Termination, Suspension and Force Majeure
5 minutes
5 Questions
In the PMI Construction Professional (PMI-CP) framework, termination, suspension and force majeure are key contract clauses. They govern how a construction contract may be stopped, paused or excused when circumstances change. Each one allocates risk, defines notice duties and sets out financial consequences across the contract lifecycle and every delivery method. TERMINATION ends the contract before completion. Termination for cause (default) happens when a party materially breaches the contract. Typical breaches include abandoning the work, repeatedly failing to meet the schedule, poor quality, insolvency or nonpayment. Contracts usually require written notice and a cure period. The defaulting contractor may be liable for the owner's extra costs to complete the work. Termination for convenience lets the owner end the contract without fault. The contractor is typically paid for work performed, reasonable demobilization costs and sometimes overhead. Anticipated profit on unperformed work is often excluded. SUSPENSION temporarily stops all or part of the work. Owners may suspend for funding issues, design changes, permit problems or safety concerns. Contractors may have a right to suspend for nonpayment. Suspension normally entitles the contractor to a time extension and to standby, remobilization or escalation costs, unless the contractor caused it. A prolonged suspension can trigger a right to terminate. FORCE MAJEURE excuses a party's performance when unforeseeable events beyond its reasonable control occur. Examples include natural disasters, war, pandemics, government actions or widespread strikes. It usually grants an excusable but non-compensable delay, meaning extra time but no extra money. It requires prompt notice, documentation and reasonable efforts to mitigate. DELIVERY METHOD CONTEXT: In Design-Bid-Build, these clauses sit in separate owner-designer and owner-contractor agreements. Design-Build and CMAR concentrate more risk in a single contract. Integrated Project Delivery favors shared risk and collaborative resolution. PMI-CP practitioners must understand these clauses during drafting and negotiation. They should keep strong records, issue timely notices, assess schedule and cost impacts, manage stakeholder communication and ensure orderly closeout to reduce disputes and protect project value.
Termination, Suspension and Force Majeure: A Complete PMI-CP Guide
Overview
Termination, suspension and force majeure are the contract provisions that apply when a construction project cannot continue as planned. They decide who may stop or end the work, when, how, and who pays. For the PMI Construction Professional (PMI-CP) exam, this topic belongs to the Contract Lifecycle and Delivery Methods domain. It tests whether you can protect the project, the organization and the relationship by following the contract rather than reacting emotionally.
1. Why This Topic Is Important
Financial exposure: A wrongful termination can turn an owner's legitimate grievance into a breach of contract by the owner. The owner may then owe lost profits, demobilization costs and damages.
Schedule and continuity: Suspensions and force majeure events disrupt the critical path, resources and supply chains. Handling them well limits delay and cost.
Risk allocation: These clauses are the contract's planned answer to severe risks such as insolvency, persistent non-performance, non-payment, pandemics, war, natural disasters and government action.
Disputes: Most construction claims and arbitrations involve notice, entitlement or valuation after a stoppage. Strict compliance with notice periods is often what decides whether a party is entitled to anything.
Relationships and reputation: Termination is the most adversarial step in contracting. PMI values collaboration, so terminating is a last resort after attempts to cure and resolve.
2. What It Is: Key Definitions
Termination: Ending the contract, or part of it, before the work is complete. The main types are:
- Termination for Default / for Cause: One party ends the contract because the other materially breached it. Examples include abandoning the work, persistent failure to perform to specification or schedule, insolvency, failure to pay subcontractors, corruption or repeated safety violations.
- Termination for Convenience (T for C): Usually the owner's right to end the contract without any fault by the contractor, for example because funding was withdrawn or business needs changed. The contractor is normally paid for work done, costs of demobilization and committed costs, and sometimes overhead and profit on completed work. Lost profit on the unperformed work is usually excluded.
- Termination by the Contractor: Usually triggered by non-payment, a prolonged suspension, the owner's failure to certify payments, or the owner's insolvency.
- Mutual Termination / Termination by Agreement: Both parties negotiate an exit and settlement.
