Investigating Reasons For The Unsuccessful EoT Claim in The Malaysian Construction Industry Views From The Professionals

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ICRMBEE 2021 IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1067 (2022) 012055 doi:10.1088/1755-1315/1067/1/012055
Investigating Reasons for the Unsuccessful Extension of Time

(EoT) Claim in the Malaysian Construction Industry; Views
from the Professionals
Norazian Mohamad Yusuwan¹ʼ*, Hamimah Adnan², Noor Aisyah Asyikin

Mahat³, Zul Zakiyudin Ahmad⁴ and Har Einur Azrin Baharuddin⁵
¹ʼ²ʼ³ʼ⁵ʼ* Centre of Studies for Quantity Surveying, Faculty of Architecture, Planning &
Surveying, Universiti Teknologi MARA, 40450 Shah Alam, Selangor Darul Ehsan.
⁴ School of Housing, Building and Planning, Universiti Sains Malaysia,
*E-mail: norazianmy@uitm.edu.my
Abstract. Construction claims are often being cited as difficult and complex; hence, the rejection
of claims is regarded as common in the construction industry. Such situation will generally lead
to various consequences, among which are conflicts and disputes. In this respect, this paper aims
to investigate the reasons for the rejection of EoT claims in the Malaysian construction industry.
Findings were drawn from a consolidation of practitioner’s perceptions via questionnaire survey
and semi-structured interviews. However, this paper will only present results obtained from the
semi-structured interviews which was conducted to complement findings gathered from the
questionnaire survey. The results revealed that failure by the contractor to establish the cause-
effect relationship, inadequate supporting documents, non-entitlement in principle/non-valid
ground/s, late submission, and non-compliance to the conditions of the contract are the top five
(5) reasons for the failure of the submitted claim. The findings suggest the important areas that
require much attention. Proper record keeping and management are obviously essential as these
are the keys that determine the success of any claim.
1. Introduction
A construction project involves dozens of activities performed by multi-disciplined participants.For this
reason, delays to construction projects can come from many sources. Factors such as shortage of
materials, labour problems, financial difficulties, weather conditions, unforeseen ground conditions,
interruptions by others, and variations during the course of works are among the most cited causes of
construction delays. No matter the size and complexity of the project, unexpected events can happen,
whether caused by the construction activities themselves, by the project participants, or something
beyond the control of anybody, such as the weather, force majeure, unforeseen ground conditions, an
many others.
Delays in construction projects may not only affect the project itself but also industry stakeholders,
the country’s economic situation, and many others. In general, the effects of delays includethe loss of
wealth, time and capacity [1]. Other than leading to cost and time overrun, delays are often accompanied
by claim for extension of time and additional compensation by the contractor [2]. To the owner, delays
mean loss of income through the unavailability of facilities, while for the contractor, delays mean loss
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of money for additional payments on equipment, labour and materials, and the inabilityto pursue other
projects due to capital constraints, and for the public, delays mean the facilities being built for them are
unavailable for use as planned [1, 3]. Since delays are regarded as the norm in the construction industry,
the extension of time (EoT) claim emanating from such delays has been found tobe the major source of
claims in the construction industry. In fact, [4] viewed claims originating from delays in construction
projects as an integral part of the modern construction process. In order for the contractor to get the
extension period to the original contract duration, he should submit the EoT claimaccompanied by all
the relevant documents and facts to support the claim and to prove that he is not liable for the delay.
1.1. Extension of Time (EoT) Claim

Construction claims are one of many factors that influence the execution of construction projects,in which
if it is not managed properly, they can lead to conflicts, which can jeopardise the project's goals[5]. This
statement appears to be consistent with earlier views by [6] who claimed that most project participants
view claims as undesirable side effects as it will cause the project to deviate from its main goals. As its
often being cited as difficult and complex, hence, the rejection of claims is regarded as common in the
construction industry and EoT claim also has no exception. Extension of Time claims are a common
source of contention among key construction stakeholders in traditional claim management systems [7].
Disputes and claims are undoubtedly a critical issue in project management, as they have a significant
impact on the progress of construction projects [8].
The scenario of the contractor’s EoT claims failing completely or in part is not uncommon in the
construction industry. If it is successful, the contractor will be relieved from Liquidated and Ascertained
Damages (LAD) and may probably be compensated for the losses and expenses incurred due to the
delay, while in contrast, if his claim is unsuccessful, LAD will be imposed on him. In such
circumstances, the contractor may have two (2) options; to expedite his works to minimise the delay
days, which will then minimise the amount of LAD, or to challenge and fight for his right to an extension
of time [9]. A review on previous researches by scholars, identified six (6) common reasons for the
rejection of EoT claim which are failure to establish cause-effect relationship, inadequate supporting
document, late submission, non-entitlement in principle/non-valid grounds, non-compliance with
contractual requirements and insufficient breakdown of claim amount/global claim.
a) Failure to establish cause-effect relationship

