There are considerable differences between SIA Building Contract and PSSCOC in respect of the ways in which extension of time clauses operate. Under these contract forms, notable differences exist particularly in relation to grounds or events entitling time extensions, notification requirements and the option for prospective delay analysis. This article is part 7 of a series of articles comparing the main contract standard conditions of the SIA form published in 2016 and the PSSCOC published in 2020.

As the PSSCOC is commonly used for public sector projects utilising public funds whilst the SIA form is primarily used for private sector projects, the risks allocation philosophy as regards delay differs accordingly. Although the PSSCOC provides additional ground for entitlement to extension of time, its associated notification requirement also entails considerable details and information pertaining to the delaying event. These features could be due to the additional need for transparency in publicly funded construction projects. 

Extension of time clause in essence allow the original practical completion or phase completion date, as the case may be, to be extended if the project schedule is delayed through no fault of the contractor. This provides contractual relief to the contractor from being liable for liquidated damages. In reality however the extension of time clause primarily benefits the Employer as it preserves its right to impose liquidated damages by establishing an extended completion date. Without the extension of time clause, there will be no extended completion date causing the time to be at large. Despite the differences in the operations of extension of time clauses between the SIA form and PSSCOC, the fundamental purpose for time extension remain unchanged between these contract forms. To this end, some of the common features of SIA and PSSCOC will be explored in the next section of this article so as to establish a basic premise of how the extension of time clause works.  

Common Features of Extension of Time Clauses Between SIA and PSSCOC

A construction contract typically stipulates a time frame within which the contractor shall complete the agreed scope of works failing which the Employer may recover liquidated damages. If the Employer breaches the contract by preventing the contractor from performing its works resulting in delay, the Employer is in principle is not entitled to recover damages from the contractor. The extension of time is effectively a contractual remedy for the Employer’s breach by extending the construction duration, thereby allowing the liquidated damages to continue to be applicable but from a new completion date. There are also situations where the construction duration may be extended if the delaying event is ‘neutral’ where neither parties were at fault e.g. inclement weather, pandemic etc. Therefore one of the common features of extension of time clause is a list of grounds that entitle the contractor to an extended completion date which comprises both neutral events and the Employer related events. In other words, the contractor is not in culpable delay under these circumstances. 

The second common feature of extension of time clause is notification requirement. This is in general a mandatory requirement imposed on the contractor to notify the Employer and its agent within a prescribed duration from the occurrence of the event included in the grounds for extension of time. The contractor’s entitlement to any extension of time is strictly subject to compliance with such requirement, i.e. such notification is a condition precedent. Where the delaying event is caused by the Employer e.g. variation, late site possession by the contractor etc, such condition precedent provides an opportunity to the Employer to take corrective measures in an upfront manner to either avoid the delay entirely or mitigate the delaying effects where possible. The contractor is usually in a better position than the Employer in detecting potential delaying events occurring on site. 

Delay analysis and subsequent identification of any time extension are matters of professional assessments that involve subjective evaluation. The ‘Architect’ in the case of SIA Building Contract or the ‘Superintending Officer’  in the case of the PSSCOC are contract administrators that are empowered to certify any extension of time to the contractor. They are however the Employer’s agent who are paid and engaged directly by the Employer. This gives rise to a conflict of interest. Therefore, under both English common law and express conditions of the contract, these contract administrators are required to discharge their certification functions in an impartial, fair and neutral manner. In other words, they wear two hats under the construction contract – one as an agent, the other as an independent certifier. This is yet another common feature found in both the extension of time provisions of the SIA form as well as the PSSCOC. 

Having established some key common features of extension of time clauses under SIA form and PSSCOC, the next few sections of this article explore the notable differences in the respective operations of these clauses.

Adverse Physical Conditions/ Unforeseen Ground Conditions

Clause 14.2 of the PSSCOC sets out the grounds which may entitle the contractor to extension of time. Clause 14.2(p) is a unique ground that deals with adverse physical conditions as defined within its Clause 5.2. Adverse physical conditions refer to underground obstructions. This is particularly relevant for PSSCOC since public sector projects may well include subterranean infrastructure works such as tunnels or foundation works. There is no equivalent ground for extension of time included under the SIA form. Further, Article 8 under SIA form states amongst others that the contractor’s rates and prices included in its contract sum shall be inclusive of all expenditures even it is not specifically mentioned in the contract document which may contingently become necessary to overcome difficulties in completing the works. Therefore for projects under SIA form, if underground obstructions are subsequently discovered that are neither included in the contract document nor any of its contract drawings, there is a strong argument that such risk is shouldered by the contractor with no entitlement to additional payment or extension of time. 

The risks associated with adverse underground conditions could refer to either obstructions posed by existing cable and pipe services, natural boulders or even difficult soil conditions such as marine clay. These risks if materialise can have significant impact on the project schedule, amongst others. Additional foundational support or the need to re-route the existing works may be necessary in order to overcome such adverse physical conditions so as to achieve project completion. 

