduate students, Yong Mei Lee, Ling Teck Lee and Dennis
Oon should also be recognized for their support, guidance and care. My sincere
appreciations also extend to all my colleagues and others who have provided
assistance at various occasions. Their views and tips are useful indeed.
v
ABSTRACT
The aim of this research is to know how a construction work programme can
be a tool in reducing disputes which relate to extension of time (eot). Extension of
time entitlement is only granted to the successful claimant (contractor) who had
fulfill certain conditions in the application and one of the condition is the claimant
had successfully proved that the delay happened was not by his fault, it is either
caused by employer or was one of the neutral events.
Therefore it is important for the contractor to have sufficient records and
documents about a project’s progress so that he is able to prove the caused of the
delay occurred. Unfortunately, most of the contractors failed to do so because they
are more focus to the work on site rather than doing the management and
documentation work.
It is believed then that by having a proper method of work progamme and
updated progress of work can be so helpful in resolving the dispute, even the
preparation of it are not required in any of local standard form of contract.
This research are based on literature information about work programme and
it will supported by referring to court case where had considered work programme as
an important document in judgment. Even there are no specifications of method in
preparing a work programme but there are some important elements in the work
programme which may contribute to its purpose.
Besides having credits in resolving disputes, there are still weak points in the
work programme application which have to be studied and improved. It is found that
it is good to have work programme requirement in document contract for the better
future and quality of the industry.
vi
ABSTRAK
Penyelidikan ini adalah bertujuan untuk mengkaji sejauh mana penggunaan
perancangan kerja dapat membantu di dalam usaha mengurangkan kesulitan yang
timbul daripada tuntutan lanjutan masa. Lanjutan masa hanya dianugerahkan kepada
kontraktor yang berjaya membuat tuntutan dengan memenuhi beberapa kriteria, dan
kriteria utama ialah membuktikan penyebab bagi kegagalan menyiapkan kerja yang
memerlukan lanjutan masa adalah atas kesalahan pemilik ataupun persekitaran
semulajadi, bukan atas kesalahan kontraktor.
Oleh yang demikian, kontraktor yang memohon lanjutan masa ini akan
berusaha membuktikan bahawa punca kelewatan adalah bukan dari kesalahannya dan
dengan ini masalah sering timbul dimana tiada dokumen, rekod atau bukti yang
kukuh mengenai pihak yang sepatutnya bertanggungjawab ke atas sesuatu kelewatan
aktiviti yang memberi kesan kepada tempoh penyiapan sesuatu projek.
Walaubagaimanapun dipercayai bahawa perkara ini dapat diselesaikan dengan
mengaplikasikan
penggunaan
perancangan
kerja,
meskipun
perlaksanaan
penggunaannya tidak terkandung di dalam kontrak.
Kajian ini dibuat berdasarkan beberapa kes mahkamah yang menggunakan
rekod perancangan kerja ini sebagai sandaran perbicaraan.Terdapat beberapa elemen
di dalam perancangan kerja yang dapat memantu dalam mengenalpasti punca
kelewatan itu berlaku. Dengan itu daripada rujukan kes-kes yang berkaitan
dipercayai dengan menguatkuasakan penggunaan perancanagan kerja ini dapat
membantu dalam perselisihan berkaitan dengan lanjutan masa. Walaubagaimanapun,
masih terdapat beberapa kelemahan di dalam perancangan kerja ini dimana usaha
untuk menyeragamkannya perlu untuk menjamin kualiti perlaksanaan pembinaan di
negara ini.
vii
TABLE OF CONTENTS
CHAPTER
1
2
TITLE
INTRODUCTION
PAGE
1
1.0 Introduction
1
1.1 Problem Statement
3
1.2 Objectives
4
1.3 Importance of the research
5
1.4 Scope
5
1.5 Methodology
6
EXTENSION OF TIME
7
2.0 Introduction
7
2.1 Extension of time provision
8
2.2 Delay
11
2.2.1 Delay caused by employer
14
2.2.2 Delay caused by neutral event
15
2.2.3 Delay caused by contractor
15
2.3 Basis events to establish eot entitlement
19
2.3.1 Time provision in contract
20
2.3.2 Due Diligence
28
2.3.3 Notice of delay
34
2.3.4 Construction Work Programme
37
viii
CHAPTER
3
TITLE
PAGE
CONSTRUCTION WORK PROGRAMME
39
3.0 Construction Planning
39
3.1 Definition of work programme
41
3.1.1 Who does project scheduling
42
3.1.2 How is scheduling done?
42
3.2 Purposed of Construction Work Programme
43
3.3 Type of Construction Work Programme
48
3.3.1 Gantt Chart
48
3.3.1.1 Gantt Chart Enhancements
49
3.3.1.2 Gantt Chart Role in Project Planning
50
3.3.2 PERT Chart
50
3.3.2.1 The Network Diagram
51
3.3.2.2 Steps in the PERT Planning Process
52
3.3.2.3 Benefits of PERT
55
3.3.2.4 Limitations
56
3.3.3 Critical Path Method
57
3.3.3.1 Steps in CPM Project Planning
58
3.3.3.2 CPM Limitations
60
3.4 Role of Work Programme in EOT Application
3.4.1 Determination EOT entitlement
61
61
ix
CHAPTER
TITLE
4
PAGE
WORK PROGRAMME AS A BASIS TO
ESTABLISH EOT ENTITLEMENT
67
4.0 Introduction
67
4.1 Work Programme in Standard form of Contract
68
4.1.1 PAM 1998
68
4.1.2 CIDB 2000
69
4.2 How work programme can contribute in eot entitlement 69
4.2.1 Logical Analysis
70
4.2.2 Critical Path Analysis
74
4.2.3 Causal Link
77
4.2.4 Regularly and Diligently
78
4.3 Weakness of Work Programme
5
79
4.3.1 Variety of methods
80
4.3.2 Contents of work programme
80
4.3.3 Presentation of work programme
81
CONCLUSION AND RECOMMENDATION
83
5.1 Introduction
83
5.2 Contribution in dispute resolution
84
5.3 Advantages and Disadvantages of Work Programme
85
5.4 Recommendation
86
5.5 Limitation
87
REFERENCES
x
LIST OF TABLE
TABLE NO
TITLE
PAGE
1
Summary of EOT descriptions
10
2
Contribution of delay
13
xi
LIST OF FIGURE
FIGURE NO
TITLE
PAGE
1
Research methodology flow
6
2
Alternative emphases in construction planning
41
3
Gantt chart format
48
4
Original bar chart showing technological logic
62
5
Project with variation to building 1
63
6
Project with variation to building 2
63
7
Project with concurrent variation to the two buildings
64
8
Project with variation to building 1 only
65
9
Project evaluate by the addition method
66
xii
LIST OF CASES
PAGE
Amalgamated Building Contractors Ltd v Waltham Holy Cross
UDC [1952] 2 All ER 452
23
Balfour Beatty Construction Limited v The Mayor and Burgess of
the London Borough of Lambeth(2002)
Barque Quilpue v Brown [1904] 2 QB 264.
72,77
24
Bremer Handelsgesellschaft mbh v Vanden Avenne-Izegem
(1978) 2 LLR 109
City Inn v Shepherd Construction Ltd [2003] ScotCS 146
34
36
Codelfa Construction Party Ltd v. State Rail Authority of New
South Wales (1982),
16
Engineering Construction Pte Ltd v Attorney General & Anar
[1997] 3 SLR 989
32
Gaymark Investments v Walter Construction (1999) Northern
Territory Supreme Court 143
GLC v Cleveland Bridge (1984) 34 BlR 50.
35
29
Henry Boot Construction (UK) Ltd v. Malmaison Hotel (Manchester)
Ltd. (1999)
75
xiii
PAGE
Hiap Tian Soon Construction Pte Ltd and Another v Hola Development
Pte Ltd and Another [2003] 1 SLR 667
32
Inserco Ltd v Honeywell Control Systems (1996)
27
John Barker Construction Ltd. v. London Portman Hotel Ltd (1996)
70
Jurong Engineering Ltd v Paccan Building Technology Pte Ltd
[1999] 3 SLR 667
32
Leighton Contractors (Asia) v Stelux Holdings Ltd (2004)
77
London Borough of Merton v Leach (1985) 32 BLR 51
34
Mobil Chemical Co. v Blount Brothers Corp. (1987),
19
Motherwell Bridge Construction Ltd v. Micafil Vakuumtechnik (2002)
75
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd
(1970) 1 BLR 111
26,35
Rapid Building Group v Ealing Family Housing (1984) 24 BLR 5
25
Sim Chio Huat v Wong Ted Fui [1983] MLJ 151
27
Sindall LId v Solland and others [2003] All ER (D) 95
33
xiv
PAGE
Skanska Construction UK Limited v Egger (Barony) Limited (2004).
81
Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd [1993] 3 MLJ 25
27
The Royal Brompton Hospital NHS Trust v Frederick Alexander
Hammond and others:
74,79
The Royal Brompton Hospital NHS v Watkins Gray International
(UK) (2000)
76
Trident Engineering Company Limited v Mansion Holdings Limited
30
Turner Corporation Ltd (In Provisional Liquidation) v Co-ordinated
Industries Pty Ltd & Ors 1994 NSW LEXIS
35,36
Wells v Army & Navy Co-operative Society Ltd (1902) 86 L.T. 764
28
West Faulkner v London Borough of Newham (1994) 71 BLR 1
30
1
CHAPTER 1
INTRODUCTION
1.0
Background of study
Delay and additional cost in a construction project are an inevitable
consequence of the risk and uncertainty associated with the execution of any
construction project, which is likely to be unique and prototypical in nature. Whilst
the risk is reduces by certainty of design and relevant experience in the construction
of similar types of project, it is sadly all too common that the project will not be
completed within the agreed time of completion. Due to this scenario, it is important
to determine the cause of any events which have potential to be the main cause of the
delay which will affect the date of completion.
The appointment of engineer or architect as Superintendent Officer (SO) or
Contract Administrator (CA) is to act as an agent of the employer to administer the
contract on the employer’s behalf. The person who hold the CA and SO title is in
charge with the responsibility of deciding whether an event is one that gives rise to
an entitlement on the part of the contractor under the contract and whether that
2
events has caused delay and or is likely to affect the date for completion of the
work.
Contract period is a period within which the contractor not only must do the
work but it is also a license for the contractor to spend that time carrying out the
works. In addition, he may plan and do the work in whatever order he pleases.
Although he must make sufficient progress to achieve the completion date, there is
nevertheless usually an express obligation for the contractor to proceed regularly and
diligently with the work. In order to provide further comfort, the employer usually
requires the contractor to provide a programme (construction work programme) at
the commencement of the work to show the sequences and timing of the activities
involved in the construction of the project in sufficient detail for the S.O or C.A to
monitor the progress of the work. It is common to use this construction work
programme as a basic model against which to consider the effect of delays.
Nowadays, it is believed that by having a proper construction work
programme for a project is a smart way in dealing with incoming disputes, especially
disputes on extension of time. In Malaysian standard form of contract, only PAM 98
and CIDB 2000 had stated the requirement of preparing work programme in
document contract while PWD 203A is silent about it. It is stated under clause 3.4 of
PAM 98 and also in CIDB 2000 under clause 5.1. However, the work programme
requirement are debarred by clause 3.5 of the PAM 98 and clause 5.2 of the CIDB
2000 respectively from having any formal significance over contractual obligations.
The said clauses dilute the significant of the work programme and its contractual
effect arising from any aberrations to the programme
Rajoo (1999) stated that the effect of making the programme an express
requirement without it being a contract document is that while the contractor may in
breach for failure to submit a master programme, he may not be in breach if the
series of events are not followed as scheduled.
3
1.1
Problem statement
In a construction project, if delay occurred and it is believed that the
completion date will be affected, the contractor is responsible to inform the SO or
CA in writing, identifying the relevant events which caused the delay. It is stated
under clause 23.1 of PAM 98, clause 43 of PWD 203A and also under clause 24.2(a)
of CIDB 2000 form. In practice, it was found that the contractor normally will state
that the delays occurred was caused by employer or it was a neutral event. Due to
this, he is entitled to be granted an extension of time and the employer has no right to
liquidated damages if the delay were caused by his action. Therefore, it is important
for the parties involved to have a proper documented information about the project
progress, thus the question of who caused the delay will be answered. In a
construction project, delay is normal, therefore it is important to identify whether the
delay has the potential to affect the completion date by determining where the delay
lies in the critical path or not. For example, it is the employer’s fault if he failed to
give instruction to the supplier to start delivering material to the site, but does this
late instruction really lead to the project to be delayed? Of course there are
possibilities that some delays only affect the activities and not the entire project or
the critical path activities. It can be said that by having a work programme
incorporating critical path analysis, parties can’t simply pointing fingers to each
other for causing the delay.
Nevertheless, the obligations of the employer’s agent when considering the
contractor’s entitlement to an extension of time are usually defined in subjective
terms. For example in case of the PAM 98 Standard Form, in accordance with clause
23.2, architect shall consider the relevant events causing delay and by written notice
to the contractor give a fair and reasonable extension of time by fixing such later date
as the date for completion. The process of forming an opinion and deciding upon
what is fair and reasonable are both subjective requirement. To what based it can be
said as fair and reasonable extension of time?
