Prolongation Costs in Vietnam Construction Contracts: How to Recover Them

Updated: 22 October 2026 · IVLF Advisors

A contractor can win every argument about who caused the delay and still recover almost nothing, because the money was never properly claimed or proved. In a prolongation costs construction Vietnam dispute, entitlement to more time is only the first gate; the second is a notice-compliant, evidence-backed claim for the extra cost of staying on site longer.

This article explains how both gates operate under the FIDIC 1999 edition and Vietnamese law, and what to put in place before delay starts. The cost of staying on site is very different on a remote solar farm, a metro or airport-terminal site and a resort fit-out, which is why the sector shapes the claim.

Extension of time is not money: the first principle

Many project teams assume that once an extension of time is granted, compensation follows automatically. It does not. A granted extension and a right to additional payment are separate questions, and an extension may be due for neutral events for which no money is payable.

A useful working classification, drawn from the delay literature, has three layers:

• Non-excusable delay: caused by the contractor (insufficient labour, late procurement). No time, no money.
• Excusable but non-compensable delay: a neutral event. The contractor is protected from delay damages but bears its own extra costs.
• Excusable and compensable delay: caused by the employer side, for example late site access or late design information. Time and cost are both in play.

In prolongation costs construction Vietnam disputes, prolongation is the extra time-related cost of an extended stay on site. It differs from disruption (lost productivity even where the completion date does not move) and from acceleration (the cost of finishing earlier than the delayed programme allows). The three are often pleaded together but proved differently.

How the FIDIC 1999 edition prices delay

Many internationally financed projects in Vietnam use a FIDIC form as the commercial backbone, adapted through Particular Conditions. This section refers to the FIDIC 1999 edition; the 2017 second edition exists and should be checked separately if your contract uses it.

Sub-Clause 8.4 gives time, and Sub-Clause 20.1 controls it

Under Sub-Clause 8.4 the Contractor is entitled, subject to Sub-Clause 20.1, to an extension of the Time for Completion if and to the extent that completion is or will be delayed by a Variation, by a cause of delay that carries an extension under another Sub-Clause, or by delay, impediment or prevention caused by or attributable to the Employer, the Employer’s Personnel or the Employer’s other contractors on the Site. The extension tracks the delay actually caused to completion, not the length of the event.

Sub-Clause 8.4 itself says nothing about money; the cost sits in the Sub-Clause that creates the underlying entitlement.

Where the cost entitlement actually comes from

In the Silver Book text, several Sub-Clauses pair an extension of time with payment. Three examples show the pattern:

• Sub-Clause 2.1 (Right of Access to the Site): if the Employer fails to give access or possession in time, the Contractor may claim an extension under 8.4 and “Cost plus reasonable profit”.
• Sub-Clause 8.9 (Consequences of Suspension): if the Contractor suffers delay or incurs Cost from complying with a suspension instruction and from resuming work, it may claim time and Cost, but not for making good its own faulty work or its failure to protect the suspended works.
• Sub-Clause 10.3 (Interference with Tests on Completion): if the Contractor is prevented for more than 14 days from carrying out Tests on Completion by a cause for which the Employer is responsible, it may claim time and Cost plus reasonable profit.

“Cost” is a defined term. In the Silver Book it means expenditure reasonably incurred, on or off the Site, including overhead and similar charges, but excluding profit. Profit is recoverable only where the Sub-Clause says “Cost plus reasonable profit”, and under some Sub-Clauses it is not. That distinction alone can move a seven-figure claim, so map it clause by clause before you plead.

The Red and Yellow Books follow the same architecture, with the Engineer receiving notices and making determinations. Clause numbers for individual entitlements differ between the books, so check your exact edition.

Sub-Clause 20.1 and the 28-day notice

Sub-Clause 20.1 requires the Contractor to give notice describing the event “as soon as practicable, and not later than 28 days” after it became aware, or should have become aware, of it. If notice is late, the Time for Completion is not extended, no additional payment is due and the Employer is discharged from liability for the claim.

The Contractor must then keep contemporary records, send a fully detailed claim within 42 days (or another agreed period), and, where the event continues, send interim claims at monthly intervals and a final claim within 28 days after the effects end. The Employer responds within 42 days, and the matter is agreed or determined under Sub-Clause 3.5. A failure to follow the procedure does not necessarily destroy the claim in every respect: where the notice itself was given in time, the assessment takes account of the extent to which the failure prejudiced proper investigation.

Vietnamese law overlay for time and money

In Vietnam the FIDIC text sits under mandatory statutory rules and, for some projects, public-sector controls. Four points deserve attention.

The statutory framework for adjusting time

Article 84 of the Construction Law No. 135/2025/QH15 (effective 1 July 2026) requires that contract amendments, including changes to schedule, time and price, be made in writing while the contract is in force. It lists the grounds on which parties may agree an amendment, including a change in State policy or law, a change in scope or requirements, force majeure, a fundamental change of circumstances, and other cases agreed by the parties.

Decree 210/2026/ND-CP (see the official summary), which replaced Decree 50/2021, develops this in Article 25. The parties agree the cases in which time and schedule may be adjusted and who bears responsibility for loss caused by extension. Vietnamese law thus expects the contract itself to allocate the cost of delay.

