09 March 2025
5 min read
#Construction, Infrastructure & Projects
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January 2025 was reportedly the warmest January on record. High temperatures, severe storms, torrential rainfall and strong winds have frequented the eastern and western seaboards, causing delays in construction projects and placing further stress on already tight programs.
Some contracts expressly deal with “inclement weather”, while others do not. In Australia, there is no standard definition for inclement weather in construction contracts. In this article, we set out key things to keep in mind when negotiating inclement weather provisions in your contract.
Inclement weather can be interpreted in various ways, reminding us of a famous Norwegian expression that “there is no bad weather, only bad clothes”.
Contractual definitions of inclement weather commonly include rain, hail and snow, but often fail to account for the project’s location. In Australia, conditions such as extreme heat, strong winds, humidity and severe dust storms are just as important and should generally be added. Climatic events such as bushfires should also be considered.
The difficulty is that inclement weather is subjective and needs to impact a project before the contractor is entitled to relief. For example, how high does the temperature need to go before it becomes an inclement weather event? There is no single ‘stop work’ temperature mandated by law in Australia. Industry agreements and guidelines can provide a reference point, such as the standard CFMEU Enterprise Bargaining Agreement, which states that workers may stop work and leave the site when the temperature reaches 35°C. However, these requirements may not apply to all weather events.
A more suitable benchmark is whether the inclement weather affects the contractor’s ability to perform the works safely or causes the site to shut down. This approach is flexible enough to accommodate local conditions, as perceptions (and realities) of severe weather vary globally, due to differing working expectations and the technologies and methodologies available to enable safe construction in extreme climates. This approach also avoids the need to exhaustively list every possible weather condition that could affect the project.
Another important consideration is how inclement weather events should be monitored and recorded. For example, contracts often require the weather event to be published by the Bureau of Meteorology and can also obligate the contractor to include details of rainfall and inclement weather in any monthly reports to the principal.
The most used forms of construction contracts in Australia, the AS4000 and AS4902, do not provide the contractor with any relief for weather events. However, they are often amended to provide the contractor with an entitlement to claim an extension of time (EOT), but not costs, for any delays caused by an inclement weather event, as defined in the contract.
If the contractor is not entitled to an EOT for inclement weather, it bears the risk of liquidated damages if there is insufficient contingency or float in the program.
If the contractor is not entitled to costs for inclement weather, it bears the risk of additional overheads and delay costs. The contractor is expected to factor in weather-related costs into its preliminaries and overheads.
The usual rationale for granting contractors time, but not costs, is that inclement weather is a neutral risk that is outside the control of both the principal and the contractor. This achieves a compromise for both parties. EOT entitlement is usually subject to a requirement for the delay to affect the critical path of the works and for the contractor to have taken all reasonable steps to mitigate the delay.
Many contracts also attempt to front-load the process by including weather contingency in the program, and only giving the contractor an entitlement to EOT once this contingency has been exhausted.
Principals are often concerned about the duration of the inclement weather event. For instance, they may not want a brief, 10-minute rain event to entitle the contractor to an EOT of an entire day. As such, some contracts specify a minimum period of delay that an inclement weather event (or a combination of inclement weather events) must exceed before the contractor is entitled to an EOT.
Contractors should ensure that the contract provides relief not only for inclement weather itself but also for its ongoing effects. For example, after a storm, it may take days to clean up before work can fully resume. Similarly, a bushfire can cause poor air quality and visibility long after the fire has been extinguished.
While most contracts do not give contractors an entitlement to costs for inclement weather, this is becoming increasingly common as weather patterns become more unpredictable and climate change continues. As such, on some projects, contractors are given costs for inclement weather as a tool to bring down their contingency. Such provisions usually require a contractor to provide detailed evidence of the additional costs it has incurred and to take all reasonable steps to mitigate these costs. Risk-sharing can be achieved through capping the costs that a contractor can recover, and this cap can be fixed or staggered.
Inclement weather events are not always covered in the definition of ‘force majeure’, and do not always help a contractor. While events like floods or typhoons are common inclusions, inclement weather events such as heat or rain are usually excluded. As such, parties should have a dedicated provision dealing with inclement weather. This is preferable to expanding a force majeure clause to deal with inclement weather as this can confuse the concept of force majeure and complicate the administration of the contract.
If you have any questions or would like us to review your inclement weather clauses and construction contract, please get in touch with our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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