Jacob Austin (00:00:17) - Hi everyone. Jacob Austin here from QS.Zone. And welcome to episode 40 of The Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cash flow and grow their business. Episode 40 The Big Four-O. It feels like a bit of a mini milestone today, and for today's episode, I'm going to be talking about proving extensions of time. It is a big issue and it is something that can see you losing money, not only sometimes because you're funding staying on site for even longer than you thought, but also sometimes the contractor may be coming back to you with costs that he's incurred because the project is overall delayed. And if you've not submitted your extension of time and proven that the delay isn't down to you, he might well be coming back to you for a contribution to that. So today I want to talk about what you can do to prevent that from happening. And if you're new to the show, please do subscribe for more user friendly advice on all things subcontracting. So I'm going to start with a bit of a cautionary tale.
Jacob Austin (00:01:22) - And it's one that comes via a plastering contractor. A friend of mine, and he was on a site which had overrun and essentially found himself towards the back end of the job. He'd made all kinds of promises of, oh, I can catch up this bit of time that's been lost. I can help you with some extra resources here and there. Don't worry, we can still get to the same end date. And the problem was that the delays that he was trying to overcome weren't his, but it almost seemed like he was trying to help out as if he'd caused the problem. And then when the inevitable happened of the rose tinted glasses wore off and he realised he couldn't get finished by the right date, the contractor started holding him accountable. And at this point delays had happened a long, long time ago and he just hadn't realised what to do and what to do at the right time. And I couldn't help but feel for him because he's just one of those people that likes to help people out.
Jacob Austin (00:02:18) - He'll almost do as much as he can to help you out, even when it isn't the best thing for him. And he's always been one of those sort of spit in a handshake kind of guys that he expects that if he does something to help you out, you'll help him out at the right point. And sadly, when it comes to main contractors, there are characters out there that are happy to take from you with one hand. And then when the going gets hard, take with the other hand. And this was sort of the situation that my friend had found himself in. He's gone in there feeling overoptimistic about what he can achieve. He's made some promises, which he'd only made to try and help out the project as a whole. But then, when he'd not achieved the promises he was being stitched up for the delay that had been caused, and this prompted this whole conversation with him of what he would do with the benefit of the hindsight that is now got, and when would he have needed to do it to be able to protect himself? And the first thing was that he'd never written a notice.
Jacob Austin (00:03:15) - And when I say he'd never written a notice, I'm not just talking about the job where he'd had this issue. He said that he'd never written a notice at all. And that is definitely issue number one. And it's the precursor to being able to establish an extension of time. So it really is important for you to submit one. Now, going back to my story, my friend was telling me that he didn't want to do that because he didn't want to cause an argument, and he then didn't want to have the back and forth over whose fault this is, whose fault that is. And he basically didn't want to be contractual, but then he was finding out the hard way that in spite of him not being contractual with the contractor, the contractor was quite happy to be contractual with him. And you can't be too surprised by that because contractors contract. The clue is in the name. And as I've said before, in previous episodes, the giving of a notice, particularly when you can do it at the right time, when something can be done about a problem, should be seen as something positive, because you're what you're actually doing is raising somebody's awareness that there's an issue here is going to cause a problem.
Jacob Austin (00:04:19) - And I'm telling you that it may cause me a delay if you don't handle that issue now. And when you're writing your notice, you can have this thought in mind. And what I mean by that is you can actually write words to the effect of, I'm giving you this notice now to make you aware of this problem, in the hope that we can do something about it and prevent this from becoming an issue that impacts the whole of the job. And at the end of the day, there is no prescribed notice template within any of the subcontracts. So it's up to you as to what you actually say when you write the thing. It's essentially a letter delivered to the right place to make your contractor aware of a potential delay or a potential issue, and why not put a positive slant on it within your body of your letter? Write to your contractor. I want to help you to overcome this issue, or I believe that by working together, we can get around this and prevent it from impacting the job and the key.
Jacob Austin (00:05:16) - To remember is that you send it to the right place, address to the right person, and they should be noted in your subcontract. You need to write it as soon as you possibly can, and you need to state that this event may cause a delay under the subcontract, and ideally, you will tie that delay into one of the delaying events, the relevant events or the compensation events. If you're working on an NEC job and you want to say that the full impact can't be fully known at this point, so you're right in due course to confirm the outcome. Now, going back to the story, my friend had had two clear issues, which were down to the contractor that he'd basically done nothing about, and those were right at the start of the job. He wasn't given the access on the right date, so effectively was told to start late and lost some time immediately. And then partway into his work, it was clear that there wasn't enough to keep his light going, so he was told to clear off from the site for a period of a few weeks and then come back and finish the work off.
