Types of Delay Claims

Types of Delay Claims

Delay, productivity losses and disruption are three intrinsically related concepts that may significantly affect the outcome of a construction project.

Disruption may result from acceleration or from site or other conditions which were unforeseen by the contractor.

Productivity losses may result from acceleration, disruption or from mitigated delay. It has generally been accepted that claims involving these concepts are more difficult to prepare and quantify than those based on “pure delay”. When the theoretical and practical aspects of preparing claims that feature analyses of productivity and disruption are considered, the following becomes apparent:

Construction contractors tend to have insufficient comprehension of the information systems that are required for effective claim preparation; this includes site diaries and other site documentation, as well as programming and progress reporting systems.

As with other impacts, it is preferable if productivity analyses are conducted with reference to actual field data, as opposed to relying on initial estimates.

Learning curve effects can be analysed by referring to a project’s productivity records, and are most significant on repetitive projects where the repetitive elements are substantially similar.

The party preparing a construction claim should not lose sight of the basic elements required to prove damages in common law.

Retrospective longest path analysis

In the retrospective longest path analysis approach, the focus lies on determining the critical path as it actually unfolded during the project, distinct from the contemporaneous or actual critical path identified through other methods.

This methodology involves several steps to unveil insights into project performance. Initially, the delay analyst establishes or verifies a detailed as-built schedule, capturing the project’s actual timeline accurately.

Subsequently, tracing back from the project’s completion date, the delay analyst identifies the longest continuous path – the retrospective as-built critical path. This path showcases the sequence of activities that significantly influenced the project’s overall duration & completion.

Further investigation into project records ( site diaries, correspondence, meeting minutes, interviews etc.) follows to understand the causes behind identified critical delays. By scrutinising events and circumstances throughout the project’s lifecycle, the analyst gains insights into factors contributing to deviations from the planned timeline.

However, it’s essential to acknowledge a limitation of this method: its relatively constrained ability to accommodate shifts in the critical path during project execution.

While effective in pinpointing key delays and their causes, this approach may not fully capture instances where the critical path underwent changes during the project’s progression.

A loss of productivity, or disruption claim is in relation to labour and the costs thereof, bringing in to question the assumptions made by the Contractor when tendering. However, Owners must be aware that if they have provided information which the Contractor has relied upon in assessing the productivity that they believe they will achieve, and that information proves to be incorrect, then the Contractor may have valid claims, even if the Contract seeks to preclude such claims.

It is essential therefore for a Contractor to implement adequate site controls to enable presentation of delay and disruption claims in a timely manner to accurately assess the impact and to document claims adequately.

For a more detailed discussion of these, refer to “Delay and Disruption in Construction Contracts” Keith Pickavance, “Construction Delay Claims” Barry B. Bramble and Michael T. Callihan and “Construction Scheduling; Preparation, Liability, and Claims” Wickwire, Driscoll and Hurlbut. Summarised below.

Definition of a Delay Claim for – Disruption, Acceleration or Loss of Productivity

In construction claims, a delay can be two things. It can be the time during which some part of the construction project has been extended beyond what was originally planned due to an unanticipated circumstance. A delay can also be the incident that affects the performance of a particular activity, without affecting project completion. An incident of delay can originate from within the contractors organization or from any of the other factors interacting upon the construction project. Incidences of delay from within the contractor’s organization are essentially those occurrences that the contractor itself has caused. Incidences outside of the contractors organization may be caused by the owner, the designer, other prime contractors, subcontractors, suppliers, labour unions, nature, or any number of other organizations and entities that participate in the construction process.

Project Impacts

In order to understand and assess productivity and disruption, it is important to understand some of the basic terms and logic that the industry uses when describing

such events.

Foreseen events – those within the Contractor’s control, such as their resource levels or material procurement program, or may not be within their control but imposed upon them by the Contract conditions such as inclement weather.

Unforeseen events – Owner changes, ground conditions, industrial action, changes to legislation, safety issues, acts of god and the such like.

