Strategies for Prevailing in Prolongation Claims Disputes in Construction
The saying, ‘Time is money’ is absolutely true in the construction sector! However, it is equally true that big projects are often delayed, leading to Prolongation Claims. Commonly known as delay claims, prolongation claims relate to any activity or inactivity on the employer’s part that may lead to an inordinate delay, causing loss of time & money to the contractor. In case of delay in project completion by the contractor, the owner/employer may file for Liquidation Damages to be paid by the contractor. Also, delays may be caused due to external factors like pandemics & natural calamities. It is essential to timely identify & record such claims and evaluate their impact on the project.
Delay Triggers in Construction Projects.
Various kinds of delays on the part of the employer may lead to Prolongation Claims, claiming for lost time, costs incurred, and loss of profit. Let us look at some of the most common delays in the construction sector that may lead to claims:
- Delay in site handover.
- Delay in issue of engineering drawings.
- Delay in supply of resources- material, equipment, and services.
- Delay in decision making.
- Delay in acquiring permits & approvals.
- Delay in payment of bills & advances.
- Delay due to a change in the scope of the project.
- Delay due to a change in plans /design of the project.
- Delay due to subcontractor/ vendor/another agency.
Classification of Prolongation or Delays in Construction
It is very important to understand the various types of delays in construction projects. These may be based on the cause, the impact, or their eligibility for compensation. Here is a simple classification of construction delays:
Critical and Non-critical Delays
Critical delays are those delays that are liable to extend the completion time of a milestone or the project itself. Non-critical delays, on the other hand, do not have any effect on the project timelines.
Excusable and Non-excusable Delays
Excusable delays are those occurring due to an unforeseeable event beyond the control of a contractor or the subcontractor. These would include natural calamities, general strike, or pandemics. Non-excusable delays are occurrences that are foreseeable and/ or within the contractor’s control. Such delays are often claimed by the employer as Liquidation Damages.
Compensable and Non-compensable Delays
Compensable delays are generally caused by the owners/employers and thus entitle the contractor to receive compensation. On the other hand, non-compensable delays are caused by a third party or are beyond the control of both the owner & the contractor and cannot be claimed.
Concurrent Delays
Concurrent delays are simultaneous delays, by both the owner & the contractor, impacting the project, or a milestone completion date. The two delays need not occur at the same time, but each delay must affect the project timelines. In such delays, there are neither prolongation claims for the contractors nor Liquidation Damages for the owners.
To file a prolongation claim, the delay should be critical i.e. affecting the project timelines, should prove the culpability of the owner, and should result in affecting the cost, time, & or profits of the contractor. The contractor needs to have all supporting documents to prove and sustain his prolongation claims.
Damages for Delays
A contractor may claim for project management & supervisory expenses, overheads, loss of profits, insurance costs, construction loan interest, and other ancillary costs for compensable delays. He may also claim against the right to finish early, even if the project is completed on time. If the contractor had planned to finish early and was delayed by the owner, the right to finish early claims may kick in.
Filing Prolongation Claims
It is the responsibility of the claimant to identify, record, evaluate, and file the claims with proper documentation to support the same. Let’s take a look at the important measures required to be taken while filing Prolongation Claims:
- Timely identification of the delay to control the cascading effect.
- A Project Delay notice to the owner, explaining the delay and the cause thereof. This would include documents, photographs, and any other report.
- Careful examination of the contract to check the exact clauses for damages for delay, Force Majeure events, or any such clause that may affect the prolongation claim.
- Delay analysis by the experts to ensure the effect of delay on the project, the costs incurred, the profits lost, and to ascertain the actual claim in terms of time & money.
- Preparation and filing of claims with complete documentation & reports supporting the claims.
- Documentation is the backbone of all claims. It is the claimant’s obligation to offer evidence to sustain the claim. Written notices, relevant correspondence, experts’ reports & analysis, and site photographs are some of the documents required to sustain damage analysis & claims.
- Prolongation Claims are almost inevitable in construction projects, and their timely identification & analysis may help you save both time & costs. Our expert claim management team at Contract Square helps you discover the claims, comb the contract for finer points, prepare entire documentation, and ensure amicable & considerable settlement awards. We help you save money, time, and unnecessary hassles, allowing you to focus completely on project execution & timely delivery. Connect with us @ https://contractsquare.co/contact-us/ for the best contract and claims management services in the construction sector.
