What to consider when formulating a construction delay claim

From time to time construction projects are delayed by events outside the control of the contractor and due to no fault of the contractor. Also, on some projects there are scope increases which may require extra time to complete.
 
Contractors need to submit a delay claim (change order) requesting an extension to the milestone completion dates. This extension is necessary to avoid penalties or damages being imposed by the client. In addition the contractor can usually request ​to be reimbursed for the costs associated with the additional time.

Most contractors believe that using the approved Construction Schedule (Programme), with linked tasks and a Critical Path, they can simply input the delays and automatically get a new end date. Essentially this is true, but it doesn’t take into account some factors which could impact the new revised Construction Schedule.

What to consider when your construction project is delayed

1. The revised Construction Schedule may push certain activities into unsuitable weather seasons. ​​
For example 1: the contractor may have planned to complete the excavations and earthworks in the dry season, but because of delays these activities are now pushed into the wet season. In some areas it can be impossible to carry out earthworks in the wet season, but at the very least the rains will cause additional delays which weren’t allowed in the original Construction Schedule.

Example 2: the original Schedule was prepared on the premise that the building being constructed would be weather tight by the time severe cold or rains arrived. Delays to construction could result in the building not being weather-tight before the onset of poor weather resulting in weather related delays which weren’t allowed in the Construction Schedule.

2. The revised Construction Schedule can cause underutilisation of construction resources and equipment, such as large cranes which may have to be re-established again on the project, or could be under-utilised for a period.

3. The revised Schedule may have resource peaks and troughs. This might result in resources (men and equipment) having to be removed and re-established on the construction project resulting in additional costs.

In fact will you be able to find the additional resources for these peak demands?

4. Pushing out the end date of the project may mean that specialist subcontractors and equipment might not be available as they are already committed to other projects.

Case study: On one earthworks project that was both delayed and increased in Scope, most of the equipment had been ordered for the original project duration and was committed by the supplier to another project at the end of this time. At the end of the original contract period the supplier removed all their equipment, even though we weren’t finished using it, and we had to source new equipment which caused us delays and additional costs.

5. Construction materials that have already been ordered may have to be delivered to the project site in accordance with the original Construction Schedule, even though they are no longer needed at that time. This could result in the site becoming congested. Also, the materials probably now have to be double handled, possibly necessitating additional transport and cranes to move them. The alternative is to store the materials and equipment off-site at an additional cost which would include security and unloading and reloading them. There’s also the additional risk of damage to these items with the extra handling and storage.

In addition the contractor usually has to pay for these items because they’re considered delivered by the supplier, but the employer may not pay the contractor for them until they are installed, which will be in accordance with the delayed Construction Schedule – with sometimes dramatic consequences for the contractor’s cash flow.

6. Moving the Construction Schedule out could also move the Schedule to coincide with statutory public holidays. These holidays cause further delays.

In some countries projects shut-down for an extended period over Christmas. Again this period further delays the project. But in addition if the original plan was to have finished the work before this holiday shut-down the contractor will now face additional costs of having to secure the project site and maintain their site facilities over this period.
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7. In some cases the contractor may have planned their Schedule so that major concrete pours occurred before the holiday period. The concrete was planned to cure and gain strength over the break so no time was allowed in the Schedule for this activity. A delay may thwart this plan meaning that the concrete is only poured after the break and the curing time has to be added to the Schedule. A delay of a couple of days could impact the schedule by several weeks.

Other Useful reading:
Negative cash flow – the death for many construction companies
Will your next construction variation claim be successful?
Construction project variations – have you included all your costs?

Conclusion

Formulating a construction delay claim, extension of time claim (change order) is not always straight forward and there is much to consider. What are the knock on impacts of the delay, both in cost and time?

Having a detailed Construction Schedule (Programme) showing all the links, the critical path, and a Schedule that is fully resourced is an essential starting point. Of course it's also helpful if you included with your Schedule submission to the client certain key assumptions you made when formulating the Construction Schedule. This could include work that had to be completed before the start of the wet season, or concrete that needed to be poured before the holiday period. 

Prepare your delay claims carefully to ensure you have not overlooked anything. Then make sure you detail in your claim all the impacts and costs. You normally have one shot to get it right.​

This article is an extract from the book Construction Claims: A Short Guide for Contractors. 
This easy to read book demystifies the claims (change order) processes ensuring entitlements are claimed. Learn when you can claim, how to make claims compelling, and the supporting documentation required to win. Your eyes will be opened to numerous events, costs and impacts. Knowing some of these tips could dramatically improve profits and avoid time consuming acrimonious disputes.
Also included is advice for contractors to avoid and defend claims from employers and subcontractors.

​© 2021 This article is not to be reproduced for commercial purposes without written permission from the author.

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