EYE TEST

Q D E G H M H Z P C
V L T E A M D Y X O
S P B V N O I T C A
V Y W F U N S P D C
T H S H W E A L T H
I B L T J Y O U G F
M J O Y E H S C N G

Call out the first word you see.

ANSWERS TO EYE TEST

Q D E G H M H Z P C
V L T E A M D Y X O
S P B V N O I T C A
V Y W F U N S P D C
T H S H W E A L T H
I B L T J Y O U G F
M J O Y E H S C N G
BPM109
Contract Administration

Study Guide 2

Completion
Delay
Extension of Time
Liquidated Damages 3
 Lecture Outline
 Commencement of Work
 Due diligence by Contractor
 Completion date
 Extension of Time (EOT)
 Delay & Concurrent Delay
 Liquidated Damages

4
 Learning Objective
At the end of this unit, you are expected to:

 Describe the parties’ rights with regards to delay,

extension of time and liquidated damages

 Explain the contractual procedures relating to

extension of time, liquidated damages and
unliquidated damages

 Differentiate between liquidated damages, penalties

and unliquidated damages.
5
 Introduction
• Time is a very important issue in building, maintenance,
servicing, operation and refurbishment contracts

• Dates are specified for start and completion of the Work

• Contractor is bound to complete the Work by the

Completion date

• Where there is a delay, Employer may:

• Extend the time for completion (EOT)
• Claim for damages for delay (LD)
6
Appendix (SIA Contract)

7
 Commencement of Work
• Contractor to commence work on Contact Commencement Date

• Site should be free and unobstructed

• Contract period and Completion date is calculated from date of

handover.

• Parties to agree on a new commencement date if Commencement

date is not stated

• Owner loses right to LD If date of site possession is not specified

8
 Commencement of Work
Rapid Building Group v Ealing Family Housing (1984)

• Employer was unable to give timely site possession

• There was delay in the Works

• Architect granted EOT and issued a certificate

• Contract did not provide for EOT due to the Employer’s breach of
contract due to late site possession

Implication
• Time became at large

• Employer loses his rights to LD 9

 Due Diligence By Contractor
Meaning of Due Diligence
West Faulner Associates v Newha LBC (1994)

• “the need for the Contractor to apply the physical capacity

industriously and efficiently’ to complete the Works.”

10
Completion Date as Stipulated in Contract
Contractor:
• Must complete the Project “On or
Before” the Contract Completion Date”

• Is liable for damages if he delays the

works.

• Must complete within a reasonable

time if the Date of completion is not
specified.

• Without a Completion Date…..

– there is no provision for LD
11
Completion Date as Stipulated in Contract
Contractor :
• To vacate the Site

• Allow Owner to take

possession but Is still
responsible for the Works.

• Is to be issued a:
– Completion Certificate
(SIA)
– Certificate of Substantial
Completion (PSSCOC)
• Rectify outstanding defects
12
 Significance of Issuance of Completion Certificate

• Liability of Contractor to pay

Liquidated Damages shall cease

• Contract shall be deemed to

have been completed

• Commencement of
maintenance period

• Release 1st half of the limit of

retention monies to Contractor

13
 ‘Let’s look at
Extension of Time’

14
 Extension of Time
Contractor must:
• Complete on time unless Owner intervenes

• Notify Owner’s representative…

• Follow the timeline and procedures

• EOT Notification must state:

– Reason(s)…
– Grounds for EOT stated in the Contract
– Why the event would delay the project

15
 Extension of Time Conditions
EOT will be given if:

• Contractor notifies the Owner’s representative within the time

limit

• Event is specified in the contract

• Event is one that delay the overall project completion

16
Extension of Time

17
SIA Form of Contract and Extension of Time

18
SIA Form of Contract and Extension of Time
Example: SIA Measurement Contract (9th Ed)

19
 PSSCOC Form of Contract and EOT
Contractor must:
• Notify (SO) within 60 days of the
delaying event

– To indicate reasons as to:

– Why there is delay to
completion
– Length of delay
– Extension of time required
– Effect on Contractor’s
schedule