Updated and verified work programme (quality work programme), will be
able to show the status or progress of any in contractor’s plan of proceeding the
4
works. It will also be a strong evidence in any dispute which may arise on issues of
responsibilities arising from delay to completion from changes of programme
sequences and duration of activities. The words quality work programme is a
subjective term which there is no specific method or requirement how a work
programme suppose to look like. In Malaysian standard form of contract there are no
guideline of how to prepare a work programme. Although Rajoo (1999) in The
Malaysian Standard Form of Building Contract (The PAM 1998 Form) had stated
the elements of work programme, it is not defined in any clause in any standard form
of contract. He stated that,
..the elements of Work programme is not defined in clause 3.4. As such, it
may take the form of a bar chart, critical path, precedence diagram, schedule,
network analysis or otherwise. A good work programme should show interfaces with
sub-contractors, dated, time frames, activities, stages and more..
Therefore, it is still an issue in this industry the right definition of a good work
programme and it had became one of the disadvantages in work programme usage
where a good work programme can’t be defined precisely.
1.2
Objectives
There are two objectives of this research which writer wish to achieve.
i.
To identify how a construction work programme can contribute in reducing
disputes in extension of time.
ii.
To determine the advantages and disadvantages of construction work
program usage in construction contract.
5
1.3
Importance of the research
This research is meant to highlight the importance of having a quality work
programme in construction contract. From the theoretical study, by having a quality
up graded and verified work programme, it can be a helpful tool in disputes resolving
such as critical path analysis which is a main content in a work programme.
The data and analysis in work programme promised valuable information for
identifying and modeling delays and their effect on progress and the use of
computerized work programme techniques for proving delay is become a practical
requirement nowadays. Nevertheless techniques are being considered by the courts
and it is now almost inevitable in litigation involving disputes over the extent of
project delays that a programming expert will be appointed. Therefore, it is good for
the parties involved in a construction project, especially contractor to have a proper
documented record such as work programme as a step to help in reducing disputes in
the future, although it is still not a legal requirement in standard form of contract in
Malaysia.
1.4
Scope
This research will mainly discuss on the work programme terms and
provision in Malaysian standard form of contract. There are Public Work Department
(PWD) 203A, Persatuan Arkitek Malaysia (PAM) 98 and Construction Industry
Development Board (CIDB) 2000. The discussion also will be supported with
international court cases, not only focusing on Malaysian court cases.
6
1.5
Methodology
This research methodology is divided into two types of methods. One is
mainly referring to the literature review which found in reference books, seminar
papers, articles, magazines and also from internet sources. The other method is to
analyse the information gained by compare, relate and support the earlier information
with standard form of contract and relevant court cases.
Literature Review
•
•
•
•
•
Reference books
Seminar papers
Standard for of contract
Article papers
Internet sources
Analysis Study
•
•
•
Seminar papers
Standard form of contract
Court cases
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Figure 1 : Research Methodology Flow
7
CHAPTER 2
EXTENSION OF TIME (EOT)
2.0
Introdution
In an agreement of completing a construction project, there obviously have at
least two parties involved, named an employer as client and a contractor. It is well
known that both parties are engaged to perform each task. The key word which
catches attention here is to perform task or to perform work. Every parties involved
in any agreement should have a crystal clear idea about each task or work that they
should perform.
It is important to understand the general obligations of employer and
contractor in a construction project whereby the contractor’s obligation is to
complete the project by the stipulated completion date in consideration for monetary
payment by employer. Should the contractor fail to complete by the completion date
and is in breach of his contractual obligation, he is liable for damages to the
employer. It is the common practice in Malaysia to stipulate an amount for liquidated
damages in the contract which will be payable by the contractor to the employer for
delay to project completion. Liquidated ascertain damages (LAD) is one kind of
8
monetary compensation which the contractor have to pay to the employer due to
delay caused by himself and normally the amount is per day which obviously stated
in earlier phase. This simplistic theoretical scenario is based on the premise that the
contractor is allowed to complete the agreed scope of work within the agreed time
frame without any interruption or hindrance (Hutching, 1998).
In construction project, the cost may be the primary concerns of the parties
involved. However, time requirement also plays a key factor to both employer and
contractor. Since time is said to be as important as cost, a provision on extension of
the time of completion is very welcomed by all parties due to avoid any further
problems or disputes. It is where an Extension of Time provision had been
introduced.
2.1
Extension of time provision
Nowadays, most of the construction contract contains an express provisions
under which the time or period allowed for the contractor to complete the works can
be extended. In Malaysia, all main Standard Form of Contract
have their own
provision on Extension of time, for example in PWD 203A, the Extension of time
provision is under Clause 43,PAM 1998 the provision on EOT had been clearly
described under Clause 23 and also the CIDB 2000 had precisely everything about
EOT under its Clause 24.
The provision of Extension of Time will obviously benefit the contractor who
will not be liable to pay any monetary compensation or LAD for any delay during the
period which time is validly extended. Although it is to be said that the contractor
will benefit most, there are some opinions agreed that the actual benefit is actually
meant for the employer.
9
At common law, the contractor’s obligation to complete the works by the
specified date is removed if the employer delays the contractor in the execution of
the works. Thus if the CA issues an instruction which increase the amount of work to
be done, or its late in giving the contractor necessary instructions, the specified
completion date no longer applies. In this situation, time is said to be ‘at large’ and
the contractor’s obligation is merely to complete the works within ‘reasonable time’.
In order to fix what is ‘reasonable’, all the circumstances of the particular project
must be taken into account, but in many cases it will simply mean that the amount of
delay for which the employer is responsible will be added to the old completion date.
Society of Construction Law (SCL) in Delay and Disruption Protocol
(October 2002) define extension of time as additional time granted to the contractor
to provide an extended contractual time period or date by which work is to be, or
should be completed and to relieve it from liability for damages for delay (usually
liquidated damages).
From all the description above about extension of time, it is hope that it can
be easily understood by referring to the table 1 :
10
Table 1: Summary of EOT Descriptions
Questions
What
Descriptions
Extension of time is a provision to contractor to apply extra numbers
of days if there are events that believed to delay the works.
EOT clause aimed to allocating the risk of non-completion between the
employer and the contractor.
Why
The benefit :
To contractor : to relieve the contractor of liability for damages for
delay (usually liquidated damages) for any period prior to the extended
contract completion date.
To employer : to establish a new contract completion date, and
prevents time for completion of the works becoming ‘at large’
When
Contractor shall notify the SO or CA if there are any possibility the
works is likely to be delayed beyond the date for completion.
How
Contractor are suppose to submit a notice of delay to SO or CA, the
procedure of the notice should be based as in the standard form of
contract involved.
Normally, entitlement of extension of time is no doubt given to the clearly approved
situation as below :
i.
Contractor is not responsible for the delay, means the cause of the delay
wasn’t by contractor. It is whether the employer’s fault or the caused by
neutral events.
ii.
The delay had possibility to contribute the delay of completion date, which
means it had effected the critical path activities and sequences of works.
11
2.2
Delay
It was stated earlier that almost all construction contract in Malaysia has an
express provision about extension of time. It is believed to be happened because its
kind of abnormal to have a project complete on time without any application of
extension of time even for a day.
A fundamental point is that the time for completion can only be extended where the
contract permits and strictly in accordance with the contract provision. If delay is
caused by some event which the contract does not cover, then the contractor cannot
claim an extension.
Generally, there are two categories of delays in a construction project:
a) Unanticipated and unforeseeable situations which cause delays to some
parts of a construction project and affects overall project completion date
b) Incidents where it affects the progress of a particular activity/task, but not
affecting overall project completion date (Thomas,1994)
The concept of delay arises out of the time limitations stated in the contract.
Extension of time only can be granted if the delay is critical, affects the date for
project completion and it falls within the language of the extension of time clause in
a particular contract. Some contract may contain clause where it allow a general
ground for extension of time, such as “..any other ground for extension of time
expressly mentioned in the Contract” under PAM 1998, Clause 23.7(xii).
It is thus important that the likely causes of delay are covered by an extension
of time clause, but the courts have made things more difficult by ruling that a general
words such as ‘other unavoidable circumstances’ do not cover delay which is due to
the fault of the employer. Oddly, although the ruling is well known, many contracts
continue to use general phrases of this kind.
It is a norm having a delay in any project, it can easily happened and can
caused by any parties, either it solely from contractor’s fault or from other parties
such as employer’s fault or other events.
12
Traditional extension of time clauses contain a list of delaying events for which the
contract administrator is empowered to grant extensions of time, and the forms
currently used in Malaysia are no exception to this.
The lists generally cover two types of delays:
a) Delays which are the responsibility of the employer (or his agent the
engineer or the architect), such as variations, late receipt of necessary
information from the engineer/architect, suspension of the works or a part
thereof, and delays by other persons employed directly by the employer.
As stated previously, it is essential for these grounds to be included if the
employer’s rights to have the works completed within the specified time
for completion, and claim liquidated damages are to be maintained.
b) Delays which are caused by neutral events which the employer has
accepted responsibility for, such as inclement weather, utility
undertakings and force majuere or special circumstances.
In summary, the following parties or events may contribute to the delay of a
construction project (F.Turner & Turner, 1999). Table 2 shows the contribution of
delay for construction parties.
a) Employer or his agents
b) Contractor / Subcontractors
c) Neutral events
13
Table 2: Contribution of Delay
Caused By:
Employer or his agents
Contactor/Subcontractors
Neutral Event
Events
-
Late Award
-
Project Site
-
Payment
-
Variation of works
-
Special materials
-
Design
-
Late instruction
-
Discrepancy.
-
Poor management
-
Poor workmanship
-
Inadequate resources
-Force majeure
-Weather
- Civil Commotion and strike
When there is a delay to progress of work in a construction project, this delay
may or may not have an effect to completion date of the project. Where a delay to
progress does not affect the critical path, the completion date of a project will not be
affected (Adrian,1988). However, if delay to progress affects the critical path, the
project completion will be delayed.
A contractor who completes the work beyond the completion date is in
breach of his contractual obligation and is liable for liquidated and ascertained
damages to the employer. Where delay is due to the contractors’ own fault, for
example inefficiency, slow in progress, poor co-ordination and management, he will
be liable to pay damages to the employer.
However, if the delay due to a neutral event such as exceptional inclement
weather or as a result of the employers’ default such as late granting of possession of
14
site, than the contractor should be excused from such delay affect the project
completion date. In such instances, the contractor should be entitled to be given more
time to complete the project and may also be entitled to claim for any loss and
expenses incurred.
2.2.1
Delay Caused by Employer
Delay caused by employer can be divided into several categories (Rubin et,
al.,1999) :
a) Employer’s failure to meet his contractual obligations
I. Delay in Awarding the Contract
II. Delay in Providing Project Site
III. Dissimilar Site Conditon
IV. Delay in Payment
V. Delay in Obtaining Necessary Approval from Local Authorities
VI. Delay in Furnishing Special Materials
VII. Delay by Nominated Sub-contractors/Suppliers caused by Employer
b) Act of prevention or interference by the employer to the works
c) Variation to the work required by the employer
d) Failure by employer’s agents to perform their contractual duties on behalf
of the employer
e) Employer’s Licensees
15
2.2.2 Delay Caused by Neutral Events
Delays that are not caused by the parties to the contract and beyond the
control or power of any parties involved are considered as neutral events (Hackett &
Robinson, 2003). The generally accepted principle in construction contract is that
delays caused by neutral events are classified as excusable and non-compensable
delay (Rubin, 1999). The contractor is excused from late performance but he will not
be entitled to extra compensation for delays caused by neutral events.
Most of the construction contract dealt with delays caused by neutral events,
such as force majuere, exceptional inclement weather, civil commotion, strike or
lockout, fire, flood, etc. By introducing such provision in a contract, all parties’ risks
will be minimized.
The exception is that the contractor will not be entitled to extension of time if
the neutral events that cause the delay to the project are foreseeable and avoidable.
As in the Australian case of Codelfa Construction Party Ltd v. State Rail Authority of
New South Wales (1982), it was held that the contractor was not entitled to a time
extension for delays due to an injunction that prevented working three shifts as the
contractor had intended, as shown in approved work program. The court determined
that the contractor should have foreseen that three shifts would not have been
allowed in the project area.
2.2.3
Delay Caused by Contractor
As a general rule, contractor will not be entitled to claim extra money or time
if the delay is due to his own default. Contractor will be required to pay liquidated
damages or any monetary compensation to the employer if he delays the project
16
completion without a valid reason (Thomas,1993). Delay caused by contractor can be
classified into the following categories:
2.2.3.1 Failure to Appraisal the Site and Design
Most construction contract requires the contactor to carry our pre-tender site
inspection to enable the contractor to appraisal the site, and to ascertain the actual
site condition. By carrying out a reasonable and proper inspection of the site, the
contractor will be able to submit a more accurate and competitive tender excluding
high contingency factors (Bramble & Callahan,1992). Failure by contractor to
appraise the actual site condition or lack of proper site inspection puts the contractor
in a risky situation where he may under price his tender submission.
Most of the construction contract required the contractor to give written
notice should be find a discrepancy between contract drawings and contract bills.
The contractor may loose his entitlement to extension of time for any consequential
delay if he fails to notify the contract administrator upon discovery of any
discrepancy (Rajoo,1999)
2.2.3.2 Non-availability of Resources
Contractor’s non-availability or inadequate resources such as finances, work
force, plants, equipment and materials may prevent the work from completing in a
timely manner. The risk of managing these resources generally rests with the
contractor and delays caused by poor management or non-availability of these
resources are borne by the contractor.
17
A common scenario in a construction project is the main contractor delaying
payment to his sub-contractors when he is having financial or cash flow problem
during the course of construction. As a result, his sub-contractors may slow down
progress of work or even abandon the work halfway. This will delay construction
completion. In order to overcome such problems, most standard of form in
Malaysian construction contract incorporate a clause to allow direct payment from
employer to sub-contractors if the main contractor fails to pay the sub-contractors
for work done.