Clear establishment of a cause-effect relationship is a core ingredient in the presentation of any claim,
and the EoT claim is no exception [10-13]. The link between cause and effect should be established to
the extent where it is possible to show how other parties’ actions and inactions have affected the progress
of works. In order for the claim to succeed, the contractor must be able to producefacts and evidence that
the damages were incurred as a result of the actions or inactions of other parties,along with a measure of
the damages, which is known as a demonstration of the cause-effect relationship[11, 14].
b) Inadequate supporting documents

According to [15], the preparation of EoT claims is a very tedious process and involves a lot of effort
by meticulously digging through piles of project documentations to sort and ascertain pertinent delays
encountered during the project. This is evidence of the fact that records and documented evidenceform
the best basis and play a significant role in the successful settlement of contractual claims [16].
[17] agreed that records are fundamental in analysing and supporting delay claims; however, retrieving
the information, is not always straightforward. On a similar note, [18] suggested that the success of EoT
claims always depends on the ability of the claimants to submit detailed and complete information as
evidence in defending their claim. As the claim evidence is like the arguments of argumentation, in the
absence of reliable evidence, insufficient or no evidence, it would be impossible for a claim to succeed
[19, 20].
2
c) Late submission
The prompt submission of an EoT claim as close in time to the delay events that gave rise to the
application has been recognised as a good practice for a speedy and harmonious settlement of a claim
[21-23] as it is impractical for the contract administrator to assess the contractor’s claim that has
surpassed the time limit [12]. In practice, most construction contracts also stipulate the time frame for
the contractor to submit detailed particulars with regard to the EoT claim. Clause 23.1(b) of PAM 2018
provides: “within twenty-eight (28) days of the end of the cause of delay, the Contractor shall send to
the Architect his final claim for extension of time duly supported with all the particulars to enable the
Architect to assess any extension of time to be granted…”. This clearly explains that the contractor has
an obligation under the contract to submit a complete application for an EoT claim within the prescribed
time frame to facilitate the assessment process by the contract administrator.
d) Non-entitlement in principle/non-valid ground/s
The best way to administer the project and the contract and also to avoid any unnecessary disputesis
through a thorough understanding on the provisions contained in the contract documents. Lack of
understanding on what is contained in the contract may cause failure by the parties to comply with the
terms and provisions outlined in the contract, which in turn lead to disputes especially when their right
to any claim has been forfeiture due to failure to comply with the contract requirement. Most standard
forms of contracts contain a provision dealing with time-related issues. For a contractor to succeed in
his EoT claim, it is ultimately important to precisely identify on what contractual basis the claim is being
made. The claimant must clearly state under which Clause or Sub-Clause of the contract he is entitled
to an extension of time, thus helping both parties (the claimant and the assessor) to fully understand the
rationality and validity of the claim [20].
e) Non-compliance with contractual requirements

The core principle in handling claims is to be fully aware of the contract's conditions, terms, andclauses
[6]. As [6] further added, a complete evaluation of a contract's ability to withstand legal prosecutions
requires carefully reading the contract's content and comparing it to project realities such as changes in
scope, cost, time, quality, and so on. With respect to EoT claims, the provision regardingthe obligation
of the claimant to submit notices or particulars with regard to the delay has often been cited as the most
neglected and disputed clauses [21, 24-26].
Technically, if the provision for serving notice has been stipulated in the contract, failure by the
contractor to adhere to it is a breach of contract, and the contract administrator has the right to take this
into account in assessing the extension of time claim. The contractor might be lucky if the contract
administrator fails to notice the non-compliance. However, in extreme cases, they may reject the claim
as the delays could have been avoided if the contractor had served the notice earlier, or the contract
administrator may at best reduce the amount of the claim instead of rejecting the entire claim [21, 26].
It is therefore, vital for every party involved to be aware of, understand and adhere to the contract.
f) Insufficient breakdown of claim amount/Global Claims