- Termination after Prolonged Force Majeure: Many contracts let either party terminate if an excepted event continues beyond a set duration.
Suspension: A temporary stop to all or part of the work while the contract stays in force.
- Owner-directed suspension: The owner orders the work stopped, for example for convenience, funding, design review, safety or permits. If the contractor is not at fault, it is usually entitled to time and cost.
- Contractor suspension: Usually a right to suspend or slow the work after non-payment, following written notice.
- Suspension for cause: The owner may stop work that is unsafe or non-conforming. The contractor is usually not entitled to compensation when it caused the problem.
Force Majeure (FM): An extraordinary event or circumstance that:
- is beyond the reasonable control of the affected party,
- could not reasonably have been foreseen or provided against before contract signing,
- could not reasonably have been avoided or overcome once it arose, and
- is not substantially attributable to the other party.
Typical examples are war, terrorism, riots, epidemics or pandemics, natural catastrophes, nuclear contamination, and certain government actions such as embargoes or lockdowns. Ordinary bad weather, price increases, labour shortages and a party's own financial difficulty are usually not force majeure unless the contract says so.
Standard Form Reference Points (useful context):
- FIDIC 2017:
- Clause 8.9: Employer's suspension.
- Clause 15: Termination by the Employer, including 15.2 for default and 15.5 for convenience.
- Clause 16: Suspension and termination by the Contractor, including 16.1 suspension after notice for non-payment.
- Clause 18: Exceptional Events, which replaced the term 'Force Majeure'. Notice is due within 14 days. Either party may terminate if the work is prevented for 84 continuous days, or for multiple periods totalling more than 140 days.
- AIA A201: Article 14 covers termination by the contractor, termination by the owner for cause, suspension by the owner for convenience and termination by the owner for convenience.
- NEC4: Section 9 covers termination. Prevention events are treated as compensation events.
3. How It Works: The Process
A. Termination for Default: Typical Steps
1. Identify and document the breach. Use daily logs, inspection reports, schedule updates, payment records and correspondence.
2. Review the contract. Check the grounds for termination, the required notices, cure periods, the notice addresses and who has authority to sign.
3. Issue a notice to correct, cure notice or show-cause notice. State the breach, the required corrective action and the deadline.
4. Allow the cure period and continue communicating. Escalate through the contract's dispute-avoidance mechanisms where appropriate, such as meetings, mediation or a Dispute Avoidance/Adjudication Board (DAAB).
5. Notify the surety if a performance bond exists. The surety may have takeover or tender rights.
6. Issue the formal termination notice exactly as the contract requires.
7. Take possession and secure the site. Inventory materials, equipment, documents and work in place. Take assignment of key subcontracts and supply agreements if the contract allows.
8. Complete the work. Use the surety, a replacement contractor or self-performance.
9. Final accounting. Value the work done and deduct the excess cost of completion, damages and back-charges. Settle the balance.
Risk to remember: If a termination for default is later found wrongful, many contracts, particularly US government and AIA-style contracts, convert it into a termination for convenience. Otherwise it may be treated as a breach by the terminating party.
B. Termination for Convenience: Typical Steps
1. The owner gives written notice and states the effective date and scope.
2. The contractor stops work, places no further orders, terminates or assigns subcontracts, and protects the work in place.
3. The contractor submits a settlement proposal. This covers work performed, materials, demobilization, subcontractor settlement costs and the allowable markup set by the contract.
4. The parties negotiate and close out, including transfer of documents, warranties and materials.
Note that courts expect good faith. Using T for C to rebid the work to a cheaper contractor, or in bad faith, may be challenged.
C. Suspension: Typical Steps
1. Issue or receive written notice. It should state the reason, the scope and the expected duration if known.
2. Protect, store and secure the work, materials and site. This includes safety, weather protection and insurance continuity.