It is important that the contractor allow for sufficient work force to carry out
the work. Shortage of labour will not be an excusable delay unless it is caused by
unforeseeable event and the contractor has diligently and used his best endeavours to
looks for alternative labour sources to resolve the issue
Failure by the contractor to provide adequate plan and equipment at the
required time for carrying out work on site will delay project completion. The U.S
Department of Interior Board of Contract Appeals decided in the case of Frank
Rivera, Inc. (1984) that the contractor is responsible for delays which arise from his
own failure to provide proper equipment in accordance with the approved
dewatering plan.
The contractor will not escape from responsibility for delaying project
completion if there is delay in procuring construction materials unless the shortage
of material is unforeseeable and beyond the control of the contractor. Nevertheless,
the contractor owes a duty to the employer under the contract for supplier’s failure to
supply material or equipment that in turn delays project completion
18
2.2.3.3 Poor Management
The contractor needs to manage his resources in order to achieve that best
price, time and quality for the work. The contractor is required to coordinate the
works, select the best construction methods and techniques, and sequences of the
work based on the work programme prepared. Most often, delay in construction
project is caused by main contractor’s poor coordination or failure to interface the
work properly amongst the various trade sub-contractors (F.Turner & Turner,1999)
Poor management may also be caused by the lack of experienced site supervisor to
manage the site workers whereby activities are not well co-ordinate.
In the American case of
Mobil Chemical Co. v Blount Brothers Corp.
(1987), the construction manager was held responsible for delayed completion
caused by poor management in early stages of the project. The contractor was
responsible for delays in mobilizing the project.
2.2.3.4 Poor Workmanship
In most of the Malaysian standard form of contracts, it is contractor’s
obligation to carry out the work in accordance with the contract drawings and
specification. The specification is used as a tool to control the quality or standard of
workmanship of the contractor.
Poor workmanship or nonconforming works entitles the employer to request
the contractor to demolish or remove the works and replace with new ones. The
contractor will not be compensated in terms of time and money for such delays to
the work (Rubin,1999). Poor workmanship is generally due to the lack of skilled
labourers engaged by the contractor.
19
2.2.3.5 Sub-Contractors or Suppliers
The main contractor is responsible to the employer for delays caused by his
sub-contractors and suppliers. This is because the contractual relationship is between
the employer and main contractor only. If the sub-contractors or suppliers’ delays
actually affect the overall project completion and the main contractor does not
contribute to the delay, then the sub-contractors and suppliers are liable to main
contractor. It is therefore important that the main contractor monitor the performance
of each of his own sub-contractor and supplier to ensure the works are properly
coordinated as delays by one may affect the work by others. At the end of the day,
the main contractor is liable to the employer irrespective of any one or a few subcontractors who cause delays although he can still bring an action against the
defaulting sub-contractors.
2.3
Basis events to establish entitlement of extension of time
This section will further discuss on the basic events and principles where the
contractor entitled to extension of time if he fully applied it. The most common
reason for contractor to get the time extended is if can proved that the delay wasn’t
caused by him. It is rather caused by the employer or from the affect of neutral
events.
20
Besides that, contractor also has right to granted extension of time if he has
much knowledge on contract and always keeps his move on the right track.
Contractor shall know what other things that entitled him to get fully extension of
time, which such as below :
i.
Time provision in the contract
ii.
Due diligence
iii.
Notice of delay
iv.
Work Programme
2.3.1
Time provision in the contract.
As a person who will hold a responsibility to complete the agreed work,
contractor should really understand and realize the important provision in the
contract. One of the primary terms in a contract is the time provision. A good
contractor will have a great awareness due to this provision, it is important to have a
clear idea what kind of time provision in the contract. Firstly, contractor should know
whether the date of completion of the project is stated and he also must understand
the terms of time extension in the contract. By having clear information about time
provision, it will help to reduce further disputes due to this problems.
In the next discussion writer would like to discuss more detail on time provision and
terms. The next discussion will touch on contract with and without time specified,
what the definition of time at large is and how it relates to the term of reasonable
time.
21
2.3.1.1 Contract with specified time
In the normal situation, where a time for completion is expressly stated in the
contract, the employer is entitled to damages if the contractor does not complete on
time. It is important for contractor to make sure enter a contract with provision of the
date of completion.
There are two different types of contract where time for completion is expressly
stated as a term of the contract. Firstly time may be of the essence or secondly time
may be extendable.
2.3.1.2 Time of essence
Time of the essence is one of the most misused contractual terms, particularly
in construction contract. Time is of the essence where failure to meet the particular
date is a fundamental breach of contract entitling the other party to treat the contract
as repudiated and claim damages.
Time is seldom of the essence in a construction contract because the effect of
such a provision is that the employer does not want the building at all and will treat
the contract as repudiated. Whilst one can think of circumstances where this may be
relevant for a building, for example the construction of the National Sports Stadium
to accommodate the Commonwealth Games on a certain date – there is no value to
the Employer in receiving the stadium one month late when the games ought to have
finished, such would be very rare.
Generally, however time is not considered to be of the essence in construction
contracts, because such contracts are different to most others in that the contractor
will have expended heavily in performing the contract prior to a delay in completion
22
and in constructing the works the employer will have become owner of the property
and thus have received a major and irretrievable benefit. Further it is clearly arguable
that liquidated damages clauses and extension of time provisions are inconsistent
with an interpretation that time is of the essence, both clauses indicating a preference
on the owner’s part to allow the contractor to complete and accept liquidated
damages as compensation.
In a situation where there is an extendable time for completion, and the
contractor is in delay, it is possible for an employer to make time of the essence by
serving a notice requiring completion by a certain date. He cannot do so, however, if
his own breach of contract is already affecting the contractor’s ability to complete.
This remedy would only be available in rare cases where the contractor’s failure to
complete is so persistent or flagrant as to evince an intention not to be bound by the
contract.
2.3.1.3 Time At Large
The majority of construction contracts provide a time for completion, and a
provision that failure to complete by that date will entitle the employer to liquidated
damages at a certain rate per day.
In the absence of any provision, the contractor will be responsible to
complete within that time, and he will have no excuse if events occur which cause
delays over which he has no control, such as weather, strikes, materials shortages or
unforeseen ground conditions.
However, the position is entirely different if the contractor suffers a delay
which is caused by the employer. Such delays are common and may be failure to
give possession of the site on the required day, the issue of variations requiring
additional works, or any other disturbance caused by the employer. It is- clearly
23
established that one party cannot impose a contractual obligation on the other where
he has impeded the other in the performance of that obligation. In Amalgamated
Building Contractors Ltd v Waltham Holy Cross UDC [1952] 2 All ER 452 Lord
Denning said:
“..the building owner cannot insist on a condition if it is his own fault that the
condition has not been fulfilled."
Brian Egglestone in his book 'Liquidated Damages and Extensions-in
Construction Contracts 1 at page 27 aptly sums up contractors' perceptions of time at
large as follows:
“The phrase 'time at large” is much loved by contractors.It has about it ring
of plenty; the suggestion that the Contractor has as much time as he wants to
complete the works"
Employers, architects and engineers have fundamentally different views.
They often view the claim that time is at large to be nothing more than an excuse
used by dilatory contractor who have failed to meet their completion obligations and
want to avoid the deduction of liquidated damages.
Essentially, time becomes at large:
(a) Where an act of prevention by the employer creates delay and that delay
is not covered by an extension of time provision; and, to a lesser extent:
(b) Where the provisions for extension of time have not
been
properly
administered or have been misapplied;
(c) Where there has been waiver of the original time requirements;
(d) Where there has been interference by the employer in the certifying
process.
In its simplest form time is said to be at large where there is no specific time
for completion or where a previously fixed time for completion no longer applies.
24
This can occur in two main ways. Firstly, where agreements for work to be, carried
out are entered into without a completion date, or period, being stated. Common
examples of this type of situation are found in letters of intent, which often contain
instructions to commence work without a completion time being agreed. Where
there is no subsequent agreement as to the time for completion then time will be said
to be at large.
The second situation occurs where a previously agreed time for completion
has been rendered inoperable. This can occur in a number of ways the most common
of which is where there is an act of prevention by the employer, which there is no
express provision within the contract for extending the completion date.
This derives from a fundamental principle of commercial law which has been
established for centuries but which was best articulated in Barque Quilpue v Brown
[1904] 2 QB 264.
In this case Lord Justice Vaughan Williams said:
“There is a term implied into every contract by each party that he will not do
anything to prevent the other party from performing a contract or to delay
him in performing it. I agree that generally such a term is by
law
imported into every contract"
Where the employer or his agents does undertake some act or omission
which prevents the contractor completing the works by the date for completion, for
example, by failing to provide necessary drawings at the appropriate time, then he
can no longer maintain that the contractor finishes his works by the stipulated date
for completion. Time is set at large unless the contract provides for extending the
date in such circumstances.
To overcome this problem most forms of building contract acknowledge that
acts of prevention are a reality in construction and provide mechanisms for changing
25
the completion obligations when delays by the employer occur. These mechanisms,
referred to as extension of time clauses, give the engineer or architect the power to
grant extensions of time for delays caused by the employer or his agents. This
allows a definite time for completion to be maintained and preserves the employer's
rights to deduct liquidated damages if completion occurs after the extended date.
Given the importance of these matters it is perhaps surprising to discover that
some of the most commonly used forms of contract do not contain express
provisions to extend time for completion resulting from an employer's act of
prevention and some of these contracts are still in use in Malaysia.
The PAM98 form of contract is an amended version of the PAM 1969
edition, which is modeled upon the JCT 1963 Edition. The JCT 1963 was the form of
contract considered in the case of Rapid Building Group v Ealing Family Housing
(1984) 24 BLR 5. Due to the presence of squatters the Employer was unable to give
possession of the site on the prescribed date. Since there was no provision to extend
time for late possession, the Contractor was successful in his argument that that time
had become at large and accordingly the obligation for completion was altered to that
of a reasonable time, and the Employer lost his right to levy liquidated damages.
A similar argument was put forward in the case of Peak Construction
(Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 heard before the
Court of Appeal in 1970. It was held that, as delays on the part of the City Council
in approving remedial works to the pilling were not catered for in the extension of
time provisions, the right to liquidated and ascertained damages was lost and time
became at large. The corporation was left with an entitlement to claim such common
law damages as a result of the Contractor failing to complete within a reasonable
time, as it was able to prove.
It is also clear from the case of Peak Construction that the extent of the delay
caused is not a relevant factor to be considered in assessing whether time has been
set at large.
26
Lord Justice Phillimore in this case summarized the law and the rationale
behind it as follows:
"I would re-state the position because I think it needs to be stated quite
simply. As I understand it, a clause providing for liquidated damages (clause
22) is closely linked with a clause, which provides for an extension of time
(clause 23). The reason for that is that when the parties agree that if there is
delay the contractor is to be liable, they envisage that the delay shall be the
fault of the contractor and, of course, the agreement is designed to save the
employer from having to prove the actual damage which he has suffered. It
follows, once the clause is understood in that way, that if part of the delay is
due to the fault of the employer, then the clause becomes unworkable if only
because there is no fixed date from which to calculate that for which the
contractor is responsible and for which he must pay liquidated damages.
However, the problem can be cured if allowance can be made for that part of
the delay caused by the actions of the employer, and it is for this purpose that
recourse is had to the clause dealing with extension of time. If there is a
clause which provides for extension of the contractor's time in the
circumstances which happen, and if the appropriate extension is certified by
the architect, then the delay due to the fault of the contractor is disentangled
from that due to the fault of the employer and a date is fixed from which the
liquidated damages can be calculated."
In this case it was also held that if the Employer caused any delay, no matter
how slight, and there was no appropriate provision to extend the time for completion
then time would be at large. The extent of the delay was not a factor in whether time
was rendered at large.
Similarly in the case of Inserco Ltd v Honeywell Control Systems (1996),
Inserco contracted to complete all work by 1 April 1991. Due to additional and
revised work, and lack of proper access and information, Inserco was prevented
from completing on time. There was no provision in the contract for extending the
completion date and time was held to be at large.
27
The Federal Court in Malaysia held in Sim Chio Huat v Wong Ted Fui [1983]
MLJ 151 that a housing developer who undertook to deliver houses erected by him to
a landowner, was not liable for liquidated damages because the landowner had
instructed for additional work to be done when their agreement contained no clause
for extension of time for completion. Time became at large and consequently there
was no date from which damages could run and therefore no liquidated damages
could be claimed.
The Supreme Court of Malaysia held in Thamesa Designs Sdn Bhd v Kuching
Hotels Sdn Bhd [1993] 3 MLJ 25 that the Employer was not entitled to deduct
liquidated damages because site possession was handed over late to the Contractor
and there was no extension of time provision for late possession.
Whilst the omission from the standard form is generally corrected by way of
special conditions of contract, in some instances it is not and on these occasions the
contractor will have grounds to argue that time has become at large due to the failure
of the employer to afford possession or other acts of prevention not expressly
provided for within the extension of time provisions.
Some contract draftsmen attempt to close this loophole by using general
"catch-all" expressions in the extension of time clause such as "other causes beyond
the contractor's control-. However the courts in the case of Wells v Army & Navy Cooperative Society Ltd (1902) 86 L.T. 764 held that words such as these did not cover
delays caused by interference of the Employer or the Architect, and accordingly an
extension of time could not be granted and time was set at large. Therefore the
contract will need to give express provisions to extend time where the Employer has
prevented performance and general clauses will not suffice. An example of specific
provision that seems to cater for the employer's delays is included in the PAM 98
conditions at clause 23.7(ix) which states:
"any act of prevention or breach of contract by the Employer not mentioned in
this Clause 23.7”
Of course most major forms of construction contract are now drafted to
28
ensure that delay caused by the employer are clearly covered and further drafted to
incorporate some risk sharing between the employer and the contractor and often
entitle the contractor to extensions of time due to neutral events such as inclement
weather or other matters outside his, or the employer's control.
