Construction Lawyers Darwin

"We have been very busy doing really good quality work and breaking over backwards to help the main contractor complete the project; we thought we would be paid for all our variations and for all the extra work which are just and fair. However, the main contractor is now enforcing the contract to the letter and rejecting all of our variations on the basis that we did not submit the appropriate notices in the required form and in the time specified in the contract. Is there something we can do?... if the variations are not approved we will incur a huge loss…"

A: 90% of our contractor clients come to see us asking this very same question. The short answer is that it is unlikely that something cannot be done. Although contracts specify what notice needs to be provided, in which form, under which clause, whom it needs to be sent to, and within which timeframe; either these are not strictly followed by the parties during the execution of the contract (until a dispute arises), and this creates a situation where it can be argued that the contract has been changed ‘by conduct’ and the main contractor is estopped from enforcing the contract to the letter.

In other cases where notification is required, the contract does not specify what constitutes notification, for example, does an email or minutes of meetings suffice or does it need to be sent formally to a nominated person? The bottom line is that it is common the knowledge that the courts will enforce all pre-conditions to a valid claim in the contract that you have agreed to; however, if you can demonstrate that you have somehow provided notice, there is a good chance that you will overcome the bars to recovery.

A: A subcontractor was building a new road, and during excavation discovered a pipe which was classed as an ‘unforeseen utility’. The main contractor complained that the subcontractor took over a month to notify the main contractor of the find, advise how long it would take to relocate the utility and estimate the approximate cost. The main contractor time-barred the claim because the contract provided that a notice of variation had to be given within seven days.

We were able to demonstrate that the subcontractor sent an email so the main contractor on the day of the find, that it took about three weeks to identify the owner of the utility, and that it took another four days to determine whether it could be concrete encased and left in place or had to be re-routed. The situation was one of impossibility of performance with strict notification requirements, and the earliest time that the subcontractor was in a position to advise the main contractor of the impact on time and cost of relocating the utility was a month after the find. The variation was paid.

A: Talk to us early. The first thing we do for our regular customers when they enter into a new contract is to create a flow chart which includes the steps that need to be taken to submit a valid variation. These include notification requirements, number of days before it is time-barred, decision boxes with ‘complied’ or ‘not complied’, references to the relevant clauses in the contract, and what to do in case of dispute.

The flowchart is accompanied with a number of standard template-letters, which address the requirements in the contract for a valid notification. We also provide a delay-log spreadsheet and give you instructions as to how to maintain appropriate records.This ready-made package is easy to implement by any site team and preserves your entitlements to a claim. The documents contain very straightforward and strong disclaimers that protect your rights, i.e.

At the date of submitting this Notice:

1. The delay event has a duration that is not reasonably ascertainable by the Subcontractor but is otherwise continuing in nature.
2. The delay event will have an impact on the Contractor’s Critical Path in the approved Construction Program
3. The delay will prevent the Subcontractor from achieving Practical Completion in accordance with the current program.
4. The delay is beyond the Subcontractor’s ability to reasonably control and cannot otherwise be avoided by the Subcontractor; and
5. Is not the result of an act or omission directly or indirectly caused or contributed to by the failure of the Subcontractor.

As soon as we implemented the package a PM wrote: “Good outcome. With our new reporting system I feel we should be able to go through the motions until the end when the Director will have a negotiation on his hands. First reporting will be compiled and submitted this week.”

"If the main contractor gets the impression that we are 'too contractual', they are not going to consider us for their next project."

A: This is an urban myth. It is an inaccurate perception of how subcontractors believe they will be treated by the clients they work for. Yes, warnings are given on-site and strong correspondence is usually issued to discourage subcontractors from becoming 'variation-happy', but as a veteran managers employed by many tier-one companies who attended many a board meeting, we can attest that a contractor’s listing in the tender for another job depends entirely on performance in delivering the works under the contract in the allocated period of time and to the expected quality and price, and not in the efforts contractors spent to administer the contract to the letter and secure their just entitlements. In fact, it is common knowledge amongst Directors who make tough commercial decisions, that only subcontractors who secure their entitlements can survive in this industry - they expect you to be tough, respect you for it, and in spite of all the posturing and aggression they are happy to see you grow with them.

We can also attest to the fact that many subcontractors who are afraid to raise a variation fearing they are not going to be looked at favourably, lose the chance to be appropriately compensated when the event that gave rise to the variation was (perhaps unknown to them) a client’s risk. We witnessed many such unfortunate events where representing the head contractor, we would have written a back-to-back variation to the client to ensure our subcontractors were compensated appropriately. Most head contractors look after their subcontractors and keep a good and cordial professional relationship with them.

