PDF | On Mar 26, , Pramen P. Shrestha and others published Delay Claims Analysis in Construction Industry. PDF | Forum papers are thought-provoking opinion pieces or essays founded in fact, sometimes containing speculation, on a civil engineering. incidence of disputes associated with delay claims resolutions. Keywords: delay analysis; construction claims; extension of time; scheduling;.
|Language:||English, Spanish, Arabic|
|Distribution:||Free* [*Register to download]|
2. Bibliography. 3. Appointments of Northcrofts Management Services Ltd on Delay. Claims Industry includes work of Building Construction, Civil Engineering. Claims and disputes under construction contracts will invariably involve a myriad of Keywords: delay and disruption claims, extension of time, concurrent and. Types of Claims. Differing Site or Changed Conditions. Delays. Acceleration. Constructive Construction disputes can often be resolved before they become .
Keywords: Claims, delay, damages, construction industry, disputes. The reasons for delays requirements. It was also observed that there are five potential areas methodology. Delays can be further classified as excusable or which can give rise to disputes: document errors, estimation non-excusable. Some of the practical cases of non-excusable errors, change in conditions, implied promises and agencies delays are incompetent sub-contractor, financial incompetency involved.
Claims however fall under two major categories of the contractor, labour disputes hindering work progress, based on their occurrence i. Critical delay are defined as a delay in any given transmission activity which results in delay of total project and non-critical 3 tower This paper mainly focuses on delay damage claims related to additional cost incurred by the contractor due to delay caused 2.
Evaluation of delay damages are when a contractor bids for a tender, a number of factors are considered Construction of a mall in Mumbai was taken as first case study apart from the labour, material and equipment that are for delay claims. The project cost was around Lakhs Rs.
In tender the duration required to claim amount by contractor was Various reasons for claims observed contractor quotes accordingly.
The quote includes material in this case includes the mainly due to delay in approved cost, labour cost, plant and machinery cost, shuttering drawings. The total built up area was around 6,77, Sq. In an event of prolongation of contract, be deployed on site. Since the work was suspended in the the major factors that are affected are additional overheads, middle of project, the resources like staff, machinery was plant and machinery, labour and material cost, loss of demobilized and transferred to other project, but it was productivity, loss of profit, loss of new business opportunities difficult to transfer the shuttering material to other site since and early mobilization.
S Shuttering Material. Details of claim for Following methodology is adopted for this research work. This This includes identification of claims that occur, factors includes claims for MS shuttering material, labour, overheads responsible for delay, prolongation claim if any, focus on and machinery. Next section gives similar analysis for factors that are affected due to delay in completion the project, construction of hotel and casino in Goa. The delays which occur in construction Claim Claim Importance projects are due to various reasons.
Analysis of three projects Sr. Description No. The range of delay claims by contractor was in the 2 Labour This may 3 Overheads Analysis of delay damages in construction projects. Project Value Claim 2. No description Lakhs Lakhs project Goa Rs. It was noted that the Mumbai. Table 3 gives details of claim for various Goa. As per the conditions the contractor ontractor mobilized the ssite approvals from the local authorities. It was also mentioned with the required resources but ut there was a delay of 1 month that all four locations would ould be made available at the start of in handing over the site.
In this case the amount of claim for project. The duration of project was 45 days. The contractor M. The minimum resources were deployed. The third case study working drawing was not issued and the permission from the includes the construction of power transmission transmis tower local authorities was not taken by the client. This payment may be conditional on completing all or part of the work by the prescribed dates.
Alternatively, the parties might agree the right to compensation for acceleration in principle, to enable acceleration to commence, but the terms of valuing the acceleration effort may be left undetermined. These approaches are each associated with particular risks and opportunities that warrant some further examination. Three scenarios are investigated below. Page6 Lump sum payments An acceleration agreement that fixes a new completion period which is less than what would otherwise be available under the contract , and provides the contractor a lump sum payment,52 is arguably the most balanced approached in terms of risk between the parties.
The employer retains the right to deduct late completion damages should the contractor fail to achieve the revised completion date, but the contractor receives the benefit of an unconditional payment for the acceleration efforts. However, the terms of this kind of agreement must be carefully negotiated.
Except in the most simple of cases, the extent of delay reduction that the desired acceleration might achieve could be difficult to determine before the measures are implemented. The contractor therefore risks incurring liquidated damages that might offset the payment obtained for acceleration if the acceleration fails.
Equally, the benefit that the employer would have otherwise obtained by the acceleration might also be lost if the effort is unsuccessful. To address these risks, Thomas and Wright suggest that the employer might offset the potential additional losses in the event that the contractor fails to achieve the required date, by setting a revised rate of liquidated damages.
Adjusting the rate of damages in the agreement is particularly important, because liquidated damages are recognised as an exhaustive remedy for delay. Conversely, the contractor might also wish to include within its lump sum payment an allowance for risk to cover the additional costs or liquidated damages that might be incurred in the event of a failure to achieve the amount of acceleration required in the agreement.
Reaching an equitable agreement on the terms of payment might therefore require careful negotiation.
