VALUING
DELAY AND DISRUPTION
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?
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 clearly shown 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.
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JOHN RUSSELL
BI-MONTHLY SERIES
ARTICLE NO
12 DATED 5/12/02 FOR DECEMBER 2002 “ELECTRICAL
TIMES”
John Russell
Construction Contracts & Training
Consultants (Established 1984)
Cheshire CW4 7DP Tel : 07770 986444
Email :
swsubbie@globalnet.co.uk Website:
www.jrconsultant.co.uk