During the construction phase, the private party may claim to be entitled to an extension of time due to a relief event (often referred to as an 'extension event'), or to an extension of time and compensation due to a compensation event (often referred to as a 'compensable extension event'). A claim by the private party is usually a result of the builder making a similar claim to the private party, however the fact that the builder may have a claim against the private party does not necessarily mean that the private party has a claim against the government party. If the builder makes a claim against the private party, the private party is usually required to take reasonable steps to ensure that the claim made by the builder is bona fide, prior to making any related claim against the government party.
The project director should ensure that any claims are appropriately analysed. Construction of a project is complex, and consequently it can be difficult to separate the impact of a relief event or compensation event from other factors affecting the project. The Independent Reviewer is responsible for determining extension of time claims during the construction phase. However the project director should consider whether any additional expert advice is needed to consider the private party's entitlement in respect of the claim.
If a claim is valid, the project director should ensure that the relevant contractual processes are followed to confirm the private party's entitlement. Usually there are a number of conditions precedent to the private party's entitlement to an extension of time, including that the private party has submitted the claim within a specified period and that the delay caused by the relief event or compensation event has or will actually cause a delay to activities on the critical path.
In addition, usually the government party's liability to the private party for a valid claim will be reduced to the extent that the relief or compensation event was caused or contributed to by the private party or the private party fails to mitigate the effects of the relevant relief or compensation event. The project director should always consider whether the private party's entitlement should be reduced. If the claim is wholly or partly invalid or the private party's entitlement should be reduced, the project director should seek legal advice on the appropriate form of response to the private party, and should develop an appropriate management strategy if it is expected that the private party will persist with the claim.
Claims for extensions of time or compensation should be reported via the steering committee to the government party's senior management and to DTF through the project governance arrangements.