Finally, if it is your fault, and you are delaying the project and losing you and them money, expect no mercy. But to talk to us about what we can do to help you recover or mitigate your loss.

The main contractor is executing the project on a lump sum basis and is rejecting all of our requests for extensions of time and additional cost because of our alleged lack of compliance with notification requirements. Is there something we can do?"

A: When a main contractor is executing a lump-sum contract that has gone wrong (for them) for whatever reason, it will naturally attempt to ‘share the pain’ to avoid a loss. Those are the types of contacts where subcontractors need to be extra-careful in their day-to-day administration. Once we brief the site administration team with the contracts administration flow chart described earlier and provide the letter templates, we can assist in drafting all correspondence to the main contractor.

We re-submitted the (amended) variation, but the client now says that day variation was lump-sum, and that since he already paid it, we are not entitled to amend it."

A: The determination of the value of a variations in most contracts is typically assessed in a cascading regime where the first step is for the parties to try to agree the value of their variation, the second step is to determine the value of the variation using the rates in the contract, and if none of these two steps is available (generally because the parties dispute the value of the variation) contracts typically provide that main contractors have to determine ‘fair value’.

In this case, where a variation has been priced in accordance with the schedule of rates in the contract, and the contract provides a formula to calculate the value and the party that made a mistake is entitled to correct the arithmetical error.

"We entered into a schedule of rates-based contract for the main works on a major highway, which included a detailed list of rates for detours, but we did not realize that a contract document specified that the permanent works are paid on a schedule of rates, but all temporary works were paid on a lump sum basis and were not re-measurable. The project needed eight detours, but we priced only the six in the schedule of rates. Can we claim a variation for the other two? Why were the rates for detours in the schedule of rates if these were not re-measurable?"

A: It is often the case that the design of a project and the procurement and contracting strategy starts life as a 100% schedule of rates contract but changes to a lump sum contract whole or in part. Clients do this to transfer risk to the subcontractor and bring certainty to their final cost of the project.

This appears to be the case in this example, and the schedule of rates for components of the detours was left unchanged after the change in strategy to transfer the risk for detours to the subcontractor had taken place. This obviously confused the subcontractor’s estimating team who priced the rates and failed to interpret the change in the contract terms correctly.

However, in this case, the order of hierarchy of documents in the contract dictated that the schedule rates (which still had a statement dictating that all detours were re-measurable), had higher hierarchy than the standard conditions where the detours had been changed from re-measurable to lump-sum. We were able to demonstrate that regardless of what the standard conditions said in relation to the detours being lump-sum, these were specified as re-measurable in a document of higher hierarchy. The courts interpret the contract against the drafter, and we were able to assist the contractor and recover the costs for all eight detours.

A: This short-question typically arises when month after month Payment Schedules have lower value than Progress (Payment) Claims. You may try sending payment reminders and claiming the unpaid amounts on subsequent Progress Claims. If it comes to the point when finances are tight and you need to do something more, Letters of Demand certainly do not work (in construction) and you have to instead consider the dispute resolution provisions in the contract, adjudication under the Building Industry Fairness (Security of Payment) Act 2017 (SOPA), or take your claim to the courts.

The NT Security of Payments Act is our recommended first step. The NT SOP Act is designed to provide effective, efficient, and fair processes for securing of progress payments. Also bear in mind that you do not have to follow the dispute resolution process in the contract because NT SOP Act is the law. We actually recommend going straight to adjudication under the Act and then come back and use the dispute resolution processes in the contract to increase your overall recovery if adjudication was not wholly successful.

A: The signs are always clear in the notices, Payment Claims or Schedules, minutes of meeting, discussions and general correspondence. You need to keep good site diaries, get the other side to sign them every day, track and update your schedule and issue it every month.

If you are a Main Contractor, do not elevate the discord by rejecting and disputing ‘everything’, claim or approve what is fair and limit your team to disputing what is not.

Get a contract review, even the more seasoned contract or commercial managers misinterpret the contract. We just reviewed entitlements for a company who has a panel agreement with a government organisation who greatly misunderstood the method of payment and determination of the prices in the schedule for banded rates, i.e. the quantities were measured ‘on completion’ of a work order, and if the variations put the entire works in a lower band, the final value of the entire contract was re-calculated and adjusted. The contract’s manager was under the impression that completion of an item of work in the work order instead of all items in the entire work order triggered the setting of the applicable rates in the band.

