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08 September 2017

How to claim an EOT under a construction contract

This article explains how to claim an EOT, and addresses some of the areas where mistakes are often made.

1. Read the contract to understand what notices are required, and when.

Most construction contracts require the contractor to send two notices in connection with a delay:

  • A notice of delay, which is simply to notify the principal and/or superintendent of a probable or likely delay; and
  • An EOT claim, being the document in which you actually claim the EOT.

Many contracts will also require you to give an updated notice where there is a lengthy or continuing delay.

It’s critical to ensure that you send these notices within the required timeframes. If you don’t, a time bar may apply (depending on the terms of the contract) and you may lose your right to claim. The contract will specify when the notices need to be sent.

2. Read the contract to determine when EOTs will be available.

Not all delays will give rise to an EOT. You need to review the contract carefully to determine which causes of delay are claimable. (A search for the words ‘delay’, ‘extension’, ‘EOT’ or ‘time’ will usually lead you to the relevant clauses.)

EOTs are usually available for delays caused by the principal (sometimes known as ‘acts of prevention’). Depending on the form of contract, EOTs are commonly available for latent conditions, delays by other contractors, industrial conditions, delays caused by changes in the law and inclement weather.

You may need to look in more than one place to determine all of the causes of delay that might be available. For example, in AS 4000, you will need to consider the definition of ‘qualifying cause of delay’ and Item 23 of the Annexure Part A. However clauses 25, 34 and 36 may also be relevant.

3. Identify, precisely, the cause of the delay and determine whether you can claim.

This sounds like a straightforward step.  However it’s surprising how regularly contractors incorrectly identify the cause of delay and then have their claims barred as a result.

For example, say the principal is considering a potential variation and the superintendent directs you not to perform a particular item of work while the details are being finalised. The superintendent subsequently gives you a direction to proceed with the variation.

In this case, there are two separate causes of delay. The first is the superintendent’s direction to not perform the work. The second is the direction to proceed with the variation.  You may be required to notify (and claim for) these events separately under your contract.

4. Read the contract to work out what you need to prove to establish your entitlement.

Usually the EOT clause in your contract will identify what you need to prove to establish an entitlement to an EOT.

For example, consider whether you need to prove:

  • an actual delay or a future delay;
  • a delay to work under the contract or a delay to practical completion;
  • a delay to the critical path and, if so, consider how that delay needs to be shown.

Your approach to proving the delay will need to reflect these requirements. Many EOT claims fail simply because they do not prove a delay in the terms required by the contract.

Many contracts also require you to prove that you have done everything possible to mitigate and/or preclude the occurrence of the delay. Again, you need to ensure that you address these requirements when making your claim.

5. Consider whether you can claim delay costs, following the same process described above.

Often the contractor will have an entitlement to claim delay costs for certain events. A delay caused by a breach of contract by the principal, such as for failing to provide sufficient access or information, is a good example.

To establish whether you can claim delay costs, you will need to follow roughly the same steps above. In other words, you will need to read the contract to determine:

  • what notices need to be sent,
  • when delay costs can be claimed,
  • which types of cost can be claimed and
  • what you need to do to establish your entitlement.

You will need to ensure that your claim for delay costs meets the relevant requirements.

6. For long or continuing delays, determine whether you need to re-submit the claim.

As mentioned earlier, for extended or continuing delays, you may need to submit multiple notices for the same delay. A failure to submit one notice could potentially result in some or all of your claims being barred, depending on the terms of the contract.

Author → Greg Henry | Principal

02 9229 2904 | greg.henry@turtons.com

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