Impact claim – is defined as any claim relating to lost productivity, disruption, acceleration or delay.

Acceleration – is a means of mitigating a delay in a construction program by allocating more resources to a project so that critical activities are performed in less time. Acceleration may also be as a result of a Contractor planning to complete a project earlier than the allotted time. As a consequence, acceleration should be viewed as the alternative to delay, giving both the Owner and the Contractor the option to accept delay, possibly with costs, or acceleration, most likely with costs.

Float – Contingency in programmed duration, which is either built in to the programmed duration, or identified within the programme of works.

Disruption – material alteration, uncontemplated by the Contractor, of the performance conditions expected of the Contractor at the time of bidding.’ However, a prudent Contractor, bidding in a commercially realistic environment, would allow for some disruption to the progress of his/her works. When disruption occurs, the Contractor is unable to proceed with work at the rate that he/she had planned and thus incurs inefficiencies and therefore costs. This definition of disruption encompasses interference, where the Contractor is prevented from proceeding as planned due to the actions of other project parties (e.g. variations ordered by the Principal) and interruption, where the Contractor is forced to temporarily stop working (e.g. industrial action).

Loss of Productivity – may occur as a result of acceleration or disruption of a Contractors workforce, thus resulting in extra costs. Productivity losses occur due to the “Principle of Reduced Productivity”, described below.

Activity dependent delay – If a delay occurs on the critical path of a project, then by definition, it will extend the date of completion unless mitigated. This would be termed an activity dependent delay. However, the progress will also be resource dependent, and hence a delay may not appear to delay the end date as there could be float, however, if the resources are critical in say a particular trade, that may delay the end date.

Reduced Productivity

A Contractor plans to allocate resources and time activities in the most efficient and cost-effective manner possible, so therefore, any deviation from his/her planned program may incur lost productivity and therefore additional costs.

The Extension of Time or “Pure Delay” Claim

If a Contractor has experienced a delay on the critical path of the works, that is not of his or her doing he/she would normally be entitled to a corresponding extension of time to fulfil his/her contractual requirements (an “excusable delay”). Dependent upon the conditions of the contract that the Contractor may have entered into, this delay may not need to be on the critical path of the works.

The Contractor will however have to address issues of concurrency of delay when making the claim.

The Delay Cost Claim

If a Contractor is entitled to an extension of time to completion of their works, then in certain circumstances it follows that the Contractor will also be entitled to the costs incurred as a direct result of that delay.

The Direct Acceleration Cost Claim

If a Contractor accelerates his/her work and the acceleration is compensable, there are direct costs associated with the acceleration that it may be able to claim.

The Loss of Productivity Claim

The costs of loss of productivity may arise from acceleration or disruption. In the case of acceleration, this claim may be regarded as an indirect acceleration cost claim. Whether the costs are compensable will depend on the contract or the common law entitlement.

Presentation of Project Programme or Schedule

The standard tool used for the planning and control of progress is the Critical Path Method (CPM) of scheduling activities.

In order to assess the impact of delaying and/or disrupting events on the progress of a project it has become accepted practice that CPM scheduling forms the basis of such assessment.

Any schedule errors , scope omission or missing logic needs to be corrected before proper assessment of delays can commence.

It is now the general view in America in that the Project owns the float.

In my view, this will only encourage Contractors to produce programs of many critical or near critical paths to remove float entirely.

The difficulties in determining criticality will almost certainly be exacerbated if the Contractor’s construction program is unsatisfactory. For example, on one large project with several possible critical paths, the Contractor’s program may contain the following problems:

Concurrency of Delay

“Concurrent delays” is the term given to the situation where a Contractor is delayed by a delay of the Owner or his agents “an excusable delay” which may entitle the Contract to an extension of time and is also delayed by an event which is within his control and would not on its own be grounds for an extension of time (a “non-excusable delay”).

The question in this situation is whether the Contractor is entitled to an extension of time and costs of that delay or simply an extension of time.