The construction industry is rife with acrimonious disputes that have emerged as a result of building projects that have completed late. These delays can cause major disagreements between employers and main contractors over how much should be paid for work completed at a given time.
Take the case of Walter Lilly & Co Ltd v Mackay and another  EWHC 649 (TCC).In 2004, Walter Lilly was engaged as main contractor to build a five-storey luxury family home for Mr Mackay in Chelsea. The £15m project was expected to take 18 months to complete.
The design work was far from ready when Walter Lilly began the works, which led to the project quickly falling behind schedule. Adding to the delays, many aspects of the building work were only briefly described and subject to provisional sums.
Unsurprisingly, the relationship between the main contractor and its employer, Mr Mackay, deteriorated rapidly. Mr Mackay considered Walter Lilly to be in serious breach of its contractual obligations, and the contractor began proceedings against the employer claiming an extension of time up to the date of practical completion as well as loss and expense.
In this key case, the court had to consider complex issues relating to extensions of time and concurrent delay -two or more delays to a project that occur at the same time; one delay being the responsibility of, or at the risk of, the contractor and the other being the responsibility of, or at the risk of, the employer.
The crux of the matter was whether Walter Lilly was entitled to a full extension of time for the delay caused at Mr Mackay's responsibility/risk. As the contractor was found not to be responsible for the delay in the project, the court ruled that an extension of time be given as well as £2m awarded for loss and expense.
As well as clarifying some complex issues within construction law, such as concurrent delay and a contractor's entitlement to an extension of time and loss and expense, this case has undoubtedly given a major boost to the position of main contractors. As a result, it is a wise tactical move for employers to draw up a strategy that will avoid any unnecessary disputes arising from a building project that has over-run.
Even though this specific case involved a unique £15m project, the actual dispute centred on everyday issues, such as delay and where the responsibility lay. Unfortunately, the construction industry is prone to bitter disputes of a similar nature between employers and contractors, especially since the recession hit in 2008. In tough times, main contractors tend to put in low bids for projects to secure work and cash flow. However, now these projects are reaching completion inflated final accounts are being issued by contractors in an attempt to make a profit on the contract or at least reduce the loss.
Employers should also bear in mind that when a project reaches completion, relationships can come under pressure and a one-off job with no continuing commercial relationship, can increase the odds of a dispute.
So it makes sense for employers to be prepared: First, if a building project has been delayed by the main contractor, for example, they didn't allocate enough men for the job, they will still be allowed a full extension of time to the project completion date if they can show that at the same time there were other events that prevented them from progressing the works, such as the employer being slow in approving design drawings. This will prevent the employer from claiming damages for late completion of the project. So, make sure all requests for information are dealt with quickly.
Secondly, employers should always keep a careful record of emails that raise issues about slow progress, quality of work and/or defects. In fact, it's advisable to hold on to all emails or instructions that make any changes or variations to the scope of works, and ask for a quote of additional costs in advance of issuing instructions. Thirdly, take regular photographs of the site and keep a record of the dates these were taken. It is often useful to keep a site diary. Fourthly, the main contractor's former staff are usually keen to help if a dispute should arise in the future, so stay friendly with the site manager and key staff.
Finally, if an inflated claim is made, employers should always check whether there are any County Court judgments or winding-up petitions issued against the main contractor. This can be pursued as a negotiating tactic. As a general rule, the Technology & Construction Court will not enforce an Adjudicator's Decision if the main contractor is insolvent.