The inability by the claimants to break down the claim amount for each of the delaying events may
contribute to the failure of their claim. The Society of Construction Law (SCL) Delay and Disruption
Protocol (2017) defines global claim as “A global claim is one in which the Contractor seeks
compensation for a group of Employer Risk Events but does not or cannot demonstrate a direct link
between the loss incurred and the individual Employer Risk Events”. It occurs when a claimant submits
a claim without breaking it down, rather than showing how each individual event caused delay and the
monetary loss associated with each delay, the claimant submits a single claim lumping all of the alleged
causes together without itemization [27]. Such practices appear uncommon, especially when there are
two or more separate matters of claim that is said to be impractical or impossible to provide a breakdown
or sub-division of the sum claimed between those [18].
Having reviewed a number of court cases and publications in respect to the global claim issue, itis
undeniable that the submission of claims on a global basis is sometimes unavoidable. The question that
is frequently being asked is, will it succeed? As answered by [28], it all depends upon the circumstances.
3
It is unlikely, however, that the claim will be rejected entirely by the courts on the grounds that it had
been prepared on a global basis; however, any award is likely to be modest [28]. If events reasonably
cannot be untangled, then a global claim is acceptable, provided that, if it is not conclusive, it is
persuasive enough to succeed in front of a judge or arbitrator [29].
2. Research Method
Having reviewed the various methods and strategies in conducting research, a quantitative method by
means of a questionnaire survey was employed to gather data from a sample of a large population, while
a qualitative approach via semi-structured interviews was conducted to provide an in-depth
understanding of the respondents’ perspectives from their experiences.
In this study, the information gathered via the questionnaire survey was sought from two sampling
frames, namely professional architects and contractors under the Grade G7 category of the Malaysian
Construction Industry Development Board (CIDB) registration. The rationale for choosing these two
discrete parties was the fact that they are highly involved in dealing with EoT claims. The contractors
are the parties who are responsible for substantiating and presenting claims, while on the other hand, the
responsibility of assessing such claims rests on the shoulders of the claim certifiers. As this study was
focused on private funding projects, particularly those using the PAM Standard Form of Contract, thus,
the claim certifier, as named in the contract, was the Architect.
A total of 1,500 questionnaire has been distributed to 500 professional architects and 1,000 GradeG7
contractors across Malaysia with 237 feedbacks received, giving a response rate of sixteen per cent
(16%). Having considered the limitations of the questionnaire survey, there was a need to gather further
data to really comprehend the main issues to address the research questions. Hence, semi-structured
interviews were conducted to complement the findings obtained from the questionnaire survey. The
literature review and the findings of the questionnaire survey, on which the questions for the semi-
structured interviews were based, were meant to provide in-depth understanding, insight and information
to accomplish the research objective. However, this paper will only present the results obtained from
the semi-structured interviews conducted purposedly to comprehend the earlier findingsobtained from
the industry wide survey.
3. Results and Discussion

3.1. Profiles of Interviewees
The details of the interviewees’ profiles from the category of professional architects are illustrated in
Table 1, while Table 2 tabulates the profiles of the interviewees from the category of Grade G7
contractors.
4
Table 1. Interviewee Profiles (Professional Architect)
ID Interviewee State Experience in Experience in

Position Construction Dealing with
EoT Claims
1. A1 Principal Architect Kuala Lumpur 26 15
3. A3 Architect Kuala Lumpur 22 19
6. A6 Principal Architect Johor 28 28
7. A7 Director Kuala Lumpur 35 30
10. A10 Principal Architect Sabah 30 30
11. A11 Architect Sabah 12 6
13. A13 Partner/Principal Selangor 30 15
Architect
14. A14 Architect Selangor 22 15
15. A15 Project Architect Selangor 10 5
16. A16 Associate/Architect Kedah 17 15
Table 2. Interviewee Profiles (Grade G7 contractors)