3. Demobilize or retain resources sensibly, and record standby costs.
4. Keep contemporaneous records of idle labour and equipment, extended overheads and escalation.
5. Submit notices of claim within the contractual time limits for an extension of time (EOT) and cost.
6. Resume work on instruction. Jointly inspect for deterioration, then re-baseline the schedule.
7. If the suspension exceeds the contractual limit, the contractor may be able to treat it as an omission or as grounds for termination.
D. Force Majeure: Typical Steps
1. Recognize the event and check it against the contract definition. Look at the listed events, the general test and any exclusions.
2. Give timely written notice. Describe the event, how it prevents performance and the obligations affected. Missing the deadline can bar relief.
3. Mitigate. Use all reasonable efforts to minimize delay and cost, such as alternate suppliers, resequencing and protecting the works.
4. Demonstrate causation. Show that the event actually prevented or delayed critical work, using schedule analysis.
5. Provide ongoing updates and give notice when the event ends.
6. Determine relief. FM usually excuses non-performance and grants an extension of time. Cost recovery depends on the contract. Typically the delay is excusable but non-compensable, although some forms allow cost for certain events, such as those in the country of the works.
7. Consider termination if the event persists beyond the contractual threshold. Payment then typically covers work done and demobilization, but not lost profit.
8. Check related remedies: insurance claims, change-in-law clauses, and the common-law doctrines of frustration or impossibility where the contract is silent.
Delay Classification Refresher
- Excusable and compensable: Caused by the owner, such as an owner suspension for convenience or late site access. The contractor gets time and money.
- Excusable and non-compensable: Neither party is at fault, such as force majeure. The contractor gets time only.
- Non-excusable: Caused by the contractor. There is no time or money, and liquidated damages may apply.
- Concurrent delay: Treatment depends on the contract and jurisdiction. Often the contractor receives time but no money.
4. Key Principles to Remember
- The contract governs. Always identify and follow the specific clause.
- Notice is king. Notices must be written, timely and delivered as specified. Time-bar clauses can defeat valid claims.
- Cure before terminate. Give the other party a fair chance to correct the problem.
- Mitigation is mandatory. A party cannot recover losses it could reasonably have avoided.
- Documentation wins. Contemporaneous records support entitlement and quantum.
- Safety and protection of the works continue during any stoppage.
- Involve the right people. This includes legal counsel, procurement or contracts, the sponsor, sureties and insurers.
- Communicate with stakeholders, including subcontractors, regulators, lenders and the community.
- Update baselines and risk registers after the event, and record lessons learned.
5. Exam Tips: Answering Questions on Termination, Suspension and Force Majeure
Tip 1: Look for 'review the contract' first. When a scenario describes a breach, a stoppage or an extraordinary event, the best first action is usually to review the relevant contract clauses. Distractors often push you to act before checking terms.
Tip 2: Termination is the last resort. Eliminate answers that terminate immediately. Prefer answers that document the problem, issue a cure or show-cause notice, meet with the party and escalate through dispute resolution.
Tip 3: Choose written, formal notice over verbal action. Phone calls and emails 'to discuss' rarely beat formal notice under the contract clause when entitlement is at stake.
Tip 4: Spot the trigger words.
- 'Owner no longer needs the facility' or 'funding withdrawn' with no contractor fault points to termination for convenience.
- 'Repeatedly fails to correct defects despite notices' points to termination for default, after the cure process.
- 'Owner has not paid for 60 days' points to the contractor's right to suspend, after notice, and possibly to terminate.
- 'Earthquake', 'pandemic lockdown' or 'war' points to force majeure or exceptional event: notice, mitigation and EOT.
Tip 5: Know the default entitlements.
- Force majeure: time yes, money usually no.
- Owner suspension for convenience: time and money.
- Contractor-caused suspension: neither.
- Termination for convenience: costs incurred plus a reasonable demobilization allowance, usually without anticipated profit on unperformed work.
Tip 6: Mitigation and safety always score. If an option includes securing the site, protecting the work, keeping people safe or minimizing the impact, it is often part of the correct answer.