20
 PSSCOC Form of Contract and EOT
In deciding EOT, SO has to consider:
• Effect or extent of any work omitted
• If event will delay the completion
• If there are Concurrent delays by Contractor
• If extension is fair, reasonable and necessary for completion

SO :
• Inform Contractor (in writing) of his decision….
• within the next 60 days from the date of the application.
• May request for further information

21
 Grounds for EOT claims
a) Force majeure
b) Exceptionally adverse weather conditions
c) Fire, Storm, lightning, high winds, earthquake or aircraft or
aerial objects
d) War, hostilities, insurgency, terrorism, civil commotion or
riots
e) Industrial action by workmen, strike or embargoes
f) To comply with instructions
g) Failure on the part of the Employer to give site possession
h) Contractor did not receive necessary drawings and
information from Architect within a reasonable time
i) Shortage of labour (foreign or domestic), etc.
j) Any other grounds for EOT mentioned in the Contract
Document 22
SITUATIONS WHERE AD ARE GIVEN (SIA)
i. Ensure Contract Compliance
ii. Secure Safe methods of working and temporary works where
the Contractor is using unsafe or unsatisfactory method of
working
iii. Vary permanent/temporary work to assist the Contractor as
his request to overcome difficulty
iv. Vary permanent/temporary work as a consequence of
defective work or other default or breach of contract by the
Contractor
v. Suspend/postpone work in order to carry out investigations as
a reasonable consequence of defective work or other default
or breach of contract by the Contractor
vi. Alter or vary any previous direction
SITUATIONS WHEN AI ARE ISSUED (SIA)
i. To vary permanent or temporary work
ii. To vary temporary works/methods where desired by Architect
and where Contractor is entitled to use different
methods/temporary works
iii. To postpone or suspend work, to carry out investigations
required by architect, and not as a consequence of default/
defective work by Contractor.
iv. To carry out work or supply goods required under a P.C.
sum/item by Nominated or Designated Sub-
contractor/Suppliers
v. To carry out work or supply goods required under a Provisional
or Contingency sum/item, by Nominated Sub-contractor/
suppliers or the Contractor himself.
vi. To alter or vary any previous instruction

24
‘Let’s look at
Delay’

25
 REASONS for DELAYS
1. Employer’s Delay
– Failure to give timely
possession of Site
– Failure by Architect to
provide plan, drawings and
information within
reasonable time.
– Variations ordered

2. Neutral Events & Third Party

– Adversely Inclement
weather
– Force Majeure, Strikes, Riots
– Delay by Statutory
regulations and bye-laws

3. Contractor’s Delay
– Late Mobilisation
– Insufficient resources
– Improper sequencing &
Planning of work
Indonesia Bans Land Sand Exports to Singapore, 6 Feb 2007
Indonesian export ban leaves Singapore short of granite
JAN 31, 2014
Boutique developer wound up in Singapore property market
slowdown, JUL 26, 2016

Several uncompleted houses have come up for mortgagee sales in recent

months from a boutique developer that was wound up last Friday.The woes of
C&C Development reflect the state of the property.
COVID-19: Construction projects could be delayed months,
as contractors fear manpower crunch when clearing backlog
 Contractors to Get Universal 4-month
Extension to Complete Projects
A law passed in Parliament yesterday will
provide a universal four-month
extension for construction projects to
be completed, including Build-To-Order
flats.

It will also allow property buyers who

incur out-of-pocket costs due to
construction delays - like renting a place
to stay - to seek reimbursement from
developers, including the Housing Board.

Contractors will also have to co-share

50 per cent of additional non-
manpower costs such as equipment
rental and storage of materials with their
subcontractors and suppliers, capped at a
monthly value of 0.2 per cent of the
PUBLISHEDNOV 4, 2020 contract sum.
BFM109 Contract Administration 31
 SIA Form of Contract and Delay
Architect must:
• Issue a Delay Certificate (DC)

Employer :
• Can deduct LD from
Contractor after DC is issued
• Cannot deduct LD if DC is not
issued
• Can deduct LD from
Contractor at any time
• Can record LD in subsequent
Payment certificates
32
 PSSCOC Form of Contract and Delay
• No requirement to issue a Delay Certificate

• When Works have not been completed….

