PAM 2006 - CLAUSE 23 (EXTENSION OF TIME)

The principle purposes of this clause are namely:

o To retain as far as practicable, a defined time of
completion for the contractor to work towards in order to
meet his obligations under the contract;
o To preserve the employer’s contractual rights to
liquidated damages against acts of prevention; and
o To give the contractor, as part of the balancing of risks
between the parties, reasonable relief from his strict duty
to complete on time in respect of delays caused by certain
permitted “neutral events” such as force majeure”,
exceptionally inclement weather, civil commotion,
strikes, etc

The inclusion of this clause is basically for the benefit of not only
the contractor but also the employer

- The benefit to the contractor of an Extension of Time is only

to relieve the contractor of liability for damages for delay
(usually Liquidated Damages) for any period prior to the
extended contract completion date

- The benefit of Extension of Time to the employer is that it

establishes a new contract completion date, and prevents
time for completion of the works becoming “at large”

Clause 23.1

- This clause deals with the inception stages of an extension of

time claim, ie the contractor’s decision to tender a claim or
otherwise, his notification of the same to the architect and
his subsequent application/substantiation of the claim in
question

- The contractor must make a decision whether he has a

contractual basis to pursue a claim for extension of time

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- The credible evidence that he can based on are:
o The completion of the works is actually delayed; or
o The completion of works will be delayed; and
o The cause(s) of the delay is or are one or more of the
Relevant Events stated in Clause 23.8

- If the delay to the progress of works has no impact on the

Completion Date, the contractor may be able to claim for
disruption but not for extension of time

- Clause 23.1(a) requires the contractor to give to the architect

a written notice of his intention to claim for extension of
time

- The minimum contents of the notice shall include:

o A statement on the contractor’s intention to claim for
extension of time; and
o An initial estimate of the extension of time that he
requires; and
o All particulars of the cause of the delay

- The maximum period for the notice to be send has been

prescribed as 28 Days from the date of AI, CAI or the
commencement of the Relevant Event, whichever is earlier

- The giving of the notice is a mandatory requirement for the

entitlement of the EOT

- Clause 23.1(b) states that if the contractor is not able to meet

the prescribed 28 Day period and he require more time, he
has to officially apply to the architect in writing for an
extension with reasons to support his application

- “All particulars” as stated in this clause include such

important matters as programme analysis, event analysis,
resource analysis, comparative analysis, time impact
analysis, reprogramming analysis, etc and contemporary
records

- If he defaulted in submitting the particulars then the

contractor is considered to have waived his right to any
extension of time

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Clause 23.2

- This clause requires the contractor to send to the relevant

nominated sub-contractors, a copy of the written notice that
he has given to the architect

- The default by the contractor may have serious contractual

ramifications on the nominated sub-contractors involved

Clause 23.3

- The architect is required to thoroughly review the

submissions of the contractor and make a decision whether
the particulars submitted are complete and sufficient for him
to proceed with the assessment

- The architect is obliged to undertake the following:

o To identify the deficiency that he requires the contractor
to remedy;
o To notify the contractor to provide such further
particulars as he has identified in item above;
o To require the contractor to submit these particulars as
above to him within a prescribed period

- The minimum period that the architect can prescribe must be

28 Days

Clause 23.4

- This clause deals with the assessment of the contractor’s

application for extension of time under clause 23.1 and the
architect’s decision on the fate of the application

- The architect will need the input from the other relevant
parties such as the QS, engineers and other consultants
involved in the contract before he make the important
decision for EOT

- The architect must act fairly and reasonably in assessing the

contractor’s application as any default in this obligation may
affect the certificate issued by him

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- The architect should undertake a number of preliminary
checks such as:
o To establish matters such as the occurrence of the delay
as alleged;
o The relevancy of the submissions made;
o The accuracy of the information submitted;
o The evidential value of the submissions made can
substantiate proof of entitlement;
o Whether the event in principle entitles the contractor to
an extension of time as claimed

- The followings are the prevailing principles that must be

taken into consideration in assessing the contractor’s
entitlement for EOT:
o An extension of time can only be validly granted if the
procedures laid down in the contract are strictly followed;
o An extension of time can only be validly granted in
respect of an event as expressed in the contract as
‘relevant events’ and which has delayed or is likely to
delay completion;
o The delay must be affecting an activity or activities that
are on the critical path i.e one that is having ‘little or no
float’ that cannot be delayed without affecting the others;
o The ‘net effective’ delay must be assessed based on the
contractor’s approved work programme and the
interdependence of the operations of the work in relation
to the whole of the works. Consequential delays must
also be considered;
o In assessment, a logical analysis and not a mere
impressionistic must be undertaken in a methodical way
of the impact which the relevant matters had or were
likely to have on the contractor’s planned programme;
o The overriding requirement is as to the satisfaction of the
‘Fair and Reasonableness’ on part of the assessor

