Scenario
You are managing a 12-month commercial building project as the Contract Administrator. The contract includes rules for giving extra time (Extensions of Time or EOT) and a penalty clause for finishing late, known as Liquidated and Ascertained Damages (LADs).
Four months into the project, the Employer runs into money trouble and delays handing over part of the site (the West Wing) to the builder for 8 weeks. The contract states that the builder must submit a formal written notice of delay within 28 days to qualify for extra time.
The builder experiences the delay from the late site handover, but completely forgets to submit the formal notice within the 28-day window. Instead, they just talk about it during casual site meetings. Later on, the builder suffers another 6-week delay because their own subcontractor walks off the job.
In total, the project finishes 14 weeks late (8 weeks from the late site access + 6 weeks from the subcontractor problem). Because the builder never formally requested extra time on time, you refuse to grant an extension, declare the builder late, and deduct 14 weeks of financial penalties (LADs).
The builder fights back immediately. They argue that because the Employer caused the initial 8-week delay, and no extra time was given, the completion deadline is now completely canceled or "at large"—meaning the penalty clause is wiped out entirely.
Questions
A) How does the Employer causing an 8-week delay affect the project deadline, and does the builder missing the strict 28-day notice rule mean time automatically becomes "at large"?
B) What is the exact legal effect on the original project deadline and the Employer's right to charge financial penalties if time is successfully proven to be "at large"?
C) Who is responsible for keeping the project timeline on track in this situation, and how should you, as the Administrator, handle the 6-week delay caused by the builder's own subcontractor?
D) What other legal options does the Employer have to recover money for the late finish if the penalty clause is ruled invalid?
Draft PEPC Examination Answer (Malaysia)
Topic: Extension of Time (EOT), Time at Large and Liquidated Ascertained Damages (LADs)
This answer is prepared based on Malaysian construction law principles, PAM 2018, PWD 203A (Rev.1/2010), CIDB Standard Form, common law principles, and leading authorities relevant to the PEPC Professional Engineering Examination.
A) Effect of the Employer's 8-week delay and whether failure to submit the 28-day notice automatically makes time "at large"
The Employer's failure to provide possession of part of the site (West Wing) constitutes an Employer Risk Event. Under Malaysian standard forms of contract such as PAM 2018 and PWD 203A, delayed possession of the site is normally a valid ground for an Extension of Time (EOT).
The purpose of an EOT clause is to preserve the original contractual completion mechanism whenever delays occur due to causes beyond the Contractor's control, especially those caused by the Employer.
However, entitlement to an EOT depends upon compliance with the contractual notice provisions. In this scenario, the Contractor failed to submit the required written notice within 28 days and merely discussed the matter informally during site meetings.
Whether this failure bars an EOT depends upon:
- Whether the notice provision is expressed as a strict condition precedent.
- The wording of the contract.
- Whether the Contract Administrator retains independent powers to assess EOT.
- The applicable Malaysian legal principles.
Failure to issue the notice does not automatically make time "at large."
Time becomes at large only if:
- the Employer prevents completion,
- and the contractual mechanism fails to extend time for that Employer-caused delay.
If the contract clearly makes timely notice a condition precedent, the Contractor may lose entitlement to EOT. Nevertheless, Malaysian courts may examine whether the Contract Administrator still possesses an independent obligation to fairly assess EOT despite procedural non-compliance.
Therefore, the failure to submit notice alone does not automatically invalidate the completion date.
B) Legal effect if time becomes "at large"
If the Contractor successfully establishes that time is "at large," significant legal consequences follow.
(i) Original Completion Date
The original contractual completion date ceases to be enforceable.
Instead, the Contractor is required only to complete the works within a reasonable time, determined according to:
- project complexity;
- size of works;
- extent of Employer-caused delay;
- industry practice;
- surrounding circumstances.
No fixed contractual completion date remains.
(ii) Effect on Liquidated Ascertained Damages (LADs)
Once time becomes at large:
- the LAD clause can no longer operate because there is no contractual completion date against which delay can be measured.
Accordingly, the Employer loses the contractual right to impose LADs.
However, this does not mean the Contractor escapes liability entirely.
The Employer may still pursue:
- general damages for breach of contract,
- provided actual losses can be proven.