• Contractor shall pay Employer LD

33
 Concurrent Delay
• Means different types of delay overlapping over a period of time

• Delay can be:

– Contractor-caused Delay
– Non-Contractor-caused Delay

• Non-Contractor-caused Delay may be caused…

– by Owner
– Other factors…

34
 1. Dominant Cause
When a Concurrent Delay occurs…
• Dominant Cause (or Real Cause) will prevail over the other cause

Example,
– Owner ask Contractor to stop work (Condo soft launch)
– Contractor facing severe labour shortage (Real cause)
– Owner may not award EOT

35
 2. Apportioned Delay Approach
This Approach
• Considers the relative importance and degree of responsibility
for each delay

Example, Owner and Contractor agree on..

• 70:30 apportionment

36
 3. Malmaison Approach
Malmaison Approach:
• Considers only the Relevant Event

Example,
– Owner asks Contractor to stop work (Relevant Event)
– Contractor face labour shortage (Non-Relevant Event)
– Court will grant EOT to Contractor

37
 SIA Form of Contract on Concurrent Delay
Delay is grouped into:
• Owner-caused Delays and Neutral events
• Contractor-caused Delays

If Delay is caused by Owner or Neutral events,

• LD cannot be deducted.
• Instead, EOT may be granted.

If Contractor caused the Delay,

• A Delay certificate must be issued by the Architect
• Owner may but NOT bound to deduct LD from Contractor

38
SIA Form of Contract on Concurrent Delay

Others
Architect Employer Contractor
Unanticipated
• Poor design • Excessive • Poor weather
• Incomplete performance
changes Changing Market
design • Lack of
• Delays in conditions
resources
• Slow approval Unforeseeable
• Mismanageme
response • Prolonged nt conditions
planning • Labor Force majeure
• Delayed shortage
payment • Default 39
 Further Delay or Further EOT
SIA Contract provides for Further Delay or Further EOT…
Architect must issue:
• Delay Certificate after the latest date for completion…. (LD
commences)
• “Termination of Delay Certificate” (“TDC”) if EOT is granted, and (LD
stops operating)
• A Revised Completion date
• “Further Delay Certificate” (“FDC”) if Contractor is unable to
compete by the revised completion date (LD commences again)
• Issue ‘Completion Certificate’ when all the Works (including
variation works) are completed (LD stops operating)

40
Further Delay or Further EOT
 Scenario 1
• Contract period – 18 months

• Contract Commencement date - 12 Jan 2015

• EOT of 20 days granted to Contractor

Question:
State the Contract Completion date and the
Extended Completion date.

42
 Scenario 1
• Contract period – 18 months

• Contract Commencement date - 12 Jan 2015

• EOT of 20 days granted to Contractor

Ans:

Contract Completion date = 11 Jul 2016

Extended Completion date = 31 Jul 2016

43
 Scenario 2
• Contract period – 18 months
• Contract Commencement date - 12 Jan 2015
• EOT of 20 days granted to Contractor
• Contractor failed to complete the Works by the
Extended Completion date.
• Architect granted a further EOT from 10th - 13th of Aug
2016 for additional works
• Actual completion date - 18 Aug 2016

Question:

State all the relevant dates, and certificates to be issued

by the Architect.

44
 Scenario 2
• Contract period – 18 months
• Contract Commencement date - 12 Jan 2015
• EOT of 20 days granted to Contractor
• Contractor failed to complete the Works by the
Extended Completion date
• Architect granted a further EOT from 10th to 13th of
August 2016 for additional works
• Actual completion date - 18 Aug 2016

Ans:
Issue Delay Certificate – 1 Aug 2016
Issue Termination of Delay Certificate –10 Aug 2016
Issue Further Delay Certificate –14 Aug 2016
Issue Completion Certificate – 18 Aug 2016
45
 Scenario 3
• 18-month contract period
• Contract Commencement date - 12 Jan 2015
• EOT of 20 days granted to Contractor
• Contractor failed to complete the Works by the Extended
Completion date
• Architect granted a further EOT from 10th to 13th of August
2016 for additional works
• Actual completion date - 18 Aug 2016
• Liquidated damages rate is $5000 per day.

