The document discusses suspension and termination of construction contracts by contractors. It defines suspension as stopping work ordered by the owner or contractor to resolve issues, while termination ends the contract before all obligations are fulfilled. The contractor has rights to suspend work if the owner fails to meet certain obligations, such as payment. The contractor can also terminate the contract by providing notice if the owner fails to meet additional obligations over timeframes. The contractor's obligations after termination include removing equipment and turning over documents. The owner must then pay the contractor outstanding amounts after termination.

1. Suspension and
Termination by
Contractor
Contract and Legal Aspects in Construction Management
ENGR. NATHANNIEL P. GONZALES
MSCM-1A

2. TOPICS
Introduction
Termination by
Contractor
Contractor’s Obligations
After Termination
Payment After
Termination by Contractor
02
01
03
05
04
06
Suspension by
Contractor
Other Related Topics

3. Defining Contract Suspension and
Termination
Introduction
01

4. What is Work Suspension?
is the suspension of a project ordered by either
a site owner or contractor to resolve an issue
involving an aspect of
the construction process.

5. What is Contract Termination?
the process of ending a contract before the
obligations within it have been fulfilled by all
parties..

6. Suspension
by Contractor
02
Contractor’s Rights to Suspend
Construction Work

7. TheRightoftheContractortoSuspendWork Operation
Suspension
By
Contractor
the Engineer fails to certify in
accordance with Sub-Clause 14.6
[Issue of IPC];
the Employer fails to provide reasonable
evidence in accordance with Sub-Clause
2.4 [Employer’s Financial Arrangements];
the Employer fails
to comply with:
the Employer fails to comply with
Sub-Clause 14.7 [Payment];
a binding agreement, or final and
binding determination under Sub-
Clause 3.7 [Agreement or
Determination];
a decision of the DAAB under 21.4
[Obtaining DAAB’s Decision]
(whether binding or final and
binding)

8. the Contractor may, not less than 21 days
after giving a Notice to the Employer (which
Notice shall state that it is given under this
Sub-Clause 16.1), suspend work (or reduce
the rate of work) unless and until the
Employer has remedied such a default.

9. This action shall not prejudice the
Contractor’s entitlements to financing
charges under Sub-Clause 14.8
[Delayed Payment] and to termination
under Sub-Clause 16.2 [Termination by
Contractor].

10. If the Employer subsequently remedies the
default as described in the above Notice
before the Contractor gives a Notice of
termination under Sub-Clause 16.2
[Termination by Contractor], the Contractor
shall resume normal working as soon as is
reasonably practicable.

11. If the Contractor suffers delay and/or incurs
Cost as a result of suspending work (or
reducing the rate of work) in accordance
with this Sub-Clause, the Contractor shall
be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to EOT
and/or payment of such Cost Plus Profit.

12. Termination by
Contractor
Contractor’s Entitlement to Terminate
the Contract Agreement
03

13. Termination of the Contract under
this Clause shall not prejudice any
other rights of the Contractor, under
the Contract or otherwise.

14. The Contractor shall be entitled to
give a Notice (which shall state that it
is given under this Sub-Clause 16.2.1)
to the Employer of the Contractor’s
intention to terminate the Contract or,
in the case of sub-paragraph (g)(ii),
(h), (i) or (j) below a Notice of
termination, if:
NOTICE

15. TheRightoftheContractortoTerminate Contract
h.
c.
i.
a.
f.
e.
d.
Termination
by
Contractor
the Contractor does not
receive the reasonable
evidence within 42 days
after giving a Notice
under Sub-Clause 16.1
[Suspension by
Contractor] in respect of
a failure to comply with
Sub-Clause 2.4
[Employer’s Financial
Arrangements];

16. TheRightoftheContractortoTerminate Contract
h.
c.
i.
f.
e.
d.
Termination
by
Contractor
the Engineer fails,
within 56 days after
receiving a
Statement and
supporting
documents, to
issue the relevant
Payment
Certificate;

17. TheRightoftheContractortoTerminate Contract
h.
c.
i.
f.
e.
d.
Termination
by
Contractor
the Contractor does
not receive the
amount due under
any Payment
Certificate within 42
days after the expiry
of the time stated in
Sub-Clause 14.7
[Payment];

18. TheRightoftheContractortoTerminate Contract
h.
i.
f.
e.
d.
Termination
by
Contractor
the Employer fails to comply
with:
i. a binding agreement, or
final and binding
determination under Sub-
Clause 3.7 [Agreement or
Determination]; or
ii. a decision of the DAAB
under 21.4 [Obtaining
DAAB’s Decision] (whether
binding or final and binding)
and such failure constitutes
a material breach of the
Employer’s obligations
under the Contract;

19. TheRightoftheContractortoTerminate Contract
h.
i.
f.
Termination
by
Contractor
the Employer
substantially fails to
perform, and such
failure constitutes a
material breach of, the
Employer’s obligations
under the Contract;
e.