Tip 7: Do not over-apply force majeure. Foreseeable risks, normal weather, market price rises and the contractor's own financial problems are generally not FM unless the contract says otherwise. Choose the answer that tests the event against the contract definition.
Tip 8: Respect time bars. If a contractor discovers an FM event or a suspension impact, the best answer submits notice within the contractual period, even before the full cost is known. Details can follow.
Tip 9: Remember the surety and subcontractors. In default scenarios with a performance bond, notifying the surety is a key step. On termination, consider assigning or terminating subcontracts and paying for committed materials.
Tip 10: Think stakeholder engagement and collaboration. PMI favours answers that keep communication open, use partnering or DAAB processes, and seek negotiated outcomes before litigation.
Tip 11: The project manager acts within authority. A PM usually cannot terminate a contract alone. The correct answer often involves consulting the contracts or legal team, or the authorized signatory.
Tip 12: Close out properly. After termination or a long suspension, the correct actions include a joint inventory or site inspection, final accounting, a re-baselined schedule, updated risk registers and documented lessons learned.
6. Sample Scenario Walkthroughs
Scenario 1: A subcontractor has missed three milestones and ignored two emails. The owner's representative tells you to fire them today. Best action: Review the subcontract termination clause, then issue a formal written cure notice with a deadline. Document performance and involve contracts or legal staff. Do not terminate immediately.
Scenario 2: A regional government imposes a sudden lockdown that halts site work. Best action: Check the force majeure or exceptional-event clause, and give written notice within the required period. Secure the site, mitigate the impact and track the delay to the critical path. Request an extension of time and claim cost only where the contract allows it.
Scenario 3: The owner suspends work for four months to redesign a wing. Best action: The contractor protects the works and records standby and extended overhead costs. It then submits timely notice for time and cost, because this is an owner-caused, compensable suspension. It should also check whether the suspension exceeds the period that allows termination.
Scenario 4: The owner terminates for convenience halfway through. Best action: Stop work as directed and protect the work in place. Notify subcontractors and suppliers, then prepare a settlement proposal covering costs incurred, committed costs, demobilization and allowable markup.
7. Quick Memory Aid: 'R.N.C.M.D.'
Review the contract, then Notify in writing. Allow a Cure or Communicate, then Mitigate and protect. Throughout, Document everything.
Summary
Termination, suspension and force majeure clauses control how a project stops, pauses or ends. For the PMI-CP exam:
- Follow the contract.
- Give timely written notice.
- Allow cure before terminating.
- Mitigate and protect the works.
- Classify delays correctly.
- Document thoroughly.
- Favour collaborative resolution over unilateral or emotional action.
Termination, suspension and force majeure are the contract provisions that apply when a construction project cannot continue as planned. They decide who may stop or end the work, when, how, and who pays. For the PMI Construction Professional (PMI-CP) exam, this topic belongs to the Contract Lifecycle and Delivery Methods domain. It tests whether you can protect the project, the organization and the relationship by following the contract rather than reacting emotionally.
1. Why This Topic Is Important
Financial exposure: A wrongful termination can turn an owner's legitimate grievance into a breach of contract by the owner. The owner may then owe lost profits, demobilization costs and damages.
Schedule and continuity: Suspensions and force majeure events disrupt the critical path, resources and supply chains. Handling them well limits delay and cost.
Risk allocation: These clauses are the contract's planned answer to severe risks such as insolvency, persistent non-performance, non-payment, pandemics, war, natural disasters and government action.
Disputes: Most construction claims and arbitrations involve notice, entitlement or valuation after a stoppage. Strict compliance with notice periods is often what decides whether a party is entitled to anything.
Relationships and reputation: Termination is the most adversarial step in contracting. PMI values collaboration, so terminating is a last resort after attempts to cure and resolve.
2. What It Is: Key Definitions
Termination: Ending the contract, or part of it, before the work is complete. The main types are:
- Termination for Default / for Cause: One party ends the contract because the other materially breached it. Examples include abandoning the work, persistent failure to perform to specification or schedule, insolvency, failure to pay subcontractors, corruption or repeated safety violations.