ID Interviewee State Experience in Experience
Position Construction Dealing with EoT
Claim
1. C1 Company Director Selangor 22 20
2. C2 Company Director Selangor 30 28
3. C3 Director Kuala Lumpur 26 26
4. C4 General Manager Kuala Lumpur 15 13
(Technical)
5. C5 Contract Manager Selangor 30 20
6. C6 Contract Manager Kuala Lumpur 10 8
7. C7 Contract Manager Kuala Lumpur 22 10
8. C8 General Manager Putrajaya 32 30
9. C9 Project Manager Selangor 11 7
10. C10 Construction Putrajaya 18 15
Manager
11. C11 Senior Manager Selangor 10 6
12. C12 General Manager Pulau Pinang 18 15
13. C13 Project Manager Kedah 22 15
14. C14 Executive Director Selangor 22 14
(Technical)
15. C15 Senior Planning Kuala Lumpur 20 20
Manager
16. C16 Director Selangor 28 15
17. C17 Director Kuala Lumpur 20 15
5
Thirty-four (34) interviews lasting between 45-90 minutes per session were conducted with the
professional architects and the industry practitioners working in construction companies under Grade
G7 of the CIDB registration. The 34 interviewees were spread evenly across the two groups of industry
participants, i.e., the professional architects and Grade G7 contractors (17 interviewees for each group).
The majority of the interviewees (82%) were working in the three (3) major states of Malaysia, i.e.,
Kuala Lumpur, Selangor and Putrajaya, while the rest were based in Sabah (6%), Kedah (6%), Johor
(3%) and Pulau Pinang (3%). This was due to the high concentration of construction projects in these
three (3) major states compared to the other states in Malaysia. However, no matter where they were,
most of them had project experience in other states of Malaysia, not only in the states they were currently
based in. Thus, the information and insights obtained from them can represent the real industry situation
from a nationwide context.
In terms of interviewee’s working experience, all the interviewees had been in the industry for more
than ten (10) years, with most of them holds the top positions in their organisation, such as Directors,
Associates of the company, project managers, and contract managers. The strong professionalbackground
and established practical experience of the interviewees suggest that the information, ideas and insight
provided by them were highly valuable for this study. For analysis purposes, interviewees from
professional architect’s category were coded as ‘A’ while those from contractor’s category were coded
as ‘C’.
3.2. Reasons for Unsuccessful EoT Claims

