Article 36 Commencement, Time to Taking-over and extensions of time

The purpose of the time provisions

36.1 The purpose of the time provisions is to ensure that the Subcontractor is afforded adequate time to complete the Subcontract Works, given the time in which it originally agreed to complete the original scope of work, and that the Main Contractor is assured both of a predictable completion Date and retains the right to impose Delay Damages if the Subcontractor completes the Works or any Section of them after the Time to Taking-Over as adjusted under the Subcontract. It is normally preferable to reach contemporary agreement on extensions of the Time to Taking-Over.

Start Date

36.2 Unless otherwise agreed, the first Day of the Time to Taking-Over is calculated from the Day after the Start Date.

36.3 Unless otherwise agreed, the Start Date shall be determined as follows:

  1. It is a pre-condition to the commencement of the Subcontract Works on the Start Date that (i) the Subcontractor has received possession of such Sections of the Site as are required and the Notice to Proceed, and (ii) the Main Contract Start Date has occurred.
  2. The Main Contractor shall issue to Subcontractor the Notice to Proceed in the form set out in an Appendix (if any) or in a letter identifiable as the Notice to Proceed, once it has received (if applicable) the Subcontractor’s performance guarantee.
  3. The Day after which the requirements of Articles 36.3(a) and 36.3(b) have been met shall be referred to herein as the Start Date.

If the conditions of Articles 36.3(a) and 36.3(b) have not been satisfied six months after the Subcontract Date, each Party shall have the right to terminate this Subcontract at any time by 14 Days’ notice to the other Party. Where the termination occurs as a result of a failure on the part of the Subcontractor to provide the agreed performance security (if any), the termination shall be deemed for fault of the Subcontractor and the Main Contractor shall have the entitlements provided for in Articles 57.15 and 57.16.

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Extension of the Time to Taking-Over and additional Costs

36.4 Provided not caused by any wrongful action or omission on the part of the Subcontractor, the Subcontractor shall be entitled to an extension of the Time to Taking-Over and, where applicable, additional payment subject to Article 36.5 for the whole of the Subcontract Works or for any Section of them if it is or will be delayed either before or after the Time to Taking-Over by any of the following causes:

  1. a cause of delay giving an entitlement to extension of the Time to Taking- Over, including an event of Force Majeure, and, where applicable, additional Costs under any Article;
  2. any suspension by the Subcontractor to which it is entitled under the Subcontract, or any suspension, delay, impediment, default or breach of the Subcontract by the Main Contractor or its agents or any activity, act or omission of the Employer or any other contractors employed by the Main Contractor or the Employer preventing the Subcontractor from proceeding efficiently with the Subcontract Works; or
  3. any action or inaction of third parties (including, without limitation, public authorities) that the Subcontractor has not reasonably been able and could not reasonably be expected to prevent.

36.5 If the Subcontractor intends to assert an entitlement to an extension of the Time to Taking-Over under this Article 36, the Subcontractor shall give a Notice to the Main Contractor of such intention as soon as reasonably practicable after the Subcontractor has become aware of the event giving rise to the delay and/or any other likely additional payment claim(s). Repeated Notices are not necessary where it is reasonably obvious that the event has or may have a continuing impact.

36.6 Where practicable, the Subcontractor shall keep such contemporary records as may be necessary to substantiate any assertion of entitlement to an extension of Time to Taking-Over. The Subcontractor shall permit the Main Contractor to inspect all such records, and shall provide the Main Contractor with copies as required.

36.7 Within 28 Days of the Subcontractor giving Notice as set out above (or such other period as may be agreed with the Main Contractor), the Subcontractor shall submit such further details of its application (if any) it considers necessary to demonstrate its entitlement.

36.8 The Main Contractor has an obligation to assess or agree appropriate extensions of time as soon as any Notice has been received and, in any event, not later than 59 Days after receipt of any Notice (unless a different period of time is agreed). Alleged failures to give sufficient details or other supporting information may be grounds for not giving the full extension requested or no extension at all, where e.g. because of the Subcontractor’s failure the Main Contractor’s entitlements under the Main Contract have been or are likely to be jeopardized. If the Main Contractor decides that in fairness no extension should be granted, it must immediately inform the Subcontractor at the time the decision is made. In all cases, the Main Contractor must consult with the Subcontractor about the right to, and/or length of, the extension. In all cases, the Parties should attempt to agree on the result of the Notice.

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36.9 If practical, the Subcontractor's entitlement to compensation (if any) for Costs arising from any extension of time shall be negotiated at the same time as the extension of the Time to Taking-Over.

Direction to reschedule

36.10 Where the Subcontractor’s rate of progress on the Subcontract Works is too slow to ensure Taking-Over of the whole of the Subcontract Works within the Time to Taking-Over, the Main Contractor may order the Subcontractor to revise its Time Schedule or Method Statement to show accelerated activity and/or resources leading to completion within the Time to Taking-Over as it then stands. If the Main Contractor is later shown to have been incorrect in its assessment, the additional Costs incurred by the Subcontractor (if any) will be payable as a Variation.

36.11 Upon request by the Main Contractor for purpose of reassessment based on Article 36.15 of the Main Contract, the Subcontractor shall provide such information as may reasonably be required by the Main Contractor. If so required by the Main Contractor, the Subcontractor shall take such part in such reassessment as is reasonably appropriate. The Main Contractor shall provide to the Subcontractor details relating to the Subcontract Works of any reassessment that has taken place under the Main Contract.

36.12 Extensions of time can be agreed, determined or instructed before or after the Time to Taking-Over as originally scheduled.