- Termination for Convenience (T for C): Usually the owner's right to end the contract without any fault by the contractor, for example because funding was withdrawn or business needs changed. The contractor is normally paid for work done, costs of demobilization and committed costs, and sometimes overhead and profit on completed work. Lost profit on the unperformed work is usually excluded.
- Termination by the Contractor: Usually triggered by non-payment, a prolonged suspension, the owner's failure to certify payments, or the owner's insolvency.
- Mutual Termination / Termination by Agreement: Both parties negotiate an exit and settlement.
- Termination after Prolonged Force Majeure: Many contracts let either party terminate if an excepted event continues beyond a set duration.
Suspension: A temporary stop to all or part of the work while the contract stays in force.
- Owner-directed suspension: The owner orders the work stopped, for example for convenience, funding, design review, safety or permits. If the contractor is not at fault, it is usually entitled to time and cost.
- Contractor suspension: Usually a right to suspend or slow the work after non-payment, following written notice.
- Suspension for cause: The owner may stop work that is unsafe or non-conforming. The contractor is usually not entitled to compensation when it caused the problem.
Force Majeure (FM): An extraordinary event or circumstance that:
- is beyond the reasonable control of the affected party,
- could not reasonably have been foreseen or provided against before contract signing,
- could not reasonably have been avoided or overcome once it arose, and
- is not substantially attributable to the other party.
Typical examples are war, terrorism, riots, epidemics or pandemics, natural catastrophes, nuclear contamination, and certain government actions such as embargoes or lockdowns. Ordinary bad weather, price increases, labour shortages and a party's own financial difficulty are usually not force majeure unless the contract says so.
Standard Form Reference Points (useful context):
- FIDIC 2017:
- Clause 8.9: Employer's suspension.
- Clause 15: Termination by the Employer, including 15.2 for default and 15.5 for convenience.
- Clause 16: Suspension and termination by the Contractor, including 16.1 suspension after notice for non-payment.
- Clause 18: Exceptional Events, which replaced the term 'Force Majeure'. Notice is due within 14 days. Either party may terminate if the work is prevented for 84 continuous days, or for multiple periods totalling more than 140 days.
- AIA A201: Article 14 covers termination by the contractor, termination by the owner for cause, suspension by the owner for convenience and termination by the owner for convenience.
- NEC4: Section 9 covers termination. Prevention events are treated as compensation events.
3. How It Works: The Process
A. Termination for Default: Typical Steps
1. Identify and document the breach. Use daily logs, inspection reports, schedule updates, payment records and correspondence.
2. Review the contract. Check the grounds for termination, the required notices, cure periods, the notice addresses and who has authority to sign.
3. Issue a notice to correct, cure notice or show-cause notice. State the breach, the required corrective action and the deadline.
4. Allow the cure period and continue communicating. Escalate through the contract's dispute-avoidance mechanisms where appropriate, such as meetings, mediation or a Dispute Avoidance/Adjudication Board (DAAB).
5. Notify the surety if a performance bond exists. The surety may have takeover or tender rights.
6. Issue the formal termination notice exactly as the contract requires.
7. Take possession and secure the site. Inventory materials, equipment, documents and work in place. Take assignment of key subcontracts and supply agreements if the contract allows.
8. Complete the work. Use the surety, a replacement contractor or self-performance.
9. Final accounting. Value the work done and deduct the excess cost of completion, damages and back-charges. Settle the balance.
Risk to remember: If a termination for default is later found wrongful, many contracts, particularly US government and AIA-style contracts, convert it into a termination for convenience. Otherwise it may be treated as a breach by the terminating party.
B. Termination for Convenience: Typical Steps
1. The owner gives written notice and states the effective date and scope.
2. The contractor stops work, places no further orders, terminates or assigns subcontracts, and protects the work in place.
3. The contractor submits a settlement proposal. This covers work performed, materials, demobilization, subcontractor settlement costs and the allowable markup set by the contract.
