August 2008

IN THIS EDITION OF THE MDA REPORT:

weather delays are not

Weather delays are generally treated in contracts as a shared risk. In other words, a contractor can get an extension of time to relieve him of the obligation of paying penalties or liquidated damages but the employer who gets his facility late and forfeits the use of such for that period, also does not have to pay any time-related and other costs to the contractor.
In addition, contracts usually anticipate some rain delays can be expected and contractors can and should make allowance for such in their pricing and programming of the contract. This time effect (for normal rainfall) is often allowed for by the use of a formula, which compares actual rain delays with the historical record of delays recorded in the same season or month at a location close to the site.
However weather delays in an extended contract period are different to weather delays in the original contract period when the contract period is extended as a result of admissible delays, for example, a delay for which the contractor can get extension of time in terms of the contract and/or perhaps some financial compensation.
Firstly, assuming the value of work done has not changed significantly, any allowance (either time or cost) the contractor may have made in his bid for weather delays in the original contract period will, in theory at least, probably have been expended. This will include time-related P&Gs as well as the impact on production (standing time of plant and other resources, clean-up operations and slow progress after the adverse weather conditions have abated). The other principle that needs to be appreciated is that, but for the previous delay, the contractor would not be in the predicament he now faces. He was delayed by some event not of his own making and which is recognised by the contract as fairly entitling him to an extension of time. The delay as a result of the weather is, therefore, the result of the original delay and such weather delay, therefore, follows the original delay. The contractor’s entitlement will, therefore, be the same as that which applied to that original delay. For this reason, it does not matter whether or not the weather was more favourable in the original contract period.
The converse is, of course, also true. If the original delay is the responsibility of the contractor, he cannot claim an extension as a result of rain because his rights to claim are governed by the original delay. The delay was of his making so the rain delay experienced during the resultant extended period is also of his making and is not admissible. This is the policy an engineer will invariably adopt. When the original (partially-extended) contract period comes to an end he will no longer recognise the rain delays a contractor is palpably suffering.

An extended period
When delays are experienced on contracts, their effect does not impact on the original contract period. Their effect extends that period and the delay duration is added onto the end of the original contract duration. This is consistent with the concept that the contract duration is inviolate. It can be extended but not reduced. When the delay duration is added onto the end of the contract duration after the original date for completion, non-working days, such as weekends, public holidays, builder breaks and the like, are taken into account. We don’t look at the original period and say that the net number of calendar days was so and so, and that is all the contractor can get. This would be clearly inequitable.
Weather delays experienced during an extension to the contract period cannot be allowed for (either their cost or their time effects) by a contractor because they come about (the extension of the contract period and, therefore, the risk of additional rain delays) as a result of something outside of his control, which allows him to claim extension of time. In principle, weather delays in an extended contract period are part of the original delay and they are actually ad hoc non-working days that arise fortuitously (rather than weekends and public holidays that we know about and can allow for in the programme calendar).

? It, therefore, stands to reason that, unless there is an express provision in the contract disallowing anything to the contrary, such weather delays as occur in an extended contract period should not be subject to adjustment using any formula that may be provided for this purpose in the contract. The actual delay should be taken into account. The duration would also include any slow production days or days spent cleaning up after severe rainstorms, for example. Since the primary cause of the delay was not weather but the original delay that extended the contractual duration, the contractor’s entitlement for the duration of the weather delay effect will be the same as his entitlement for the original delay. Depending on the terms of the contract, time-related and value-related P&Gs could be claimed on such period and on such value increases. Similarly, the standing time of plant and other resources during and after the adverse weather conditions would also be claimable.