Consultant’s delay in consultancy agreements under FIDIC White Book

FIDIC White Book in brief

The FIDIC White Book (FWB) is a set of rules that can be used for large, complex, cross-border projects. 

For more about FIDIC and FIDIC contracts, see:

What causes the delay?

Sometimes it will not be possible to adhere to the agreed time schedule in a construction project, including the design phase, and the project is delayed. While delays may occur on both the client and the consultant sides, this article focuses on the consultant’s delay. 

A delay is when the agreed service is not delivered on time and the technical consultant is not entitled to an extension of time. 

If the technical consultant is blameless because the delay is due to circumstances outside its control, the due dates in the time schedule will be deferred correspondingly. This is so under both FWB and the Danish ABR18 (General Conditions for Consultancy Services for Building and Construction Works). 

Exemption from liability for delay - right to EOT

Thus, if there is a basis for an extension of time (EOT), the consultant is not liable for the delay and therefore has no liability to pay damages (liquidated or otherwise). The consultant will be allowed an EOT. 

Under FWB, the consultant will generally be entitled to an EOT where one of the following conditions are met (GC, clause 4.4.1):

• If the client demands variations in the work (GC, clause 5)
• If anything attributable to the client, another consultant, another contractor or any other third party causes a delay
• If an Exceptional Event occurs (GC, clause 4.6)
• If anything else happens which under the Agreement entitles the consultant to an EOT - i.e., an omnibus clause encompassing all the events that justify an EOT.

Clause 38 ABR18 lists similar circumstances that may entitle the consultant to an EOT. Under ABR18, the consultant must notify the client of such circumstances as soon as possible. The consultant must, however, be sure to take ordinary loss mitigation measures and try to limit the delay.  

When will there be liability for delay?

Under FWB, the technical consultant is responsible for any breach of contract within its area of responsibility (GC, clause 8.1.1).  Therefore, a delay caused by the consultant will constitute a basis of liability in damages. Similarly, clause 39 ABR18 provides that any delay which does not entitle the consultant to an EOT establishes liability. 

GC, clause 8.1.3 stipulates the terms on which the party liable in damages under FWB will be obliged to pay damages to the injured party:

1. First, the loss must be reasonably foreseeable and a direct consequence of the breach.
2. Second, the loss is capped at a certain maximum amount, as detailed in GC, clause 8.3 “Limit of Liability”. 
3. Third, if a plurality of separate (natural or legal) persons have acted culpably in connection with the delay, the consultant will be liable to pay only a proportionate share of the loss. This is called pro rata liability.

Under FWB, same as under ABR18, the parties can also agree that the consultant must pay daily penalties. That way the client will not have to prove its loss. However, it is important to note i) that daily penalties must be specifically agreed upon when drafting the PC, as FWB does not contain a separate rule on daily penalties, and ii) that it should be explicitly stated that the client’s claim for daily penalties is also subject to the limit of liability, possibly capped at a separate amount or percentage. 

Notice of breach required

If there is a breach of contract, including delay, FWB requires formal notice within the stipulated liability period (PC and GC, clause 8.2.1). Under ABR18, notice must be given within reasonable time after a party learns that a delay has occurred or will occur - whether daily penalties have been agreed or a claim for damages will be made.

In addition, both sets of rules stipulate that the consultant must notify the other party as soon as it learns that a delay will occur, see GC clause 4.3.3 and ABR18 clause 38, respectively. The same is required of the client (GC clause 4.3.3 and ABR18 clause 40).

Limitation of liability in case of delay

Under FWB, a party's financial liability is capped at their agreed financial maximum (GC clause 8.3.1).

When drafting a FIDIC contract, the parties must therefore generally decide, in PC clause 8.3.1, what the maximum financial liability should be in the specific construction project. 

Under ABR18, the consultant's liability for delay is limited already, whether daily penalties have been stipulated for exceeding deadlines (clause 39) or whether the client's loss in case of delay is to be determined under the general rules of Danish law (clause 50). In other words, under ABR18 the parties do not need to decide the maximum financial liability themselves.

For more information, please see our article on limitations of liability:

Need advice on FIDIC or ABR?

Deciding whether to go with FIDIC or ABR terms when drafting contracts is not always an easy call. We have advised on many different projects and are ready to guide and help you. Please do not hesitate to get in touch.

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