4. The parties negotiate and close out, including transfer of documents, warranties and materials.
Note that courts expect good faith. Using T for C to rebid the work to a cheaper contractor, or in bad faith, may be challenged.
C. Suspension: Typical Steps
1. Issue or receive written notice. It should state the reason, the scope and the expected duration if known.
2. Protect, store and secure the work, materials and site. This includes safety, weather protection and insurance continuity.
3. Demobilize or retain resources sensibly, and record standby costs.
4. Keep contemporaneous records of idle labour and equipment, extended overheads and escalation.
5. Submit notices of claim within the contractual time limits for an extension of time (EOT) and cost.
6. Resume work on instruction. Jointly inspect for deterioration, then re-baseline the schedule.
7. If the suspension exceeds the contractual limit, the contractor may be able to treat it as an omission or as grounds for termination.
D. Force Majeure: Typical Steps
1. Recognize the event and check it against the contract definition. Look at the listed events, the general test and any exclusions.
2. Give timely written notice. Describe the event, how it prevents performance and the obligations affected. Missing the deadline can bar relief.
3. Mitigate. Use all reasonable efforts to minimize delay and cost, such as alternate suppliers, resequencing and protecting the works.
4. Demonstrate causation. Show that the event actually prevented or delayed critical work, using schedule analysis.
5. Provide ongoing updates and give notice when the event ends.
6. Determine relief. FM usually excuses non-performance and grants an extension of time. Cost recovery depends on the contract. Typically the delay is excusable but non-compensable, although some forms allow cost for certain events, such as those in the country of the works.
7. Consider termination if the event persists beyond the contractual threshold. Payment then typically covers work done and demobilization, but not lost profit.
8. Check related remedies: insurance claims, change-in-law clauses, and the common-law doctrines of frustration or impossibility where the contract is silent.
Delay Classification Refresher
- Excusable and compensable: Caused by the owner, such as an owner suspension for convenience or late site access. The contractor gets time and money.
- Excusable and non-compensable: Neither party is at fault, such as force majeure. The contractor gets time only.
- Non-excusable: Caused by the contractor. There is no time or money, and liquidated damages may apply.
- Concurrent delay: Treatment depends on the contract and jurisdiction. Often the contractor receives time but no money.
4. Key Principles to Remember
- The contract governs. Always identify and follow the specific clause.
- Notice is king. Notices must be written, timely and delivered as specified. Time-bar clauses can defeat valid claims.
- Cure before terminate. Give the other party a fair chance to correct the problem.
- Mitigation is mandatory. A party cannot recover losses it could reasonably have avoided.
- Documentation wins. Contemporaneous records support entitlement and quantum.
- Safety and protection of the works continue during any stoppage.
- Involve the right people. This includes legal counsel, procurement or contracts, the sponsor, sureties and insurers.
- Communicate with stakeholders, including subcontractors, regulators, lenders and the community.
- Update baselines and risk registers after the event, and record lessons learned.
5. Exam Tips: Answering Questions on Termination, Suspension and Force Majeure
Tip 1: Look for 'review the contract' first. When a scenario describes a breach, a stoppage or an extraordinary event, the best first action is usually to review the relevant contract clauses. Distractors often push you to act before checking terms.
Tip 2: Termination is the last resort. Eliminate answers that terminate immediately. Prefer answers that document the problem, issue a cure or show-cause notice, meet with the party and escalate through dispute resolution.
Tip 3: Choose written, formal notice over verbal action. Phone calls and emails 'to discuss' rarely beat formal notice under the contract clause when entitlement is at stake.
Tip 4: Spot the trigger words.
- 'Owner no longer needs the facility' or 'funding withdrawn' with no contractor fault points to termination for convenience.
- 'Repeatedly fails to correct defects despite notices' points to termination for default, after the cure process.
- 'Owner has not paid for 60 days' points to the contractor's right to suspend, after notice, and possibly to terminate.
- 'Earthquake', 'pandemic lockdown' or 'war' points to force majeure or exceptional event: notice, mitigation and EOT.
Tip 5: Know the default entitlements.