2.3.2
Due Deligence
The previous section has considered the obligations of the contractor to
complete the works within a specified time for completion, and in the event of his
failure to do so, the employer's right to liquidated damages.
However, delays may occur during the progress of the works that may cause
the employer damage but which do not delay the overall completion Such delays will
generally not entitle the employer to claim damages and so in an attempt to prevent
such delays occurring it is common for construction contracts to include terms that
define the manner in which the works are to be progressed.
Contracts normally use such terms as:
"...Proceed regularly and diligently..." (PWD 203A, clause 51 (a)(ii) and
PWD Form DB/T - clause 54.1 (b))
"... regularly and diligently proceed... "(PAM98, clause 21.1).
"...shall proceed... with due expedition... "(IEM, clause 38(a)).
". ..shall proceed with due diligence and expedition... "(CIDB, clause 17.1)
The definition of the terms 'diligence' and 'expedition' may be illustrated by
reference to the Shorter Oxford Dictionary thus:
29
Diligence - "the attention and care due from a person in a given ituation",
Expedition - "the act of expediting, to perform quickly, dispatch" .
The expression "due diligence and expedition~ was dealt with in GLC v
Cleveland Bridge (1984) 34 BlR 50. Here the Arbitrator's view (which was upheld
by the court) was:
“if the access date, key dates and completion date are varied or extended the
respondent could not in my view be said to be lacking in diligence if it paced
its work so as to ensure delivery consistent with the appropriate access and
key dates even though this might have the effect of increasing the sums
,eventually recoverable under the VIC provision” (Adjustment of Price
clause}".
The judge further stated that the expression 'due diligence' imposed
"an obligation on the contractor to execute the works with such diligence and
expedition as were
reasonably required in order to meet the key dates and
completion date in the contract".
In the case of West Faulkner v London Borough of Newham (1994) 71 BLR
1,the Court of Appeal acknowledged the difficulty of defining "diligently" when the
proper construction of the term regularly and diligently was considered.
The courts in this case found that:
“... the word 'regularly' is not least a requirement to attend for work on a
regular daily basis with sufficient in the way of men, materials and plant to
have the physical capacity to progress the Works substantially in accordance
with the contractual obligations.
What in particular the word diligently contributes to the concept is the need to
apply that physical capacity industriously and efficiently toward that same
end. "
30
This approach was adopted in the recent Hong Kong High Court case of
Trident Engineering Company Limited v Mansion Holdings Limited wherein Deputy
Judge To elaborated by stating:
"So far as supply of materials is concerned, the contractor has to plan his
requirements ahead and ensure that the materials of the right quality and in
the right quantity are available at the right time. This is to enable the works to
progress continuously, industriously and efficiently. The most ideal situation
would be to arrange delivery to coincide with work progress so that the
materials will arrive at the site precisely when they are wanted and be lifted to
where they are required . If such precise delivery is not possible, at least the
contractor should ensure that a minimum stock is kept on site, which is
sufficient to provide for the time required for placing orders and delivery, plus
a reasonable provision for contingency. Otherwise, labor will be wasted while
waiting for materials and delay will result.
The term "regularly and diligently" must incorporate a wide spectrum of
diligence and regularity. At the one end of the spectrum are breaches, which
are just short of due diligence and regularity, such as falling slightly behind
the schedule or causing some minor interruption. At the other end are severe
breaches amounting non-performance, such as doing no more than keeping a
watchman on the site, or perhaps proceeding with a less than minimal
workforce while directing the major labour workforce to other more
profitable projects. Both are breaches of duty but with very different
consequences. The former is a minor breach sounding in damages while the
latter is a repudiatory breach as it evinces an intention on the part of the
contractor no longer to be bound by the contract. "
Notwithstanding the absence of a precise meaning of the terms used in
contracts, it seems clear that at the very least the contractor must organize and order
his works so as to achieve the completion dates.
31
Whilst this is the general rule the situation under the CI DB conditions of
contract is different. CI DB conditions clause 17.1 (a) requires that "the Contractor
shall proceed with the works with due diligence and expedition..." which is prime
facie a standard clause importing the obligations discussed above however the
clause goes on to state:
“..in accordance with the Contract and by reference to the works
programme and/or method statement or any revised or modified works
programme and/or method statement accepted by the Superintending
Officer pursuant to Clause 5. I'
It would thus appear that clause 17(a} of CI DB contract sets a yardstick in
the form of works programme and method statement for the parties to measure the
extent of due diligence and expedition. The works programme is one of the effective
tools in measuring the Contractor's due diligence and expedition as the S.O. is able
to compare the Contractor's actual progress against the as-planned works programme
apart from assessing the Contractor's available resources on site.
In the Singaporean case of Hiap Tian Soon Construction Pte Ltd and
Another v Hola Development Pte Ltd and Another [2003] 1 SLR 667, the High
Court followed the Court of Appeal's decision in Jurong Engineering Ltd v Paccan
Building Technology Pte Ltd [1999] 3 SLR 667 where 'reasonable diligence' could
only be determined by pacing the progress of the subcontractors work against the
sub-contract programme. The High Court treated the term 'reasonable diligence' as
the same as 'regularly and diligently' and therefore found that the contractor's
progress of work had consistently lagged behind the construction programme thus
falling below what was regularly and diligently. Moreover, the contractor persisted
in its delay despite reminders from the employer to expedite the work.
Although the contract only gave the employer a right to terminate the
contractor's employment for the failure to proceed regularly and diligently, the High
Court in following the Court of Appeal's decision in Jurong Engineering's case, held
that the contractor's breach of the obligation to proceed regularly and diligently
would give rise to damages as well as to a right to terminate the contractor's
32
employment.
The court cited the reason enunciated in Hudson's Building and Engineering
Contracts, Vol 2 (11th Ed, 1995) as where the nature of the work undertaken
indicated that work by other contractors of the employer were within the
contemplation of the contract as being dependent on the maintenance of a reasonable
rate of progress.
However, as the events in the works unfold, the works programme must be
revised to reflect and consider actual progress which have taken place including
external delaying events. The onus may lie on the S.O. to insist and instruct the
Contractor to revise the works programme from time to time. In the absence of such
updated programme, it may be near impossible for the S.O. to measure the
Contractor's due diligence and expedition.
It is interesting to note that in the case of Engineering Construction Pte Ltd v
Attorney General & Anor [1997] 3 SLR 989, the employer selected from the
contractors' fifth revised programme the excavation works as a critical activity by
which to measure the contractors' ability to work to the programme. Under this
revised programme, the contractors maintained that they would complete the
excavation works by 31 March 1992. The High Court held that whether or not the
contractors were proceeding with reasonable diligence would be determined in
accordance with the facts and circumstances of each case. In this case, it was held that
the target of completion of the excavation works set by the employer to measure
whether the contractors were proceeding with reasonable diligence or not, was not at
all unreasonable. The contractors failed to meet the target and were thus not
proceeding with the work with reasonable diligence.
Another factor which a C.A needs to take into account when measuring the
contractor's due diligence would be whether the contractor is entitled to any further
extension of time based despite the contractor having failed to notify the C.A of any
causes of delay. If the C.A fails to consider the contractor's further entitlement to
extension of time yet at the same time arrives at an opinion that the contractor fails to
proceed regularly and diligently, the C.A may put the interest of the employer at risk.
33
Such are the circumstances seen in the case of Sindall LId v Solland and
others [2003] All ER (D) 95 where the contractor entered into a contract with the
employer for renovation work. The date for completion had lapsed and was later
extended. Subsequently the extended date for completion lapsed and there were still
delays being caused by the employer including the employer's artist and tradesmen.
The C.A issued a notice of default to the contractor forming his view that the
contractor had failed to proceed regularly and diligently on the grounds that, inter
alia, the contractor had a low number of operatives on the site. The employer acted
on the C.A’s view and subsequently terminated the contractor's employment.
Humphrey Llyod J's in his obiter statement said:
“Were there not events which entitled Sindall (the contractor) to a further
extension of time? If there were such events then the Contract Administrator
may not have been right to have formed the view that the contractor was then
failing to proceed regularly and diligently"
The judge in the Sindall's case referred to Vinelott J's judgment1 in London
Borough of Merton v Leach (1985) 32 BLR 51 at pages 89-90 and stated that a
contract administrator had always to consider whether there were any factors known
to him which might justify an extension of time, even though the contractor failed to
give a notice of delay. This was particularly important if the C.A needed to determine
whether the contractor was proceeding regularly and diligently. It should be noted
that the contract in this case did not stipulate such notice as a condition precedent to
any entitlement to an extension of time. Hence, the application of Sindall's case may
be confined to such contracts.
34
2.3.3. Notice Of Delay
In most standard forms of contract there is a requirement for the contractor to
submit written notice of delays to the architect or engineer. Very often there is a time
limit on the submission of such notices. By submitting notice of delay in a proper
procedure can be the merit of contractor to granted time extension, but contractor
should be familiar with the procedure of notice submitting refereeing to the standard
of form he was involved in.
The starting point for the submission period is generally either the start of the
event giving rise to the delay, an objective test, or when it becomes reasonably
apparent that an event is likely to cause delay, a subjective test.
Most forms, internationally, do not expressly state that giving of such notice
is a condition precedent to the right to an extension of time, and the case of Bremer
Handelsgesellschaft mbh v Vanden Avenne-Izegem (1978) 2 LLR 109, confirmed
that unless it was expressly so stated the clause would not be a condition precedent.
Vinelott J gave the judgment on the construction of clause 23 of JCT 23
(similar to clause 43 of PWD 203A),i.e. the contractor was required to give a
notice if the contractor had known an event had resulted or would inevitably
result in delay. If the architect had known an event which would likely cause
delay, he must estimate the delay and extend the time for completion. He
owed that duty to both the contractor and building owner. It may be against
the owner's interest not to consider a cause of delay of which there is no
notice or a lack of it. Although the giving of notice by the contractor under
clause 23 was not a condition precedent to the architect considering any
possible time extension, the contractor's failure to give notice when it was
apparent that the work had been delayed would be a breach of contract.
Hence. considering this breach, the architect would assess the length of time
extension to which the contractor was entitled had he given the notice at the
proper time.
35
The reason for this arose from a fear that in the event of an employer's delay,
if the contractor failed to serve a notice and was thus prevented from claiming an
extension of time, it may be open to argument that time was at large because the
employer had prevented completion and no extension of time was possible. This
stemmed from the decision in Peak Construction (Liverpool) Ltd v McKinney
Foundations Ltd (1970) 69 LGR 1.
However, the Australian case Turner Corporation Ltd (Receiver and
Manager appointed) v Austotel Pty Ltd 1994 NSW LEXIS 12792 appears allay such
fears and held that:
"Jf a Builder, having a right to claim an extension of time fails to do so, it
cannot claim that the act of prevention which wouJd have entitled it to an
extension of time for Practical Completion resulted in its inability to complete
by that time. A party to a contract cannot rely upon preventing conduct of the
other party where it failed to exercise a contractual right which would have
negated the effect of that preventing conduct. "
However, a more recent Australian case of Gaymark Investments v Walter
Construction (1999) Northern Territory Supreme Court 143, concerns an appeal on
the arbitrator's award where disputes between the parties had been referred to
arbitration. The contract between the employer and the contractor provided for notice
as a condition precedent to any extension of time.
However, the contract did not provide for any discretionary power to the
owner's architect to grant extension of time notwithstanding the contractor's failure
to comply with the notice provisions. The arbitrator found that the employer had
caused delays to the works but, by virtue of the stringent notice provisions coupled
with the absence of any discretionary power to award extension of time, the
employer must be regarded as having elected to take the risk that if the employer
himself had caused delays and the contractor had not given the required notice, time
would have been set at large and liquidated damages could not have been recovered
by the employer under the prevention theory. The court agreed with the arbitrator.
36
Examples of standard forms of contract where notice is not a condition
precedent:
(a)
None of the Malaysian Standard Forms require the giving of notice as
a condition precedent to the right to an extension of time.
(b)
PWO Form OBIT (clause 45.1), PWD Form 203A (clause 43),
PAM69 (clause 23), PAM98 (clause 23), and IEM (clause 43), state that:
"Upon it becoming reasonably apparent that the progress of the Works is
delayed, the Main Contractor shall forthwith give written notice of the cause
of the delay to the [P.D./S.O./Architect/Engineer.] ... n
(c)
CIDB conditions impose a time frame upon the Contractor for
issuance of a notice and reaction to that notice by the Superintending Officer
however compliance with this requirement is not a condition precedent to the
granting of an extension to the Time for Completion of the Works.
Example of a foreign standard forms of contract where notice is a condition
precedent. This can be found in the Singaporean SIA Conditions clause 23(2) which
states:
"It shall be a condition precedent to an extension of time by the Architect
under any provisions of this Contract including the present clause (unless
the Architect has already informed the Contractor of his willingness to grant
an extension of time) that the Contractor shall within 28 days notify the
Architect in writing of any event or direction or instruction which he
considers entitles him to an extension of timer together with a sufficient
explanation of the reasons why delay to completion will result. "
If the details submitted are insufficient to enable the Superintending Officer
to decide on an extension of time, then the Superintending Officer may require the
Contractor to provide further information which may reasonably be required.