Jacob Austin (00:06:20) - Now, as far as delaying events go, those are about as cut and dried as you're ever going to get. We haven't got any kind of concurrency arguments. These are clear issues that have been caused by the contractor. Nothing else could have happened because my friend wasn't on site. And so there's a clear entitlement to this extension of time. And if you think about it, it really beggars belief, the situation that he's found himself in because the contractor, the cheeky bastard, has caused some clear delays to his subcontractor, and then he's going about stitching him up for a contribution to his losses. But this is sadly the world that we can live in sometimes. And this is why I want you to avoid the same issues and protect yourself when delays happen. So moving on from submitting the notice, what would he need to do next? Well, this is where things can get complicated. Or rather, this is where people can overcomplicated game with snap because what you now need to do is to prove that you have an entitlement.
Jacob Austin (00:07:20) - So this needs you to refer to your subcontract and point out whether the delay that has been hurting you sits under one of the relevant events, or under one of the compensation events. Now, handily, if you go back to episode 14, I've run through in detail the relevant events and relevant matters from the JCT subcontract and try to give you a plain English view of what each of those mean, because in typical contractual form, they are written in lawyers English, and that's not always straightforward to understand or even helpful. Now you need to write a follow up letter to your notice to say that the event that I notified you of previously has happened, and when now able to confirm the amount of delay that was caused because of that event. And it's here that you need to write that this event is one of the permissible events under your subcontract, and you need to identify which event that this falls under. And now it's not just enough to identify that the event is permissible. What you next have to produce is proof that your completion has been delayed.
Jacob Austin (00:08:31) - And that means proving a delay to your critical path. So in the example, because the critical path had been delayed by first starting late and then second by being told to go away from site and come back again, those delays are really quite clear cut and they must have delayed the critical path. But it is possible for you to be delayed in areas which aren't critical to your completion. To give a really simple example, say you've been contracted to build a house out of brickwork, and with that house comes a garage. The longest piece of string involved is the construction of the house, and as long as you've been given access to start and finish the garage within periods that work, then if you are delayed in constructing the garage, it wouldn't necessarily delay you from finishing the house as a whole. And what would need to happen for you to get an extension of time for the garage is that it would need to be delayed in starting so long that it became impossible to finish it before you'd finished the house, and effectively all of the float associated with the garage.
Jacob Austin (00:09:36) - Let's say the house was going to take you 12 weeks to build the house, and it was only going to take you two weeks to build the garage. You would have to be delayed by more than ten weeks on the construction of the garage, before it started becoming the critical path for completion. The next important thing is to consider any concurrent delay. Now, going back to our house building analogy, if you were supplying the bricks and for a period of a week you ran out of bricks and you couldn't get any more delivered. And let's say, for argument's sake, this time, rather than it being the garage, the contractor has caused a delay to building the house. And so they've caused a delay of, let's say, two weeks and your. Delay that you've caused by not supplying bricks at the right time has caused a delay of a week. For the delay to be concurrent, it would mean that you would have to run out of bricks at the same time that the contractor was delaying you building the house.
Jacob Austin (00:10:30) - Now, those two things, there isn't a large chance that they would fall at exactly the same time. So when we're talking about concurrency, true concurrency is actually quite rare because as much as anything else, just what's the chances? Now I'm using a particularly simple example there, and it may be the case that there is more than one critical path, and you might be causing a delay to one critical path and your contractor causing a delay to another, equally improbable that they should both line up and happen at exactly the same time. And what's more often the case is that there's a tiny delay that say you have caused, let's say your lack of bricks only delayed you by a day. The contractor might be then making some spurious argument that that's caused a concurrent delay to them holding you up, when in fact, the days delay that you've caused is so minor that it almost shouldn't be considered. And at the very most, you could knock a day off of the two week delay that they've caused and call it done with.
Jacob Austin (00:11:30) - There is an argument to say that regardless of there being concurrent delay, because the contractor has caused you that delay, they need to extend the time anyway. The next issue then is showing that it's critical, and partly this is down to the nature of the event. So if they are really cut and dried, simple events where you've been prevented from accessing, then all you really need to do here is tip out some records that show this was the date that I should have started, and this is the date that I did start. And obviously the timing between the two is the time of the delay. Clearly, if you've been told to demobilize and re mobilize, the same sort of approach can be applied. Where it gets more tricky is where you have a quite a complex program of overlapping sections, overlapping activities, and you then need to be carrying out a form of critical path analysis to show how your end date is being impacted by any delay, and this may be more or less difficult depending on how complex your work is, how many overlaps are with other trades, how much float there are in between various pieces of work, and so on.