Written claims and public-sector approvals

Article 4 of Decree 210/2026 requires proposals and requests in writing. Article 21 lets a party that finds the other has performed wrongly, or not at all, make a claim with grounds and evidence, sent to the correct address. For public investment and PPP projects only, the recipient must answer in writing within seven working days, giving reasons if it does not accept.

Also for public investment and PPP projects only, Article 25(2) of Decree 210/2026 provides that if an extension would push the contract beyond the approved project duration, the project owner must first report to the investment decision-maker for a decision on adjusting the project timeline, before the parties agree the revised contract schedule. A contractor may therefore hold an entitlement the owner cannot honour until that approval is obtained. Private-capital projects follow the parties’ agreement.

Damages and late-payment interest

Article 86(2) of the Construction Law allows compensation for actual loss or for pre-agreed damages tied to the breached obligation. This supports a claim for actual prolongation cost where the Employer is in breach, for instance by failing to deliver the site. Separately, Article 28(5) of Decree 210/2026 provides that a late payment bears interest at the rate agreed in the contract, failing which the overdue lending rate of the contractor’s bank applies. Finance charges caused by late payment are therefore a separate and often easier head.

Governing law and the FIDIC text

Whether the 28-day forfeiture in Sub-Clause 20.1 will be enforced in full by a tribunal applying Vietnamese law is not a point we would treat as settled. The safe course is to comply with the notice regime as written.

Heads of claim and the evidence each one needs

A prolongation costs construction Vietnam claim is the sum of identifiable cost heads for an identified period. The table below sets out the commonly claimed heads, the proof that normally supports them, and the objection an employer or its supervision team typically raises. It reflects general market practice and the delay literature, not a Vietnamese statutory list.

Head of claim	Typical proof	Typical objection
Site staff and supervision	Timesheets, organisation charts, payroll, site diaries	Staff would have been on site anyway; not critical to the delay
Site establishment (cabins, utilities, security, transport)	Hire agreements, invoices, meter readings	Costs were fixed or already priced in the preliminaries
Plant and equipment standing time	Plant logs, hire records, proof of idleness	Equipment could have been redeployed
Extended bonds, guarantees and insurance	Issuer invoices, endorsements	Premium would have been paid regardless
Head office overheads	Proof of specific allocation, or evidence of lost opportunities	Formula used without proof of actual loss
Finance charges	Facility statements, interest calculations	No proof of borrowing caused by the event

No head is recovered merely because it appears on this list; each needs a causal link to a compensable event and a loss actually suffered.

Building a prolongation costs construction Vietnam claim that survives scrutiny

The following principles reflect widely accepted delay practice, including the Society of Construction Law protocol as discussed in the delay literature. They are market practice, not statute.

Evidence for prolongation costs construction Vietnam claims

Contemporary records are the foundation. Sub-Clause 20.1 obliges the Contractor to keep the records needed to substantiate a claim and lets the Employer inspect them and instruct further record-keeping. The following should be created as work proceeds, not reconstructed later:

• an updated, logic-linked programme and the baseline it departs from;
• daily site diaries, resource histograms and progress photographs with dates;
• instructions, requests for information and responses, with dates of receipt;
• cost ledgers coded to the delay event, not only to the project.

Quantification must rest on actual cost, not theory, and the burden of proof lies on the claimant. A tribunal should be able to follow cause, delay and cost on a single page per event.

Which weeks are paid

A frequent error is to multiply the extension by a weekly average of preliminaries. The accepted approach is to evaluate cost for the period in which the effect of the employer risk event was felt, not for the extra weeks at the end of the contract.

Concurrent delay

Where an employer delay and a contractor delay overlap, the usual market position is that the contractor’s concurrent delay should not reduce its extension of time, but that it does reduce compensation: the contractor recovers cost only to the extent it can separately identify the cost caused by the employer delay. Whether the contract adopts this position must be read from the Particular Conditions.

Overheads, finance and mitigation

Site overheads should be traced to the delayed period through diaries and daily reports. Head office overheads should be allocated to the event where possible; formulae such as Hudson or Emden are generally a last resort and need evidence that the contractor lost other work because its capacity was tied up. Finance charges are recoverable only where the loss was actually suffered.

The contractor also has a general duty to mitigate, which absent express wording does not usually require extra resources or work outside planned hours. Global claims, which lump many events into one figure, are discouraged and rarely accepted; an event-by-event claim that concedes what cannot be proved is the realistic course.

Practical protocol for Vietnam projects

These steps narrow the gap between entitlement and recovery in prolongation costs construction Vietnam claims.

1. Calendar the notice trigger. Treat the date the contractor should have become aware as day one of the 28 days, and notify early, in writing, to the contractual address.
2. Notify time and money together. A notice reserving only an extension of time may be argued not to reserve cost.
3. Keep Vietnamese and English records aligned. Site records are often in Vietnamese and the claim in English; keep originals and reliable translations.
4. Separate cost codes by event from day one, with subcontractor claims back-to-back with your own.
5. Agree pricing before acceleration. Decree 210/2026 (Art. 23(3)) expects additional quantities to be priced before execution; apply the same discipline to time-related changes.
6. Check the payment currency. Article 87(2)(c) of the Construction Law makes Vietnamese dong the payment currency, with foreign currency only in line with foreign exchange law. Test any foreign-currency claim against the contract and exchange-control rules.

