Delays happen on almost every construction project. Contractors lose time and money waiting on project owners or dealing with events out of their control. If the cause of the delay is out of the contractor’s control, they can make a claim to extend the contract time. This is called an extension of time claim, or EOT claim. Most of the time contractors will only receive an extension of the schedule, and won’t be reimbursed for additional costs, but each situation is different.
We’ll take a more detailed look at what an EOT claim is in construction, what are valid reasons for a claim, if and how a contractor gets paid, and tips for submitting a successful EOT claim.
What is an EOT claim?
An extension of time (EOT) claim is a request for a change in the scheduled completion date due to a delay that is not the contractor’s fault. The delay could be caused by natural events, owner delays, or other unexpected occurrences.
The process for filing an EOT claim is often outlined in the contract between the owner and general contractor. Subcontractors are bound by the terms of their contract with the GC. Most often these terms require a written notice of delay and an official claim with backup documentation, which is reviewed by the owner or GC. If the extension is approved, a change order is issued.
EOT claims must establish the cause and liability for additional costs or schedule delays, along with the extent of the damages or disruption.
Valid reasons for an extension of time claim
Each contract is going to have specific terms that establish valid reasons for an EOT claim. Review and refer to your contract for allowable claim causes.
Here are a few that may be covered.
Most significant weather events will be covered under an EOT claim. However, if an event could have been foreseen, such as during hurricane season, contractors may be required to take some measures to protect themselves from a delay before making a claim.
Acts of God and Force majeure
Any natural event (or “Act of God”) that causes a delay — like the effects of an earthquake — may be covered by an EOT claim.
Force majeure specifcally occurs “when superior external forces such as a storm or a natural disaster affect a project participant’s ability to successfully complete their responsibilities in full or in a timely manner on a construction project.”
During 2020 and early 2021, many construction sites were forced to deal with shutdowns and stay-at-home orders. In most cases, the pandemic was interpreted as a force majeure, and EOT claims covered these delays.
If a terrorist attack affects the job site or access to the job site, you may be able to file an EOT claim for the delay.
Delays caused by the project owner
Any delay directly caused by the project owner is covered by EOT claim. “Because as a matter of law, a principal cannot benefit from its own wrongdoing,” says attorney Alexander Tuhtan.
“No doubt, it would be an unjust result if a principal could delay a contractor from completing works and there be no mechanism to adjust time under the contract!”
Does a contractor get paid for an EOT claim?
The answer is: It depends. Compensation for delays will depend on the terms of the contract.
For example, the contract may have a clause that states that no damages will be awarded for the delay.
These clauses are called “no damages for delay” clauses, and may or may not be enforceable depending on state statute. They generally state that contractors cannot be paid for any additional expenses tied to a delay, they only get a contract extension.
In cases where the force majeure clause applies, contractors may not be eligible for added costs. This is based on the idea that everyone is paying for the delay in some way, so it’s not fair to compensate one party over another.
In cases where a delay is compensable — like when the owner has caused the delay — contractors can only recover costs directly tied to the delay.
These costs may include things like:
- Project management time
- Supervision time
- Overhead costs
- Loss of use, rents, or profits
- Insurance costs
- Construction loan interest
Contractors will have to provide documentation to substantiate any additional costs they are requesting compensation for.
6 tips for a successful EOT claim
1. Read your contract
It’s especially important that you read and understand the contract and know the terms that govern extension of time claims. These terms may require notices to be sent within a certain timeframe, and if the notices aren’t sent, you may lose your right to file a claim. You should also know the valid reasons for filing a claim.
2. Send notices on time
There are generally two notices that need to be sent for an EOT claim: a notice of delay and the extension of time claim itself.
A notice of delay is fairly simple. It can be sent in the form of a letter or email, and it explains the event that has occurred and how long of a delay is expected. The extension claim is sent once all costs have been determined and includes evidence of the event and its effect on the project.
If the EOT claim is not sent within the required timeline, the contractor may give up the right for further extension claims or damages related to the event.
3. Document everything
Submitting an EOT claim requires documentation of the cause of the delay, its effect on the project, and any costs related to it.
Contractors should include photos, revised schedules, emails, weather reports, and any other evidence to support their claims of delay and cost. It’s often said that the one with the most documents wins, and it’s true on an EOT claim.
Learn more about proper documentation: Construction Photo Documentation | Jobsite Progress Photos
4. Keep an up-to-date schedule
Keeping track of the project schedule allows you to show the effects of a delay on the critical path of the project. This evidence is important when submitting an EOT claim. Scheduling software easily and clearly shows delays and how they affect the overall schedule.
5. Submit a change order
Once the extent of the delay and damages are known, submit a change order request to the GC or owner that documents the cause of the delay and the costs associated. This can be submitted with the EOT claim, and helps ensure that it gets addressed in a timely fashion.
6. Follow up on a long delay
In the course of a long delay, more than one EOT claim may need to be submitted. If that’s the case, it’s important to continue communication with the owner or GC and let them know of the effects of the delay and whether further claims will be filed.
Always review your contract to make sure you’re covered for delays
If a delay happens on a construction project that is not caused by any of the contractors working on the project, the GC can submit an extension of time claim to push out the completion date on the project. A claim includes documentation supporting the fact that the delay occurred, as well as evidence of any costs incurred due to the delay. The best way to improve your chances for a successful claim is to document everything related to the delay, so you can provide proof when submitting your claim.
In addition, contractors need to review contracts carefully. Some contracts include a “no damages for delay” clause that prohibits them from collecting on costs related to a delay. Most of the time these clauses aren’t enforceable, but contractors should ask that they be stricken from the contract if possible. If you have questions regarding a delay clause, ask a construction attorney to review it for you before signing.