Productivity
What Works When Contractors Calculate Project Disruption Claims
An aerial view of a gas plant under construction, where any disruption can be costly and some means of calculating a claim are better than others, according to HKA's new study.
Inefficiencies and lost productivity caused by owners are harder for contractors to document than the more commonly understood delay claims, which concern matters that extend the time to complete a project.
So making a claim for disruption, as opposed to delay, requires convincing proof and documentation.
That is one of the key takeaways from a newly issued report from HKA, the claims consultant, the second it has published on disruption assessment.
Numerous construction lawyers have weighed in on the subject, too, but HKA's report, written by Partner Derek Nelson, has the international perspective that characterizes HKA's practice and familiarity with courts and claims tribunals around the world.
Nelson, citing numerous studies of the subject, identifies a dozen different methods of quantifying lost productivity, with the most popular being Measured Mile, which compares disrupted pace of production to an undisrupted rate, and Earned Value, which measures progress against a planned schedule or budget.
Nelson discusses the different methods in detail, including systems dynamics modeling, which was invented in the 1950s and shows the complex and varied repercussions of changes and additions to a project. Those include sustained use of overtime, fatigue, work errors and additional hiring that leads to dilutions of skills.
Using data from the project in question, rather than from general studies of construction productivity, is best in formulating a claim.
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"...Project practice-based approaches whose calculations are drawn from the project records," Nelson writes, "are expected to be more credible than alternative general approaches." He cites a 2004 study published by the Association for the Advancement of Cost Engineering on lost labor productivity in construction claims.
Courts and other tribunals "prefer estimations of damages that are directly linked to the disputed project and supported by its contemporaneous documentation," Nelson writes.
"This again highlights the importance of keeping good records from the outset of the project," he concludes, which allows the contractor to "reliably quantify and successfully claim for lost productivity" by showing that damages are associated with a cause.