Above all, do not make it personal. It is unfortunate when one gets to see a huge amount of money spent on legal fees, which at times are well above the value of the claim, because at the heart of the dispute two people chose to not get along.

A: Perhaps. We are “true” ‘construction lawyers’. All lawyers are allowed to adopt the moniker ‘construction lawyer’, even if they know nothing about actual construction. These ‘construction lawyer’ create unrealistic expectations (and further loss) for their clients by pursuing claims while oblivious to the fact the claims they are pursuing are invalid and unwinnable.

We wrote on 18 September 2021 the below in reply to a so-called ‘construction lawyer’, who is probably unaware of the fact she is pursuing an unwinnable claim. All the red flags for you as a client are there, her claim evolved from ‘unlawful termination’ to ‘my client did not read the contract’, and even includes ‘we acknowledge the claim contains errors and some the personnel in the claim did not attend the site’:

“The contract your client signed without reading is legally binding. The costs claimed are both unsubstantiated and unreasonable. The excuse that the alternative 25 Ton excavator provided by your client on the night was accepted by our Client is just nonsense. Our Client had no choice, it either accepted the alternative excavator your client turned up with or no work would be carried out in a night where detours and traffic police were in place waiting for your client to excavate the stormwater trench, which he was unable to excavate anyway because (a) the alternative 25 Ton excavator was too big and (b) his personnel were not inducted. Your client carried out no work at all, and my Client obtained no benefit that he may be liable to pay for even in contract, in tort or in equity; on the contrary, my client was embarrassed by your client’s lack of professionalism and breach of trust relating the agreed 14 Ton excavator, lack of inductions of personnel and had to take remedial action at its own expense”.

We can explain your case quickly and inexpensively because we are engineers and builders too, we rarely ever need to approach ‘experts’. We can review the technical merits of any claim, and because ‘we do really know construction’, we can see if your delay claim has merit because we track progress ourselves for many clients and use P6. We do advise our clients that their claim may not be meritorious before they spend any money on us (legal fees) and/or in litigation. We wrote this the next day after dealing with the 25 Ton excavator saga:

“We reviewed your invoice No 031, the contract, and the recommendations of the Royal Institute of Quantity Surveyors (RICS) in relation to the rules of measurement of fill material and common practice in relation to your dispute, and regret to inform you that it is unlikely that you will obtain a favorable outcome either in adjudication or the courts. Both the Contract, and RICS Rules of measurement for earthworks tell us that the quantities from the drawings are (a) bulk before excavating or (b) net measuring the void to be filled. This means that in both cases the contract and the RICS rules tell us that payment is on net quantities, or in situ and compacted and without the additional bulking factor claimed in Invoice No 031.”

But when we take on a matter we are typically hugely successful. Below is an excerpt of an adjudication decision issued in September 2021. We prepared the adjudication application, payment claim 11, the accompanying chronology, a delay analysis and cost breakdown fully in-house.

“Accordingly, I have decided the correct valuation of delay damages incurred due to the suspension is under clause 34.4. The Claimant has provided its detailed breakdown of the costs of suspension in payment claim 11. The Respondent has only rejected the Claimant’s entitlement to delay damages and has not challenged the quantum of that claim. I have compared the costs to the provisions of the Contract and, prima-facie, the costs are the type of cost that I would expect claimed. Accordingly, as detailed above, I find in favour of the Claimant and value the work at $186,900.85 including GST. In the context that I decided above that the Claimant is entitled to an extension of time, the Respondent’s claim for liquidated damages must fail.”

A: Most certainly. We typically propose that acceleration proposals be instructed as a direction to accelerate the work under the contract and paid as a lump-sum variation with amounts included on payment claims made on agreed dates rather than measure of completed works, i.e.September (30%), October (30%), November (30%) and December (10%).

Below is a snapshot of a simplified offer we completed for a client in September 2021:

The proposal included an acceleration schedule for a remote site in the NT, an implementation plan and a list of deliverables. The financial proposal included incentive payments for personnel for extended swings, project completion payments, and wage increases, most of which we suggested. Of course, when acceleration is implemented, production rates decrease sharply and this is taken into account in the calculation of costs and when preparing the schedule.

This same process of analysis is followed when constructive acceleration has been instructed by clients.

