In 1982 a Scottish soft rock band was formed named Wet Wet Wet. They are best known for their 1994 cover of ‘The Troggs' 1960s hit "Love Is All Around", which was used on the soundtrack to the film Four Weddings and a Funeral. According to their website, the band has sold in excess of 15 million singles and albums to date, featured in the official UK singles and album charts for over 500 weeks and their albums have been platinum certified 20 times in the UK alone. In other words, they know how to produce records.
What does this all have to do with construction? Well, nothing, but the ‘Tedious Link’ (a BBC Radio 1 feature between 2002 and 2012) is records and the well-known, quote of Max Abrahamson: Records, records, records[1].
The full quote reads:
“A party to a dispute, particularly if there is an arbitration will learn three lessons (often too late): the importance of records, the importance of records and the importance of records”.
Barriers to Entry (Entitlement)
A primary obstacle preventing Contractors from securing an extension of time or additional payment often stems from inadequate evidence in the form of records to substantiate its claim. The Contractor may contend that within the project's scope, it is consistently confronted with challenges stemming from budgetary constraints, scheduling conflicts, and resource limitations, with record-keeping often relegated to a lower priority in the delivery of the project. However, poor or inadequate records is not an excuse. Without regular and detailed records, it is almost impossible to substantiate your position. Consequently, even the most meticulously managed, and planned projects are susceptible to disputes, particularly those lacking comprehensive records of activities and events. It is therefore crucial that upon identifying an issue that proactive measures are taken to document any resulting impacts on planned work activities.
Document the decisions made or proposed by both the Engineer and Employer and ensure formal communication of these decisions. Maintaining a record of decisions from both sides serves as a retrospective roadmap, highlighting how these decisions, or the absence of, might have influenced the project. In addition to facilitating claims, recorded decisions can serve as a defence of your actions if the other party alleges fault.
In McAlpine Humberoak Ltd v McDermott International,[2] Lloyd LJ observed that:
“The judge [at first instance] dismissed [McDermott’s] approach to the case as being ‘a retrospective and dissectional reconstruction’ by expert evidence of events almost day by day, drawing by drawings, TQ by TQ and weld procedure by weld procedure, designed to show that the spate of additional drawings which descended on McAlpine virtually from the start of the work really had little retarding or disruptive effect on its progress. In our view [McDermott’s] approach is just what the case required.”
The burden of proof lies with the party asserting a proposition, not the party defending or denying it. To satisfy the burden of proof, the party asserting must (1) prove the alleged fact; and (2) to the standard required by the applicable standard of proof. The standard of proof being ‘on the balance of probabilities’ as per Denning J (as he was then) in Miller v The Minister of Pensions,[3] where he stated that:
“If the evidence is such that the tribunal can say ‘we think it more probable than not’ the burden is discharged, but if the probabilities are equal it is not.”
Without proper records, it is unlikely that a party pursuing a claim against another would be able to satisfy the burden of proof required.
What records should a Contractor keep?
The records that should be kept for any project will vary according to the type, complexity, and size of the project. In relation to the FIDIC 2017 editions Sub-Clause 20.2.3 [Contemporary records] states that:
“[…]“contemporary records” means records that are prepared or generated at the same time, or immediately after, the event or circumstance giving rise to the Claim.
Sub-Clause 20.2.3 goes on to state:
“The claiming Party shall keep such contemporary records as may be necessary to substantiate the Claim.”
The Contractor is obliged to keep whatever contemporary records may be necessary to substantiate the claim and, the Engineer or Employer may monitor the Contractor’s contemporary records and instruct him to keep additional such records. It is additionally made clear that any monitoring, inspection or instruction by the Engineer or Employer does not imply acceptance of the accuracy or completeness of the Contractor’s contemporary records [Sub-Clause 20.2.3. paragraph 3].[4]
Generally, the Contractor should record:
- resource name, job roles, work progress and interruptions;
- the identification of specific work activities being undertaken;
- productivity and output, recorded against working area;
- the use of any operating plant and equipment: the number of hours worked, idle or down time for repair; hire charges, setting up costs and running costs;
- information and approvals required and received;
- instructions and orders given (written and oral);
- test and inspections: when they took place and the results;
- the identification of any other delays encountered; and
- the weather conditions.
Records can also serve to illustrate impacts on both time and money. For instance, meticulously maintained daily work logs, can help demonstrate instances where a Contractor has been impeded or devoted a specific amount of time to an activity. In the case of an extension of time claim, the Contractor would also have to establish that an event occurred that impacted on an activity (or group of activities) which were on the critical path and consequently, the Time for Completion was delayed; thus, records become instrumental in assessing criticality. These records may encompass project schedules, daily logs, and progress updates.
Moreover, when seeking additional payment, it is imperative to provide details on incurred costs, including invoices for equipment procurement or rental, labour timesheets, salary records, and project accounting records etc.[5]
Record Management
A simple but effective way to manage your cost records for a delay event is to set up new billing codes in your financial systems against which your teams, sub-contractors and suppliers can record their time relating to the issue. This allows you to easily identify the period from which the issue first impacted the project to the end date in which the delay ceased.
Early management and collation of records will save a huge amount of time, and this will support any adjustment required to the programme in the form of an extension of time.
In relation to claims of a continuing effect [Sub-Clause 20.2.6] regular monthly updates are to be submitted by the Contractor and for continual assessments to made and submitted throughout the duration of the delay event [Sub-Clause 20.2.6.(c)]. The above actions will help manage those requirements and ensure that measures can be put in place to mitigate the overall impact of the issue.
Conclusion
Become a Record Producer: plan, keep and maintain contemporaneous records. Ensure that they have the necessary details to support the effects of any extension of time and additional payment claims. Without adequate records, there is essentially no contemporaneous evidence, and it is therefore almost impossible to provide a persuasive claim.
Should you require any further information, have any comments, or concerns you wish to discuss, please contact Carl at carl.simms@diales.com.
[1] Engineering Law and the ICE Contract (1965)
[2] (1992) 58 BLR 61 (CA).
[3] (1947) 2 ALL ER 372 [374A-B].
[4] Adapted from William Godwin QC, The 2017 FIDIC Contracts, 2020, pp 185-15.2.4.
[5] Adapted from Corbett & Co, Clause 20, 2021, page 17.