This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
In most contracts, dates will be specified for starting and completing the work. The contractor is bounded to do the work by the due date, and will be liable in damages for failing to complete. It is very costly if a contractor gets a penalty to pay for the liquidated damages for failing to complete the work during the completion time stated in the contract document. However, it is rare for a project is completed within the specified time (Assaf and Hejji, 2006).
Procedures for dealing with time extensions are established in the general conditions of the contract. Claims for EOT must be based on delays that are caused by the owner or the owner's agents or on delay due to acts of God or based on the provision clauses in the form of contract. Contractor has to prove that the number of days that effected under the causation and apply for the equitable EOT. This becomes the burden of the contractor to submit the application of extension of time and the relevant document to support his application and stipulate the exact time needed to complete the work. This is not easy to identify the delay and notice to the authorize person in the early time. The contractors still have to complete the job within the granted EOT and in doing so they preserve the employer's right to liquidated damages.
Another technique used is Time Impact Technique, this analysis examines the delay effects during the progress of the project. The impact of each delay or delaying event on the schedule is determined at the relevant construction stage. A 'stop action picture' of the project before and or after a major delay impact would be produced. The difference between the projected completion dates at these two stages is determined as the delay to the project that occurred during the period, the total delay to the project duration is the sum of all delays during the project.
Snapshot Technique approach is based on comparing the as-planned and revised as-built schedules that have been implemented during the execution of the project. But unlike the Time Impact technique, this approach does not focus on special delays or delaying events. The total project duration is divided into a number of time periods, or snapshots. The snapshots is done coincide with major project milestones, significant changes in planning or when a major delay or group of delays is known to have occurred. The relationships and durations of the as-built schedule within the snapshot period are imposed upon the as-planned schedule, while maintaining the relationships and durations of the as-planned schedule for the remaining activities after the snapshot period. The project completion date of the extended schedule is then compared with the established, as-planned completion date of the project being snapshot. The difference between the completion dates is taken as the amount of delay that occurred to the project as a result of delaying events during that snapshot period. The more snapshots chosen, the greater the accuracy.
In Adjusted As-Built CPM Technique, it is based on the concept that the Critical Path Method (CPM) format is used to develop an as-built schedule. Delaying events are depicted as activities and linked to specific work activities. The critical path(s) are identified twice, firstly in the as-planned schedule and secondly at the end of the project. The difference between the as-planned completion date and the adjusted as-built completion date is the amount of time for which the claimant would request compensation (Kumaraswamy and Yogeswaran, 2003). This technique is similar to the net impact technique in that both techniques only show the net effect of all claimed delays on the project's completion date and do not distinguish between different causes of delay.
These techniques were listed in the questionnaires to obtain the respondents' agreement to use them in substantiation and assessment of claim for EOT. A brief explanation were included below the name of each technique listed to ensure that the respondents knows the academic terms of the technique used.
2. Research objective
The objective of this study is to identify the major reasons in applying EOT, to review and identify the most preferred technique used to substantiate and evaluate the EOT, and to identify the alternatives solution beside granted EOT.
3. Problem statement
The problem of delay in construction industry is a global phenomenon and construction industry in Malaysia has no exception. In year 2005, about 17.3% of 417 government contract projects in Malaysia were considered sick (with more than 3 months of delay or abandoned) (Sambasivan and Soon, 2007).
In recent decades, projects have tended to become more time-constrained and ability to deliver a project quickly has becoming an increasingly important element in winning a bid. There is an increasing emphasis on tight contracts by using prime contractorship to pass time-risk onto the contractor, frequently with heavy liquidated damages (LADs) for lateness (Williams, 2003).
Delays are a major source of claims and disputes in construction projects (Bramble and Callhan, 2003; Kumaraswamy and Yogeswaran, 2003; Odeh and Battaineh, 2002) and have even been cited as the most common and costly causes of problems (Alkass et al., 1995; Othman et al., 2006). In construction industry, there are a lot of matters that may cause delay and some of it is unpreventable (Ahuja et al., 1994). Therefore we need a guideline to judge which event is entitled with EOT and which is not being granted.
Thus, it is becoming more important for a contractor, when faced with delays caused by the client, to be eligible for a suitable EOT to his contractual finish-date. Otherwise the contractor will find himself subject to LAD for reasons within the client's control, but not within his own control. Therefore EOT claims do happen, and they are often very difficult to prepare, both conceptually and practically (Williams, 2003).
Planning techniques are frequently used on a project for the evaluation of possible EOT caused by changes to the project. There are many problems inherent in this (Alkass et al., 1995). Some problems arise because the planning techniques were not developed for retrospective analysis; other problems arise because the techniques are wrongly applied. Therefore, a more scientific approach is needed in evaluating the EOT in a reasonable model. It can help in avoiding unnecessary dispute or breach contract, cause by the doubtful in the process of claiming extension of time.
