In order to avoid taking a financial hit on a construction project, it is crucial that the deadlines for notifications and requests are met. Failing to meet these deadlines may result in not getting paid for the work performed and critically impact the project’s profitability. Below we will take a closer look at the strict notification deadlines according to the Norwegian construction contracts NS 8405 and NS 8407. Parties involved in a construction project should have these rules at their fingertips.
Missing a deadline can cost you – preclusive deadlines explained
According to NS 8405 (suitable for design-bid-build models) and NS 8407 (suitable for PEC contracts), the deadlines are "preclusive". This means that a claim will be lost if the deadlines are not met. This is in contrast to the rules in NS 8406 (simplified version of NS 8405). Here, the deadlines are not preclusive, but the claim may still be lost as a result of a passive approach by the opposite party.
Also read: Construction contracts - A framework for your construction project
What must be notified? Key situations requiring notification
In accordance with NS 8405 and NS 8407, the contractor must be notified of all changes to the agreement that may affect the progress or costs of the project, such as the contractor's claim for additional construction time (notice of extension of time) or claim for higher remuneration than originally agreed (notice of adjustment of the amount payable).
Sometimes, the contractor may be in doubt about whether the work will constitute a change requiring notification. In such cases, it is generally better to give one too many notifications than one too few. If no notification is given, and the matter still turns out to constitute a change, the contractor’s claim for extension of time or additional payment may be lost as the result of the lack of notification.
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Act fast – The "Without Undue Delay" rule in NS 8405 and NS 8407
In accordance with NS 8405 and NS 8407, changes must be notified "without undue delay". In principle, this deadline must be assessed on a case-by-case basis. However, it is important to note that the deadline is practised very strictly, and in practice, there should be a reason for the time you wait to send a notification. In practice, we're talking about only having a few days.
In other words, there is rarely time to calculate the number of days needed for the extension of time or the size of the monetary claim. For this reason, it is better to give notice in time and follow up with a further notice specifying the claim in more detail.
In comparison, there are more lenient deadlines under NS 8406, where notice must be given "within a reasonable time". This is still a deadline that requires you to react relatively quickly, but you may have anything from 1-2 weeks to a couple of months depending on the circumstances.
The client’s response deadlines – Failure to reply can be costly
As soon as the client has received a notice of, for example, a claim for an extension of time or additional payment, a new deadline runs for the client to submit any objections. According to NS 8405 and NS 8407, this deadline is also "without undue delay".
The client’s response deadline is calculated in the same way as for the contractor's notification deadline, but a specific deadline may also be set by the contractor. In this case, it is this deadline that applies, provided that it is not unreasonably short. If the contractor's deadline is exceeded, the opportunity to submit objections will be lost. Furthermore, failure to respond will be considered as an acceptance of the claim.
The importance of counter-notification
NS 8405 and NS 8407 have another important provision stating that the party who believes that the other party has given notice or responded too late must give notice of this "without undue delay". This is often referred to as counter-notification. If no such counter-notice is given, the original notice or response will be deemed to have been given on time, even if the deadlines were missed in the first place.
Formal requirements – How to ensure a valid notification
For a notice to be valid according to the NS standards, it is also important that the formal requirements are met. According to NS 8405 and NS 8407, notifications and requests must be made "in writing". The notification must be sent to the person stated in the contract as the contracting party's contact person and to the stated address/email.
The starting point for the written requirement is somewhat different under NS 8405 and NS 8407 respectively:
- According to NS 8407, the starting point is that e-mail exchange is accepted unless otherwise agreed between the parties.
- According to NS 8405, the starting point is that electronic communication (including e-mails) is only accepted if agreed between the parties.
It is worth noting that email exchange may prove to be agreed between the parties in accordance with NS 8405 if the parties demonstrate this through their behaviour. However, it will be an advantage if the form of communication is already agreed upon when the contract is entered into in order to avoid doubt.
Apart from this, there are no formal requirements for the notification, but in many projects, the parties have often drawn up standard forms that they want to be used for such notifications.
Furthermore, the notice should be clear. If a contractor writes: "Things are not ready on site, so we will wait until next week", the client may protest that this satisfies as a notice of extension of time or adjustment of the amount payable. For the avoidance of doubt, it is recommended that you use the wording of the NS standards, preferably with a reference to the relevant provisions. It is also recommended to carefully read any standard form in the project to ensure that it addresses the issues you are notifying about.
Conclusion – Be proactive to avoid costly mistakes
NS 8405 and NS 8407 create a continuous cycle of strict notification deadlines that must be carefully managed. To avoid unnecessary risks:
- Ensure multiple people in the company are responsible for monitoring notifications.
- Establish clear routines and use standard forms for submitting and following up on claims.
- If your company lacks structured procedures, consider seeking expert assistance or using NS 8406, which has more flexible deadlines.
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