A large part of the administration of a construction contract comprises a contractor seeking genuine contractual entitlements for additional time and costs and the determination and award or rejection of those claimed entitlements by the engineer/employer. As a result, contractor’s claims for extensions of time and additional costs are also often the subject of arbitral proceedings and litigation.

Under both the contractual process and subsequent formal dispute resolution proceedings, contemporary records form a critical part of the evidence to be utilised in evaluating the contractual entitlement. The importance of good record keeping – by both contractors and employer’s agents or engineers—cannot be overstated.

The maintenance of ‘contemporary records’ is an important risk management strategy under any form of contract or subcontract. Under the FIDIC suite of contracts, the failure to maintain contemporary records can severely prejudice or completely extinguish a contractor’s entitlement to additional time or cost.

Sub-clause 53.2 of the FIDIC Conditions of Contract 1987 (the ‘old Red Book’) provides that ‘the Contractor shall keep such contemporary records as may reasonably be necessary to support any claim he may subsequently wish to make.’ Of course, in the event that a contractor subsequently seeks to make a claim, the ‘contemporary records’ are often insufficient or are supplemented by subsequent evidence, such as witness statements from site staff, prepared a long time after the event and in contemplation of the claim.

The issue of what constitutes ‘contemporary records’ and whether or not ‘contemporary records’ can be supplemented by further evidence was considered in the often cited case of Attorney-General for the Falkland Islands v Gordon Forbes Construction (Falklands) Limited (No 2), before the Falklands Islands Supreme Court.

In this case, the court was asked to decide whether or not a witness statement prepared for formal dispute resolution proceedings (significantly after the event giving rise to the claim) could be used to prove a claim under an old Red Book contract where no contemporary records existed. In the judgement on this issue, the court stated that ‘contemporary records’ meant:

‘original or primary documents…prepared at or about the time giving rise to a claim, whether by or for the contractor or employer.’

The court also said that contemporary records does not include witness statements produced after the event, as such documents cannot be said to be original or primary documents prepared at the time. In so doing, the court confirmed the fear of the contractor – no contemporaneous documents means no entitlement.

The judgement in this case stands as a stark reminder of the criticality of ‘contemporary records.’

The situation under the FIDIC Conditions of Contract 1999 (‘the new Red Book’) may not be as desperate as under the old Red Book, but contemporary records remain critically important and the failure to maintain such records still has the capacity to seriously affect the contractor’s rights of recovery.

The new Red Book contains a similar obligation under sub-clause 20.1 as was imposed under sub-clause 53.4 of the old Red Book. Sub-clause 20.1 states, in part, that:

‘the Contractor shall keep such contemporary records as may be necessary to substantiate any claim…’ Sub-clause 20.1 also states that ‘if the Contractor fails to comply with this or any Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim…’

While the Gordon Forbes case is authority for the proposition that failure to maintain contemporary records under the old Red Book may extinguish the contractor’s entitlement, failure to maintain contemporary records under the new Red Book may also prejudice the contractor’s rights or ability to recover. It is worth noting that the emphasis and value of witness evidence will of course be different from jurisdiction to jurisdiction. In civil law jurisdiction such as the UAE, for example, witness evidence may be more compelling than in common law jurisdictions. These differences do not affect the importance of maintaining contemporary records.

So at the risk of labouring the point, the moral is simple – record what happened, when it happened. While the tasks of maintaining a site diary, staying on top of correspondence, and keeping minutes of meetings may appear to be an inefficient use of site staff and managerial resources, such ‘contemporary records’ can be the key to securing contractual entitlements.

By Sachin Kerur and William Marshall

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One comment

  1. I endorse the authors’ final statement to “record what happened, when it happened”. As Max Abrahamson wrote in his book on ‘Engineering Law and The ICE Contract’, “A party to a dispute, particularly if there is an arbitration will learn three lessons (often too late) the importance of records, the importance of records and the importance of records”.

    If one looks at the health of the project and compares it to the health of a vehicle, the comparisons are
    striking. People who ignore routine maintenance of a vehicle typically experience premature breakdowns
    and exorbitant repair costs that could be traced directly back to the lack of maintenance. If a contractor ignores routine maintenance of a project by taking the easy approach of updating schedules, the
    outcome is very likely to be an expensive “repair” in the form of a claims battle and often a claims loss, or
    even missed opportunities.

    Most construction professionals do not enjoy reporting progress. This task rivals the other bane of keeping
    minutes of meetings. The fact that the progress reporting duty is taken on not with relish, but usually
    because no-one else will touch it with a barge pole, is evident in the tosh that often passes for the monthly Client Progress Report.

    On most projects, the client is looking for simplicity in the monthly report, and he is primarily interested in one key thing; when will the project be complete. The information in the programme/progress section of the report to the client should be easy to understand and well annotated/explained.

    Site diaries maintained by job-site supervisory staff are important source documents used to develop a daily specific as-built programme. The site diaries should record the following information on a daily basis,
    • Weather,
    • Manpower by number and trade and subcontractor,
    • Specific work performed, with reference to the corresponding programme activity number,
    • Delays / interruptions / issues encountered,
    • Work stoppages,
    • Variation, or change order, work performed,
    • Repair or rework performed,
    • RFI’s (requests for information) submitted,
    • CVI’s (confirmation of verbal instructions) received.

    A quality as-built programme can be generated from well-kept site diaries. The as-built data can be maintained in an electronic database, and nowadays can be collected using handheld devices during job-site walkthroughs. Photographs are also a very helpful way of documenting site progress, however, to be useful they should be labelled with the date of the photo and specific description of the subject.

    Obtaining your correct extension of time and obtaining time-related costs is all to do with the strength of your case, and whether you can prove it with factual records. It is a truism to say there is no substitute for good record keeping.

    For example, can you prove that an entitlement to an extension of time resulted from information being received late? The key element in most cases is the contemporaneous project records. Success with the claim is all about keeping them; and then using them to demonstrate cause, effect and entitlement.

    Disruption and loss of productivity are difficult to prove as generally there is very little contemporaneous data available from site showing the levels of productivity attained before and after the disruptive event. Any data kept that can establish disruption and productivity loss, particularly in respect of subcontractors who carry out the majority of the work, will be invaluable.

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