Article 37 delay damages

37.1 Delay Damages are payable by the Subcontractor if the Taking-Over occurs after the Time to Taking-Over.

37.2 If the Subcontractor fails to complete the Subcontract Works or any Section within the Time to Taking-Over as adjusted under the Subcontract, then the Subcontractor shall pay to the Main Contractor the relevant sum (if any) calculated in the Subcontract as Delay Damages for such default and not as a penalty (which sum shall be the only monies due from the Subcontractor for such default and any other consequences of the delay) for every Day that shall elapse between the Time to Taking-Over as adjusted and the Date specified in the relevant Taking-Over Certificate(s), subject to the limit stated in an Appendix (if any). The Parties agree and acknowledge that the value of the Delay Damages so to be paid is estimated here by the Parties because of the difficulty of ascertaining accurately the exact amount of damage prior to the occurrence of any delay.

37.3 If no rate or rates of Delay Damages are stated otherwise in the Subcontract, the rate of Delay Damages 11shall be 0.3% of the Subcontract Price agreed upon signature of the Subcontract or if there is a delay to a Section or some Sections only, 0.3% of the value that the Section or Sections delayed bears in proportion to the value of the whole of the Subcontract Works for each complete seven[Page48:]Day period of delay up to a maximum of 10% (ten percent) of the Subcontract Price agreed upon signature of the Subcontract. Subsequent amendments to the Subcontract Price will not be taken into account in calculating the rate of Delay Damages or the maximum amount of the Delay Damages.

37.4 The payment of such Delay Damages shall not relieve the Subcontractor from its obligation to complete the Subcontract Works or from any other of its obligations under the Subcontract, but shall be in full discharge of the Subcontractor's liability for delay in Taking-Over and any other losses related to that delay. Such Delay Damages shall be the sole and exclusive remedy for late Taking-Over.

37.5 If so agreed, where the Employer takes over, uses or occupies (whether or not acknowledged as Taking-Over) Sections of the Subcontract Works, Delay Damages, if payable, shall be reduced in the proportion that the value of the Section so taken over, used or occupied bears to the value of the whole of the Works.

Article 38 schedule of subcontractual dates, time, schedule and reporting progress

38.1 Agreement on the important stages of performance of the Subcontract Works and monitoring/reporting progress (and problems) are important aspects of turnkey projects. However, it is in the Subcontractor’s legitimate interest to manage progress in the most efficient fashion for its organization. Nonetheless, the Subcontractor undertakes to perform the Design and the Subcontract Works in accordance with the Subcontract and also the Schedule of Subcontractual Dates as set out in an Appendix (if any).

38.2 The Schedule of Subcontractual Dates, if any, shall contain:

  1. the Start Date set out in an Appendix (if any) or otherwise agreed;
  2. the Dates by which each stage of the Design will be provided by the Party responsible for it;
  3. the Dates by which each of the permits set out in an Appendix (if any) will be provided by the Party responsible for it;
  4. the Date(s) on which the Subcontractor will be given possession of the Site or parts thereof;
  5. milestone Dates (if any);
  6. the Date(s) of Completion of the Subcontract Works, or Sections of the Subcontract Works, including the Dates of any Performance Tests; and
  7. the Date(s) of Taking-Over of Sections of the Subcontract Works in respect of which a separate Time to Taking-Over has been provided in the Subcontract (or otherwise agreed) and the Date of Taking-Over of the whole of the Subcontract Works.

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38.3 The Dates set out in the Schedule of Subcontractual Dates may be amended by agreement of the Parties or application of the extension of Time to Taking-Over provisions of this Subcontract.

38.4 The Subcontractor shall normally, unless otherwise agreed, prepare a detailed program for performance of the Subcontract Works and their interrelationship by using the critical path method or such other method/schedule as agreed (the “Time Schedule”). The Subcontractor shall submit the Time Schedule to the Main Contractor not later than one month after the Start Date. The Time Schedule shall be updated monthly thereafter as part of a monthly progress report to reflect any changes to the Time Schedule. The Main Contractor shall be entitled to comment on the Time Schedule and any update thereof and the Subcontractor agrees to consider in good faith any and all comments made by the Main Contractor.

Article 39 progress reports

39.1 Unless otherwise agreed in writing, monthly progress reports shall be prepared by the Subcontractor and submitted to the Main Contractor. The first report shall cover the period up to the end of the first month following the Start Date. Reports shall be submitted monthly thereafter, each within 5 Days after the last Day of the period to which it relates.

39.2 Reporting shall continue until the issue of the last Taking-Over Certificate for the Subcontract Works.

39.3 The progress reports should be suitable for monitoring the progress of the Subcontract Works. Unless otherwise agreed each report shall include:

  1. charts and adequately detailed descriptions of progress, including each stage of Design, Subcontractor’s Documents, procurement, manufacture, delivery to Site, construction, erection, testing, commissioning and trial operation;
  2. photographs showing the status of manufacture and of progress on the Site;
  3. the details of the deployment of Subcontractor’s Personnel and Equipment;
  4. safety statistics, including details of any hazardous incidents and activities relating to environmental aspects and public relations; and
  5. comparisons of actual and planned progress, with details of any events or circumstances that may jeopardize Taking-Over in accordance with the Subcontract, and the measures being (or to be) adopted (if any) to overcome delays.

39.4 The progress reports will be prepared and understood as evidence of the Subcontractor’s position on the state of actual completion of the Subcontract Works at the time the report is made. If the Main Contractor disagrees with any of the contents of a report, this disagreement will be recorded in a Notice to the Subcontractor within 14 Days of the Date of the report, otherwise it will be considered for all purposes to be agreed.

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These figures normally vary from industry to industry and depending on the type of Project, and its individual circumstances. These figures are inserted for certainty, but should be subject to specific negotiation.