Unlike LADs, general damages require evidence of:
- actual financial loss,
- causation,
- foreseeability,
- mitigation.
Prevention Principle
This situation is governed by the Prevention Principle.
A party cannot insist upon a contractual completion date where its own conduct has prevented completion unless the contract contains an effective mechanism to extend time.
Leading authority:
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd [1970]
This principle has been recognised in many Commonwealth jurisdictions and influences Malaysian construction law.
C) Responsibility for maintaining the project programme and treatment of the Contractor's 6-week delay
The Contractor bears primary responsibility for:
- planning,
- programming,
- supervising subcontractors,
- managing labour,
- coordinating construction activities.
The subcontractor is engaged by the Contractor.
Accordingly:
- the subcontractor's default remains the Contractor's contractual responsibility.
This 6-week delay is therefore a Contractor Risk Event, not an Employer Risk Event.
As Contract Administrator, I would:
Step 1
Separate the two delays:
Employer delay:
- 8 weeks
Contractor delay:
- 6 weeks
These must never be merged automatically.
Step 2
Assess entitlement to EOT for Employer delay
Determine:
- validity of notice,
- contractual requirements,
- powers under the contract,
- factual evidence,
- critical path impact.
Step 3
Assess Contractor delay separately
The subcontractor walking off site does not justify EOT.
The Contractor remains liable.
Step 4
Determine concurrency (if applicable)
If Employer and Contractor delays overlap,
consider principles relating to concurrent delay under the governing contract and applicable authorities.
Step 5
Issue a reasoned determination
The Contract Administrator must:
- act independently,
- act honestly,
- exercise professional judgment,
- comply with the contract.
Under PAM contracts, the Architect/Contract Administrator must exercise quasi-certification functions fairly and impartially.
D) Employer's remedies if LADs become unenforceable
If time becomes at large and LADs cannot be imposed, the Employer still possesses several legal remedies.
(1) General Damages
The Employer may claim damages for breach of contract.
Examples include:
- loss of rental income;
- additional financing costs;
- consultant prolongation costs;
- operational losses;
- additional supervision costs.
These losses must be proven.
(2) Set-off
Where permitted by the contract, the Employer may exercise contractual or equitable set-off against monies due.
(3) Performance Bond
If contractual conditions permit, the Employer may call upon the Performance Bond.
(4) Retention Sum
The Employer may continue withholding retention in accordance with the contract.
(5) Termination
If delays become fundamental or amount to repudiatory breach, termination rights under the contract may arise.
(6) Professional Negligence Claims
Where delay resulted from consultants' negligence, separate claims against consultants may be available.
Relevant Malaysian Legal Authorities
A high-quality PEPC answer should refer to:
- PAM Contract 2018
- PWD Form 203A (Rev.1/2010)
- CIDB Standard Form of Contract
- Contracts Act 1950
- Construction Industry Payment and Adjudication Act 2012 (CIPAA) (where relevant to payment disputes)
Important cases:
- Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd [1970] – Prevention Principle and Time at Large.
- Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) – Effect of strict notice provisions leading to Time at Large.
- Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd [2007] – Notice provisions and prevention principle.
- Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd [2018] 2 MLJ 417 (Federal Court) – Enforceability of liquidated damages under Malaysian law and the application of Section 75 of the Contracts Act 1950.
- Selva Kumar Murugiah v Thiagarajah Retnasamy [1995] 1 MLJ 817 – Earlier Malaysian position on proving actual loss under Section 75 (later clarified by Cubic Electronics).
Conclusion
The Employer's 8-week delay is an Employer Risk Event that would ordinarily justify an EOT. However, the Contractor's failure to comply with the contractual 28-day notice requirement does not automatically render time "at large"; the outcome depends on the wording of the contract and whether the EOT mechanism can still operate. If time is ultimately held to be at large, the contractual completion date and LAD mechanism fall away, and the Contractor's obligation becomes one of completing the works within a reasonable time. The Employer cannot recover LADs but may pursue general damages if actual loss is proven. The separate 6-week delay caused by the Contractor's subcontractor remains the Contractor's responsibility and should not attract an EOT. As Contract Administrator, the delays must be assessed independently, impartially, and in accordance with the contract and Malaysian legal principles.