Whilst contractor under the PSSCOC may relish at the idea of not being burdened by the risks of adverse physical conditions, it is worth noting that the grounds for extension of time is only applicable where the event was ‘unforeseeable’. Under Clause 5.2, the adverse physical condition could not have been reasonably foreseen by an experienced contractor. Since the contractor is the party making claim for extension of time, it is up to the contractor to demonstrate that the event in question was not foreseeable despite its best effort in carrying out due diligence to the level expected of an experienced contractor. Although the question of foreseeability is undeniably a subjective matter, the contractor will be greatly assisted if it had taken the effort to thoroughly review any existing as built records relevant to the grounds of the project, requesting for additional documentation during tender that may assist with its investigation and to have these requests documented in writing. 

In reality, the delaying effect of underground obstruction can be extremely significant especially if it results in the need to re-design any of the diversion route, to investigate the actual magnitude of obstruction and also the associated construction works to effect the alternative design. Given such protracted duration, it is likely that other delaying events may occur concurrently during this period some of which could be due to the contractor’s own default. Even if those concurrent events are excusable and qualify for extension of time, the burden is on the contractor to ensure compliance with condition precedents to preserve its right to time extension. As a matter of practical concern and prudence, the contractor should produce sufficient amount of evidentiary records and contemporaneous programmes during this period. The entitlement to extension of time does not always result in actual grant of sufficient time extension. All these efforts on the part of the contractor is to avoid the argument that whilst the contractor is in principle entitled to extension of time for unforeseen ground conditions, the contractor was in culpable delay in any case due to concurrent events. 

Notification Requirements/ Condition Precedents

As mentioned earlier, the notification requirement differs quite significantly between the SIA form and the PSSCOC. Pursuant to Clause 23(3)(a) of the SIA form, the contractor shall provide its notification within 28 days of the occurrence of the delaying event which he considers excusable whereas the contractor under Clause 14.3(a) of the PSSCOC shall do so within 60 days. So why is the prescribed duration under PSSCOC almost double that of the same duration under the SIA form? The short answer is that the level of information expected from the contractor is considerably higher under the PSSCOC. 

Under Clause 23(3)(c) of the SIA form, the contractor shall provide a sufficient explanation to the Architect in its notice, the reasons why there shall be delay to completion. As what exactly constitute ‘sufficient’ explanation is not explicitly defined, this quite possibly indicate that the contractor need only to provide a brief narrative of the nature of such delaying event and the fact that such event is on the critical path of the prevailing construction programme. Interestingly, the subsequent Clause 23(4)(a) of the SIA form appear to put the onus on the Architect to request for sufficient explanation, information, particulars or materials so as to enable him to ‘estimate’ the period of time extension. Therefore, the Architect will be hard pressed to accuse the contractor for not complying with Clause 23(3)(c) for reason of insufficient explanation, when there is an explicit alternative avenue for the Architect to request the same from the contractor. Further, the immediate priority for the Architect upon receipt of such notice and the associated explanation is merely to estimate the extension of time rather than the formal time certification. Therefore when the notification requirements under the SIA form is viewed in its entirety, the 28 days duration does not appear unreasonable. 

Whilst Clause 14.3(1) of the PSSCOC appears to provide a more generous 60 days notification duration, the burden of reporting and disclosure on the contractor is noticeably heavier. In this regard, the contractor not only has to provides reasons for the possible delay but also (1) length of delay, (2) duration of extensions of time required, (3) the effect of the event on the programme accepted. It should be noted that according to Clause 14.3(5), the contractor is neither entitled to claim a greater extension of time than that notified under the initial notification in any future arbitration nor advance new/ additional grounds not initially submitted under the same initial notification. Therefore, the contractor is expected to carry out its own due diligence and delay analysis in a full and comprehensive manner, far more seriously than a mere advance warning or early notification to the counter party. In other words, the contractor is not at liberty to include the usual disclaimer that such claim is advanced on a “without prejudice” basis. It is not uncommon that the prevailing programme reflective of the actual progress on site is different from the version that was formally accepted and agreed by the parties under Clause 9. Therefore, the contractor under such circumstance is required to first get a formal approval of its prevailing programme pursuant to Clause 9 so as to demonstrate the disruption or delay to such programme. It is no surprise that where the project is in delay, parties may find it hard to agree on much of the timeline issues which could complicate the approval process for a contemporaneous programme under Clause 9. Where there are concurrent delays occurring on site with one event following very closely with the subsequent event, the cumulative delaying effects complicate matter. The contractor may not be entirely certain if the back log of previous events had been granted with any extension of time and if so how it should reflect the impact of subsequent events. Any prior events that had not been granted with extensions of time materially affect how the prevailing programme should be presented. Again, this will have very real impact on the contractor’s ability to discharge its reporting and disclosure responsibilities under the notification requirements. It should also be noted that since the 60 days notification duration is triggered from the occurrence of the delaying event and that the contractor is required to submit the delaying period and time extension required, this may not be feasible if the event in hand has delaying effect continuously beyond the 60 days. The contractor may not be able to predict with certainty the delaying effect in its entirety if such event continue to be in progress when the notification deadline expires. 

