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A GLOBAL PERSPECTIVE ON EXTENSIONS OF TIME IN CONSTRUCTION PROJECTS
Janine Stewart, Grant de Lisle and Katie Karpik
In construction projects it is uncontroversial across jurisdictions that the primary goal for both principals and contractors is to complete on time and on budget. However, this is usually the exception rather than the rule. The probability of achieving a successful project in these terms depends on the procurement model, the pricing structure, the form of contract and the relationship between the parties.
Invariably, issues and unforeseen circumstances arise and result in changes to the scope and cost of a project. The project’s ability to deal with these circumstances depends on the level of pre-project planning, the clarity of risk allocation, the Contract process for claiming cost and time, and, again, relationships. This article focuses on time.
Extension of time (“EOT”) clauses in construction contracts are essential to contractors and principals alike, providing a solution for delays outside a contractor’s control while protecting a principal’s right to liquidated damages and certainty around the completion date. While EOTs are a creature of contract and common across the standard forms in most jurisdictions, the governing jurisdiction of the parties will be relevant in determining the extent of relief available, and the Contractor’s obligation to mitigate delay.
We examine treatment of time in construction projects and how the principle of mitigation affects the extent of relief available across jurisdictions. We also assess the distinction between mitigation and acceleration by contractors (acceleration clauses entitle the Principal to order a variation requiring the Contractor to accelerate works). We will cover this with reference to:
(a) the treatment of time in standard form contracts most commonly used in New Zealand, Australia, the UK, Europe and the Middle East; and
(b) how the applicable common law or civil law affects treatment of time in these jurisdictions, including in relation to concurrent delay, contractors’ duties to mitigate and the ability to recover for acceleration.
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