THE NEW “DELAY AND DISRUPTION PROTOCOL”
A COMMENTARY – Part 7
SOME QUESTIONS ANSWERED
In previous articles, we have commented on the “Delay and Disruption Protocol”, published
by the Society of Construction Law.
This month, we answer some key questions.
Why
is such a protocol needed?
In our industry, the evaluation of entitlements to additional time
and money has been the subject of prolonged disputes, with the parties quoting
all manner of fanciful arguments for and against. The protocol provides a set of common benchmarks and
strategies. This could assist in resolving
contractual problems as the job proceeds, and so minimise end of job disputes.
Is
use of the protocol compulsory?
Use of the protocol is not compulsory. However, it is open to the parties
to incorporate the protocol, in whole or in part, into the original contract
documents. A special supplement is already available for use with JCT forms of
contract. In any event, people will tend to refer to the protocol for guidance
or for support.
What
are the essential elements of the protocol?
Essential elements include:
·
Agreement as to what
and when site notices and records to be used
·
Early agreement of a
detailed baseline programme
·
Regular monitoring
with progress reports
·
Prompt identification
and recording of time and money events as they become apparent
·
Interim adjustment
of time and money as the works proceed
·
Final resolution to
be carried out in a timely manner
What
about variations?
The protocol recommends that all
financial and programme effects of variations be agreed before the works
proceed. However, unless such a procedure is written into the contract, the
sub-contractor should be careful not to delay the project by refusing to carry
out variations until the prices are agreed.
How
should prolongation costs be valued?
The protocol states that
“preliminaries” should be based on actual costs incurred at the time of
delay, rather than the tail end over-run.
Use of tender allowances as a basis is discouraged. This is good news, and
reflects long-established case law, despite the resistance shown by many
clients’ representatives.
Who
owns the “float” in the programme?
The protocol says that general float is there for the benefit of
the project. In other words, the client owns the float. If the sub-contractor wants to retain
ownership of float within his programme, he should show specifically
marked contingency allowances.
What
about concurrent delay?
Where separate delays occur side by side, one the client’s fault and
one the sub-contractor’s fault, this should not be used by the client to refuse
the latter’s entitlements to extension of time. However, financial compensation is only allowed if it can be
clearly demonstrated that the costs relate to the client’s delay.
What
about claims for disruption? Are “global claims” allowed by the protocol?
Global claims are discouraged by the protocol, which takes the view
that, if the claimant has given notices and maintained his programme and site
records, it should be possible to evaluate time and cost effects of individual events. However, the protocol recognises that this is not always possible, and suggests a “measured mile”
approach (ie productivity on a “good” area compared with that on disrupted
areas). In the absence of a “good”
area, then it may be possible to use statistics from a similar project. It may also be relevant to utilise published
research regarding gang strengths, working hours, winter working etc.
Can
the sub-contractor get paid for accelerating his programme?
The principal contracts and sub-contracts make no provision for acceleration. In most cases, the protocol
recommends that acceleration measures and costs should be agreed in advance. As to the common practice of making
retrospective claims for acceleration costs after the event, (ie “constructive”
acceleration), this is to be discouraged. If a sub-contractor finds himself
faced with the necessity to accelerate because of the client’s refusal to grant
an extension of time, the protocol recommends that he refer the matter to
adjudication.
Can a
sub-contractor recover head office overheads as loss and expense?
The protocol recommends that the claimant should record the
expenditure of managerial time by direct costing to the project and the specific
event. As to the use of formula, the claimant should be able to demonstrate
that he has actually suffered a reduction in overheads recovery during the
prolongation period, and that he has been prevented from recovering the
overheads elsewhere (ie because his resources were retained on the over-run
project).
What
are the pros and cons from a sub-contractor’s viewpoint?
If a sub-contractor diligently follows the recommendations from the
outset of a project, he will be in a much stronger position to protect his entitlements. However, there will be a need
for additional site staff , particularly planners. My concern is that smaller sub-contractors may not have the
necessary resources or expertise , and
so lose their entitlements.
Copy of Contract Law column “Electrical Times” May 2004.
John Russell
Construction Contracts & Training Consultants (Established
1984)
Cheshire CW4 7DP Tel : 07770 986444
Email :
swsubbie@globalnet.co.uk Website:
www.jrconsultant.co.uk