Furthermore, in Malaysia, local practice is doubtful in the process of claiming and assessing the extension of time. There is no standardized procedure or protocol for both contractors and clients. Therefore, it is essential to reveal the local practice on EOT before any recommendation of methods to reduce EOT claim.
4. Data collection
A structured questionnaire was used to gather data in order to achieve the targeted objectives. Questionnaires are an inexpensive way to gather data from a potentially large number of respondents. Often they are the only feasible way to reach a number of reviewers large enough to allow statistically analysis of the results. A well designed questionnaire that is used effectively can gather information on both the overall performance of the test system as well as information on specific components of the system.
Questions for this study are designed and delivered in a user-friendly multiple choices format with a few open-ended questions at the end. The use of multiple choices is due to the natures of the construction industry itself, most of the respondents probably have no or little time to answer open-ended questions. Open-ended questions enable better exploration for those respondents who wish to share more. The questionnaires were pilot tested by a group of contractors. The questionnaire was revised according to the comments and discussion made before mailed with a self addressed stamped envelope.
Simple random sampling is used in determining the sample of this study. This method requires statistical independence of every units being sampled; meaning that each item must not depend on the drawing of other items.
The author has mailed the questionnaire survey forms to numerous companies includes architecture firm, consultant firm, developer, contractor and also some government bodies. The questionnaire was sent to 70 potential respondents, 36 responses (cover 51% of the total forms distributed) were received. The respondents were civil engineers (28), quantity surveyors (5) and architects (3).
The questionnaire was divided into three sections, Section A (Respondent Background), Section B (Issues of EOT) and Section C (Substantiation & Assessment of Claims for EOT). Section A would provide the respondents' background such like the respondents' position, type of firm, year of experience and also further contact information like company name, address, phone number and email address. These information are useful for comparison of data between several parties for instance the respondents' viewpoint on EOT between contractor, consultant or developer would be different.
Section B would gathered information about current practice of EOT, opinion of respondents on issues like float time, who should own the float time, concurrent delay by both parties, contractual requirement on approved programme, using the same scheduling software between developer and contractor were disclosed in this section.
In Section C, respondents are required to state their agreement on matter of substantiation and assessment of claims for EOT. A likert scale of 1 - 5, with 1 indicating strongly disagree and 5 indicating strongly agree was used for respondents to rate their opinions. The questions covered time of submission of claim, reason for delay submission, time of assessment to the claim, reason for delay in assessing the claim, major reason used to claim extension of time, late payment issue, related substantiation documents and the technique used in substantiation and assessment the extension of time.
Data from Section C were analyzed through mean value analysis (StatPac, 2008). Formula of mean value is as shown below. The mean values were classified according to Table 1.
n = Frequency of item
x = Likert Scale for item
5. Results and discussions
The respondents were asked to rate their opinion on the suitable time to submit claims for EOT. The response summary is shown in Table 2. The timing of 'occurrence of an excusable event' is often arguable. Assuming that agreement exists on the timing of occurrence of excusable events, most of the respondents stated that the submissions of the claims for EOT are made within the construction period but rarely within 4 weeks of the occurrence of the event giving rise to the claim. It was found that there is a common understanding among developer, consultant and contractor, where they have the same viewpoint in this issue. The result gave a mean value of 3.86, which means that all of them agreed that the timing of submission is usually within a reasonable time while compare to the other two timing (3.33 and 2.83 for within 28 days and at the end of original construction period respectively). A 28-day period was chosen in the questionnaire in any case, to reflect the traditional monthly reporting of progress and events.
Clearly, events such as inclement weather could be analyzed within a week from the date of cessation of the effects of weather on the activities, which are weather sensitive (e.g. earthworks). However, since EOT associated with inclement weather are classified as 'non-compensable excusable' events, contractors often prefer to seek other openings that may enable alternative claims for 'compensable and excusable' events. Therefore, the claims of EOT would not be submitted until the contractor has found a "suitable" reason.
The respondents were requested to identify the reasons for delays in submissions of details of EOT claims, and these are ranked based on the mean value. Reasons for delays in submissions are ranked in Table 3. Comparison with the previous researcher who did the similar research in Hong Kong (Kumaraswamy and Yogeswaran, 2003) was also presented.
In this study, the principal reasons for delays in submissions are often related to the inexperienced in contract procedures of the site staff and the head office expert will need time to understand the claim situation when the task is undertaken by head office. However, the same reason was ranked at the 9th position in the rank of Hong Kong research (Kumaraswamy and Yogeswaran, 2003). In Hong Kong, inability to identify the full extent of the delay at the beginning of the event causing the delay; and contractor's desire to focus on the progress of the works were the top reasons for delay in submitting details for EOT. Nevertheless, this reason is at the second last in local practice. Thus, it shows a total different environment between here, the Malaysia and Hong Kong's construction industry.
