Actualités

Mitigation

EXPO 2020 in Dubai is fast approaching. The immovable deadline for this incredibly important event for the UAE will put significant time pressure on all those involved, especially on contractors who will have undoubtedly faced delays and other challenges during construction.

In the fifth of a series of articles in the lead-up to EXPO 2020, Driver Trett’s Daniel Weller looks at mitigation; the obligations it places on a contractor, and how complying with these obligations can help actively manage delay, whilst securing the contractor’s entitlement to an extension of time or disruption under the contract. 

Mitigation is the act of making a condition or consequence less severe; in the context of a construction project, it generally refers to the measures taken to reduce the impact of an event that is causing or will cause delay, disruption or financial loss. 

Failure to mitigate is commonly pleaded as a defence or partial defence to a claim for delay or disruption[1].  Contractors, therefore, need to be aware of their obligations to mitigate delays and other losses so as not to vitiate contractual entitlement. 

The extent and nature of these obligations are also of importance to the employer who may wish the contractor to recover delays against the programme but be unsure whether additional funds need to be allocated to the recovery of the delays.

The first point of reference regarding the contractor’s obligation to mitigate is the conditions of contract.  Standard forms of contract will generally include a clause requiring the contractor to mitigate its own delays.

Mitigation is not a term explicitly used in the FIDIC suite of contracts.  The 2017 Red Book includes Sub-clause 8.7  ‘Rate of Progress’ which provides that the engineer may instruct the contractor to submit a programme describing the revised methods which it proposes to adopt in order to expedite progress, if the contractor has fallen behind programme or is too slow to achieve the ‘Time for Completion’, other than as a result of a cause which entitles the contractor to an extension of time under the contract.   

Unless notified otherwise the contractor is required to adopt these revised methods at its own risk and cost.

The contractor may also have a duty to mitigate the effects of an employer delay.  The Society of Construction Law (SCL) Delay and Disruption Protocol, 2^nd Edition regard this as a general duty[2]; albeit one which does not extend to requiring the contractor to expend additional resources unless expressly stated by the contract.  The contractor must take reasonable steps to minimise the employer’s loss and must not take unreasonable steps that increase that loss.

FIDIC contracts do not generally place this obligation on the contractor, though the typical forms of contract adopted in the UAE are often amended to include terms to this effect, or even to the more onerous position which may require the contractor to expend additional resources and cost. 

Even if the contractor is not required to expend additional resources and cost, it is a common requirement for the contractor to be required to notify the engineer when mitigation measures are available but require additional expenditure.  The engineer may then instruct, subject to the employer’s agreement, the contractor to proceed with the mitigation measures at an additional cost to the employer.  Failure to comply may be reflected in any subsequent extension of time award. 

So, how can contractors ensure compliance with their contractual obligations, help mitigate delay and loss, and secure their entitlement to an extension of time or disruption under the contract?

1. Condition precedent clauses such as notice provisions and detailed particulars should be fully complied with.  This will provide appropriate opportunity for both the employer and contractor to identify appropriate mitigation measures;
2. The contractor should have a clear understanding of the extent of its obligations; whether they extend to mitigating the employer’s delay, and if so, the precise nature of that obligation;
3. Mitigation measures should be recorded at the time they are undertaken in programme updates, weekly or monthly reports, and a letter to the engineer;
4. If there are no mitigation measures available when a delay or loss is identified this should also be recorded.  It is common for supposedly available mitigation measures to be identified in hindsight, despite not being feasible at the time of the event;
5. Likewise, the contractor should record any potential mitigation measures that were considered, but not regarded as feasible and the reasons why;
6. Additional resources employed should be accurately recorded and relate to the specific event causing delay or loss;
7. Contemporaneous records relating to the cost of the mitigation measures undertaken should be maintained.  Again, specific to the event causing delay or loss.

If you wish to have a no-obligation discussion with one of our highly experienced consultants to discuss assistance around the administration of your contract, or assistance and advice specifically in respect to contractual issues you are facing please contact dubai@drivertrett.com or call +971 4 453 9031