EOT Claim and Prolongation Cost Claim – The Basic Concepts

Purpose of EOT

It is often incorrectly thought that entitlement to an EOT automatically carries with it an entitlement to compensation for prolongation costs during the period of the EOT. The main effect of an EOT is that the Contractor is relieved of its liability for liquidated damages during the period of the extension and is able to reprogramme its works to completion. Its entitlement to compensation is usually to be found in other provisions of the contract or at law. The benefit of an EOT for the Employer is that it establishes a new contract completion date, prevents time for completion of the works becoming ‘at large’, and allows for coordination/planning of its own activities, such as training operational staff. (SCL D&D Protocol 2nd Edition, page 22)

Result of delay analysis

The structure of the delay analysis should be organized in two sections/steps: calculating EOT and calculating compensable delay for prolongation cost.

• To calculate correctly the EOT, acceptable delay analysis methods could be Time Impact Analysis, Time Slice Windows Analysis, or As-Planned versus As-Built Windows Analysis.
• To calculate correctly the compensable delay for prolongation cost, an acceptable delay analysis method could be Collapsed As-Built.

The results of the steps above are illustrated in the following example.

• The planned duration of the project was 502 days and the actual duration was 677 days. The actual delay was 175 days.
• The first step of the delay analysis was performed and came up with an EOT of 74 days. Therefore, the liquidated damage duration is 101 days.
• The second step of the delay analysis was performed and came up with a compensable delay of 26 days.
• In conclusion, the Contractor is entitled to an EOT of 74 days and a prolongation cost of 26 days.