37
2.3.4 Construction Work Programme
The burden of proof of delay rests on the contractor whether the application
be made before or after completion and whether the delaying events is the
employer’s fault or neutral. If the contractor intends to challenge liquidated damages
on the grounds of delay or aims to avoid liquidated damages, by obtaining an
extension from the C.A or an arbitrator, the contractor will have to produce evidence
that delay occurred and that the cause of the delay gave an entitlement to an
extension. Consequently it is up to the contractor to keep records as evidence of both
delay and cause. The strength of the contractor’s case will depend on the quality of
the records.
There is no doubt that a comprehensive programme marked up on a regular
basis to show actual start dates, durations and completion dates of significant
activities, is at least a credible record of progress even if it says nothing on the actual
causes of any delays. But by adding to the programme
indicators on when
variations, revisions and the like were ordered, instruction were given, and other
events were encountered, the programme can provide a detailed picture which
should satisfy the test of good evidence.
In Malaysian standard form of contract, the requirement for preparing a work
programme in the document contract is stated in clause 3.4 of PAM 98 and clause
5.1 in CIDB 2000 while PAM 203A is silent about it. It had been mentioned before
the importance of having this document in construction project. The main advantage
is to foreseen the contractor’s planning of work and to determine the critical path or
critical activities in a project. This information is useful in knowing which party had
contributed to the delays and due to that, make an easier assessment for S.O or C.A
in granted time extension to contractor.
The contractor who fails to produce an effective and realistic programme
puts himself at a disadvantage on proof of entitlement to extension. First of all, he
must show that he has suffered delay and that this delay has affected completion of
the works, then he must show that the delay was caused by a relevant event and not
38
his own deficiency and difficulties.
To do this without a programme showing what was intended by way of
orderly progress and output, and records showing how progress and output were
comparing with the programme before the alleged delay, is a near impossible task.
As for C.A having to form his own view in such circumstances, he may have so few
definite facts on which to base his decision that the contractor can hardly complain
of unfair treatment.
Professor Wallace in Hudson’s Building and Engineering Contracts (1980)
explained the usefulness for the architect of the requirement of work programme :
The purpose of contractual requirement for a programme to be supplied by
the contractor is often misunderstood, and is primary to enable its owner, or his
Architect or engineer, to plan their own arrangements for giving possession,
supplying information and working drawings, and co-ordinating the work of other
contractors or nominated sub- contractors, and only secondarily for use in
connection with the contractor’s extension of time applications or monetary claims,
or to impose additional time obligations on it.
39
CHAPTER 3
CONSTRUCTION WORK PROGRAMME
3.0
Construction Planning
Construction planning is a fundamental and challenging activity in the
management and execution of construction projects. It involves the choice of
technology, the definition of work tasks, the estimation of the required resources and
durations for individual tasks, and the identification of any interactions among the
different work tasks. A good construction plan is the basis for developing the budget
and the schedule for work. Developing the construction plan is a critical task in the
management of construction, even if the plan is not written or otherwise formally
recorded. In addition to these technical aspects of construction planning, it may also
be necessary to make organizational decisions about the relationships between
project participants and even which organizations to include in a project. For
example, the extent to which sub-contractors will be used on a project is often
determined during construction planning.
Most people, describe a train of events is what the result would be. They can
put those events together in their minds, and argue from them that something will
40
come to pass. There are few people told a result, would be able to evolve from their
own inner consciousness what the steps were which led up to that result.
Like a detective, a planner begins with a result (i.e. a facility design) and
must synthesize the steps required to yield this result. Essential aspects of
construction planning include the generation of required activities, analysis of the
implications of these activities, and choice among the various alternative means of
performing activities. In contrast to a detective discovering a single train of events,
however, construction planners also face the normative problem of choosing the best
among numerous alternative plans. Moreover, a detective is faced with an observable
result, whereas a planner must imagine the final facility as described in the plans and
specifications.
In developing a construction plan, it is common to adopt a primary emphasis
on either cost control or on schedule control as illustrated in Figure 2. Some projects
are primarily divided into expense categories with associated costs. In these cases,
construction planning is cost or expense oriented. Within the categories of
expenditure, a distinction is made between costs incurred directly in the performance
of an activity and indirectly for the accomplishment of the project. For example,
borrowing expenses for project financing and overhead items are commonly treated
as indirect costs. For other projects, scheduling of work activities over time is critical
and is emphasized in the planning process. In this case, the planner insures that the
proper precedences among activities are maintained and that efficient scheduling of
the available resources prevails. Traditional scheduling procedures emphasize the
maintenance of task precedences (resulting in critical path scheduling procedures) or
efficient use of resources over time (resulting in job shop scheduling procedures).
Finally, most complex projects require consideration of both cost and scheduling
over time, so that planning, monitoring and record keeping must consider both
dimensions. In these cases, the integration of schedule and budget information is a
major concern.
41
Figure 2: Alternative Emphases in Construction Planning (Scheduling
Construction Projects, 1997)
3.1
Definition of work programme
Scheduling project work is an essential element of project management. A
project schedule makes clear to all participants when work is expected to be
completed. It also shows the time-related dependencies between different project
tasks.
In a complex project, several schedules may be necessary, covering different
levels of detail or different parts of the project.
42
3.1.1
Who does Project Scheduling
Setting overall completion dates must be done by the project sponsor and
stakeholders. The project manager assists in this by digesting information about
scope, deliverables, and resources, and estimating times for completion of project
tasks.
Once an overall schedule is set, the project manager is responsible for
monitoring the progress of the project and revising the schedule if needed. This must
be done in consultation with project team members who are doing the work.
Working with team members to produce accurate time estimates is one of the high
mysteries of the art of project management. The project manager must balance the
needs for honesty and realism with appropriate motivation to keep the project on
track despite inevitable surprises.
There will typically be give-and-take as a project proceeds among budget,
features, and schedule. It is essential for the project manager to keep all participants
informed as to current schedule status.
3.1.2
How is scheduling done?
The Gantt chart is a popular format for displaying schedule information.
Many software packages are available to assist in preparing Gantt charts and other
similar charts. The example of scheduling software is Primavera, Microsoft Project
and Atrimis.
43
3.2
Purposed of Construction Work Programme
The type of person use construction work programe and the uses they make
of those schedules are as diverse as is the construction industries itself. The owner
and his representatives will use the construction work programme to monitor
progress on the construction project. The contractor’s project manager, project
superintendents, engineers and subcontractors will also use the construction work
programme.
From here, the main purpose of construction work programme is to predict
the progress of following caracter :
i.
Project Completion Time
ii.
Task Time
iii.
Conflict in work sequence
iv.
Requirement of financing
v.
Effect of proposed changes
vi.
Delay in work
vii.
To serve as a record of actual versus schedule completion
viii.
Historical cost data
ix.
3.2.1
To satisfy a contractual requirement
Project Completion Time
The project completion time is the date when a project will be completed. If
the project is being performed under the terms of a contract that specifies a contract
completion date, there may be financial penalties for late completion. If the schedule
indicates that the plan will result in late completion, then the construction manager
has been put on notice that he must revise that plan. Perhaps he can employ more
44
craftsmen, mobilize more equipment, work overtime, or perform tasks in a different
sequence.
3.2.2
Task Time
Task times are the times that specific tasks or activities will commence or
end. With this information, the manager can make arrangements to have material,
craftsmen, and equipment on hand when they will be needed. Procurement of
material is often a critical task. The manager can schedule the preparation of
procurement specifications and shop drawings, the architect's approval of these
documents and the fabrication and delivery of the material. If the schedule does
indicate that initiation of critical tasks will be delayed by the lack of some resource,
then the manager is alerted to the need to take extraordinary action to obtain that
resource in a timely manner.
3.2.3
Conflict in Work Sequence
Examination of the task times may reveal conflicts that will occur between
different trades or subcontractors because of limited work space. It may also reveal
that one trade is scheduled to start a task before another trade has done work that
must be completed before that task can be started.
45
3.2.4
Requirement for Financing
The rate of progress on the project determines the rate at which labor,
equipment, and material resources will be consumed and costs will be incurred. It
also affects the rate at which the contractor will receive progress payments. The
difference between costs incurred and paid and payments received represents the
contractor's cash flow on a project. During the early stages of a project, the cash flow
is negative, meaning that more cash has been paid out than has been taken in. The
contractor may need to borrow additional working capital if he doesn't have enough
liquid assets to cope with the problem.
3.2.5
Effect of Proposed Changes
Changes in the project scope, in the type of materials to be used or of any
kind may affect the starting and finishing dates of uncompleted tasks. These changes
may increase or decrease the overall project cost. If these changes are initiated by the
owner and if they result in increased costs to the contractor, then the contractor
should request additional compensation. One of the commonest causes for increased
project cost is the extension of the project duration. The cost component project
overhead, or is nearly proportional to project duration.
46
3.2.6
Delay in work
The schedule should be periodically updated to show both scheduled and
actual task times. It should show when work was delayed, whether by the
contractor's acts or omissions, or by changes in the project scope or design initiated
by the owner. If a task: actually starts later than its scheduled time, that delay may
affect costs incurred on other tasks. If the delay was caused by the owner, the
contractor is entitled to a time extension and additional compensation. If the delay
was caused by neither the owner nor the contractor, then the contractor may be
entitled to a time extension.
The project superintendent should maintain a project diary and should make
frequent job photographs. These records, together with the updated schedule, will
indicate to the contractor the amount and reasons for delay and increased costs, and
will aid him in negotiating fair compensation from the owner. Such records may be
valuable if the contractor wishes to defend himself against penalties that the owner
intends to assess for late completion. They may also assist the contractor in
justifying increased compensation, which is warranted because of changes initiated
by the owner.
3.2.7
To serve as a Record of Actual Versus Schedule Completion
It is customary in contract construction for the contractor to submit a
periodic invoice or request for partial payment as the work progresses. He will
receive progress payments that are based on the percentage completion of the
project at the time the invoice was submitted. Often the owner will withhold some
percentage of the contractor's earnings until the project is completed. The retainage
47
may be 10% of cumulative earnings until the project is 50% completed. There
after, if the project is on schedule, the retainage may he reduced to 5%. A detailed
schedule, one that has been properly posted with current project status, is one of
the most acceptable forms of evidence that the percentage completion claimed by
the contractor is accurate.
3.2.8
Historical Cost Data
A properly updated schedule may be a valuable source of cost and
scheduling data that estimators and schedulers can use for future projects.
3.2.9
To satisfy a contractual Requirement
Often, in contract construction, the owner of the future facilities has a
contractual right to be provided with a copy of the contractor's schedule. He may
also have a contractual right to direct the contractor to accelerate progress, perhaps
by working extended hours, if the schedule reveals that the job will not be finished
by the contract completion date, some owners may specify the form of the schedule
that they are to be provided
48
3.3
Type of Construction Work Programme
3.3.1
Gantt Chart
During the era of scientific management, Henry Gantt developed a tool for
displaying the progression of a project in the form of a specialized chart. An early
application was the tracking of the progress of ship building projects. Today, Gantt's
scheduling tool takes the form of a horizontal bar graph and is known as a Gantt
chart, a basic sample of which is shows in Figure 3:
Figure 3: Gantt Chart Format (Planning and Controlling Construction Projects-The
Best Laid Plans, 1996)
The horizontal axis of the Gantt chart is a time scale, expressed either in
absolute time or in relative time referenced to the beginning of the project. The time
resolution depends on the project - the time unit typically is in weeks or months.
Rows of bars in the chart show the beginning and ending dates of the individual tasks
in the project.
49
In the Figure 3, each task is shown to begin when the task above it completes.
However, the bars may overlap in cases where a task can begin before the
completion of another, and there may be several tasks performed in parallel. For such
cases, the Gantt chart is quite useful for communicating the timing of the various
tasks.
For larger projects, the tasks can be broken into subtasks having their own
Gantt charts to maintain readability.
3.3.1.1 Gantt Chart Enhancements
This basic version of the Gantt chart often is enhanced to communicate more
information.
•
A vertical marker can used to mark the present point in time.
•
The progression of each activity may be shown by shading the bar as
progress is made, allowing the status of each activity to be known
with just a glance.
•
Dependencies can be depicted using link lines or color codes.
•
Resource allocation can be specified for each task.
•
Milestones can be shown.
50
3.3.1.2 Gantt Chart Role in Project Planning
For larger projects, a work breakdown structure would be developed to
identify the tasks before constructing a Gantt chart. For smaller projects, the Gantt
chart itself may used to identify the tasks.
The strength of the Gantt chart is its ability to display the status of each
activity at a glance. While often generated using project management software, it is
easy to construct using a spreadsheet, and often appears in simple ascii formatting in
e-mails among managers.
For sequencing and critical path analysis, network models such as CPM or
PERT are more powerful for dealing with dependencies and project completion time.
Even when network models are used, the Gantt chart often is used as a reporting tool.
3.3.2
PERT Chart
Complex projects require a series of activities, some of which must be
performed sequentially and others that can be performed in parallel with other
activities. This collection of series and parallel tasks can be modeled as a network.
In 1957 the Critical Path Method (CPM) was developed as a network model
for project management. CPM is a deterministic method that uses a fixed time
51
estimate for each activity. While CPM is easy to understand and use, it does not
consider the time variations that can have a great impact on the completion time of a
complex project.
The Program Evaluation and Review Technique (PERT) is a network model
that allows for randomness in activity completion times. PERT was developed in the
late 1950's for the U.S. Navy's Polaris project having thousands of contractors. It has
the potential to reduce both the time and cost required to complete a project.