Parallel delays are delays that are the sole responsibility of one party regardless of whether they affect the critical path, they should not be confused with concurrent delays where the responsibility for each delay rests with a different party.

Delays that fall on the same section of the critical path and one delay impacts the other, i.e. design delays where the contractor delays the submission of shop drawings and the Engineers take longer than allowed in approving.

A true concurrent delay is the occurrence of two or more delay events at the same time, one a Client’s risk and the other a Contractor risk, and the effects of which impact the critical path at the same time.

The Contractor delays the works deliberately due to the Client’s delays in critical areas. This is useful as a mitigation measure of the Client’s loss and is made with the purpose of keeping pace with the Client’s revised schedule.

A: It depends on where you are in the timeline for execution of the project and what documentation you have gathered. Separate delay events into excusable and non-excusable, compensable and non-compensable and then analyse the data and its effect on the schedule.

We use Impact as Planned Analysis for prospective delays when we are aware that the project will be delayed and the project is still in execution. We use this method to commence claiming delay costs early and progressively each month when we know that (a) the end date has already slipped and (b) the client has accepted this fact and has revised his overall schedule. We cannot use this method if the client does not recognise or ignores the delay has occurred (at least on paper) so we request EoTs and claim against them.

As-Planned vs As-built is the most effective method to substantiate a claim because we can compare what we planned at the outset vs what occurred during construction. It leads to robust claims, except that the claim can only be submitted at the end of the project. It is a great tool for delays that occurred at the last possible minute but ineffective for projects of long duration where claims need to be lodged progressively as EoTs and cost variations with each progress claim.

We view time slice and windows analysis as the only option for a poorly administered contract. In essence we are presented with schedules that were delayed by multiple events and since the contractor kept no data for each delay event, we say ‘in this time-period (the time slice or window), we were affected by each of these events, we were delayed by so long, and our cost is $$’.

These claims end up creating a lot of debate as they are argued as a matter of opinion of the delay experts as to how the site and schedule data needs to be interpreted. Arbitrators and Judges have a hard time understanding the arguments from each side and typically, there is no hard evidence to substantiate the claim. Success depends on expert opinion rather than hard data.

Even meritorious claims are at times unsuccessful due to the lack of solid evidence. Statistics prove that less than 20% of these claims are successful. Yet, given that some of our clients come to us late, well after the delay events occurred and the data needed is unavailable, we do offer windows analysis and produce the more robust analyses linked to pricing, manpower, procurement and equipment.

The collapsed as-built is a complex method, it cannot be used prospectively, it is therefore rarely used.

A: Definitely not. In our experience most planners are accustomed to working on one piece of software and using one delay analysis method. He who works on Primavera loathes Ms Project and vice versa, and those who are accustomed to analysing delays using time slice or windows analysis will not have a bar when asked to develop an as planned vs as built schedule.

When it comes to windows analysis, the problem is that windows have to be analyzed consecutively, and it is only after a window is cleared and the corresponding delay established that the next window can be analysed. If you are not able to supply delay breakdowns, each ‘guessed’ delay in a window builds up on the errors of the previous one, and the errors are compounded exponentially by the time you are on the sixth window. Your claim becomes a (poorly substantiated) global claim. We refuted quite a few when defending, showing that they had no basis. In simple terms, global claims translate as ‘I did not keep any evidence, but I was delayed and I am losing money, so we might as well try’... hence the less than 20% success rate.

When it comes to delay analysis we are engineers/planners who first decide the most appropriate method for presenting our case based on what evidence you have, and then we engage the appropriate planner with the required skills to develop a schedule analysis that will present your claim in the best light. If we have no choice but to present a global claim based on a windows analysis, rest assured that your chances of success will be much greater than 20%. We will be fair in our assessment of your chances when advising you, we prefer to not take on commissions where our chances are below 50% unless you want to use the analysis solely as a negotiating tool, our reputation and your repeat business is important to us.

A: We will prepare the normal P3, P6 or Ms Project analysis with 500 to 15000 activities so we can hand it over to an independent expert, but we will also prepare simple to comprehend graphs which represent the events and data so that non-experts can comprehend the issues and make informed commercial decisions:

A: Absolutely, we produced finance-ready packages for board approval for many projects, complete with packaging, procurement and contracting strategies. Below are some of the slides we produced for Iron Road, where we approached the SA government, Port Authorities, completed a MOU with Thiess and Parsons Brinkerhoff for the development of the entire project: