On a construction project, it is common for events to occur that delay or disrupt the progress of the works and may, as a result, affect the Contractors and Sub-Contractors [1] ability to complete the works by the completion date. Case studies show that when time lost as a direct consequence of a disruption event accounts for only 3.57%, it was found that the interruptions flowing from the same event can cause a productivity loss of up to 38.99% overall. This delay or disruption can seriously impact a contractor's balance sheet if not accounted for.[2]
Experience has shown that when claims for delay and disruption are made, very often the term delay and disruption is used as meaning the same, but in fact, they are two distinct concepts, and from a contract perspective, it's important to distinguish one from the other. This article aims to untangle delay and disruption by explaining what both concepts mean, the importance of linking cause and effect, how both delay and disruption can be measured and what to be mindful of when making claims for both.
In the context of a construction project, delay refers to the works being affected by events that have a critical effect on the progress of the works and means that the contractor will not be able to complete the works by the completion date. The implications of delay, both for the employer and the contractor, depend principally upon whose fault (under the contract) the event that caused the delay is.
If delay is caused by the employer, the contractor will get an extension of time and possibly also additional money (often known as loss and expense). In addition, liquidated damages will not be payable to the employer if the contractor fails to complete the works by the completion date.
The Society of Construction Law Delay and Disruption Protocol (SCL Protocol) describes disruption as being a disturbance, hindrance or interruption to the contractor's normal working methods, which reduces efficiency/productivity.[3]
The key difference between delay and disruption is that disruption does not necessarily lead to the contractor failing to complete the works by the completion date—i.e. it is non-critical. If disruption is significant or prolonged, it may subsequently cause the contractor to fail to complete the works by the completion date, but, unlike delay, this is not necessarily so in all cases. Disruption does not entitle the contractor to claim an extension of time, but depending on the terms of the contract, it may be entitled to claim compensation to recover any loss and expense that it has incurred in association with the disruption.
A contractor wishing to claim under its contract for delay and/or disruption will need to show cause and effect, i.e. establish that a particular event(s) caused delay/disruption to the works and demonstrate the effects of such event(s) on the progress of the works. Sometimes, although the cause may be clear, the effect can be difficult to map. If there is one clear cause of delay and/or disruption this can be straightforward, but often it is more complex. For example, if one pebble (the cause) is thrown into a river, it is straightforward to map which ripple (the effect) belongs to the pebble. However, if numerous pebbles are thrown, it can be difficult to determine which pebble caused the ripple.
When mapping effect, the investigation will often look at progress schedules, daywork sheets, deliveries and other site records and notices of delays. This information gathering is intended to determine when events occurred, how extensive they were, which physical areas of the project were affected and which elements of the programmed works were affected. It is, therefore, important to collect and preserve records and information during the course of the project. For the contractor, such records will play a crucial role in enabling it to prove its time and money claim—both in relation to the occurrence and effects of a particular event.
Where a contractor has suffered loss or delay caused by two or more events but it is unable to identify the loss and/or delay caused by each individual event, it may be allowed bring a single claim for all of the losses and/or delays arising out of the various events. Such claims, known as 'global claims,' are permissible once the criteria outlined in Walter Lilly v Giles Patrick Mackay [2012] are met.[4]
The SCL Protocol outlines six commonly used methods of delay analysis.[5] Most methods require a baseline programme to compare from, which in effect, outlines the contractors scheduling intentions at tender stage. It would therefore be prudent for contractors to include with its tender, a baseline programme along with a method statement explaining why the works are scheduled as programmed.
One of the most commonly used methods for measuring delay is the 'As-Planned versus As-Built Windows Analysis'. This method of analysis compares the planned performance to the actual or as-built performance evaluating each impact to the critical path (critical path being a dynamic/evolving condition) in a chronological and cumulative manner. Again, it is preferable to start with a baseline programme, but if this is not available, then the programme used for construction should be used. The as-built data can usually be obtained by any combination of schedule updates, daily/weekly reports, allocation sheets or diary entries etc.
When there are significant changes in the planned performance, the analysis should be divided into periods (often referred to as windows) such that the actual performance is compared to the contemporaneous plan. Generally, each period will commence with an approved schedule update (if not approved then one that was used for construction) that includes the changed plan.[6]
Case studies show that when time lost as a direct consequence of a disruption event accounts for only 3.57%, it was found that the interruptions flowing from the same event can cause a productivity loss of up to 38.99% overall. This delay or disruption can seriously impact a contractor's balance sheet if not accounted for
When measuring the level of disruption on a project, like delay, there are several methods for calculating lost productivity resulting from disruption events. They generally fall into three categories of productivity-based methods such as project-specific analysis (PSA), where site-based data is used; project comparison analysis (PCA), where data from other projects is relied upon and industry studies (ISD), where data generated from such studies are relied on to estimate lost productivity.[7]
One such PSA method relied upon is the measured mile analysis. The measured mile approach involves the comparison of productivity rate achieved for periods when work was not impacted by disruption events (this being the 'measured mile') to the productivity rate on identical activities or periods impacted by the disruption events. According to the SCL Protocol [8], the measured mile analysis is the most widely accepted method of calculating disruption. This is because it considers only the actual effect of disruption events for which the employer is responsible, thereby eliminating disputes over the validity of original tender stage productivity assumptions and the contractor's own performance. However, the approach could be limited when (a) there are no affected area / period or (b) the affected period is too abrupt to provide a reliable measured mile, and (c) no similar activities exist to allow for a like-for-like comparison. [9]
Time and money claims are normally based on an express contractual entitlement—i.e. the contract states that the contractor is entitled to time and/or money in certain circumstances. Construction contracts often contain prescriptive notice provisions applicable to time and money claims. One of the most common, and in some cases most crucial notice requirement is for the contractor to give the contract administrator and/or employer an initial notice of the relevant event and/or its claim. Usually, such a notice must be given as soon as possible and/or within a specified time frame. For example, see clause 10.3.1 of the PWC Contract where notice of claim must be issued within 20 working days and substantiated within a further 20 working days.[10]
Under some contracts, timely compliance with this notice requirement may be a condition precedent to the contractor's entitlement to receive any additional time or money, regardless of how well-founded its claim may be. For example, see clause 10.3.1 of the PWC Contract, where the employer is released from all liability should the contractor fail to comply with the relevant notice requirements. An unamended RIAI [11] form of contract has yet to contain such condition precedent provision.
[1] Reference to Contractor also applies to Sub-Contractors
[2] Hamish Lal, Quantifying and managing disruption claims, 1st Ed, 2002, page 162
[3] Society of Construction Law Delay and Disruption Protocol, [2nd Ed part A para 5, part B para 18.1]
[4] [2012] EWHC 1773 (TCC)
[5] Society of Construction Law Delay and Disruption Protocol, [2nd Ed, section 11.4, page 33]
[6] Modeled or Planned v. As-Built - In Periods (John H. McTyre HKA, Aug 2018)
[7] For example, see ‘Change Orders, Overtime, Productivity Manual’ by MCAA [1994]
[8] Society of Construction Law Delay and Disruption Protocol [2nd Ed, section 18.6, page 47]
[9] Disrupted? Prove It! (Fenwick Elliott, Insight Issue, May 2017).
[10] Irish Public Works Contract issued by the Office of Government Procurement
[11] Royal Institute of the Architects of Ireland