The superintendent officer (SO) is obliged to assess the submitted claims for EOT, while the onus of providing adequate information for this evaluation rests with the claimant (contractor). The respondents who were requested to identify the timing of assessment of claims for EOT and the summary of responses is shown in Table 4. It appears that the assessments are carried out within 28 days of the submission or within reasonable time in most cases. Submissions and assessments are inter-related and responses to questions on the timing of submissions and assessment are consistent (Tables 2 and 4) in identifying the more frequent timing to be 'within the reasonable time'.
The respondents were then requested to identify the reasons for delays in assessment of claims for EOT. These reasons are ranked based on the mean value of responses for each of the reasons. The ranked reasons are presented in Table 5.
It appears that the principal reasons for delays in assessments are related to delays in submissions of details by the claimant and lack of details and clarity in substantiation. There also appear to be deficiencies in procedures and approaches/attitudes that may be traced to a lack of clear policies and guidelines. Thus a need to set out common objectives for the claimant and the assessor to achieve speedy settlement of the claims for extensions of time is essential. It should be appreciated that the contractor and the engineer representing the Employer could have a common goal in achieving speedy and successful completion of a project, although manifesting conflicting financial interests in respect of price levels.
The reason used to claim for extension of time and the summary of the results is shown in Table 6. The result indicated that the most common reason used to claim for extension of time is change order by consultants. This is because of the nature of local construction practice. Most of the time, the construction drawings are based on preliminary design and this design is usually based on previous design experience and seldom did in crucial analysis or referred to the real environment. While during construction period, then the real environment constraints will arise and obviously is not suitable or accomplishment to the design. This will create variation order and also additional works. Late issuance of construction drawing was identified as one of the famous reason for extension of time. This reason can be seen as the consequences activities of the first reason.
The respondents were asked to identify the common techniques used in substantiation and assessment of claims for EOT. It was found that contractors frequently use Time Impact technique in substantiation, while the consulting engineers often apply Net Impact Technique. This difference in technique applied might be the reason of argument among the contractor and consulting engineers in the duration of EOT.
The respondents were also asked to identify their preferred techniques used in substantiation and assessment of claims for EOT and these are summarized in Table 7. Net Impact and Time Impact technique has evoked general preference in both substantiation (from the viewpoint of a claimant) and assessment (from the perspective of assessor) modes, while Global Impact technique which plots all the delays on a summary bar chart also attracted substantial (and almost equal) interest in both modes. Net Impact is a technique which only focuses on the net effect of all delays including concurrent delays and plotted on a bar chart based on the as-built schedule, while Time Impact is the technique analysis and examines the delay effects during the progress of the project. However, it may be noted that each of these technique have some shortcomings therefore there is a need for a uniform policy and consistent strategies, at least in identifying suitable techniques or a mix of techniques for specific scenarios.
The respondents have been requested to suggest some alternatives solution except granted the EOT. The developer suggested that contractor shall be provided incentive for their timely completion. Whilst from the viewpoint of consultants, they also agreed to compensate time with money value through acceleration claim. Meanwhile the contractors suggested that EOT should be priced into the contract before submission of a tender; therefore the loss can be taken care of if delay occurs.
6. Research contribution
A study that investigated on the assessment of contractual claims for EOT in construction industries in Malaysia has been conducted. In the process of applying EOT, contractor should trace progress of work in a regular basis. When it is apparent that the progress of work is going to be delayed, the concurrent event should be examined. If the delay is beyond the contractor's control and is specified under contract clause, the impact should be analyzed as soon as possible and written notice should be directed to the SO. Contractor should enclosed with supporting documents such as delay records and monthly progress meeting as these information are crucial to prove the delay. Besides, contractor should submit a revised construction schedule program in support of a claim, showing how the contractor has been (or will be) delayed in completing the work.
For the process of assessing the EOT, the architect/SO should check whether the contractor has send a reasonable written notice enclosed with reasons of delay enclosed with all supporting documents. The architect/SO should assess and grant EOT to the contractor if the reasons of delay were beyond contractor's control and the reasons are specified under contract clauses. Otherwise, the claims of the contractor will be rejected by the architect/SO.
Besides, there are a lot of related documents or supporting documents need to be submitted as an evidence or proof to claim for EOT and the SO's instruction is the most commonly used supporting document. Other documents such as variation orders, weather record, application letter, site daily record, minutes of meeting, site memo, as-planned schedule and as-built schedule are also used as supporting documents in the process of applying EOT. This study should be served as a guideline for contractor in applying EOT and also for client in assessing EOT.