| Date | 13 October 2004 |
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| Judgment | Glenlion Construction Ltd v The Guinness Trust, QBD 28 July 1987 |
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| The Issue | Whether a contractor is entitled to extensions of time and prolongation costs measured by reference to an early completion programme. |
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| Implication |
Whilst a contractor under most standard form contracts is entitled to plan the early completion of the works, this will not impose unilateral obligations upon the employer to facilitate that early completion. |
printMost standard forms of construction contract contain provisions for the contractor to submit to the employer a programme showing the manner in which the contractor intends to carry out and complete the works. That requirement may range from a simple request for the submission of a master programme without prescription as to its form or content, or at the other extreme, very detailed requirements as to the format, content and operation of the programme to be submitted by the contractor. In whatever form it is submitted, the programme is of course a crucial document for the effective management of any construction project. Such programmes also provide fertile ground for disputes. Contractors often submit highly optimistic programmes of work showing completion considerably before the contract completion date. If the architect or engineer approves or accepts the programme without comment, it is then argued that the contactor has a claim for damages for failure by the architect or engineer to issue instructions at times necessary to comply with the shortened programme. These issues were examined many years ago in the case of Glenlion Construction Ltd v The Guinness Trust. The guidance given in that case remains relevant today. Guinness was a charitable trust who had invited tenders to carry out works at a residential development at Bromley in Kent. The works were to be carried out under the then existing JCT Main form of contract. Tenders were invited on the basis of a 104 week contract period. Glenlion, the successful tenderer, submitted its tender for a programme of 114 weeks stating that in return for adding 10 weeks to the contract period, Glenlion would offer a reduction in its contract price of some £24,000. The contract was awarded on this basis and the appendix completed to the effect that the completion of the works would be within 114 weeks from commencement. On commencement Glenlion submitted its master programme in accordance with the requirements of the contract and this showed completion within 104 weeks. The architect accepted this programme, no doubt delighted with the idea that his client had obtained a cost reduction by agreeing to a longer period for construction of the works, yet the contractor was nevertheless planning to deliver the completed project in accordance with the client's earlier wishes. Unfortunately, things were not quite as plain sailing as that. Glenlion did not finish as early as it had planned and made claims for extension of time and reimbursement of loss and expense. These ended up in front of His Honour Judge Fox-Andrews QC in the Official Referees Court. Three preliminary questions were put to the court. Firstly, where a contractor had submitted a programme in accordance with the requirements of the contract did the architect's approval of that programme relieve the contractor of his responsibility to complete the whole of the works by the contract date for completion? Secondly, when a contractor had submitted a programme which showed an earlier completion than that required by the contract, was the contractor entitled to carry out and complete the works in accordance with that shortened programme? Finally, where an early completion programme had been agreed, was there an implied term that the employer or his architect should so perform their obligations under the contract as to enable the contractor to complete the works in accordance with that programme. Judge Fox-Andrews recognised that it was commonplace for contractors to produce programmes that were over-optimistic and that therefore the issues raised in this case were of general importance to the industry. Dealing with the first question, Judge Fox-Andrews was clear that agreement or approval by the architect had no bearing on the contractor's responsibility under the contract to complete the whole of the works by the contract date for completion. As to the second point, he concluded that in the context of the JCT form of contract, Glenlion were nevertheless entitled to complete the works before the contractual date for completion. Clause 21 of the contract obliged the contractor to proceed diligently with the works and to complete them "on or before" the date for completion. The third question was, of course, the key point. Whilst Glenlion was entitled to complete the works early, could they impose unilaterally an obligation upon the employer to facilitate that early completion by, for example, ensuring that the architect provided design information in accordance with the early completion programme? Judge Fox-Andrews held that it could not. It was not being suggested by Glenlion that it was both entitled and obliged to finish by the earlier completion date and the unilateral imposition of a different completion date would result in the whole balance of the contract being lost. The consequence of this decision is that a contractor may not make a claim for an extension of time by reference to an early completion programme. The extension of time mechanisms of the contract must be operated by reference to the contractual date for completion. More difficult questions arise, however, when considering the effect of this decision upon the contractor's claims for prolongation costs. In the normal course of events the employer is not bound by the contractor's internal pricing. If the contractor has priced to complete the works earlier than the contract period the employer will not necessarily be obliged to pay the contractor the cost of prolongation beyond that earlier date. The employer will be entitled to assume that the contractor has priced for all risks inherent within the programme and accordingly that his rates and prices cover the possibility of having to remain on site for the full contract period. Such assumptions are not, however, cast in stone and may change where, for example, the contract identifies for the basis of the pricing of the contract preliminaries.
CJ-0441
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