Article in Electrical Times, December 2002
VALUING DELAY AND DISRUPTION
by John Russell FCIOB ACIArb
The Society of Construction Law has produced its final version
of the “Delay and Disruption Protocol”. The object is
to provide guidance to those who submit or respond to applications
for extension of time and additional costs. The intention is to
“provide a means by which the parties can resolve these matters
and avoid unnecessary disputes”. Whilst it has no formal status,
the protocol will inevitably to be used as a source of reference,
initially on larger
projects. So what are the key recommendations?
Programme and records
A key essential is the early agreement of a programme, showing planned
approach and sequences. This serves both as a management tool for
progressing the works, and a baseline for recording and agreeing
effects of delays and variations. As to site records, the precise
format and frequency should be agreed between the parties at the
outset.
Sorting out problems at the time The partiers are encouraged to
identify and resolve problems at the time, together with extension
of the period and agreement of additional costs. This approach should
reduce end of job disputes.
Programme float
General float in the programme is there for the benefit
of the project , rather than “owned by the sub-contractor”.
However, the protocol suggests that specific contingency allowances
may still be retained for the benefit of the sub- contractor, providing
they are clearly shown and described on the programme. Where the
parties have agreed at the outset to attempt an “early finish”
or “target” programme, the protocol suggests that delay
which eats into this “end
float” may entitle the sub-contractor to financial compensation,
although no extension is required.
Concurrent delay
Where two causes of delay run side by side, one which is
compensable and one is which culpable (ie the sub-contractor’s
own fault), this should not reduce entitlement to extension of time.
However, financial compensation is only applicable where the costs
can be clearlyshown as flowing from the compensable delay.
Mitigation
The protocol recognises the common law duty of the sub-contractor
to mitigate the effects of delays and costs. However, this duty
should not involve the use of “special measures” eg
extra labour and weekend working). In other words, mitigation should
not involve significant additional costs.
Variations
The effects of variations, both in time and money, are
best agreed up front, including any alterations to the programme.
Where the character or conditions of the varied works differs from
that set out within the original documents, then most existing contracts
provide for revised rates to be agreed.
Prolongation costs
Prolongation costs , where financial entitlement is established,
should be based on actual costs incurred at the time of the delay,
rather than the “tail end” over-run. Use of tender allowances
as a basis is discouraged.
Global claims
Rolled up “global” claims are strongly discouraged.
Maintenance of good site records should enable the claimant to evaluate
additional costs and attribute them to individual events under the
sub-contract ie “cause and effect”).
Acceleration
Unless the contract contains special provisions, the special
measures and costs of acceleration are best agreed in advance. The
protocol advises against the common practice of claiming “acceleration”
costs after the event, often referred to as “constructive”
acceleration.
Disruption
This is described as “disturbance, hindrance or interruption
to normal working methods”. Good records and labour allocation
sheets are absolutely essential. One approach is to compare productivity
on a “good” area with that on disrupted areas. In some
cases, it may be permissible to use a previous project as a baseline.
Mere percentage assessments are discouraged. However, acknowledgement
is given to the possible use of published research (eg CIOB etc).
Head office overheads
The protocol recommends that “dedicated overheads”
(eg time spent by head office managers and staff) should be recorded
to individual projects as a matter of routine, so that the claimed
costs can be established and verified. As to the more general overheads
(eg rent and rates etc) it is necessary to prove that a loss took
place due to the prolongation, and that this could not be recovered
elsewhere. If a formula is used, then credit should be made for
additional recovery via variations.
Conclusion
One cannot quarrel with the commendable aims of the protocol.
The emphasis on programming and early identification and management
of problems is very similar to the widely used NEC contract. However,
if the protocol recommendations are diligently followed, there will
be a need for additional staff on site to handle the demanding regime
of notices, records and forecasts. In particular, there is a need
for more planners. The question is whether smaller projects can
accommodate the extra costs required to operate the procedures.
Reproduced with permission from Electrical Times
(http://www.jrconsultant.co.uk)
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