The importance of time in construction contracts

Time is an interesting concept. At its fundamental level it is used to describe the continuing progression of a sequence of events. Its precise definition might vary depending on whether you are looking at it from a religious, philosophical or scientific standpoint. Roland Finch looks at it from a construction point of view.

Time for completion

One of the first questions anyone asks when considering having building work done is: “How long is it going to take?”

As with all things, it is important not to take too long, or conversely, to allow too little time. There are consequences attached to both.

Time for completion is an important concept in contracts. When a time limit is attached to an obligation under a contract, failure to complete that obligation within the time prescribed is usually a “material” breach of contract and the other party may be entitled to damages. If no time obligation is added, then the default position is usually that the allowance has to be reasonable, or in some cases time is said to be “at large” and it is not considered relevant.

Of course, there are a number of reasons why the work has been delayed, and it is not always the contractor’s fault. Hold ups can be caused, for example, by the client failing to provide information at the time that they agreed to provide it or by not allowing access. Building materials may not arrive at the time they were expected, or other unforeseen events could occur that delay the work.

So if the contractor doesn’t (or it looks like they won’t) finish the work by the agreed date, the contract will often have a couple of mechanisms for dealing with it.

First of all, the contractor may be able to get the completion date changed. This is typically referred to as an “extension of time”, although different contracts have their own name for it. Essentially, the contractor makes an application, setting out the reasons and, if the other party agrees, the date can be changed.

Inevitably, this process can be long and complicated, especially where there are multiple causes for delay, or it is argued that a delay to one part of the work has no impact on the overall completion of the remainder. The courts regularly deal with disputes of this nature, especially where there is a lot of money involved, and because each contract may have a different methodology, sometimes the causes and effects can be very difficult to understand and resolve.

Perhaps the contractor hasn’t progressed as quickly as they should, or they have gambled on the weather being good and it is not.

Time limits

As you can imagine, having too little time leads to difficulties. The Construction (Design and Management) Regulations 2015 (CDM) place a duty on clients (as defined) to ensure that “sufficient time and resources are allocated”. So, in theory, a client who wants work carried quickly may be in breach of their statutory obligations if they don’t give due consideration to the need to carry it out safely.

One thing perhaps to note is that the caveat under CDM is that everything should be “reasonable” and “proportional”, and this is usually subjective, in contrast to an “absolute” contractual obligation which may be much more precise.

A different time-related issue is communication. Most contracts will have provisions relating to things like notices, instructions and certifications. In many cases, these will have a time limit — and in the case of payments, there may be a statutory timescale. The Housing Grants, Construction and Regeneration Act 1996 (as amended) requires that applications for payment, and their associated payment procedures, must take place within a regulated timescale, and the consequences for not doing so can be harsh.

In principle, if the client fails to challenge the contractor’s application within a certain period of time, then the amount shown on the application can become the sum they are obliged to pay in full, regardless of whether it is correct or not. This has been the source of much argument over the years, although the courts have generally supported the principle, however unfair it is perceived to be.

Other notices which include a time limit include things like the aforementioned extension of time, notice of termination, and requests for instructions or information, as well as completion and making good of defects certificates. In some cases, the applicant will lose the right to any restitution they may have been entitled to simply by failing to issue the application in time.

Finally, and perhaps most importantly, is the statute of limitations. This is the legal doctrine which sets out time limits for taking legal action for breaches of the contract. This is usually expressed in years, but the start and expiry date of the period can vary depending on the type of action and the way the contract is signed.

How to calculate the time for a construction project

If we know when something starts and how long it is supposed to take, then it should be easy to calculate the dates. Yes, if we know what the rules are for counting. Most standard contract forms have methodologies for calculating time, (or reckoning periods, as they are sometimes called).

If a notice period is expressed as a number of days, it should say whether this is “working” days or includes weekends and bank holidays. However, it’s not always clear what time of day the period extends to. In our increasingly global 24-hour society, does a notice issued at 6pm on one day expire at 5.59pm on the appointed day, or midnight of the day before?

Contracts regularly specify periods in months or years but these are of variable length, so a rule is needed to govern that, too.

The method of delivery needs to be considered; depending on the type of communication, the date of delivery can vary. A contract acceptance can be deemed to have taken place when a letter is posted, not when it is received, for example; while separate rules govern delivery by fax, email, and registered post — and even oral instructions.

Conclusion

Time, as Einstein once observed, is relative. He postulated that there may be many simultaneous time scenarios, where different actions and results may be observed.

This was perhaps illustrated in the late 1500s, when the Catholic Church decided that a revised calendar was needed to correct some errors and bring it back into line with changes in the seasons. However, protestant England and its colonies did not recognise the new (Gregorian) calendar and stuck with the existing (Julian) one. The result was for over 150 years, England and the rest of Europe (including Scotland) had different calendar dates, roughly 11 days apart.

Also, the Gregorian year starts on 1 January, whereas the English “Civic” calendar, based on the Julian one, began on 25 March. These were referred to as “old style” and “new style” dates and are referenced on many legal documents of the period. This is also one of the reasons the UK tax year begins on 6 April, once the differences were sorted out by Parliament in 1750, and resulted in a standard for calculating Easter that confuses us every year.

Despite all that, business went on as usual. It proves that as long as we have rules to follow, we can manage. So as always, make sure you read the rules in your contract and follow them.

And do it all in good time.

Roland Finch BSc. FRICS ACI Arb. is a technical author for the National Building Specification (NBS), specialising in preliminaries. The views expressed here are those of the author and should not be taken as representing either NBS or RIBA Enterprises Ltd.