20. TheRightoftheContractortoTerminate Contract
h.
i.
Termination
by
Contractor
the Contractor does
not receive a Notice of
the Commencement
Date under Sub-
Clause 8.1
[Commencement of
Works] within 84 days
after receiving the
Letter of Acceptance;
f.

21. TheRightoftheContractortoTerminate Contract
h.
i.
Termination
by
Contractor
the Employer:
i. fails to comply with
Sub-Clause 1.6
[Contract
Agreement], or
ii. assigns the
Contract without the
required agreement
under Sub-Clause
1.7 [Assignment];

22. TheRightoftheContractortoTerminate Contract
i.
Termination
by
Contractor
a prolonged
suspension affects the
whole of the Works as
described in sub-
paragraph (b) of Sub-
Clause 8.12
[Prolonged
Suspension];
h.

23. TheRightoftheContractortoTerminate Contract
Termination
by
Contractor
the Employer becomes bankrupt
or insolvent; goes into
liquidation, administration,
reorganisation, winding-up or
dissolution; becomes subject to
the appointment of a liquidator,
receiver, administrator, manager
or trustee; enters into a
composition or arrangement with
the Employer’s creditors; or any
act is done or any event occurs
which is analogous to or has a
similar effect to any of these acts
or events under applicable
Laws; or
i.

24. TheRightoftheContractortoTerminate Contract
Termination
by
Contractor
the Employer is found,
based on reasonable
evidence, to have
engaged in corrupt,
fraudulent, collusive or
coercive practice at
any time in relation to
the Works or to the
Contract.

25. Termination
Day 14
The Contractor can
Issue 2nd Notice for
Termination
Day “N”
2nd Notice Received
by Employer
1st Notice Received
by Employer
Day 1
Date of Termination

26. However, in the case of sub-paragraph
(g)(ii), (h), (i) or (j) of Sub-Clause 16.2.1
[Notice], by giving a Notice under Sub-
Clause 16.2.1 the Contractor may terminate
the Contract immediately and the date of
termination shall be the date the Employer
receives this Notice.

27. If the Contractor suffers delay and/or incurs
Cost during the above period of 14 days, the
Contractor shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or
EOT] to EOT and/or payment of such Cost
Plus Profit.

28. Contractor’s Obligations
After Termination
Cessation and Removal of
Contractor’s Equipment and Turning
Over of Documents, Plant and
Materials Paid
04

29. After termination of the Contract under Sub-
Clause 15.5 [Termination for Employer’s
Convenience], Sub-Clause 16.2
[Termination by Contractor] or Sub-Clause
18.5 [Optional Termination], the Contractor
shall promptly:

30. Contractor’s
Obligations
remove all other
Goods from the
Site, except as
necessary for
safety, and leave
the Site.
c.
cease all further work,
except for such work as
may have been instructed
by the Engineer for the
protection of life or property
or for the safety of the
Works. If the Contractor
incurs Cost as a result of
carrying out such
instructed work the
Contractor shall be entitled
subject to Sub-Clause 20.2
[Claims For Payment
and/or EOT] to be paid
such Cost Plus Profit;
a.
deliver to the
Engineer all
Contractor’s
Documents, Plant,
Materials and other
work for which the
Contractor has
received payment;
and
b.