- Force majeure: time yes, money usually no.
- Owner suspension for convenience: time and money.
- Contractor-caused suspension: neither.
- Termination for convenience: costs incurred plus a reasonable demobilization allowance, usually without anticipated profit on unperformed work.
Tip 6: Mitigation and safety always score. If an option includes securing the site, protecting the work, keeping people safe or minimizing the impact, it is often part of the correct answer.
Tip 7: Do not over-apply force majeure. Foreseeable risks, normal weather, market price rises and the contractor's own financial problems are generally not FM unless the contract says otherwise. Choose the answer that tests the event against the contract definition.
Tip 8: Respect time bars. If a contractor discovers an FM event or a suspension impact, the best answer submits notice within the contractual period, even before the full cost is known. Details can follow.
Tip 9: Remember the surety and subcontractors. In default scenarios with a performance bond, notifying the surety is a key step. On termination, consider assigning or terminating subcontracts and paying for committed materials.
Tip 10: Think stakeholder engagement and collaboration. PMI favours answers that keep communication open, use partnering or DAAB processes, and seek negotiated outcomes before litigation.
Tip 11: The project manager acts within authority. A PM usually cannot terminate a contract alone. The correct answer often involves consulting the contracts or legal team, or the authorized signatory.
Tip 12: Close out properly. After termination or a long suspension, the correct actions include a joint inventory or site inspection, final accounting, a re-baselined schedule, updated risk registers and documented lessons learned.
6. Sample Scenario Walkthroughs
Scenario 1: A subcontractor has missed three milestones and ignored two emails. The owner's representative tells you to fire them today. Best action: Review the subcontract termination clause, then issue a formal written cure notice with a deadline. Document performance and involve contracts or legal staff. Do not terminate immediately.
Scenario 2: A regional government imposes a sudden lockdown that halts site work. Best action: Check the force majeure or exceptional-event clause, and give written notice within the required period. Secure the site, mitigate the impact and track the delay to the critical path. Request an extension of time and claim cost only where the contract allows it.
Scenario 3: The owner suspends work for four months to redesign a wing. Best action: The contractor protects the works and records standby and extended overhead costs. It then submits timely notice for time and cost, because this is an owner-caused, compensable suspension. It should also check whether the suspension exceeds the period that allows termination.
Scenario 4: The owner terminates for convenience halfway through. Best action: Stop work as directed and protect the work in place. Notify subcontractors and suppliers, then prepare a settlement proposal covering costs incurred, committed costs, demobilization and allowable markup.
7. Quick Memory Aid: 'R.N.C.M.D.'
Review the contract, then Notify in writing. Allow a Cure or Communicate, then Mitigate and protect. Throughout, Document everything.
Summary
Termination, suspension and force majeure clauses control how a project stops, pauses or ends. For the PMI-CP exam:
- Follow the contract.
- Give timely written notice.
- Allow cure before terminating.
- Mitigate and protect the works.
- Classify delays correctly.
- Document thoroughly.
- Favour collaborative resolution over unilateral or emotional action.
Test mode:
PMI-CP - Termination, Suspension and Force Majeure Example Questions
Test your knowledge of Termination, Suspension and Force Majeure
Question 1
A contract lets the contractor suspend or slow work if a certified payment remains unpaid. Before doing so, the contractor must give written notice and wait for the stated notice period to pass. The owner missed a certified payment, and the contractor's project manager is now ten days into a 21-day notice period. The site team proposes demobilizing crews to cut losses. What should the project manager do?
Question 2
In construction contracts, what is the key feature that distinguishes termination for convenience from termination for default?
Question 3
A contract defines force majeure as an exceptional event beyond a party's control that it could not reasonably have foreseen or avoided, with notice due within 14 days. The contractor gives timely notice claiming force majeure for steel delays caused by a fabricator's shutdown. The owner's project manager finds that the contractor placed the steel order eight weeks later than its own baseline schedule required, and that the fabricator announced the shutdown before that order was placed. How should the project manager respond to the claim?
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