Delay notices – a declaration of war?

Throughout my career I have encountered a general reluctance and even fear on the part of contractors when it comes to reporting delays and additional costs to the employer. To a certain extent this reticence is understandable. A contractor is no doubt trying to build a long term relationship with an employer and fears that such notices may attract an adverse reputation and jeopardise an amicable settlement and most importantly, future work.

If such a settlement is achievable on your project and future work is assured, read no further. But, if both these are a distant dream then consider this – the employer drafted the contract, you didn’t.

It is the employer who insists upon delay notices two days before the event occurs and details full particulars before the ink on the notice has dried. Therefore, the employer should not be aggrieved or surprised when he receives enough notices to wall paper the Burj Dubai and perhaps the contractor might consider gently reminding the employer of this, the next time he complains.

At this point I could discuss familiar territory such as failure to give notice constituting a breach, condition precedent versus the prevention principle and/or unjust enrichment et al under the UAE Civil Code.

But it is more useful to view these issues from a practical perspective namely if a contractor does not tell the employer that he has been delayed or disrupted or that he has decided to accelerate; then at the very least he risks waiting a very long time for his money.

Alternatively, if a contractor does keep the employer informed of events that could genuinely give rise to additional costs including full particulars, then the employer might make some allowance in his budget, which could make life a lot easier when it comes to negotiating the final account.

Detailed and timely notices will also enable the employer to identify the ‘genuine’ events, which may have real impact and that otherwise might get ‘lost’ amongst the mountain of notices, which the contractor is forced to submit. Plus, contractors should not ignore the possibility that the employer may genuinely be unaware of the full implications of a proposed variation and may find some alternative action when notified of its possible consequences.

Fear may also emanate from a misunderstanding regarding the content and tone of notices. When I first started work in the industry there were several publications which contained standard templates for contractual notices. These templates were littered with contract clauses and were also written in a tone that would guarantee an increase in blood pressure in the recipient.

It is possible for a notification clause to include detailed procedures. And, in such circumstances contractors should ensure that they comply. However, generally there is no specific requirement to quote contract clauses. Also if a contractor feels words like ‘prolongation’ and ‘disruption’ might be provocative then he should consider alternative wording.

To enable this process to be managed efficiently, it is very important to set up a dedicated team adequately resourced to implement a robust claims management system. Contractors should not risk relying upon their existing commercial and planning resources to accommodate this process in conjunction with their extensive work load. Investment in such a team during the project has the potential to be much less than the money spent on sorting out the mess at the end.

Finally the above serves an equally important role as an internal claim verification process to avoid ‘invalid claims’ being declared as sales and thereby managing the expectations of internal stakeholders. It may also avoid the risk of such claims being escalated to expensive dispute.

Adams is a senior consultant at Systech in Dubai. He has provided commercial, contractual and dispute resolution advice on projects ranging from high specification offices, data centres and long distance fibre optic networks to major civil engineering projects, multi-storey offices and hotels. He is a member of the Royal Institution of Chartered Surveyors and a fellow at the Chartered Institute of Arbitration.

The opinions expressed in this column are of the author and not of the publisher.

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