- It is advisable for both the contractor and the architect to

employ common techniques for time and delay analysis in
the application for EOT and its subsequent assessment
respectively

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- The architect may utilize any relevant records, documents,
etc at his disposal, architect’s personal records, official
records of the contractor, official progress reports, site
diaries, relevant correspondence, drawings/diagrams, official
records of meetings/discussions, work
programmes/scheduling documentation,
records/information/reports, etc from third parties and/or
independent bodies and other relevant records, documents,
etc

- The architect should use the above to cross-check and verify

the contractor’s various contentions contained in his
application and use these as a basis of his own analysis for
the entitlement

- The architect has to make either of the following two

decisions and communicate to the contractor in writing:
o Reject the contractor’s application; or
o Grant the contractor a commensurate EOT

- This clause require the architect to issue a Certificate of

Extension of Time to the contractor

- This Certificate must state the duration of extension granted

on an elemental basis ‘event-by-event’ with relevant reasons
and the fixing of the new/revised Completion Date

- The architect shall either reject or issue the contractor’s

application or issue the Certificate of Extension of Time
within six (6) weeks from the receipt of the sufficient
particulars

Clause 23.5

- Clause 23.5(a) deals with the situation where many

architects feel that when omissions are issued, they are
entitled to reduce an extension of time already granted or
reduce the contract period so that the original contract
completion date is accordingly brought forward

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- The architect cannot reduce the original contract period
irrespective of how many omissions he issues to the
contractor
- Clause 23.5(b) states that although the architect has a
discretion, he must nevertheless act reasonably and fairly in
his assessment for EOT

- He is empowered also to consider any other Relevant Events

that will have an effect on the contractor’s entitlement to an
extension of time

- This clause permit the architect to grant extension of time

even if the contractor chooses not to apply for extension
based on the employer’s breach eg not made timely
payments to the contractor

Clause 23.6

- This clause is an obligatory provision which the architect

must consider before giving any extension of time and it
comprises the following elements:
o The architect must decide what reasonable steps the
contractor has to take to either prevent and reduce delay
or further delay;
o The delay in question must impact on the completion of
the works beyond the Completion Date;
o The architect must then require the contractor officially to
take the steps identified in the above item; and
o The contractor must then take these steps and discharge
these to the reasonable satisfaction of the architect

- If the contractor is the culpable party, he must act on his own

volition to prevent and reduce delay or further delay by
mitigation or taking corrective steps to ensure that the delay
is avoided

- The architect on becoming aware of the contractor’s default

and the likelihood of it leading to delay, should forewarn the
contractor accordingly

- He should ask the contractor to take the necessary corrective

and mitigative steps which must be reasonable under the

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 circumstances and all the cost must be borne by the
contractor

Clause 23.7

- This clause is to ensure that the particular nominated sub-

contractor involved is duly informed of any extension of
time granted to the main contractor

- The architect is required to merely notify the nominated sub-

contractor of his decision; implying that he has just to
communicate the new completion date he has fixed and does
not have to give reasons for his decision

Clause 23.8

- This clause consists of twenty-four ‘Relevant Events’ for

which the contractor can claim for extension of time

- Refer to the sub-clauses ranging from Clause 23.8(a) to

Clause 23.8(x) in PAM 2006

- Clause 23.8(a) states that the PAM Contract 2006 defines

‘force majeure’ as any circumstances beyond the control of
the Contractor caused by terrorist acts, governmental or
regulatory action, epidemics or natural disaster

- This constitutes a neutral event for the purposes of extension

of time

- Clause 23.8(b) specify not only any adverse inclement

weather but exceptionally adverse or inclement weather

- To prove this, it may be necessary to provide meteorological

records of a reasonably lengthy period of about ten (10) to
twenty (20) years for the particular locality and time on
which the claim is premised

- If it is not possible to get the Malaysian Meteorological

Department’s records, the records of any other independent
third party such as the Drainage and Irrigation Department
should be sufficient

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- Clause 23.8(c) deals with insurance contingencies which
cause loss and/or damage to the work itself and the
contractor is entitled to claim for extension of time

- These contingencies include perils, or insurable risks such as

fire, storm, lightning, floods, etc which are regarded as
neutral events beyond the control of either the contractor or
the employer

- Clause 23.8(d) refer to events such as civil commotion,

strike or lockout

- The civil commotion must involve those employed upon the

works and those engaged in the preparation, manufacture or
transportation of any materials and goods required for the
works

- The strikes cover the contractor’s own workforce and those

belonging to all the sub-contractors involved in the
preparation, manufacture or transportation activities

- Clause 23.8(e) refer to the contractor’s obligation to show

that the Completion Date is likely to be delayed or has been
delayed because the architect has failed to comply with his
general obligation to issue AIs