3.3.2.1 The Network Diagram
In a project, an activity is a task that must be performed and an event is a
milestone marking the completion of one or more activities. Before an activity can
begin, all of its predecessor activities must be completed. Project network models
represent activities and milestones by arcs and nodes. PERT originally was an
activity on arc network, in which the activities are represented on the lines and
milestones on the nodes. Over time, some people began to use PERT as an activity
on node network. For this discussion, we will use the original form of activity on arc.
52
3.3.2.2 Steps in the PERT Planning Process
PERT planning involves the following steps:
I) Identify Activities and Milestones
The activities are the tasks required to complete the project. The milestones
are the events marking the beginning and end of one or more activities. It is
helpful to list the tasks in a table that in later steps can be expanded to include
information on sequence and duration.
II). Determine Activity Sequence
This step may be combined with the activity identification step since the
activity sequence is evident for some tasks. Other tasks may require more
analysis to determine the exact order in which they must be performed.
III). Construct the Network Diagram
Using the activity sequence information, a network diagram can be drawn
showing the sequence of the serial and parallel activities. For the original
activity-on-arc model, the activities are depicted by arrowed lines and
milestones are depicted by circles or "bubbles".
53
If done manually, several drafts may be required to correctly portray the
relationships among activities. Software packages simplify this step by
automatically converting tabular activity information into a network diagram.
IV). Estimate Activity Times
Weeks are a commonly used unit of time for activity completion, but any
consistent unit of time can be used.
A distinguishing feature of PERT is its ability to deal with uncertainty in
activity completion times. For each activity, the model usually includes three
time estimates:
•
Optimistic time - generally the shortest time in which the activity can be
completed. It is common practice to specify optimistic times to be three
standard deviations from the mean so that there is approximately a 1% chance
that the activity will be completed within the optimistic time.
•
Most likely time - the completion time having the highest probability. Note
that this time is different from the expected time.
•
Pessimistic time - the longest time that an activity might require. Three
standard deviations from the mean is commonly used for the pessimistic time.
54
V). Determine the Critical Path
The critical path is determined by adding the times for the activities in each
sequence and determining the longest path in the project. The critical path
determines the total calendar time required for the project. If activities outside
the critical path speed up or slow down (within limits), the total project time
does not change. The amount of time that a non-critical path activity can be
delayed without delaying the project is referred to as slack time.
If the critical path is not immediately obvious, it may be helpful to determine
the following four quantities for each activity:
•
ES - Earliest Start time
•
EF - Earliest Finish time
•
LS - Latest Start time
•
LF - Latest Finish time
These times are calculated using the expected time for the relevant activities.
The earliest start and finish times of each activity are determined by working
forward through the network and determining the earliest time at which an
activity can start and finish considering its predecessor activities. The latest
start and finish times are the latest times that an activity can start and finish
without delaying the project. LS and LF are found by working backward
through the network. The difference in the latest and earliest finish of each
activity is that activity's slack. The critical path then is the path through the
network in which none of the activities have slack.
The variance in the project completion time can be calculated by summing
the variances in the completion times of the activities in the critical path.
Given this variance, one can calculate the probability that the project will be
55
completed by a certain date assuming a normal probability distribution for the
critical path. The normal distribution assumption holds if the number of
activities in the path is large enough for the central limit theorem to be
applied.
Since the critical path determines the completion date of the project, the
project can be accelerated by adding the resources required to decrease the
time for the activities in the critical path. Such a shortening of the project
sometimes is referred to as project crashing.
VI). Update as Project Progresses
Make adjustments in the PERT chart as the project progresses. As the project
unfolds, the estimated times can be replaced with actual times. In cases where
there are delays, additional resources may be needed to stay on schedule and
the PERT chart may be modified to reflect the new situation.
3.3.2.3 Benefits of PERT
PERT is useful because it provides the following information:
•
Expected project completion time.
•
Probability of completion before a specified date.
•
The critical path activities that directly impact the completion time.
•
The activities that have slack time and that can lend resources to critical
path activities.
•
Activity start and end dates.
56
3.3.2.4 Limitations
The following are some of PERT's weaknesses:
•
The activity time estimates are somewhat subjective and depend on
judgment. In cases where there is little experience in performing an
activity, the numbers may be only a guess. In other cases, if the person or
group performing the activity estimates the time there may be bias in the
estimate.
•
Even if the activity times are well-estimated, PERT assumes a beta
distribution for these time estimates, but the actual distribution may be
different.
•
Even if the beta distribution assumption holds, PERT assumes that the
probability distribution of the project completion time is the same as the
that of the critical path. Because other paths can become the critical path
if
their
associated
activities
are
delayed,
PERT
consistently
underestimates the expected project completion time.
The underestimation of the project completion time due to alternate paths
becoming critical is perhaps the most serious of these issues. To
overcome this limitation, Monte Carlo simulations can be performed on
the network to eliminate this optimistic bias in the expected project
completion time.
57
3.3.3
Critical Path Method
In 1957, DuPont developed a project management method designed to
address the challenge of shutting down chemical plants for maintenance and then
restarting the plants once the maintenance had been completed. Given the complexity
of the process, they developed the Critical Path Method (CPM) for managing such
projects.
CPM provides the following benefits:
•
Provides a graphical view of the project.
•
Predicts the time required to complete the project.
•
Shows which activities are critical to maintaining the schedule and which
are not.
CPM models the activities and events of a project as a network. Activities are
depicted as nodes on the network and events that signify the beginning or ending of
activities are depicted as arcs or lines between the nodes.
58
3.3.3.1 Steps in CPM Project Planning
I). Specify the Individual Activities
From the work breakdown structure, a listing can be made of all the activities
in the project. This listing can be used as the basis for adding sequence and
duration information in later steps.
II). Determine the Sequence of the Activities
Some activities are dependent on the completion of others. A listing of the
immediate predecessors of each activity is useful for constructing the CPM
network diagram.
III). Draw the Network Diagram
Once the activities and their sequencing have been defined, the CPM diagram
can be drawn. CPM originally was developed as an activity on node (AON)
network, but some project planners prefer to specify the activities on the arcs.
IV). Estimate Activity Completion Time
59
The time required to complete each activity can be estimated using past
experience or the estimates of knowledgeable persons. CPM is a deterministic
model that does not take into account variation in the completion time, so
only one number is used for an activity's time estimate.
V). Identify the Critical Path
The critical path is the longest-duration path through the network. The
significance of the critical path is that the activities that lie on it cannot be
delayed without delaying the project. Because of its impact on the entire
project, critical path analysis is an important aspect of project planning.
The critical path can be identified by determining the following four
parameters for each activity:
•
ES - earliest start time: the earliest time at which the activity can start
given that its precedent activities must be completed first.
•
EF - earliest finish time, equal to the earliest start time for the activity
plus the time required to complete the activity.
•
LF - latest finish time: the latest time at which the activity can be
completed without delaying the project.
•
LS - latest start time, equal to the latest finish time minus the time
required to complete the activity.
The slack time for an activity is the time between its earliest and latest start
time, or between its earliest and latest finish time. Slack is the amount of time
that an activity can be delayed past its earliest start or earliest finish without
delaying the project.
60
The critical path is the path through the project network in which none of the
activities have slack, that is, the path for which ES=LS and EF=LF for all
activities in the path. A delay in the critical path delays the project. Similarly,
to accelerate the project it is necessary to reduce the total time required for
the activities in the critical path.
VI). Update CPM Diagram
As the project progresses, the actual task completion times will be known and
the network diagram can be updated to include this information. A new
critical path may emerge, and structural changes may be made in the network
if project requirements change.
3.3.3.2 CPM Limitations
CPM was developed for complex but fairly routine projects with minimal
uncertainty in the project completion times. For less routine projects there is more
uncertainty in the completion times, and this uncertainty limits the usefulness of the
deterministic CPM model. An alternative to CPM is the PERT project planning
model, which allows a range of durations to be specified for each activity.
61
3.4
Role of Work Programme in EOT Application
Extensions of the time allowed for carrying out a project are important
considerations because of the nature of the contract, which forms the basis of so
many construction projects. Planning techniques are frequently used on a project for
the evaluation of possible extensions of time caused by changes to the project. There
are many prob1ems inherent in this. Some problems arise because the techniques
were not developed for retrospective analysis, other problems arise because the
techniques are wrongly applied. This section describes, with il1ustrative examples,
some methods which can be applied to evaluate extensions, the problems which
might be encountered and possible solutions to them. It should be remembered that
the calculated extensions of time should be used as negotiating positions rather than
statements of extensions. The information contained in the section is equally valid
for clients and contractors.
The objective of using any technique to evaluate a possible extension of time
is to produce a model of the project which, when it has alterations imposed on it,
behaves like a project managed. by an experienced contractor.
3.4.1
Determination EOT entitlement
Consider the example below. The scenario is quite complex and some time
should be spent understanding what is happening and way. The connections, which
represent the technology of the method, are represented in Figure 4. The connection
between the brick activities has not been included because it only represent the
contractor’s preferred method of work showing the intended progress of resources.
Consider the following variation to the project:
62
•
The contractor fail to start building 1 until week 3 for reasons which are
not in dispute and for which the responsibility is accepted as the
contractor
•
In week 2 building 2 suffers a delay, which is caused by the client.
Figure 4: Original Bar Chart Showing technological Logic (Planning and
Controlling Construction Projects-The Best Laid Plans, 1996)
The variations that arise can now be applied at the times at which they
became apparent. There is no clarity in the example as to when this was and
therefore it is suggested that a worst case scenario should be adopted in which it is
assumed that the delays are known about only just before they occur.
In this case, the failure to start building 1 would be known about at the start
of the project and the situation would be as shown in Figure 5. It is important to note
that the delay to the building would not have extended the project because an
experienced contractor would have been expected to take mitigating action, which in
this case would have meant increasing the number of bricklaying resources to enable
the two buildings to be worked on together. Whoever caused the delay might be
expected to pay for the extra resources required but would not be expected to pay for
63
an extension to the project. It is a matter of judgment as to whether or not the
provision of extra resources constitutes reasonable mitigating action; following the
example it is assumed to be so here.
Figure 5 : Project with variation to building 1 (Planning and Controlling
Construction Projects-The Best Laid Plans, 1996)
The second variation affected only building 2. It took effect in week 2 and,
for this exercise, it is assumed that it became known about at the start of week 2.
This is illustrated in Figure 6 which shows the state as known about at this time with
a reschedule done from start of week 2.The work actually carried out is shown in
black.
Figure 6 : Project with variation to building 2 (Planning and Controlling
Construction Projects-The Best Laid Plans, 1996)
64
It can be seen that this variation is quite important to the project. It extends
the project duration to 11 weeks and reduces the amount of time for which the
doubling of resources is required. This is brought about because the path which has
been extended contains only technological constraints. If this delay were caused by
the client then it is suggested. that the client should pay for an extension to the
project but should not pay for extra bricklaying resources.
Figure 7 shows the effects of the next stage of the delays. In this, there are
concurrent delays to building I and building 2 . They occur at the start of week 4.
The actual work done on the project is shown in black and it can be seen that onethird of building 1 concrete structure is complete while half of the original building
2 concrete structure and all the previously known delay to it is complete.
Figure 7: Project with concurrent variation to the two buildings (Planning and
Controlling Construction Projects-The Best Laid Plans, 1996)
Rescheduling from the start of week 4 shows once again that the project is
delayed by a week and now is forecast to take 12 weeks. The variation which caused
this delay can clearly be seen to be the one which affected building 2. The variation
to building I had no effect at all on the project duration hut did have an effect on the
timing of the resource demands and, if it was extra work rather than delay, would
65
affect the project costs.
It would be important if this variation to building 1 occurred without the
concurrent delay to building 2. In this case, the reschedule would be as shown in
Figure 8 and the project would not have been delayed but the resource demands
would have to be altered in the future to enable the two brickwork activities to be
carried out simultaneously for 2 weeks.
All these stages have been carried out in a manner which models the behavior
of a reasonable contractor. That is, as the variations have become known, the work
has been rescheduled assuming the same technological logic and wherever possible
maintaining the concept of the work method which in this case meant using a single
bricklaying gang. The ownership of the delays to the project and the extra cost are
apparent from the analysis.
Figure 8 : Project with variation to building 1 only (Planning and Controlling
Construction Projects-The Best Laid Plans, 1996)
66
Figure 9 : Project Evaluate by the addition method (Planning and Controlling
Construction Projects-The Best Laid Plans, 1996)
On a more complex project, the same method should be followed and the
rescheduling process wou1d be the same in principle but rather more timeconsuming.
67
CHAPTER 4
WORK PROGRAMME AS A BASIS TO ESTABLISH EOT ENTITLEMENT
4.0
Introduction
The purpose of preparing a work programme in construction work is briefly
written by Rajoo (1999) as a tool to help architect or engineer to form an opinion of
when he will need to prepare information and aid the quantity surveyor to gauge the
employer’s cash flow profile on the project.
4.1
Work Programme in Standard form of Contract
Work programme is one of the new things introduced in Malaysian
construction contract, therefore only PAM 1998 and CIDB 2000 have this provision
in its standard form of contract while PWD 203A is silent about it. It can be seen that
68
the provision of work progamme are quite detailed discussed in CIDB 2000 form of
contract rather than PAM 98 form of contract.
Both PAM 98 and CIDB 2000 are not stated the provision of having work
programme under the extension of time clause, but there is stated under clause of
contract document. In other words, there are no direct link in clause of extension of
time and requirement of work programme.
