Adverse Weather
With some economists estimating that the cost of the so called ‘Beast from the East’ to the UK economy was at least £1bn per day, there can be little doubt that heavy nationwide snowfall and plummeting temperatures do have a significant depressing effect on a range of commercial activity in the UK. The construction industry is vulnerable to severe winter weather; considerable activity takes place outdoors or in structures that are not yet weatherproof, materials are transported by road and essential plant and machinery have to be operated in temperatures below freezing. Construction and engineering standard forms govern how severe weather will affect the parties’ rights and obligations.
When presented with such weather the burning question for contractors and employers will more than likely be “How does this weather event effect the project programme is an extension of time due, and what about site preliminaries and overheads?”. In this article we examine how three common standard forms; the JCT DB 2016, NEC4 and FIDIC 2017 deal with adverse weather and what their contractual processes entail with reference to time and money.
JCT DB 2016 (“DB16”)
The Adjustment to the Completion Date provisions at DB16 clauses 2.23 – 2.25 provide that the contractor must give notice to the employer in order to start the contractual process for extending the time for completion. The contractor must do so when it becomes “…reasonably apparent that the progress of the Works or a section is being or is likely to be delayed…”. The contractor must detail the circumstances giving rise to the delay and why they are a Relevant Event. Clause 2.26 lists 14 circumstances which are deemed a Relevant Event, and clause 2.26.8 says that ‘exceptionally adverse weather conditions’ is one of them. The contractor must then follow up setting out the expected effects of the Relevant Event, including an estimate of any delay beyond the completion date. DB16 is often amended to provide that the contractor should rely on information provided by the Meteorological Office to demonstrate the weather’s adverse qualities compared to the norm.
If the employer is satisfied that the notice and its particulars detail a Relevant Event (exceptionally adverse weather conditions), and that completion of the works is likely to be delayed beyond the completion date, then the employer may grant an extension of time as he thinks fair and reasonable. An architect/contract administrator under other JCT forms has a recognised duty to act fairly, lawfully, rationally and logically in making such assessments, which inevitably postpone the employer’s entitlement to liquidated damages for late completion. The words ‘fair and reasonable’ in DB16 import the same obligation of objectivity on the employer, but the expectation that they (or their agent) will act against their own interests in extending time is often a forlorn one. As with all JCT forms, exceptionally adverse weather conditions are not a Relevant Matter providing loss and expense under clause 4.19 – 4.22 of DB16. The philosophy is ‘time not money’. However, if some other prior act of employer prevention which is a Relevant Matter extends the completion date into or beyond a period of exceptionally adverse weather conditions, that kind of concurrency will not deprive the contractor of its entitlement to loss and expense[1].
NEC4 (“NEC”)
NEC takes a more rigorous approach. Section 6 of the Contract Data requires the parties to specify detailed historic ‘weather data’ to provide a benchmark. It also requires the parties to collect ‘weather measurements’ concerning monthly rainfall, daily rainfall exceeding 5mm, days where the air temperature is less than 0oC, and days where snow is present at a specified time, who is to supply that and where they are to be taken from. A contractor seeking an extension of time must establish that a ‘Compensation Event’ has occurred. Unlike the JCT suite, Compensation Events under the NEC regime can also give rise to the contractor being given loss and expense as well as additional time.
Clause 60 of the NEC details approximately 20 circumstances which amount to a Compensation Event and clause 60.1.13 governs adverse weather. It says that a Compensations Event occurs where a ‘weather measurement’ is recorded:
- within a calendar month;
- before the completion date for the works; and
- at a place stated in the Contract Data,
the value of which by comparison with the ‘weather data’, is shown to occur on average less frequently than 1 in 10 years. Only the difference between the weather data and the weather measurement (i.e. the amount by which the present weather measurement has exceeded the 1 in 10 year measurement) is taken into account when assessing whether a Compensation Event has occurred.