Question:
Calculate the amount of liquidated damages chargeable
to the Contractor.
46
 Scenario 3
• 18-month contract period
• Contract Commencement date - 12 Jan 2015
• EOT of 20 days granted to Contractor
• Contractor failed to complete the Works by the Extended
Completion date
• Architect granted a further EOT from 10th to 13th of August
2016 for additional works
• Actual completion date - 18 Aug 2016
• Liquidated damages rate is $5000 per day.

Answer:

1st delay period – 1 August 2016 to 9 August 2016 = 9 days

2nd delay period- 14 August 2016 to 18 August 2016 = 5 days

Liquidated Damages = 14 days @ $5,000/day = $70, 000 47

 TIMELINE DIAGRAM
Extended Actual
Contract Completion Completion Date
Completion Date (31 Jul) (18 Aug)
Date (11 Jul 16)

EOT Delay EOT Delay

(LD) (LD)

Contract Period
Delay Certificate
(1 Aug 16)
Contract
Commencement Termination of
Date (12 Jan 15) Delay Certificate
(10 Aug 16) Further Delay
Certificate
Completion
(14 Aug 16)
Certificate
(18 Aug 16)
PSSCOC Form of Contract on Concurrent Delay
SO must:
• Inform EOT decision within a
reasonable time

• Have sufficient information to

assess EOT

• Consider the Contractor-caused

delays that were concurrent with
the delays due to the Relevant
Event to assess EOT

• Apportion part of the Delay due to

the Contractor 49
PSSCOC Form of Contract on Concurrent Delay
Extension of Time during Delay Period
SO may:
• Order Contractor to do additional
works

• Grant EOT, Set new Time for

Completion and

• Add EOT to Original Time for

Completion

• Issue Certificate of Substantial

Completion when all Works are
completed 50
PSSCOC Form of Contract on Concurrent Delay

Extension of Time during Delay Period

51
 ‘Let’s look at
Liquidated Damages’

52
 What is Liquidated Damages?
• Monetary amount fixed and agreed by the parties in advance, as
the damages payable in the event of a breach of contract

• LD are payable only if Contractor fails to complete on time

• Employer cannot rely on LD if the Employer hinders or prevents

the Contractor’s progress

Possible reasons (during contract period):

• Employer tells the Architect to delay payment certificates
issuance due to cash flow reasons

• Employer wants a drastic change (e.g. change from

concrete structure to structural steel structure) to the
building design
53
 Liquidated Damages
What is LD?
• Genuine pre-estimate of loss, not a payment of money to offending
party

• Will not be enforceable if it is considered a ‘penalty’

• Penalties are void and not enforceable under common law

• Victim has to prove the actual loss caused to him by the delay

• Determined by Client’s Quantity Surveyor

54
 Liquidated Damages
Dunlop Tyre Co. Ltd v New Garage Ltd (1914)

Held:
• LD clause was considered a ‘penalty’ and unenforceable

• The sum paid by defendant was ‘extravagant’/ in comparison

with the greatest loss

55
What if there is No LD Clause In Contract?
• Employer has to go through the hassle of having to prove his claim
for damages

• By way of documentary evidence showing all the expenses which

the Employer has incurred as a result of the delay

• If he is unable to do so, his claim for damages will fail

56
 Summary
• Commencement of Work, Completion date
• Due diligence by Contractor
• Extension of Time (SIA Contract and PSSCOC form of Contract)
• Delay (SIA Contract and PSSCOC form of Contract)
• Concurrent Delay
– Dominant Cause
– Apportioned delay Approach
– Malmaison Approach
• Liquidated Damages

57
 Reminder - Read
 Contract Administration and Procurement in the
Singapore Construction by Lim Pin, Chapter 9.

58
Quiz Time

59
End of Seminar 2

60