Jacob Austin (00:12:40) - Now, if you have a relatively simple program, it may be something that you can simply chart out on Excel, coloring in some boxes with the fill button with the activities running down the left and the program date running across the top. And you need to refer back to those same records to show these are the dates in between which this event occurred, and therefore this is the impact of the delay. And you're going to translate that into your Excel form by inserting another row for this new event, and then simply shunting out to the right all of the events that follow on from it. If you have a contractor's program, you may be able to mark up that program, highlighting out what your original critical path is and inserting the new events into it so that you're sort of breaking the program either side of the event, and again, sliding the completion across by the duration of the delay. Alternatively, this might be an area if you've got anything particularly complex where you need to get some extra resource, and drafting a bit of planning help so that you can really demonstrate the impact of the delay.
Jacob Austin (00:13:47) - Our case law suggests there isn't a requirement for a critical path analysis within an extension of time, and if you're able to describe what your impact has been with some clear records to show what happened and how the delaying event has prevented you from carrying out your work. And in my experience, the events that happened to subcontractors tend to be of that more clear cut nature that you should just be able to rely on, evidencing when things happened and telling the story of the event. And really, the contractor should know whether they've delayed you or not, and they should be issuing you with an extension of time, because the contractor is obligated to make a fair and reasonable assessment of what the permissible delay has done to the completion date, and therefore, what the extension of time should be. And also set out in case law, is a set of criteria that the contractor should be applying to determine the amount of extension of time that they are awarding. So to calculate a fair and reasonable award, they should be applying the rules of the contract.
Jacob Austin (00:14:54) - They should be recognizing the effects of the change or the delay. They should carry out a logical analysis in a methodical way of the relevant events that you're claiming and how they affect your program, and they should provide an objective calculation rather than some kind of subjective guess or assessment. And this. Framework gives you the clues that you need to support your own assessment. Clearly, if you're making it easy for the contractor by identifying the rule under the contract under which you're entitled to the extension, and you're then telling them what the effects of the change are and methodically laying out how it's impacted your ability to work, then you're making it easy for the contractor to acknowledge the issues and award that extension of time. And all of this ought to be done. In another letter, as I mentioned, if you send any supporting correspondence that you've got photographs, if they're relevant, provide your records with your request for more time. Do what you can do to make it easy for the contractor to agree with you and make yourself hard to argue with.
Jacob Austin (00:16:04) - Now, going back to my story, my friend had emails from the contracts manager telling them not to start on the right date, and this was the date that he now needed to start. He also had emails from the project manager saying, we've looked at everything. We need you to stop. We think you want to come back on this date, but we'll let you know in due course. And of course, due course ended up being a week later than that date. So he had all of the bullets there for him to fire to get his hand on his extension of time, but he just didn't act on it. And I would urge you not to be in the same position now as it happens. No plastering contractors were hurt in the making of this episode because he actually leaned on one of the higher ups within the organisation he was working for, and whilst he had to take a bit of short term pain, he was able to use his ill treatment on the One Project to secure another project that he was able to negotiate a little bit more fairly.
Jacob Austin (00:17:04) - And the final word before I wrap up on critical path analysis, the Society of Construction Law has produced the Delay and Disruption protocol. I mentioned that during the disruption episode, a few weeks ago. There are several different ways of carrying out critical path analysis outlined in that publication. And the thing with it is that some of them will give you a different answer to others, and do have a few copies before you start reading it, because it isn't the most thrilling of reads, and because of some of those get quite complicated. If you are really having a major issue and you think it's going to be thousands and thousands of pounds worth, it really is worth putting this in the hands of a professional planner or programmer who can hopefully digest your facts and give you something to support your claim in a matter of a day or two, and should be able to advise you on the best method of proving critical path delay. And that might just be the best money that you spend. My mission here is to help the million SME contractors working out there in our industry.
Jacob Austin (00:18:09) - If you've taken some value away from today's show, I'd love it if you'd share the share and pass on that value to somebody else who would benefit from hearing it. And of course, subscribe yourself if you haven't already. Thanks for tuning in to today's show. If you like what you've heard and you want to learn more, please do find us at QS.Zone. That's the letters Q and S, dot zone Z-O-N-E, where you can subscribe to our training support system for like minded subcontractors. In there you'll find templates, how to videos, interviews and more. And it's less than the price of a cup of coffee per day. You can cancel any time. We're also on all your favourite socials at @QS.Zone. Thanks again! I've been Jacob Austin and you've been awesome.
