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International Construction Law Review

PROLONGATION COSTS IN THE FIDIC YELLOW AND GREEN BOOKS: AN ENGLAND AND WALES AND GERMANY ANALYSIS1

Benjamin Hicks

LLB, B Com, M Const Law, Lawyer

I. INTRODUCTION

Prolongation costs (PGCs) are time-related costs suffered by a contractor as a result of a compensable event impacting on the works which lead to critical-path delay to the completion date.2 There are three components:
“The contractor has to demonstrate on a balance of probabilities, that, first, events occurred which entitle it to loss and expense, secondly, that those events caused delay … and thirdly that such delay … caused it to incur loss and/or expense (or loss and damage as the case may be).”3
Ordinarily a compensable event is an Employer Risk Event which may include events such as a variation, breach of contract or other identified provision in the contract such as unforeseen latent conditions.4 The International Federation of Consulting Engineers (FIDIC) contract suite defines “Employer Risk” and provides which are compensable events by expressly providing if entitled to an extension of time (EOT) and additional “Cost Plus Profit” or “Cost”.5
Assuming the contractor can establish a contractual entitlement to a compensable event, there is ordinarily no automatic entitlement to loss or expense in PGCs.6 This is because the contractor may need to meet notice and time bar requirements (condition precedent), substantiate amounts


Pt 3] Prolongation Costs in The FIDIC Yellow and Green Books

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