- Clause 23.8(f) is intended to address the time impact of any

delay by the employer in giving to the contractor possession
of the whole site or sessions of the site

- The contractor can be given a commensurate extension of

time to compensate him for the delay caused by the
deferment or postponement

- Clause 23.8(g) states that the contractor will be given

extension of time in respect of the AIs relating to the
discrepancy between the contract document and other
documents issued by the architect or a variation ordered or
of postponement or suspension of the whole or part of the
works that will result in the delay to the completion date

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- Clause 23.8(h) allows the contractor to an extension of time
due to the delay on the part of the nominated sub-
contractors, but only for those relevant events for which the
latter could claim extension of time

- Clause 23.8(i) refers to the delay on the part of the architect

in re-nominating another nominated sub-contractor if the
previous sub-contractor’s employment has been validly
determined

- Clause 23.8(j) refers to the delay by other independent

contractors employed by the employer to carry out the works
and these contractors may cause delays to the contractor’s
work under the principal contract

- The above clause permits the contractor to be compensated

with a commensurate extension of time to his contract; his
entitlement to loss and/or expense

- Clause 23.8(k) permits the contractor to be allowed a

commensurate extension of time if the employer had agreed
to supply materials and goods for the works, but had either
delayed or failed to do so at the right time and this affected
the contractor’s progress of work which led to a delay in
completion

- Clause 23.8(l) permits the contractor to allow for delay

incurred in such opening up for, testing and making good of
the works where the materials and the goods were in
accordance to the contract and the contractor be allowed a
commensurate extension of time

- Clause 23.8(m) makes allowance for an extension of time to

be granted to the contractor premised on any act of
prevention or breach of contract by the employer

- Clause 23.8(n) was made to cater for the not so common

eventuality of incidence of war and its consequential effect
on the contractor’s time obligations under the contract

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- Clause 23.8(o) requires the contractor to stop work and to
take all necessary precautions to preserve them upon the
discovery of fossils, antiquities and other objects of interest
or value on the site and the contractor will be allowed a
commensurate extension of time

- Clause 23.8(p) allow the contractor to claim a commensurate

extension of time should there be any changes to any such
law, regulations, by-law or terms and conditions of any
Appropriate Authority and Service Provider presumably
after the contractor has commenced with the works under the
contract; compliance with which results in any delay to the
completion date

- Clause 23.8(q) address the impact of delays of third parties

such as the authorities and service providers on the
contractor’s performance of his obligation under the contract

- Clause 23.8(r) refer to the delay on the replacement of the

Architect, Engineer, QS and Specialist Consultants if the
original person cease to act for the employer and this will
entitled the contractor to a corresponding extension of time
for the delay he has suffered as a consequence

- Clause 23.8(s) refer to the disputes with the neighbouring

property owners and the event can be categorized as an act
or prevention and this will entitled the contractor to claim for
extension of time

- Clause 23.8(t) refer to the delay which is a direct result of

the contractor’s execution of work for which a Provisional
Quantity is included in the Contract Bills and the architect
has to decide whether such a quantity is not a reasonably
accurate forecast of the quantity of work required

- Clause 23.8(u) refer to the failure of the employer of his

obligation to give access and egress to the site to the
contractor at the time it is due and this will entitled the
contractor to an extension of time

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- Clause 23.8(v) refer to the contractor to suspend Works for
non-payment and compulsory suspension of Works and this
clause, caters for the consequential time effects of such
suspension and should the contractor have a ‘knock-on’
effect to the contract Completion Date, this will entitled the
contractor to an extension of time

- Clause 23.8(w) refer to the suspension of works by order of

an Appropriate Authority and this had a material effect on
the contractor’s ability to meet the Contract Completion
Date thereby resulting in a time delay

- Clause 23.8(x) is a ‘catch all’ provision and has inherent

limitations, principal of which is that it cannot be used to
cover the employer’s acts of prevention

Clause 23.9

- This clause govern the situation where a delaying event

occurs after a Certificate of Non-Completion has been issued
by the architect

- The architect can grant extension of time to the contractor

and in the process, fix new or revised dates for completion,
thereby preserving the employer’s rights to impose
liquidated damages

- Thus, the Certificate of Non-Completion previously issued

would be automatically revoked

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Clause 23.10

- This clause requires the architect to review the completion

date in any event; and he must do this in the light of any
Relevant Events whether or not specifically notified to him
by the contractor

- The fixing of the later Completion Date by the architect shall

be fair and reasonable

- The architect should inform the contractor in writing within

a reasonable period upon the expiry of the prescribed 12-
Week period

- If either the employer or the contractor is not satisfied with

the architect’s decision under this clause, they may have a
right to call on the architect to reconsider such a decision
especially in the light of further and better particulars

- The employer has to repay the contractor any surplus

liquidated damages by reason of further extension of time
being granted by the architect in the final review

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