The NEC process therefore involves an objective assessment of the weather conditions, by reference to a period of historic weather conditions, in determining whether a Compensation Event has arisen. However, the contractor only has 8 weeks from him becoming aware that the event has happened in order to notify the project manager; otherwise he loses the right to do so (Clause 6.13, a ‘condition precedent’). If the project manager agrees that the notified event is a Compensation Event, he invites the contractor to provide a quotation for time and money. The quotation is then either accepted by the project manager, rejected and the contractor is asked to re-quote, or the project manager can make his own assessment of the changes to the Completion Date.
In comparison to the JCT, it is not the Employer, but the project manager, who has the discretion to award an extension of time – a fairer process. In addition to this, the decision must be based on objective criteria i.e. the weather data.
FIDIC - Redbook 2017 (“FIDIC”)
Under the FIDIC regime, clause 2.5 ‘Site Data and Items of Reference’ require the employer to provide the contractor with all the information he has concerning topography, sub-surface conditions, hydrological, climatic and environmental conditions on site. There are two routes under which an extension of time may be given in the event of severe winter weather. Firstly, the ‘Advance Warning’ clause 8.4 sets out a procedure whereby the contractor, employer and engineer (a role similar to the NEC project manager) are obliged to advise one another of any probable or future events or circumstances which may:
- adversely affect the work of the Contractor’s Personnel;
- adversely affect the performance of the Works when completed;
- increase the Contract Price; and/or
- Delay the execution of the Works or any Section
The engineer then has the option to request the contractor to submit a proposal under the Variations by Request Process at clause 13.3.2, to avoid or minimise the effects of the event(s) or circumstance(s) that were the subject of the Advance Warning.
Secondly, clause 8.5(c) provides that the contractor shall be entitled to an extension of time where completion is or will be delayed by “…exceptionally adverse climatic conditions…which shall mean adverse climatic conditions at the site which are Unforeseeable having regard to climatic data made available by the Employer under Sub-clause 2.5 [Site Data and Items of Reference] and/or climatic data published in the geographical location of the Site”. FIDIC defines ‘Unforeseeable’ as ‘…not reasonably foreseeable by an experienced contractor by the Base Date’.
Under Clause 20.2, a contractor has 28 days from when he became aware of the event or circumstance giving rise to the extension of time to provide a Notice of Claim (the “Notice”) to the engineer or lose any right to make a claim (like NEC, a ‘condition precedent’). If the Engineer fails to reject the Notice for being out of time within 14 days, the notice is deemed valid. Within 84 days of the contractor becoming aware the circumstances or event giving rise the extension of time claim, it must then submit a fully detailed claim to the Engineer, including full particulars of the likely effect on the programme. The Engineer then determines the extension of time and loss and expense (if any) that is due.
Effective operation of the FIDIC extension of time procedure in exceptionally adverse weather conditions is therefore dependent on, on the one hand, the site data that the employer is to provide, and the unforseeability of the weather event by an experienced contractor on the other. FIDIC is the preferred choice of contract for international projects, which by their nature, may involve sites in parts of the world with challenging climates and weather conditions. However, instead of using wholly objective measures like NEC, it requires the contractor to scrutinise the critical site data (and use its experience) to anticipate the climatic conditions on site and programme accordingly.
Conclusions
The three contracts differ in terms of the requirements the contractor must satisfy in order to be granted an extension of time. JCT DB 2016 reposes significant power on this issue in the hands of the employer, while NEC and FIDIC have a neutral third party role fulfilled by the Project Manager and Engineer respectively. NEC and FIDIC include objective considerations for assessing if a weather event is significant enough to warrant an extension of time, but arguably only NEC does so with rigour. Both impose deadlines for notification, but also provide for loss and expense whereas the JCT suite does neither.
The above standard form contracts are commonly amended by the parties on a bespoke basis. Contractors and Employers should consider how their respective interests could be better served by an amended contract which caters properly for severe weather during the life of project in an objective fashion.
[1] EH Cardy & Son Limited v Taylor and Paul Roberts and Associates (1995) 38 Con LR 79
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.