In the previous post we examined the key components required to demonstrate an effective Extension of Time (EoT) claim from the perspective of the main headings that need to be addressed. It could be argued these headings form the basis of any claim event.
An integral element of this is the Delay Analysis employed.
There are effectively two major forms of Delay Analysis, these being:
• Impacted As Planned Delays Analysis
• Time Impact Analysis
We will investigate these in greater depth in the next posts.
However prior to this we need to evaluate the essential elements of a successful claim. This can be summed up as the 4 main requirements, these being:
We could ask the question, What is a claim? It can be defined as follows:
A claim is an assertion of a party’s rights under the terms of a contract or at law.
In the construction industry, a claim is usually in relation to additional time, additional payment or both additional time and payment. A significant driver of a claim will be variations to the contracted works which increase the scope and / or complexity of the works that have been contracted for. By way of example the following could lead to a claim for variation:
• Change to the quantity of works
• Change to the quality or characteristics of work
• Change to the sequence or timing of works
• Change to the levels, positions and / or dimensions
• Omission or addition of works
Some of these examples of variations to the contracted works may also lead to a claim for an EoT which may lead to additional payments being due as a consequence. However this can also prevent the deduction of “Liquidated and Ascertained Damages” (LAD’s) as the EoT (even if granted without costs) moves the date for the completion of the contract works.
Almost any claim, irrespective of form of contract will require the Contractor or Sub-Contractor to demonstrate that they have suffered a delay in some shape or form and here the programme is critical in demonstrating the delay. In effect the programme is both the Contractor or Sub-Contractors plan to complete the project works but also the yardstick to measure delays based on actual progress against the programme.
Most forms of contract require the Contractor or Sub-Contractor to submit a programme within a stipulated time frame, which then becomes the Contract (Baseline) or Approved Programme and updated accordingly periodically. A Joint Contract Tribunal (JCT) form of contract requires the programme to be submitted as soon as possible after the execution of the contract. However this will be to the start and completion dates that will be included within the contract data.
The programme update requirement should be stipulated in the contract, but for the protection of both parties should be at least within each Application for Payment (AfP) period. These updated programmes will be a record of progress made thus far and also be able to predict events that are yet to take place, based on the update. This is particularly relevant where an activity moves onto the critical path of the programme. In the event an EoT has been claimed and granted, this should be reflected on the next period updated programme and in particular showing where the contract-end date has moved to. This is particularly important where LAD’s could be levied.
In the event of a claim, it is good practice to produce an “As Build” programme at the start of any delay as this will provide a detailed record of actual progress that can be demonstrated at the time that the delay has crystallised.
It also needs to be borne in mind that not every delay will lead to a change in the completion date as the possibility exists that if the event is not on the critical path that the delay can be mitigated by moving the sequence of the programme around, however this could lead to disruption, which in itself could be subject to a financial claim. This could be on a number of grounds, although this list is not exhaustive, such as:
• Acceleration costs to catch up on the programme
• Non Productive costs • Additional staff costs
• Abortive costs
This leads to the question. What should the Contract or Approved Programme demonstrate?
• The intentions of the party at the time of contract
• The time and sequence of how the works are planned to be implemented
• A clear critical path
• Dates that require input from the Employer, particularly where it links to the critical path
• Dates that require input from key Stakeholders, particularly where it links to the critical path
• Identify “float” within the programme and who “owns” the float whether it is the Employer, Contractor or the project.
Who owns the float is particularly important as this will be utilised for any delays before the completion date can be affected by any delays. Where the project owns the float any initial delays by either Employer or the Contractor will utilise the float, whereas if the Contractor owns the float, then any Employer delays can immediately have an impact on the project end date.
You have had a delay event, its impacted on the end date of the contract and will attract a cost, what three things are critical to being able to demonstrate this delay successfully?
• Good records
• Good records
• Good records
And perhaps most important of all, a claims specialist to ensure that not only is the claim prepared in accordance with the contract requirements but in a way that is easy to follow and able to allow a third party to assess and determine liability in favour of the company bringing the claim.