4.1.1
PAM 1998
Requirement in preparing work programme in contract document is stated in
PAM 98 under clause 3.4. In PAM 98, the contractor under the clause is required to
provide two copies of work programme to the architect within 14 days after receiving
the Letter of Acceptance (L.A). Usually the programme is in graphic representation
of the detailed work activities and mobilization of resources towards that sequence of
activities. PAM 98 describes work programme as represents the contractor’s plan of
proceeding for the work, nevertheless the expected element in work programme are
not defined in the clause, but Rajoo (1999) stated that it may take the form of a bar
chart, critical path, precedence diagram, schedule, network analysis or otherwise. He
also described a good work should show interfaces with sub-contractors, dates, time
frame, activities, stages and more.
However under clause 3.5 and 3.6, there are stated that the work programme
is not consider as a part of contract documents and do not relieved the contractor
from his obligations and responsibilities.
69
4.1.2
CIDB 2000
The provision of work programme is stated under clause 5.1 in CIDB 2000
form of contract and it seems to be more detailed describe in clause 5.1 (a) which
defined the expected work programme should clearly identifying the sequence, logic
and critical path in which he propose to carry out the Works including the various
work activities and milestones to be achieved.
Both of PAM 98 and CIDB 2000 stated later in clause 3.5 and clause 5.2(a)
that work programme is not a part of contract document and shall not treated as one.
The said clauses dilute the significant of the work programme and its contractual
effect arising from any aberrations to the programme. The effect of making the
programme an express requirement without it being a contract document is that while
the contractor may be in breach for the failure to provide the programme, he may not
be in breach if the series of events are not followed as scheduled.
The two clauses from two different standard form of contract above are more
likely to each other, except that CIDB2000 contents more detail on the provision.
JCT Standard Building Contract 2005 at clause 2.27…if and whenever it become
reasonably apparent that the progress of the works or any section is being or is likely
to be delayed the contractor shall forthwith give written notice..
4.2
How work programme can contribute in eot entitlement
It has been proved by several court cases, it is an advantages to have a work
pogramme as a guidance to parties involved to understand the contractor’s plan of
proceeding for the work. Even there are different ways to produce a work
programme, but it still have one objective, that is to show in graphical form the
procedure and sequences of work that should be done. There are few elements and
70
points in work programme that make it strong and useful to the industry which will
be discuss further in the next discussion.
4.2.1
Logical analysis
Logical analysis is defined as decisions or result of an analysis which made
based on a logical ground. There are so many ways in construction to produce
information based on a logical ground, such as the usage of software or manual
method of calculation. The information gained is more
Logical analysis can be produced by using methodological method of work
programming such as critical path network as an example. Almost all of Malaysian
standard form of contract have a provision on giving a fair and reasonable time
extension to the contractor.
..the S.O shall soon as he is able to estimate the length of the delay beyond
the date or time aforesaid make in writing a fair and reasonable extension of
time for completion of the work…(Clause 43, PWD 203 A)
..the architect shall consider the relevant events causing delay and by written
notice to the contractor give a fair and reasonable extension of time..( clause
23.2, PAM 98)
…the S.O may in his absolute discretion, grant a fair, reasonable and
necessary extension of time..( Clause 24.5, CIDB 2000)
The term used (fair and reasonable) is considered as a subjective term which
no actual method or systematic calculation in stating the number of days. A
prominent case which discussed about this matter is John Barker Construction Ltd. v.
London Portman Hotel Ltd (1996).
71
This case is between a firm of building contractor named John Barker
Construction Ltd as the plaintiff carried out refurbishment works to the London
Portman Hotel, which is owned by the defendant, London Portman hotel Ltd in 1984.
The invitation to tender, dated 28 February 1994 stated that the contract would be let
on the JCT Standard Form of Building Contrcat (1980 edition)
The project was dealt under two contract, one was concerned the ground the
ground and first floor of the hotel and the other one was concerned the second to
eleventh floor of the hotel. The dispute and argument is more basically about the
unsatisfied extension of time given. The party involved in the contract were Gleeds,
acting on behalf of the defendant and acted as quantity surveyor, Mr. Miller of RPW
Ltd as the erchitect nominated in the building contract, Mr. Pickavance as the expert
witness of work programming and others. At the finding of this complicated case, Mr
Recorder Roger Toulson QC had stated that:
“…I accept that defendant had made a fair assessment of the extension of
time due to the plaintiff. It is fairly apparent that the defendant were
concerned by the overrun of the contract in time and costs, and I have no
doubt that the defendant was conscious of this, but I believe also that he
endeavoured
to exercise his judgment independently. However, in my
judgment his assessment of the extension of time due to the plaintiff was
fundamentally flawed in a number of respects, namely :
i.
Mr. Miller as behalf of the defendant did not carry out logical analysis
in a methodological way of the impact which the relevant matters had
or were likely to have on the plaintiff’s planned programme
ii.
He made an impressionistic, rather than a calculated, assessment of the
time which he though was reasonable for the various items individually
and overall
On the evidence, I accept that at the time of the acceleration agreement the
plaintiff’s planned resources were reasonable for their planned programme. I
accept that the subsequent variation were likely to have and had a disruptive
72
effect on that programme, and that the exercise which plaintiff has done is a
fair way of calculating a reasonable extension of time…”.
From this case, it was said that in exercising his duty under clause 25 the
architect or C.A must undertake a logical analysis in a methodological way of the
impact of the relevant events on the contractor’s programme. The application of an
impressionistic rather than a calculated and rational assessment is not sufficient. The
terms of logical analysis in methodological way gave a significant impact in
approving extension of time in this case. Further, it was said that the extension is
flawed if the architect makes an impressionistic rather than a calculated assessment
bearing no logical or reasonable to the delay caused. At the same case, the judge also
said:
“ I accept that the assessment of a fair and reasonable extension involves an
exercise of judgment, but that judgment must be fairly and rationally based.”
The word rationally based is clearly defined as a logical analysis by using
some kind of methodological way or methods.
In Balfour Beatty Construction Limited v The Mayor and Burgess of the
London Borough of Lambeth(2002), the Critical Path Network (CPN) terms had been
stated in His Honour Judge Humprey Llyod QC judgment: “In the context of a
dispute about the time for completion a logical analysis includes the logic required
for in the establishment of a CPN (critical path network)”
The case between Balfour Beatty (BB) and defendant Lambeth was for the
refurbishment and remodeling of Falmouth House, Penwith Manor Estate,
Kennington Park Road, London under the JCT Standard Form of building contract
1998 edition. In the judge’s basis argument, it was found that:
i.
BB programmed the work on a flat type basis (without identifying the
critical path) and at the very least BB should have measured progress
against these same flat types. That way it would have been possible to
73
compare the planned progress with the actual progress in a meaningful
way.
ii.
BB’s programme do not comfort or comply with any of the recognized
and accepted delays analysis methods.
From the two prominent cases as mentioned above, it is clear that the
provision of fair and reasonable extension of time should not be taken as a subjective
matters which SO or CA can simply awarding reasonable period of time to the
contractor. It must be in calculated and logical method no matter what kind of work
programme they are going to use.
There are obvious that in Malaysian standard form of contract are not clarify
the terms of logical analysis, but from the judgment of the above mentioned two
cases, it can be considered the term in clause 43, PWD 203 A means something. It is
stated… S.O shall soon as he is able to estimate the length of the delay.. the words is
able to estimate should be taken in a wider perspective. What define the word able
here? It cant be just a simple estimation, it should be based on something stronger to
make the SO looks capable in doing his job. In John Barker case, it was alleged that
the architect had been negligent in awarding extension of time because it seems that
he is not able to award extension of time based on a logical analysis and
methodological way.
The other terms in Malaysian standard form of contract which sound like
subjective matters but could be in deeper meaning and understanding is in clause
24.5, CIDB 200,.the S.O may in his absolute discretion, grant a fair, reasonable and
necessary extension of time.. The word necessary here should be taken into more
detail understanding. It is surely not the intention of this clause to just simply said
that any award of extension of time is necessary by an authorized SO or CA. By
referring the cases above, necessary extension of time is supposed to be based on
logical analysis and again with methodological method, therefore the necessary word
needs a better definition to avoid any confusion assumption.
74
4.2.2
Critical Path Analysis
It is clear that in order to determine whether an event affected the completion
date, it is necessary to determine whether the event affected the critical path, so there
are delays occurred in the construction progress which are not affected the critical
path, therefore it doesn’t affected the completion date. Hence, this kind of delay if
caused by employer or neutral events are not considered as a basis to extension of
time entitlement. It seems that critical path analysis is a significant element in
preparing work programme. Unfortunately the terms of critical path analysis is not
directly stated in any of standard form of contract so it is not a breach of contract if it
is not prepared even it is a good basis to be referred to.
The importance of having work programme in construction progress which
can determine the critical events were stated in The Royal Brompton Hospital NHS
Trust v Frederick Alexander Hammond and others (2002), which the contract was
under JCT Standard Form of Contract, HHJ Richard Seymour QC said that :
..“It was plain from the evidence called at the sub-trial on behalf of the Claimant, in
particular that of Mr. Gibson, who of course is a programming expert, that there are
a number of established ways in which a person who wishes to assess whether a
particular event has or has not affected the progress of construction work can seek to
do that. Because the construction of a modern building, other than one of the most
basic type, involved the carrying out of a series of operations, some of which
possibly can be undertaken at the same times as some of the others, but many of
which can only be carried out in a sequence, it may well not be immediately obvious
which operations impact upon which other operations. In order to make an
assessment of whether a particular occurrence has effected the ultimate completion
of the work, rather than just a particular operations, it is desirable to consider what
operations, at the time the event with one is concerned happens, are critical to the
forward progress of the work as a whole. On the evidence of Mr.Gibson and Mr.
Luder (for the Claimant) the establishment of the critical path of a particular
construction project can itself be a difficult task if one does know how the contractor
planned the job..”
75
From the judge statement, it is far from clear that a critical path analysis is
always required or merited. In the case of certain types of delay it may be so plainly
obvious that a delaying event has affected the critical path that provided such an
event is properly evidenced and based in fact and is a relevant event then the
contractor will be entitled to the time.
The earlier case of Henry Boot Construction (UK) Ltd v. Malmaison Hotel
(Manchester) Ltd. (1999) which under JCT Standard Form of Contract had also
stated the importance of having critical path analysis in a construction project and yet
further confirmation of the requirement to establish the critical path. It was held by
Dyson J. that ,
“ the respondent was entitled to respond to the claim both by arguing that
the variations, late information and so on relied on by the claimant did not
cause any delay because they were not on the critical path and positively by
arguing that the true cause of delay was other matters”
This confirms the view that, in order to establish that an event has affected
the completion date, it must be shown that it falls on the critical path.
The later case on critical path terms found in Motherwell Bridge Construction
Ltd v. Micafil Vakuumtechnik (2002), Micafil was engaged as main contractor for the
construction of an autoclave under modified FIDIC 1998, a large steel vessel with an
internal volume of 650m3. The vessel was to be used in the manufacture of high
quality power cables.
Micafil undertook responsibility for the design of the vessel and subcontracted its construction to Motherwell Bridge. The project did not run smoothly.
During construction Motherwell Bridge raised many technical queries and there were
a number of significant design changes issued by Micafil. There were two major
formal amendments to the contract. Delays occurred and Micafil deducted liquidated
damages. Motherwell Bridge in turn claimed extension of time to extinguish the
claim for liquidated damages.
76
Judge Toulmin provided:
“ Crucial questions are (a) is the delay in the critical path, and if so, (b) is it
caused by Motherwell? If the answer to the first to the question is ‘Yes’ and
the second question is ‘No’ then I must assess how many additional working
days should be include”
The judgment of the case can be defined as if the delay touch on the
programmed critical path and it was not caused by the contractor, the contractor is
entitle to get reasonable time extension.
The passage from Henry Boot referred to above also points to some of the
principle defenses to a delay claim. In order to show that an event was not on the
critical path, the defendant has to argue that the claimant’s version of the critical path
is incorrect and must prove on the balance of probabilities that the critical path in fact
went elsewhere.
Other related case is The Royal Brompton Hospital NHS v Watkins Gray
International (UK) (2000), His Honour Judge Richard Symour QC concluded the
basic skills for the architect to practiced. First is the skill of construction knowledge,
the architect is encourage to have an in-depth knowledge of construction and the
inter-relation between trades and construction operations. The second skills which is
relevant with this topic is to understanding the programming techniques. Architect
usually have to adopt an appropriate programming techniques to analyze the effect
various events. By having the knowledge to analyze the link between cause and
effect make it easier task for architect to determine the delay had or had not caused
the critical path and it will lead to the extension of project completion date, and the
final skill is to have a deep knowledge in contractual matters.
77
4.2.3
Causal Link
One of the advantages by using method of programming, is people can see
the sequences works and the links involved, if there is ones. It is a significant task in
work programme to clearly state the links of cause and effect. It should show that in
any delay happened, what are the cause of it and the effect. Therefore, if the effect
has potential to delay the completion date, it can be defined as a critical path. If the
work programme had successfully proved the causal link, the application for the time
to be extended would be considered. This condition can be referred to a very recent
case in Hong Kong, Leighton Contractors (Asia) v Stelux Holdings Ltd (2004).
Stelux was the employer and Leighton the main contractor on a large building project
in Hong Kong which under the JCT Standard Form of Contract. One of the
Leighton’s argument was that Stelux had caused delay by releasing tender
information for the heating, air conditioning and electrical subcontract works late and
it was found that by the time the information has been provided and the relevant
subcontractors awarded, Leighton was still only commencing construction of the
basement slab.
On this basis, it was concluded that the late information could not have
caused actual delay. The judge concluded that there had to be some finding of a
causal link between the late submission of information and the potential delay to the
completion of the works. It was not enough for the contractor simply to show that the
information was late. Whichever delay analysis method was used it was therefore
necessary to take account of the progress of the works at the point that the claimed
delay event occurred.
