In principle construction work set out a date in which thernparticular contractor is obliged to complete the work. The contractorrnshould complete the work on the specified date stated in the contract.rnHowever, the practice shows that there are difficulties on the part of therncontractor on the specified date to complete the work on the specifiedrndate. This might be attributable either to lack of calculation the inrnestimation of completion date or other factors that threatens the smoothrnrunning of the project. It might be the employer fault, the contractor faultrnor neutral events. Given the fact that there is potential for delay to occurrnin construction industry it is perhaps surprising that any constructionrnwork is even completed on the specified contract time.rnIt is a lready stated that the contractor might encounter severalrndelaying circumstances during of the course of the work. This mightrnjustify the inclusion of the mechanism that deals with delays which likelyrnto affect the completion date. This is the concept of "extension of time"rnclause. It allows the party to revise the contract period under thernspecified grounds.rn'Extension of time' clause has importance for the contractor andrnthe employer. Extension of time might reduce the contractor's risk inrnrelation to delay by entitling him a time for completion. Other wise he willrnbe subjected to liquidated damage. On the part of the employer itrnpreserves the employer's right to liquidated damage due to act ofrnprevention (faults of employers).rnIt is not untrue that it is only for events stated in the contract as arnrelevant event justified as a ground for extension of time. It might bernneutral events like force majuere of events due to the employer. Mostrnstandard contract forms framed broadly so as to include both events. Ifrnthe contract period lapsed due to employer's fault and this is notrnincluded as a ground then there is a possibility that time will be at large.rnIn this case there is no specific completion date. The contractor isrnexpected to complete in a reasonable time.rnThe issue as to the link between extension of time and the recoveryrnof loss and expenses or extra cost for extended period is controversial.rnMost standard form stated that the linkage between the two lies on thernfact that whether the delay is due to neutral event or the fault of thernemployer. If the delay is due to neutral event, the contractor will notrnrecover the loss and cost for extended time. The contractor bears his ownrncost (the loss lies where its falls). Whereas if the delay is due to thernemployer fault, the employer is liable to pay for the loss & the costs.rnIt is a lso important to note that the inclusion of extension of timernclause does not automatically justify extension of time unless therncontractor complies with the procedural and substantive element in therncontract. The contractor is obliged to give notice for any delay with itsrndetails. Moreover the contractor is entitled to extension of time only ifrnthere is delay due to relevant events that affect critical path (completionrndate).rnFinally most standard forms widely practiced in Ethiopia recognizernliquidated damage as a remedy if the contractor fails to complete a workrnon time. The inclusion of liquidated damage clause and the existence ofrncertain completion date is a prerequisite. Moreover, the amount ofrnliquidated damage should be a genume pre-estimate and should bernrecovered without court proceedings.