The interviewees were required to give their views with regard to the reasons for the unsuccessfulEoT
claims based on their experience in dealing with such claims. In response to the question regardingthe
rationale behind the unsuccessful EoT claims, all the interviewees agreed with the top five (5) common
reasons for rejection that have been discovered from the questionnaire survey; (1) failure by the
contractor to establish the cause-effect relationship; (2) inadequate supporting documents; (3) non-
entitlement in principle/non-valid ground/s; (4) late submission, and (5) failure by the contractor to
comply with the contractual requirements.
The majority of the interviewees, especially those from the professional architect category, confessed
that the demonstration of the cause-effect relationship is among the important criteria that areassessed
during the assessment process. As stated by respondents A5, A9 and A16, it is vital as this is where the
architect will be able to identify the extent of the delay events that have affected the overall project
duration as only those events that modify the overall project completion date/period will be considered
for a time extension. As noted by [30], the contractor’s entitlement to EoT is not simply determined by
the list of the delay events in a project; but rather, they should be able to prove the extentto which the
listed delay events affect the overall project duration and disrupt the critical path of the project.
Therefore, as respondent A5 emphasized, a clear demonstration of the cause-effect relationship is
essential as this will be a strong point to the claim, and thus will facilitate the claim assessment processfor
a speedy and amicable claim settlement.
The failure of the contractor to submit sufficient particulars to support the claim not only slows down
the claim assessment process, but is also one of the common reasons for the rejection of such a claim.
Although it has been clearly specified under Clause 23.1(b) of the PAM 2018 form of contract that the
contractor is obliged to submit the claim for extension of time duly supported with all the particulars
and relevant documents to enable the architect to make an assessment, still the problem of poor
submission and lack of supporting documents occurs. In addition to that, the contract also takes into
consideration the submission of such particulars, where there is a provision under Clause 23.3 of the
PAM 2018 contract, that says, “If the Architect is of the opinion that the particulars submitted by the
Contractor are insufficient…the Architect shall, within twenty-eight (28) days of the receipt of the
Contractor’s particulars…inform him of any deficiency in his submission and may require the
Contractor to provide such further particulars within twenty-eight (28) days or within such period of
time as may be stated by the Architect in writing”. However, the failure by the contractor to furnish the
architect with the requested particulars within the stipulated period is not uncommon. A study by [31]
6
discovered that, claim documentation issues may be caused in part by on-site personnel who do not fully
comprehend the importance of the documentation system, resulting in improper record keeping. Such a
situation hinders the smoothness of the claim preparation that may lead to a poor claim submission due
to the absence of sufficient supporting documents which may, in turn, caused failure to the claim
submitted.
Respondents A7 and A8 admitted that in some cases they have to reject the contractor’s claim due
to insufficient documents because when their claim is rejected, it will alert the contractors and will drive
them to take appropriate action to fulfil the architect’s request as soon as possible. Most of the architects
also raised their concerns with regard to the contractor’s attitude in taking for granted the importance of
relevant particulars to support their claim with the excuse that the architects also have copies of all the
necessary documents. Respondents C13 and C16, on the other hand, highlighted that sometimes the
architects do not provide such justification regarding any deficiency in their claim, leaving them in a
vague position.
The entitlement to the claim is another no less important point to be considered in determining the
success of a submitted claim. Definitely, the first place to check for the entitlement is the contract
document. The majority of the professional architects highlighted that a great deal of attention should
be given by the contractor to precisely identify under which contractual provisions the claim is made.
One of the architects commented that:
“…As the responsibility for proving a claim lies on the shoulders of the contractor, they should do their
best to prove their entitlement to the claim and make the assessor’s job as easy as possible. A greater
amount of attention should be given in demonstration of the contractor’s entitlement by reference to the
contract…”
Respondent A6
He further added:
“…Reference to the contract should not only be made in the event of a crisis or when you are preparing
a claim, etc. It is a document that contains everything that is necessary in facilitating the management
and administration of a project…it may not be perfect…but close to perfect...it is vital to adhere to the
contract as any deviation from it may cause problems in the future that may affect the overall project
performance…”
Respondent A6
The late submission of claims was also listed as a common reason for the failure of a claim basedon
the questionnaire survey. This was also confirmed by most of the respondents in the semi-structured
interviews. According to respondents A1, A5, C3, C4 and C15, the failure is usually due to some
forgotten facts and information that are relevant to the claim. As asserted by most of the respondents,
the submission of a claim within the prescribed period is very important to ensure that all the relevant
facts and information are still remembered by the parties involved. This is consistent with the
recommendations of previous scholars, who emphasized the importance of the timely submission of
claims to achieve not only a successful, but also a fast and harmonious claim settlement.
The next common reason for the failure of EoT claims is the failure of the contractor to comply with
the contractual requirements. Most of the respondents emphasized the importance of adherence to the
contract in order to achieve the best performance for the project in terms of time, cost and quality. In
addition to that, respondents A9, A11, C6, C10 and C11 highlighted the importance of drafting the
contract in a language and structure that can be easily understood by the contracting parties. This concern
is in line with the earlier concerns raised by [30] with respect to the importance of clarity in the
construction contract. They recommended the use of plain English instead of legalese and complicated
language in a construction contract to enhance the understanding of the contracting parties towards the
contract, especially the understanding of those construction professionals who are not from a legal
7
background.
4. Conclusion
Although an earlier questionnaire survey was conducted to address the research objective, the semi-
structured interviews were carried out to comprehend the matters being studied and also to supportthe
data obtained from the questionnaire survey, thus, making the data robust and reliable. The results
revealed that failure by the contractor to establish the cause-effect relationship, inadequate supporting
documents, non-entitlement in principle/non-valid ground/s, late submission, and non-compliance to the
conditions of the contract are the top five (5) reasons for the failure of the submitted claim. Obviously,
those are closely related to the sufficiency of the documents and records to justify the claim and also the
competencies in handling the claim. For example, poor record keeping and management will result in a
poorly submitted claim, while lack of competency in handling claims and non-compliance with
contractual requirements, which are pre-requisites to the success of a claim, will result in failure to
establish a claim. Proper record keeping and management are obviously essential as these are the keys
that determine the success of any claim. Other than that, competency in dealing with claims is no less
important as those who are competent knows what will be the essentials elements that contributes to the
success of a claim. In order to be competent in managing claims, it is essential for everyone involved to
acquire adequate knowledge not only on technical construction but also to acquire a clear understanding
of contractual terms and their implications, as these will influence their behaviour towards contract
compliances that might influence the way they handle claims and enhances the chances of success.
5. Acknowledgements
The authors would like to acknowledge the support, assistance and encouragement from the members
of the Faculty of Architecture Planning and Surveying, Universiti Teknologi MARA. Specialthanks also
to the reviewers for their invaluable comments on this paper. Not forgetting that special gratitude is
given to those industry practitioners who responded and contributed their valuable input incompleting
the questionnaire survey and participated in semi-structured interviews.
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- PARAMETER ESTIMATION AND

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Investigating Reasons for the Unsuccessful Extension of Time

Norazian Mohamad Yusuwan¹ʼ*, Hamimah Adnan², Noor Aisyah Asyikin

1.1. Extension of Time (EoT) Claim

a) Failure to establish cause-effect relationship

b) Inadequate supporting documents

e) Non-compliance with contractual requirements

f) Insufficient breakdown of claim amount/Global Claims

3. Results and Discussion

Table 1. Interviewee Profiles (Professional Architect)

ID Interviewee State Experience in Experience in

Table 2. Interviewee Profiles (Grade G7 contractors)

3.2. Reasons for Unsuccessful EoT Claims

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