Guidelines for Construction Contractual Notice

Ensuring Clarity, Compliance and Claims Protection from the perspective of a Contractor

Contractual notices are a vital part of effective project management and contractual claims management.

Whether related to time, cost or variation orders, these notices ensure that all parties are aware of potential impacts on the contract and serves the purpose that the Contractor preserves their claim entitlements and the Employer can take steps to mitigate the claim against them. Failure to issue proper notices, which must firstly be issued within the time allowed in the contract, can result in waived claims, disputes or financial loss.

This article outlines the key elements a contractual notice should include, and the importance of supporting documentation.

What is a Contractual Notice?

A contractual notice is a formal communication from one party (in this instance the Contractor) to another (usually the Employer or Principal Agent), notifying them of an event or condition that may affect the time, cost, scope of the works or any combination of time, cost and scope.

Notices are often required under contracts such as FIDIC, NEC, JBCC, and GCC. These contracts further stipulate the circumstances under which notices are required, the entitlement of the party submitting the notification, including what should be included in the notification and the time period within which to submit the said notification.

A contract notification should be differentiated from a contractual claim, which is usually preceded by a contractual notification. The focus of this article is the notification which is a critical step in the contractual claim process. An incorrect notice or a notice issued out of time may jeopardize a potential and valid contractual claim.

Core Elements a Contractual Notice:

A properly constructed notice should be clear, specific and timely. Failure to submit a contractual notice on time may result in a claim being time barred which means that the Contractor will have to absorb the said claim and is at risk for penalties should the claim affect time.

It should include the following:

1. Reference to the Contract

• Clearly identify the contract (e.g., Contract Name, Date and Clause being invoked).
• Mention the relevant clause that necessitates the notice and gives right to an entitlement of claim (e.g., “Clause 32.1 – Delay Event Notification,” etc).
• It is possible for multiple contractual clauses to be invoked for a single claim.

2. Description of the Event & Potential Impacts

• Provide a concise but comprehensive explanation of the event or circumstance that is the subject of the notice.
• Include details such as what happened, when it happened and where possible, how it affects the works, time or cost. (e.g., a delay that affects the critical path of the programme)
• If applicable, note that further particulars will follow during the claim submission process.

3. Date of the Event

• Specify the date on which the event or issue occurred.
• This is critical especially when assessing whether the notice is issued within the timeframe specified in the contract.
• If it’s a continuing event, mention both the start date and expected duration or what is required for the event to cease.

4. Supporting Documentation

To strengthen the notice and improve its credibility, include relevant documents as attachments to the notice. Some examples are included below:

a. Contract Instructions (CIs)

• Include any written instructions received from the Principal Agent or Engineer that led to the change or event.
• Reference instruction numbers and dates.

b. Field Engineering Queries (FEQs)

• If the notice arises from or relates to technical uncertainties, attach the FEQ with responses.
• Reference any delays in responses or unresolved issues that impact progress.

c. Updated Drawings or Specifications

• Include or reference any new or revised drawings that contributed to scope changes or rework.
• Clearly identify the drawing numbers, revision dates and the nature of the change.

5. Action Requested or Being Taken

• Indicate what action is being taken by the contractor (e.g., preservation of works).
• Request any required instructions or clarifications from the Employer, Principal Agent or Engineer as required.

Best Practices for Issuing Notices

• Timeliness is key: Most contracts stipulate timeframes (e.g., within 7 or 14 days). Late notices can be time barred and thereby invalidate claims.
• Keep it factual and objective: Avoid emotional or speculative language.
• Use formal communication channels: Email may be acceptable, but verify the method prescribed in the contract (e.g., hard copy, online portal).
• Track and log all notices: Maintain a register with dates, subjects and responses.

Conclusion

A well-prepared contractual notice is more than a formality—it is a strategic tool that protects your rights, facilitates transparent communication and also aids in dispute avoidance or dispute resolution.

Should you require any further information or clarity, please contact the Association.

Bilaal Dawood | Head: Membership Services