It is clear to show us the importance to have causal links in the argument.
Without links, it is almost impossible to prove the connection between events and the
effect whether it has possibility to contribute in delaying the project.
The other case which had touch on the absent of link is Balfour Beatty
Construction Ltd v. The London Borough of Lambeth (2002). The main issue in this
case was not on causal link directly, but Judge Lloyd in his judgment had quoted on
78
importance of having the causal link. It was found that Balfour Beatty was unable to
identified the critical path on its programme as there were not a critical path analysis
but were a simpler bar chart without any links. In this case, it was clear that Balfour
Beatty did a little or nothing to present its case in a logical or methodical way. There
then was no attempt to provide a critical path analysis.
4.2.4
Regularly and diligently
The definition of doing work regularly and diligently had been discussed in
chapter 2. Almost all contract determination clauses in Malaysian standard form of
contract have stated failing to do works regularly and diligently is one of the events:
Clause 25.1(ii) of PAM 98..fails to proceed regularly and diligently with the
works
Clause 51.(a)(ii) of
PWD 203A..if he fails to proceed regularly and
diligently with the works..
Clause 44.1(iv) of CIDB 2000..he fails to proceed with the design (to the
extent required by the contract) and/or the execution and completion of the
works with due diligence and expedition..
From the clauses above, one of the reason or event which can bring the
contract to the end by employer if it was proved the contractor were not doing the
agreed work regularly and diligently. The next question will be how the employer
can detect his contractor did not perform the works regularly and diligently? The
most logical answer to this is by referring to the project work programme.
79
As mentioned before failure to perform series of the events as scheduled is
not a breach of contract, but it may contribute to evidence of failure to proceed
‘regularly and diligently’.
It is also can be viewed in different way, which the contractor shall be
granted extension of time if he can prove he is doing the works regularly and
diligently. In another words, the contractor have a very good record and good
management by proving he is doing the works as scheduled in the work programme.
4.3 Weakness of work programme
In judgment of case The Royal Brompton Hospital NHS Trust v Frederick
Alexander Hammond and others (2002), it was found that there are one significant
weakness in using a work programme in construction. HHJ Richard Seymour QC
said that :
….the critical path may well change during the course contractor planned the job.
Not only that, but the critical path may well change during the course of the works,
and almost certainly will do if the progress of the works is affected by some
unforeseen event. Mr. Gibson (a programming expert) frankly accepted that the
various different methods of making an assessment of the impact of unforeseen
occurrences upon the progress of construction works are likely to produce different
results, perhaps dramatically different results. He also accepted that the accuracy of
any of the methods in common use critically, depends upon the quality of the
information upon which the assessment exercise was based. All of this does, of
course, emphasis the vital point that the duty of a professional man, generally stated
is not to be right but to be careful…
From the statement above, there are two obvious points of the weakness of
using a work programme, one is having different result fron different methods and
also the accuracy of the programme really depends on the quality of the information.
80
Even there are so many good points by practicing work programme in
construction progress had been discussed, there are also some disadvantages. In
every new thing introduced, there have to be several amendment before it become
completely useful to the users.
4.3.1 Variety of methods
In chapter 3, it had been discuss on the methods or strategies in preparing a
good work programme. There are a lot of methods which promise different result. It
was said that even by using the same information, the same activities it can come
with different result if the method is different.
It had been stated in above mentioned judgment of case, where was accepted
by one of the programming expert about this problem. It also will bring out
difficulties because there are no specific recommendation by any standards form of
contract in Malaysia in preparing the work programme.
4.3.2 Contents of work programme
There are no specific way how to prepare a good work programme, means
there are no standard form in the work programme contents. In PAM 98, there are no
clause about how a work programme should look like, or there are no guideline of an
expected work programme. The contents are usually depends on the requirement
from client or it is up to the programmer expertise.
81
There are no standardized in categorizing a good work programme or not. It
only said that the work programme with sufficient information is a good work
programme without knowing what are the expected information should be enclosed
in a work programme.
By having a multi style of work programme presentation, it will lead to a
various quality of work programme and this is finally will put parties involved in
problems of uncertainty document.
4.3.3 Presentation of the work programme
To prepare a high quality work programme, it is not only based on having a
good planner or programmer, it is also need a good teamwork and enforcement in
updating the progress and information.
A good work programme is not necessary full of information, but it has to be
clear and user friendly which means can be easily understand by readers who might
be have different background with different knowledge. This can be supported with
a case of Skanska Construction UK Limited v Egger (Barony) Limited (2004). Egger
is a subsidiary of an Austrian family owned company which produces chip board and
other timber based products at several factories throughout Europe. It entered into a
contract with Skanska for the design and construction of a factory to be built in East
Ayrshire in Scotland. Skanska agreed to undertake design development, management
and construction of the factory while Egger took direct responsibility for the supply
and installation of the specialist plant and equipment.
Judge Wilcox in his judgment in the case of Skanska Construction UK
Limited v Egger (Barony) Limited (2004) clearly preferred the evidence of
Skanska’s expert who had prepared an analysis which he described as “accessible”.
He described the characteristics of a good planning expert as someone who was
82
objective, meticulous as to detail and importantly, not hide-bound by theory when
demonstrable fact collided with computer programme logic.
Apparently, this could not be said of the evidences which been provided by
Egger’s programming expert. Judge Wilcox was severely critical of this evidence on
a number of levels. Firstly, he made clear his frustration with the too complexity of
the report (Egger’s). It had ran into several hundreds of pages supported by 240
charts. Egger’s expert had been supported by a team of assistants and it appears that
the report he had prepared was too complex and extensive for the court to easily
assimilate.
There are might be other cases which had touched on the presentation quality
of a work programme. What the above mentioned case had proved that complexity of
a work programme did not promise the quality of it. The more important is to keep
the information inside the work programme easily understood and can be a good tool
of data proving to any background of individual.
In summary, it is clear that a good understanding of the legal principles
governing the analysis of delay, the right choice of approach supported by good
factual evidence and the effective presentation of that evidence via a transparent
work programme analysis are now essential in order to maximize the likelihood of
success in adjudication, arbitration and litigation.
83
CHAPTER 5
CONCLUSION AND RECOMMENDATION
5.1 Introduction
Extension of time provision is not purposely for the sake of the contractor
only, it is also give a meaningful benefit for the employer. It is a win win situation,
where every parties involved will get the benefit and it will lead to a very good
relationship which finally result a good quality of works with minimum disputes. In
a construction progress, disputes can possibly happened everyday at every level and
any reason, this is where the importance of having a planned programme to foresee
the activities planned and the implementation of the works.
In chapter 2, it had stated that by having a good work programme is one of
the basis event to establish entitlement of extension of time, besides the awareness of
the contract with or without specific time for completion, doing works regularly and
diligently and by giving a proper notice of delay if it s believed a delay have a
potential to caused delay in date of completion.
84
Work programme is one of new finding methods in resolving disputes in
construction. The definition and the expected contents of a work programme had
been discussed in detail in chapter 3. Work programme is not directly mentioned in
standard form of contract in Malaysia but there are few clauses had included a work
programme as apart of document contract. But it is still not binding where there are
clauses debarred the earlier clauses which stated that work programme cannot be
treated as a contract. Therefore a contractor may be in breach for the failure to
provide the programme but he may not in breach if the series of events or activities
are not followed as scheduled.
5.2 Contribution in dispute resolution.
In answering the first objective of this research, (to identify how a
construction work programme can contribute in reducing disputes in extension of
time) there are few elements in work programme which can make the assessment of
extension of time easier, such as the critical path analysis or critical path method, a
logical analysis, a causal link and also can traced the works done with regularly and
diligently or not.
Critical path analysis is a strong evidence in proving the delay occurred will
or will not effect the date of completion. Most of the method in preparing a work
programme had included critical path analysis as a main element. The importance of
having critical path analysis; where user can identify activities and sequence of work
that will effect the completion date by occurr the critical activities or events. By
knowing the events or delay, it can determine who is responsible on the delay and
this will helping granting extension of time if it is proved not the fault of the
contractor. By having information through this method is more systematic.
85
Work programme also promise a logical analysis and the method of awarding
days for extension of time is made in a methodological way. It is not a assumption
from the expertise but it is more in proper calculated method. Hence, it will reduce
the queries on what basis the number of extension days had calculated
In a good work programme, it is also can determine the causal links between
the cause and effect of an activity. Only an event which has affected the links will be
considered. It can be said that the links is clearly can be seen by using a proper and
technical method in a work programme.
A contractor is entitled for extension of time if he can proved that he had used
his best endeavour and had tried his best to avoid the delay. He is also must proved
that he is doing the works with regularly and diligently. Even it is not a legal
provision to grant an extension of time but it at least can help the contractor to prove
that his background of working procedure is in proper manner and run smoothly
without causing any delay. By having an updated progress of work, the condition of
work on site can be traced and therefore it can determine the quality of work by
contractor.
5.3 Advantages and Disadvantages of Work Programme Usage
The second objective of this research is to determine the advantages and
disadvantages by using work programme in a construction contract. The main
advantages of work programme usage in construction contract are the elements
which had been discussed earlier (by having a logical analysis,by using the critical
path analysis, by proving the causal link and proving the works done is regularly and
diligently). There are also other advantages such as to make the monitoring work
easier for parties involved and to assist in preparing the mitigation plan.
86
Therefore, even there were judgments in court cases which prefer a good
work programme as one of the concrete evidence; it is still have weaknesses to be
avoided. The main disadvantage is the variety of methods in preparing work
programme, and due to that it will lead to a different result. Therefore it is also
believed that someone who is really expert should be appointed in handling the
preparation of work programme, and that means additional cost is required in
ensuring the presentation of a work programme is not just in high quality but
acceptable by others.
From all the argument above, it is clear that by having a good quality of a
work programme is become one of the important needs today, to face difficulties and
disputes in the industry, but the responsible parties still have to study the weakness of
the usage and put some afford to deal with it in producing a right method that can be
very useful to the industry.
5.4 Recommendation
Therefore, it is recommended that :
i.
The requirement for a work programme in a document contract and updated
work programme in monthly meeting should be enforced.
ii.
Since there are many methods in preparing a work programme, the parties
involved should form a standard methods to be used in a project.
iii.
The knowledge on work programme should be treated as important
knowledge as others since it can contribute in reducing disputes in the
industry.
The usage of work programme in handling and reducing disputes in construction
industry is still in a beginner stage, even it promised a lot of benefits and it seem to
be admitted in court judgment, there are still weakness and disadvantages about it.
Therefore if it is really can be a tool in establishing extension of time entitlement, the
87
parties involved should form a standard format of a work programme and utilized it,
means keep updating it for ensuring the quality of information needed
5.5 Limitation of the research
In completing the research, there are few limitations occurred, such as
inadequate court cases which deal with work programme usage. Besides, there are no
Malaysia court case on the effect of the work programme in extension of time
entitlement, and due to that, the research is solely depends on the international court
cases. The other limitation is inadequate information on the work programme
protocol or information, it is because there are no provision about work programme
requirement in Malaysian standard form of contract.
REFERENCES
Allan Ashworth (2001), Contractual Procedures in the Construction Industry (4th
Edition). Longman.
Barry B. Bramble, Michael T. Callahan (1992). Construction Delay Claims, 2nd
Edition. New York: John Wiley & Sons, Inc
Brian Eggleston (1997). Liquidated Damages and Extension of Time in Construction
Contract,2nd Edition. London: Blackwell Sciences Ltd.
Dennis F. Turner & Alan Turner (1999). Building Contract Claims and Disputes,
2nd Edition. England: Addison Wesley Longman Limited
Donald Keating (1978). Building Contract, 4th Edition. London: Sweet & Maxwell
Duncan Wallace (1980). Hudson’s Building and Civil Engineering Contract. London
: Sweet & Maxwell
Edward M. Willis (1997), Scheduling Construction Projects. New York : John
Willey & Sons.
James J. Adrian (1988). Construction Claims – A Quantitative Approach. United
State: Prentice-Hall, N.J
John Murdoch, Will Hughes. (1996). Construction Contract: Law and Management,
2nd Edition. London: E & FN Spon.
Jonathan F. Hutching (1998). Construction Claims Manual for residential
Copntractor. NewYork : McGraw-Hill
Keith Pickavance (2000). Delay and Disruption in Construction Contract. London :
LLP Reference Publishing
Lim Chong Fong (2004). The Malaysian PWD Form of Construction Contract.
Malaysia : Sweet & Maxwell Asia
Michael Mawdesley, William Askew, Michael O’Reilly (1996). Planning and
Controlling Construction Projects-The Best Laid Plans. Longman.
Reg Thomas (1993).Construction Contract Claims. London: The Macmillan Press
Ltd.
Richard H. Clough, Glenn A. Sears, S. Keoki Sears (2000), Construction Project
Management, 4th Edition. New York: John Wiley & Sons, Inc.
Robert A. Rubin, Virginia Fairweather and Sammie D. Guy (1999).Construction
Claims Prevention and Resolution, 3rd Edition. New York: John Wiley &
Sons, Inc.
Robert Porter (1980), Building Contract Conditions, London : George Godwin
Limited.
Sundra Rajoo (1999).The Malaysian Standard Form of Building Contract (The PAM
1998 Form). Kuala Lumpur: Malayan Law Journal
Vincent Powell-Smith and John Sims (1989). Building Contract Claims. London :
BSP Professional Books.
Vincent Powell-Smith, Michael Furmston (1990). A Building Contract Casebook,
2nd Edition. London: BSP Professional Books