Analysis of Time Extension & Cost Claims: Saudi Substation Project

This case study analyzes time extension and cost claims within an 'EPC of 33 KV Switching Station' project in Saudi Arabia, providing a practical application of project management principles. The study examines delays arising from revised project technical specifications and interface contractor issues, categorizing them as excusable compensable and non-compensable delays, respectively. It details the impact of these delays on project milestones, including the effects of a Design Change Notice (DCN) on manufacturing and cable installation, and explores the application of time extensions. The analysis covers critical aspects such as liquidated damages, culpable and concurrent delays, and the importance of record-keeping and construction program management. Ultimately, the case study presents strategies for resolving delay claims and mitigating their impact on project completion, offering valuable insights for construction professionals and students alike.

CERTIFIED COST PROFESSIONAL (CCP) TECHNICAL PAPER
HOW TO GET EXTENSION OF TIME & COST CLAIMS – CASE STUDY ON SUBSTATION PROJECT IN
SAUDI ARABIA.
HOW TO GET EXTENSION OF TIME & COST CLAIMS
-CASE STUDY ON SUBSTATION PROJECT IN SAUDI ARABIA
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CERTIFIED COST PROFESSIONAL (CCP) TECHNICAL PAPER
HOW TO GET EXTENSION OF TIME & COST CLAIMS – CASE STUDY ON SUBSTATION PROJECT IN
SAUDI ARABIA.
Abstract
Disputes and claims in construction contracts will be consistently be involved in numerous
issues that are complex and numerous unique cases where the interpretation of the contract or
legal case precedents will not provide immediate solution. Nevertheless, strategies entailing
analysing time extension claims have developed and evolved in the recent years with a
combination of recommendations, practice guidelines, protocol, and surfeit of methodology
together with publications that has been prepared by experts. This paper emphasizes on
important principles and common problems concerning time extension claims within a case
study. The case study was carried out through the presently ongoing project, and the project
name is ‘EPC of 33 KV Switching Station’ in Saudi Arabia. Empirical data collected and
analysed from this running project. ( The approval to use this data was granted from
authorized Project Manager" Mr. Kundan S. Mehta (Project Manager) Contract # xxxxxx,
Contract Title xxxxxx, Mobile # +xxxxxxxx, email address …..................)
Keywords: Liquidated damages, culpable and concurrent delay, extension of time, disruption
and delay claims
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HOW TO GET EXTENSION OF TIME & COST CLAIMS – CASE STUDY ON SUBSTATION PROJECT IN
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Table of Contents
1 Introduction.............................................................................................................................5
2 LR............................................................................................................................................5
3 Typical Delays in Electrical Substation Project .....................................................................8
4 Case Study...............................................................................................................................8
4.1 Revised Project Technical Specification (PTS) Excusable Compensable Delay.............8
4.2 Delay in Construction of Duct Banks & Detour removal by the Interface Contractors
“A” & “B” on the Cable Route (Excusable Non-Compensable Delay).................................9
5 Completion Time...................................................................................................................16
5.1 Extension Time...............................................................................................................16
5.2 Applying for time extension...........................................................................................16
6 Condition precedent .............................................................................................................17
7 Record keeping .....................................................................................................................18
8 Construction Program...........................................................................................................18
9 Causation and Types of Delay...............................................................................................21
9.1 Culpable and concurrent delay.......................................................................................21
9.2 Organizing Evidence of Delay.......................................................................................21
10 Resolution of Problem........................................................................................................21
10.1 Delay Claim Analysis...................................................................................................21
10.2 Liquidated Damages.....................................................................................................22
11 Conclusion...........................................................................................................................22
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List of Tables
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1 Introduction
Elongation and time extension claim for disruption and delay in construction industry
appear to experience the same issues over time, and in some way, it is still challenging to
come up with a collective approach to handle contractual frameworks and other possible
situations16.
In spite of the presence of the advanced software for construction schedules and
programmes, enhance delay analysis methods, and the sceptical simplicity of its usability,
evaluating the extension time is frustrating due to the failure of keeping up to date
programme which is made more complex by pathetic lack of concurrent record11. The
diagram (Figure 1) below illustrates the primary components of EOT claims. The next
section will review the relevant literature from books, journals, and the internet in relation to
the extension of the time claims.
2 LR
In the case study project’s scope consists of Engineering, Procurement and Construction of: -
• Two (2) numbers of 33kV Switching Stations CC-1 & CC-2.
• 33kV Direct Buried underground cable network including fiber optic cable
from CC-1 to Source Substation # 1 (S/S# 1) & CC-2 to S/S # 1.
• Modification work to connect the 33kV Switching Station feeder Cables at the
Source Substation 380/115/33kV S/S # 1.
