Do you re-align the Contract Prelims when there is a delay to the Completion Date but no Extension of Time has been granted?

Asked 2 years ago

2021-04-08 10:26:14

It's quite interesting to see how many people actually realign the time related prelims in the Contract, when the Contractor or Sub-Contractor state that they will not achieve Completion by the Contract Completion Date and no extension of time to the Completion Date has been granted.

A helpful guidance note from the RICS provides two methods for valuing preliminaries when the contract is in delay in its guidance note "Interim Valuations and Payment, 1st Edition" effective 12--Nov-2015 [attached below and in the Construo Resources, Advice guides section].

It is suggested at paragraph 3.9 by the RICS that the following method should be adopted when there is a delay of 10 weeks on an overall contract period of 100 weeks and 50 weeks has elapsed:

Method 1:

The period of culpable delay is deducted from the time elapsed to date when assessing time-related preliminaries.


50-10 x time-related preliminaries = 0.40 x time related preliminaries

100

I have come across a few people who were unaware of this guidance note so thought it would be helpful to upload here as you need to be careful that you do not overpay the Contractor or the Sub-Contractor, since if that firm subsequently becomes insolvent or there is a termination of the Contract, you may be asked some difficult questions.

I do recognise there is a balance to play with cash flow, good relations and getting the project over the line, but being careful in this regard is fundamental.

Are you aware of this guidance note and if so, did you follow it?
Or did you devise your own method of valuation and if so, what is the method that you used?

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Andrew Crawford
Andrew Crawford
Director at CAP X SOLUTIONS LTD

Asked on Thu, Apr 8, 2021 10:26 AM

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