I am working on a high-rise residential project in which the performance bond expired ( period including the defects liability period). The project is delayed due to various reasons. The contractor applied for EOT but these are not settled yet. Since the validity of performance lapsed and it was not renewed the employer is now asking to extend the validity while the contractor is reluctant to extend unless EOT is granted on the grounds bond may be called for the delay. How should the contractor go about it?
First and foremost, the contractor must be sure to adhere to the
contractual requirement related both to extensions of time and maintenance of
the performance bond.
Failure or delay in approving an extension of time is under most
circumstances not reasonable grounds for refusal to extend a required
performance bond to cover the full duration of the Project. Thus failure to
adjust the performance bond could bring the contractor in breach of contract
irrespective of any culpability for delay.
Under most circumstances the prudent thing to do will be to
continue to negotiate the extension of time in good faith but also adjust the performance
bond to cover the duration of work.