Whilst establishing payment terms at the outset might be challenging in the context of pressure from the ongoing delays, the parties do at least obtain commercial certainty of the consequences of failing to meet the intended completion date, potentially reducing the likelihood of a dispute.
This may be applicable where the revised completion date is not fixed, but the acceleration agreement places an obligation for the contractor to use best endeavours to reach an earlier completion date.
As has been explored above, the contractor would be obliged to do all that he can do to achieve the earlier date if best endeavours are required. To provide a degree of certainty, the parties may elect to agree fixed rates for valuing the acceleration.
That was the approach taken by the Court of Appeal in Cleveland Bridge,56 where part of an award for acceleration measures was calculated based on a cost per additional shift introduced to mitigate the delay. If on the other hand the parties agree that the acceleration should be undertaken but fail to stipulate the method of valuation, then the contractor would normally be entitled to a quantum meruit for the work performed. Further deductions were then made for contractor culpable issues "A" and the cost of variations undertaken during the acceleration "B".
The second assumes that the contractor elects to implement different acceleration measures in the order of their consequential cost. On this basis, Arditi and Patel suggest that the increasing costs for the different methods can be allocated to the delay events in order of occurrence.
In practice, such precise apportionment of cost may be challenging. There are also inherent difficulties in relying on a retrospective approach to value acceleration costs. Whilst the basis of such a claim is conceptually simple, an extensive examination of the contract cost records will be necessary to establish the costs associated with the acceleration measures.
Even where records are available, some subjectivity is inevitable in determining what the situation would have been but-for the acceleration, which may act as a catalyst for disputes. It might be preferable, therefore, to express the method of valuation within the agreement before acceleration measures are begun. Conditional payments Possibly more favourable to the employer are acceleration agreements that fix a new completion period, but make payment conditional on the contractor meeting a revised completion date.
On these terms, the contractor faces a double-edged sword, with risk of liquidated damages for failing to complete by the revised date, coupled with loss of the conditional payment for any acceleration efforts implemented. A contractor entering into this kind of agreement would be wise to negotiate an allowance for the additional risk. In John Barker,62 the High Court found that an agreement to accelerate that included for payments conditional on achieving the original completion date despite prior delays was payable at 50 per cent of the agreed amount, on the basis that the contractor lost its chance to recover the additional payment.
Dealing with subsequent delays Davidson stresses that the most important aspect to consider in the agreement for acceleration are methods to manage situations in which the acceleration measures are not wholly, or only partially, successful. To reduce this uncertainty, it may be prudent for parties to incorporate mechanisms for dealing with post agreement delays within the acceleration agreement.
Where the agreement is based on reaching a specific completion date, these could be mechanisms that simply duplicate the existing extension of time machinery in the contract. Continuing to operate the contractual machinery may be the simplest solution, where both parties remain clear on the circumstances that entitle extension of time but preclude recovery of additional payment.
The agreement may therefore require provisions to follow in the event that the revised completion date is unachievable. For instance, should the contractor abandon the acceleration, or continue at the accelerated pace? Page8 7. Conclusion The case law and literature reviewed above has demonstrated that implementing acceleration measures is a potentially complicated decision that is associated with substantial risk.
The acceleration measures can lead to an increase in construction costs that must be reimbursed through additional payment, requiring the parties to enter into an agreement that sets out the terms of the acceleration.
However, the case law in this area has also demonstrated that disputes can arise over the amount of additional payment entitled after implementing the acceleration measures, unless careful consideration is given to allocating responsibility for delays at the time of the agreement, and provision is made to deal with subsequent delays whether under the responsibility of the employer or contractor.
Based on this review, the following are five key recommendations that parties should consider when setting out to negotiate an agreement to accelerate. This decision should take account of any subsisting obligations on the contractor to mitigate delays. Adopting this approach may minimise the risk of disputes arising over the value of payments due later on. Expressly setting out these requirements might avoid the need to rely on a third party determination of the payment due later on.
The practical implications of these recommendations are twofold. First, practitioners looking to implement acceleration measures can identify the key factors which might need to be considered when drafting the terms of any acceleration agreement.
Secondly, by drafting the acceleration agreement to take account of the recommendations set out above, the risks of disputes arising over Page9 payment for the acceleration measures might be reduced. Alan Whaley Const. Raid, D. Arditi and J. Mohammadi, "Integrated system for managing owner-directed project acceleration" 1 Journal of Construction Engineering and Management 77— Keane and A. Baker, B.
Mellors, S. Chalmers and A. Creyke and H.
Bramble and M. Arditi and B. Patel, "Impact analysis of owner-directed acceleration" 1 Journal of Construction Engineering and Management — Livengood and C. Raid, Arditi and Mohammadi, "Integrated system for managing owner-directed project acceleration" 1 Journal of Construction Engineering and Management 77— Cooke and P. Dieterle and T.
Horner and B. Tweeddale, "What are acceleration costs? Thomas and G. Jansma, "Quantifying construction productivity losses associated with an accelerated schedule" Final Report Burns and Roe , July