Abstract
This chapter is higher-level reading material, aimed at the more senior contract managers and professionals dealing with critical and more involved issues related to time and costs and claims generally. Delay and disruption claims are described to give the reader an understanding of what they are and the situations they can be applied to. These are important in contract management, as most often delay and disruption (also called loss and expense) claims are pursued by a contractor for losses incurred as a result of the prolongation and/or disruption of the works. As well, global claims are reviewed. Techniques used in order to substantiate the claims and costs quantifications are also reviewed. Other topics such as acceleration, reasonable time, time of essence and mitigation are also reviewed to give the reader a basic understanding of these topics. They are generally complex in nature and require much expertise of any professional who wants to tackle any of them. Finally, a matrix providing loss and expense to claims is added at the end of the chapter (Table 6.1) to give contract managers a guide to identifying and calculating the relevant damages to a particular claim.
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Notes
- 1.
Delays and disruptions in construction projects are frequently expensive, since there is usually a construction leverage involved which charges interest, bonds and guarantees with ongoing fees related to the down payment and performance, management staff dedicated to the project whose costs are time dependent and ongoing inflation in wage and material prices.
- 2.
This is usually, but potentially not in every case, a question of fact and is largely dependent upon the records of events as they occurred.
- 3.
This is largely a question of law.
- 4.
This will often require some sort of delay of analysis of the activities involved and proper records of the data that lead to this knock-on effect.
- 5.
Consequential loss is not usually allowed in any construction dispute.
- 6.
In some ways, loss and expense can be considered as being a contractual mechanism for the recovery of what may otherwise be considered as being damages.
- 7.
Therefore, where a contractor’s costs are materially different from the rates quoted in the contract for preliminaries, there must be a good reason for that difference otherwise the claimed costs may be disallowed in total or in part on the grounds that the costs claimed are unreasonable.
- 8.
In many cases the time fixed by the contract ceases to be applicable on account of some act or default of the employer or the engineer.
- 9.
Or as noted in the contract.
- 10.
Contractors will usually be required to provide notice to the employer, or its representative, of the delaying event. The notice must commence when the contractor becomes aware, or should have become aware of the delaying event.
- 11.
These contractual notices are enforced strictly in accordance with one of the fundamental principles of contract law namely pacta sunt servanda or freedom of contract.
- 12.
Large and lengthy projects will generally be divided into milestones that the contractor must achieve by set milestone dates. In such circumstances, contractors are likely to also be liable for liquidated or general damages if they fail to complete the milestones by the milestone dates.
- 13.
Due to the delays.
- 14.
Also called Acts of God.
- 15.
(1996) 83 BLR 31.
- 16.
This falls under ‘concurrency’.
- 17.
See Chapter 7 for further reading.
- 18.
Some non-critical activities will be delayed by a delay to critical activities on which they were dependent. They may still be non-critical, but they will be undertaken at a later time. This shift in time may not result in additional site overheads overall. It may merely cause the overhead costs to be incurred at a later time.
- 19.
The cost of engineering staff on civil engineering or complex multi-disciplinary projects may be higher than on building contracts.
- 20.
The delay cost related to equipment is the equipment rental charge only. In some cases, there will be reduced hire rates or even no charge for standby or non-operational periods. Where contractor owned plant is involved, invoices are not likely to be available, so an analysis of the costs claimed will have to be made separately.
- 21.
See Chapter 3 for details.
- 22.
British Steel Corporation v Cleveland Bridge & Eng Co. [1981] 24 BLR 100.
- 23.
See Chapter 7 for further reading.
- 24.
[1976] 1 All ER 890.
- 25.
(QBD 1997) 82 BLR 81.
- 26.
[2012] EWHC 1773.
- 27.
He further emphasised that it is open to contractors to prove these three elements with whatever evidence will satisfy the tribunal and the requisite standard of proof.
- 28.
(2010) 182 Cal. App . 4th 1396.
- 29.
The total cost method, similar to the global claim approach, is a methodology which compares the bid price of the project work with the total cost of the project work as performed, attributing the entire cost increase to the acts or omissions of the employer. Although advantageous to contractors, courts (as well as arbitrators and administrative boards) consistently have declared the method imprecise, and frequently have rejected it.
- 30.
Many delay and disruption disputes could be avoided if the parties properly monitored and recorded the aforementioned information. Experts who advise on disputes often find that there is a lack of records, resulting in uncertainty as to when a delay occurred, who caused the delay, and the effects of that delay. Good recordkeeping can remove this uncertainty.
- 31.
The reality is that a small proportion of time, money and effort expended by the contractor in putting in place the aforementioned procedures and record keeping at the outset of a contract could ultimately save him a significant amount of time, effort and money at the end of the contract in having to recover, in arbitration or court proceedings, loss and expense incurred due to delay and disruption to the contract.
References
Society of Construction Law (February 2017) Delay and Disruption Protocol, 2nd edn
Walter Lilly & Company Ltd v Mackay & Anor[2012] EWHC 1773
Books
Burr A (2016) Delay and disruption in construction contracts. Routledge, Abingdon
Gibson R (2015) A practical guide to disruption and productivity loss on construction and engineering projects. Wiley-Blackwell, Hoboken, NJ
Haidar AD (2011) Global claims in construction. Springer Verlag, London
Haidar AD, Barnes P (2017) Delay and disruption claims in construction. ICE Publishing, London
Case Law
Bernhard’s Rugby Landscapes Ltd v Stockley Park Consortium Ltd (QBD 1997) 82 BLR 81
British Steel Corporation v Cleveland Bridge & Eng Co. [1981] 24 BLR 100
Dillingham-Ray Wilson v City of Los Angeles(2010) 182 Cal. App. 4th 1396
John Barker Construction Limited v London Portman Hotel Limited (1996) 83 BLR 31
Mount Charlotte Investments Ltd v Westbourne Building Society [1976] 1 All ER 890
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Haidar, A.D. (2021). Time and Costs—Claims. In: Handbook of Contract Management in Construction. Springer, Cham. https://doi.org/10.1007/978-3-030-72265-4_6
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