31. Payment After
Termination by
Contractor
Employer’s Payment to
Contractor
05

32. After termination under Sub-
Clause 16.2 [Termination by
Contractor], the Employer shall
promptly:

33. Payment toContractorAfterTermination
b.
a.
Payments

34. Other Related
Topics
Work Suspension and Termination
by Contractor
06

35. CIAPConditionsforContractor’sWorkSuspension&Termination
Should the Owner suspend the work
without just cause for more than an
aggregate period of fifteen (15) days
without the Contractor's consent.
d.
Should the Owner fail to deliver at the
construction site Owner-
supplied/furnished construction
materials and/or equipment, for the
scope of work along the critical path,
beyond fifteen (15) days after its
scheduled date for delivery as provided
for in the Contract.
e.
Should approval of Variation Orders for
additional works along the critical path
be delayed beyond fifteen (15) days
after submission for approval by the
Owner or by its duly designated
Representative.
f.
Should an order of any court or other
public authority caused the work to be
stopped or suspended for an aggregate
period of ninety (90) days through no
act or fault of the Contractor or its
employees.
a.
Should the Owner fail to pay
the Contractor the approved
Request for Payment as
provided in Article 22.05.
b.
Should the Owner fail to
Pay the Contractor any
sum within thirty (30) days
after its award by
arbitration.
c.

36. Should the suspension be necessary for proper
execution of the Work or by reason of weather or
other conditions affecting the safety of the works
and/or the Contractor’s workers, the Contractor
may request the Owner to suspend work in
accordance with the applicable provision or
provisions of Article 27.02.

37. The Contractor shall be entitled to
an equitable adjustment of
Completion Time and/or Contract
Price for suspension of work due to
the above circumstances.

38. 2016 Revised IRR of RA
9184 Conditions

39. The contractor or its duly authorized
representative shall have the right to suspend
work operation on any or all projects/activities
along the critical path of activities after fifteen
(15) calendar days from date of receipt of
written notice from the contractor to the district
engineer/regional director/consultant or
equivalent official, as the case may be, due to
the following:
Suspension of Work

40. a. There exist right-of-
way problems which
prohibit the
contractor from
performing work in
accordance with the
approved
construction
schedule.

41. b. Requisite
construction plans
which must be
owner-furnished are
not issued to the
contractor precluding
any work called for
by such plans.

42. c. Peace and order conditions make it
extremely dangerous, if not
possible, to work. However, this
condition must be certified in writing
by the Philippine National Police
(PNP) station which has
responsibility over the affected area
and confirmed by the Department of
Interior and Local Government
(DILG) Regional Director.

43. d. There is failure on the
part of the procuring
entity to deliver
government-furnished
materials and
equipment as
stipulated in the
contract.

44. e. Delay in the payment of
contractor's claim for progress
billing beyond forty-five (45)
calendar days from the time
the contractor's claim has
been certified to by the
procuring entity’s authorized
representative that the
documents are complete
unless there are justifiable
reasons thereof which shall be
communicated in writing to the
contractor.

45. The Contractor may terminate its
contract with the Procuring Entity if
the works are completely stopped for
a continuous period of at least sixty
(60) calendar days through no fault of
its own, due to any of the following
reasons:
Termination by
Contractor/Consultant

46. a. Failure of the
Procuring Entity to
deliver, within a
reasonable time,
supplies, materials,
right-of-way, or other
items it is obligated to
furnish under the
terms of the contract;
or

47. b. The prosecution of
the work is disrupted
by the adverse
peace and order
situation, as certified
by the Armed Forces
of the Philippines
Provincial
Commander and
approved by the
Secretary of National
Defense.

48. Examples…
Sample Template for
Work Suspension Order
Source: DPWH D.O. 46 S.2022

49. No WSO to be
issued due to
intermittent
conditions which
renders the site
unworkable
Shall not be
issued right at the
start of the
contract effectivity
if it’s due to ROW
problem
WSO Form
should be
used
Conditions for Issuing W.S.O.
Source: DPWH D.O. 42 S.2020

50. Sample Template for
Continuation of Work
Suspension Order
Source: DPWH D.O. 46 S.2022

51. Within 5
days before
the lapse of
W.S.O
In
consideration
of the
delegated
authority
C.W.S.O.
Form as
prescribed
Conditions for Issuing C.W.S.O.

52. Source: DPWH D.O. 72 S.2019

54. TIMEFRAME IN THE PREPARATION/REVIEW/EVALUATION AND APPROVAL OF WORK SUSPENSION
ORDER, CONTINUANCE OF WORK SUSPENSION ORDER AND CONTRACT TIME EXTENSION
Source: DPWH D.O. 42 S.2020

55. Source: DPWH D.O. 42 S.2020

57. Source: DPWH D.O. 42 S.2020

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