Tendered Start Date delayed as Contract Award Delayed, Contractor Wants Additional Payment What are our options?

1

Hi,

Hope you can help with this one.

We tendered a construction job and agreed a price with the Contractor. At the point of tender it was perceived that the start date would be 1st July, with contract award in advance of this.
However, due to numerous reasons (related to all parties Client, Designer and Contractor) the contract award has been delayed until October 2023.

The price was previously agreed however now the Contractor believes they should be entitled to additional payment due to the impact on the start date. We as the client don’t have a major issue with this (as long as additional payment is agreed fairly), however we are concerned that agreeing a revised price before contract award could delay construction works.

A number of options have been considered on how to deal with this, but we are not sure how best to proceed.

  1. Award contract with back dated start date (not sure we can technically do this, or would get this past our legal and commercial teams).

  2. Award contract with October start date - Contractor unwilling to proceed with this as they feel that they will not be entitled to a compensation event as the start date would not be changing.

  3. Revise tender price on the basis of delayed start date. Ideally don’t want to do this as the time impact it could have on contract award and hence the construction works commencing.

  4. Insert something into contract to allow Contractor to claim for the delayed start date? additional compensation event clause?

  5. Add contract addendum to change contract to allow contractor to claim for delay to start date?

Any help or guidance you could provide on this would be greatly appreciated.

2

So you have not yet awarded the Contract? I know its not your preferred option, but I think your best bet is to renegotiate the price now, even if that negotiation is a rough and ready. You could do something very simple, like saying construction inflation is 8%-ish, and its been 3 months, so I’ll give you 2%.

You then enter into Contract. Trying to enter contract and deal with it as a CE is possible, but its very likely to become a distraction and source of argument when you really want to be getting on with the works.

Another option would be to negotiate the terms of a CE now, enter into Contract and then implement that CE. It depends on your governance controls, but that might be easier.

Either way, I would suggest you come to an agreement now. In the long run that will be better for everyone.

3

Contract not awarded yet, thanks for your response. Most helpful!