How to handle disruption in construction
First of all, remember that delay and disruption are not the same thing.
Disruption is the effect an event (or a number of events) has on the efficiency and productivity of a project. Delay and disruption events can be very similar in nature, such as late design information or uncoordinated drawings, but they are not the same.
There are two kinds of disruption claim. The simplest is when a non-critical activity is disrupted, so the activity takes longer, but float time means the project is not critically delayed. The lack of efficiency in completing the activity leads to a greater cost, but because time is not critical, there is no delay and the contractor is not entitled to an extension of time.
A more complex predicament is when cumulative and extensive disruption leads to what may previously have been a non-critical activity becoming critical, resulting in delay and prolongation of the time for completion. In this event, the contractor is entitled to an extension of time, and the demonstrable prolongation costs associated with it.
As disruption does not always delay the time for completion, its assessment is not as simple as prolonging the particular activity, as contractors often claim (as they would for a delay claim).
So how does he explain what he wants?
A contractor normally pursues a disruption claim based on impeded efficiency, loss of labour productivity and the uneconomic use of equipment. The problem is that these aspects are often extremely difficult to assess, because they are reliant upon comprehensive records, not only the records kept through the execution of the work but also the records used when tendering for the project.
The contractor needs to demonstrate his pre-contract calculations of the anticipated productivity for labour, plant and so on were reasonably accurate. The reason this is so important is because the only way to prove disruption is by comparing the anticipated figures with those actually achieved.
A strong disruption claim requires the following prerequisites:
i. Analysis of the activities that suffered disruption. Simply saying it was, doesn’t make it so;
ii. Establishing the cause and effect of the disruption;
iii. Reasonable evidence that the disrupted activities planned in the tender were correct, including the anticipated output, resources and time to complete;
iv. Sufficient calculation of how and why the impacted activities suffered disruption through inefficiency;
v. Demonstration that the duration logged on labour and plant time sheets matched what really happened on-site.
Records, records, records…
If the contractor has accurate records available, he can readily calculate the cost of disruption by simply subtracting the number of hours his tender anticipated from the number of hours actually worked, then multiplying the result by the cost of the particular resources disrupted per hour. Nevertheless, and as per (iii) above, the contractor should also be able to demonstrate clearly that the number of hours originally anticipated were realistic and that he has tried to mitigate the effects of the disrupting events.
In the event the contractor doesn’t have such sufficient records throughout the project, he may look to support his claim for disruption by comparing work performed in one particular period that was adversely affected by events, evidently resulting in a loss of productivity and efficiency.
The contractor would need to have similarly accurate records as those referred to above for his disruption claim to be credible. However, if he is in the midst of a project that historically has not kept sufficiently good records, a special effort could be made to improve the records and focus his claim on that period.
Acceleration?
When acceleration of the progress of the works is required, the cost may include the expense of:
a) Working additional hours;
b) Providing additional labour;
c) Providing additional or different equipment;
d) Advancing the date of delivery of manufactured elements;
The claim that the contractor will likely suffer disruption as a result of accelerating his work through loss of productivity due to the dilution of supervision (more labourers per supervisor), and the lack of sufficient detailed design information to support the accelerated work – as per (ii) and (iv) above – needs to be supported by calculations.
At project level, many prolongation and disruption claims are presented as an allencompassing global claim for commercial/resource reasons. However, that is unadvisable if the claim goes so far as arbitration. To succeed at arbitration, a global claim must demonstrate that it is not possible to disentangle cause and effect and this is therefore a last resort to demonstrate loss: the risk with this is that if the contractor doesn’t push the tipping point of probability in his favour, he risks all of his claim falling away.
As for the conundrum: the better you know your subject, the happier you’ll be with the result.
Craig Gibson works with Omnium International. He is dual-qualified in law and quantity surveying and is a chartered surveyor with experience of ICC and DIFC arbitrations and a passion for simplifying construction, commerce and conflict.