The difficulties with which the contractor is expected to comply with the above mentioned notification requirement underscores the need for an impartial and independent certifier for the contractor to be treated fairly and reasonably. 


Prospective And Retrospective Grant of Extensions of Time

Most extension of time provisions are retrospective in nature in that the notification, information disclosure and subsequent assessment of the delaying event take place after the occurrence and delaying effect of such event had completed. The parties’ focus is on the chronological order of events from a backward perspective. The simple logic to such enduring practice is that one is only able to take a comprehensive view of the delaying matters after its full and complete details had crystallised. 

The extension of time provisions under the SIA form and PSSCOC are primarily retrospective. However, Clause 14.2 of the PSSCOC provides an additional option for the Superintending Officer to extend project’s time for completion prospectively. This prospective option is unique only to PSSCOC. The advantage to a prospective approach is upfront certainty where the parties are aware of the outcome of whether an event is excusable and if so, whether time extension is granted accordingly. This in turn allow a contemporaneous programme to be updated thereby ensuring that parties are “on the same page” in so far as schedule issues are concerned. If and when further delaying events occur, its effect can be benchmarked and measured from an agreed set of programme, thereby mitigating the scope of dispute. This is particularly useful in large and complex construction projects.

For those who do not favour a prospective approach, they typically have issue with the likelihood that any grant of extension of time may not have taken into consideration full and complete material information. This is because the certifier under a prospective approach had not made his determination with the benefit of a complete picture since the delaying event could have just occurred and the associated delaying effect has not taken its full course. To the extent that there are extenuating circumstances that could have afforded the contractor to additional time extension, such risk had to be balanced with the benefit of parties having upfront certainty of schedule issues. 

It is perhaps fair to say that the retrospective approach are typically rooted in the principle of fairness and equity where the claimant is given reasonably opportunity to present the merit of its claim within the framework of rights and obligations under the contract. On the other hand, the prospective approach is influenced by what is the most commercially sensible course of action so as to minimise the time and expense parties may expend for the purposes of dispute resolution. In this regard, the certifier appointed under the contract is also acting as an agent based on the interest of his principal, i.e. the Employer. From time to time, what may be commercially expedient may not always be the fairest approach.  

In Principle Determination Of Any Entitlement to Extension of Time

The formal certification of extension of time is commonly made after the project is completed particularly for large project with a significant number of delaying events. Under Clause 14.2 of the PSSCOC, the Superintending Officer may grant any extension of time after the project’s time for completion whereas Clauses 23(4) and 23(5) of the SIA form provide similar latitude to the certifier. Whilst it is natural for contractor to be eager to receive the outcome of its application for time extension, the certifier on the other hand is likely to err on the side of caution by taking as much time as necessary to make his determination. In order to strike a healthy balance between these competing desires, the SIA form made a unique provision that is not available under the PSSCOC.

Under Clause 23(3)(d) of the SIA form, the Architect shall inform the contractor of whether he considers the contractor is in principle entitled to an extension of time. This in principle intimation allows the contractor the relief that its application is viewed favourably but at the same time does not impose any pressure on the certifier to make a determination until he is ready to do so. The Architect shall provide his in principle determination upon receipt of the initial notice or compliance of the condition precedent and within 28 days of such request from the contractor citing Clause 23(3)(d) specifically. It should be noted that Clause 23(4)(d) subsequently clarifies that the Architect shall not be required under Clause 23(3) amongst others, to decide and estimate the period of time extension to be granted until he receives all necessary particulars and information requested. Therefore it is possible that if the delaying event is one that is complex and more information may be forthcoming, the Architect may refuse to provide any indication of the in principle entitlement. Whilst this may not offer any substantive relief to the contractor, it is useful to the contractor to understand what outstanding information may be relevant to the Architect’s delay analysis and be in the position to assist with the production of such information. In other words, no news is not always bad news. 

The possible reason why such in principle determination is not found under the PSSCOC may be due to the existence of the option of prospective grant of extension of time. Although the prospective approach may mean that the certifier makes his decision without complete set of information since the delaying event continues to operate, it offers upfront certainty to the parties which can be commercially valuable. This certainty is quite similar to the in principle determination found under the SIA form. 

Conclusion

The overall difference between SIA form and the PSSCOC on the subject of extension of time is quite significant. Where the responsibility in respect of notification, reporting and disclosure are rigorous such as in the case of PSSCOC, the contractor should be prepared accordingly. Unfortunately most contractors do not practise a robust claims management that is bespoke to the form of contract being used. It cannot be overemphasised that time extension is rarely a standalone issue because any time is often associated with significant financial ramifications. Apart from being excused from liquidated damages, it could be a precursor to claims for loss and expense.




Koon Tak Hong Consulting Private Limited