Table 1 below illustrated the contract milestones for the project, contractor developed
baseline schedule based on contract milestone provided in the contract and the same was
submitted and get approved by Client accordingly.
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Table 1: Contractual Milestone
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Figure 1: EOT Claims Primary Components11. (Mohammadi & Birgonul, 2016)
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3 Typical Delays in Electrical Substation Project
Specifically, delays in construction are categorized into two major groups: non-
excusable (Unjustified) delays and excusable delays (Justified)1
 Non-excusable delays refer to the delays that is as a result of supplier or contactor.
Therefore, the contractor is not liable for any compensation and must come up with
strategies to ensure that the completion date is not affected8.
 Excusable delays are the kind of delays that have been either cause by the employer
or another phenomenon, as such, the contractor will need compensation in terms of
money or time or both 14. These delays can further be subdivided in to two type:
excusable non-compensable and excusable compensable.
These delays were analysed as it will be discussed in the subsequent sections of the case
study below.
4 Case Study
It could be observed from the report that project was going on as planned and was within
the schedule. Excusable non-compensable and compensable delays were the two key events
that interrupted the project and detail of both are as follows: -
4.1 Revised Project Technical Specification (PTS) Excusable Compensable Delay.
Excusable compensable delay was as a result of the failure to identify the type of scope
to follow even after having several meetings after being awarded the contract and advised to
analyse and give their response on new additional scope especially in terms of spare parts,
communication among other elements in the document. The contractor submitted the report
to the employer on September 7th, 2014. A number of discussions were held since then but
still there was no clear indication of what to follow. As a result, a meeting was organized to
discuss the above issue on January 30th, 2017 where the employer instructed the contractor to
proceed with the new project technical specification (PTS). The contractor designed and
resubmitted the submittal to the client and the same was approved.
Furthermore, release of manufacturing communication equipment was affected due to
the modifications that arose in ordinary course of project, therefore the client had to issue the
Design Change Notice (DCN) soon to recover the time and cost implication. This is vital in
ensuring that contractor is not penalized for the changes done by the client. The design
change notice prompts the contractor to take up the new design to enable them to adjust well
to the new design and come up with new timeline and budget. This subsequently affected
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other tasks such as delay in construction of duct banks and detour removal. Section 4.2
discusses this aspect.
4.2 Delay in Construction of Duct Banks & Detour removal by the Interface
Contractors “A” & “B” on the Cable Route (Excusable Non-Compensable Delay)
To install the medium voltage, 33kV Power cables & Fiber optic cable, feeding
switching stations CC-2, and to complete this task, duct banks are required for road and
utility crossing in the cable route. These duct banks supposed to be constructed by site
development contractors mentioned under heading above.
Contractor coordination meeting held between the interfaces contractors to discuss early
completion of the subject duct banks and removal of Detour from the cable route near old
gate #2
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Table 2: (Delay Events # 1 Revised PTS) for MS # 8
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See Table 2 above at page # 5 & Figure # 2 below at page # 7 defines the delay scenario encountered in project, it shows the comparison of
baseline dates versus current date & variance of finish date (Delay) of affected activities. The contractor presuming the new issuance date of
DCN# 1, June 16th, 2018 inserted in the current schedule and soon after the issuance of DCN # 1, Manufacturing for Communication System
start (Ref. Activity ID’s: D00221 & D00361 in Table # 2 and Figure #2 respectively and the same details shown in the red box) and all the
manufacturing activities are linked with the issuance of DCN # 1 by (Finish to Start) relationship. After rescheduling the network, the new
delivery date for the Communication System is January 30th, 2019 (Ref. Activity ID’s D00220, D00420, D00360 & D00370 in Table # 2 and
Figure #2 and the same details shown in the blue box). Therefore, new completion date for the MS # 8 (Complete delivery of all equipment and
materials, Ref. Activity ID’s M000045 in Table 2 & Figure # 2 and the same details shown in the yellow box) is January 30th, 2019 and baseline
finish date for the same is October 15th, 2017.
Considering the above reason MS # 8 shall be about 472 calendar days (67 Weeks) delayed than the contractual milestone date. Due to the
above stated delay on the delivery of Communication equipment all the succeeding activities are affected. Therefore, milestone no 9, 10 & 11
(Ref. Activity ID’s M000050 & M000060 in Table 3, Figure 3 & Table 4 & Figure 4 and Table 5 respectively at Page # 12 to 17 and the same
details shown in the yellow box) are affected. However contractor was unable to proceed with the Procurement of Communication system due
to; new PTS requirement having direct price implications on the original/approved BOQ prices. Said implication to the prices will be resolved
through DCN # 1.
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Figure 2: (Delay Event # 1 Revised PTS) for MS# 8
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