Asif GulConsultant Project Manager| Energoprojekt EntelMuscat, Oman
Hi Everyone,
We are giving provisional time extensions to contractors , if they could not complete project execution within the contractual execution time.
In the project end these extensions are being evaluated to either formalized them into final Justified time extension. or penalties, if the time extension are not justified.
Is it the right process? Do we have to stop giving provisional time extensions and stick with either final Justified time extension or penalty right away? I would like to get some insight & process being implemented elsewhere from Industry professionals.
Hi Asif,
This should be evaluated case-on-case basis. You can have a contract with a vendor for fixed bid and not worry about time extension related costs. If it is time and material contract, you may put a penalty clause if work is not completed in time. Generally, at the time of bidding you make high level requirements clear to vendors and pretty much all their quotations should have bid amounts closer to each other. If you picked a vendor who bid the least, most likely that vendor did not understand the business needs or deliberately underestimated to win the contract. In such cases if you stopped the payment, your project may suffer and you may end up losing revenues.
If the project scope was increased after the contract was awarded and if vendor did not amend the contract, then I feel you don't have much of a choice, but to give time extension. If the same vendor is executing multiple projects and if there is a pattern to this, then you need to evaluate what is going wrong. Ask for project plan and how they intend to deliver deliverables and milestones. Then using those milestones you can take corrective actions proactively. Saving Changes...