Employers and lenders should read the same list from the other side: require programme updates from the outset, answer notices within the contract period, and avoid oral instructions that later found a claim. Our analysis of extension of time under Vietnamese construction contracts and of the Engineer’s role under FIDIC in Vietnam covers the determination stage in more detail.

Private versus public and PPP projects: prolongation costs construction Vietnam rules

Issue	Private-capital project	Public investment or PPP project
Cost of delay allocated by	Parties’ agreement (Decree 210/2026, Art. 25(1))	Parties’ agreement within public-sector rules
Reply to written claim	As agreed in the contract	Written reply within seven working days (Art. 21)
Extension beyond project duration	No statutory pre-approval	Owner must first seek decision of the investment decision-maker (Art. 25(2))
Cap on contractual penalties	As agreed, subject to general law	Penalty not above 12% of the breached part of the contract (Construction Law, Art. 86(3))

The seven-working-day, project-duration and 12% rules apply to public investment and PPP projects only, and should not be read into a private contract unless the parties adopted them.

Prolongation costs construction Vietnam across project types: infrastructure, industry, energy and real estate

Prolongation heads of claim (site staff, preliminaries, plant, security, finance) have the same legal basis everywhere, but their size and proof differ by sector. The examples are hypothetical.

Infrastructure and transport

Expressway, rail-station and airport-terminal sites often involve large time-related preliminaries and many interfaces. They are often State-funded and so often within the public-investment or PPP regime, but classification depends on the funding source of each project. Where that applies, the written-approval step in the section above can delay payment even when entitlement is clear.

On a very long linear scheme, such as the planned North–South high-speed railway (about 1,541 km through 15 provinces and cities), cost records should be kept by section, because delay may affect only one section while other sections progress. At an airport terminal like phase 1 of Long Thành International Airport (commercial operation expected from 24 December 2026 per press reports), late handover of one system package can idle several trades.

Heavy industry and factories

Steel, petrochemical and cement plants and FDI factories carry heavy plant and commissioning teams. The key evidence is the standing-time record of plant and specialist crews, because those costs often exceed site staff costs. Private contracts follow party agreement.

Renewable energy and power

Solar and wind projects rely on cranes and installation vessels or vehicles that are hired by the day. Offshore work is weather-sensitive, so records of weather standby and mobilisation matter. Grid-connection delay is a frequent claim trigger. Whether the contract is private or public depends on ownership and offtake structure.

Real estate: resorts, hotels, urban areas and mixed-use

Resorts, hotels and mixed-use complexes are normally private. Claims often arise from design changes and late owner-supplied items. Since overheads and finance are contested heads, keep a clean allocation between delay-related and variation-related cost.

Sector	Main time-related cost	What to evidence
Expressway, rail, airport terminal	Preliminaries, interface standby	Cost by section; approval status
Factory, steel, cement	Plant and commissioning crews	Standing-time logs
Solar, wind, gas-to-power	Cranes, vessels, weather standby	Daily hire and weather records
Resort, hotel, mixed-use	Staff, finance, design-change cost	Delay vs variation allocation

Conclusion

Recovering prolongation costs in Vietnam requires three things in sequence: a timely, correctly addressed notice, a causal delay analysis that survives concurrency arguments, and a costed claim built on contemporary records. Vietnamese law adds a written-form discipline and, on public projects, an internal approval step that can delay payment even where entitlement is clear. For prolongation costs construction Vietnam exposure, a practical next step is to audit your live projects now: list every open delay event, check whether each has a compliant notice, and make sure cost coding exists for the period affected.

Frequently Asked Questions

Does an extension of time automatically entitle the contractor to prolongation costs?

No. Time and money are separate entitlements. Many extensions arise from neutral events for which the contract gives no payment. The contractor must identify a clause that grants cost and comply with its notice requirements.

Is profit included in recoverable prolongation costs under FIDIC?

Only where the relevant Sub-Clause says “Cost plus reasonable profit”. The defined term “Cost” excludes profit. Check each Sub-Clause relied on, as some give Cost only.

What happens if the 28-day notice under Sub-Clause 20.1 is missed?

Under the FIDIC 1999 text, the time is not extended, no additional payment is due and the Employer is discharged from liability for that claim. Enforceability under Vietnamese governing law should be checked.

Can a contractor claim head office overheads for a delay?

Yes in principle, if actual loss is shown. Specific overheads should be allocated to the event. Formulae are a fallback and generally need evidence of lost opportunities or contribution.

Do Vietnamese statutory time limits apply to private projects?

The seven-working-day response periods in Decree 210/2026 apply to public investment and PPP projects only. For private projects the contract governs, within mandatory law.

Disclaimer: this article provides general information as of 22 October 2026 and is not legal advice on any specific matter. Contract wording, governing law and facts will change the analysis.