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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
Provides tools and techniques required to research and prepare a contractual construction claim
This book guides readers through the techniques and approach for properly preparing a construction contract claim and seeing it through. It teaches them how to gather all the facts in order to present arguments concisely, clearly, and forcefully. It focuses on the practical issues of how to research and present a contract claim—whether it be for additional time, prolongation costs, disruption, or revised rates and prices for work due to some changed circumstance affecting construction.
Aimed at those who need to prepare a claim, but just as helpful to those defending one, Preparing Construction Claims offers chapter coverage on everything about planning and programming—the methods for assessing them, as well as regular and computerized techniques. The book covers time chainage/line of balance; bar charts, common sense evaluation techniques; and relevant clauses that all contracts contain. Readers will learn about standard forms and common deviations and modifications made by employers. They’ll also be taught how to establish the entitlement to make a claim from the contract and then shown what to do next. In addition, the book teaches them what to do when their records are insufficient; how to resolve a dispute; and much more.
- A clear and comprehensive, step-by-step guidebook for researching and preparing contractual construction claims
- Includes worked examples of certain types of claims to help readers comprehend the process
- Beneficial to both sides of a claim—teaching each how they should approach one
Preparing Construction Claims is an essential “how to” manual for contractors, subcontractors, and consultants worldwide dealing with all manner of construction disputes and claims preparation.
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Table of Contents
Cover
Copyright
Preface
Introduction
1 Types of Claims
1.1 What Are Claims?
1.2 Measurement Claims
1.3 Changes to the Character Timing, Quality and Content
1.4 Revised Rates and Prices
1.5 Access and Possession of the Site
1.6 Changes
Notes
2 Basis of Claims
2.1 Contractual Basis
2.2 Initial Investigation
2.3 Causation and Liability
2.4 Review of Contract Clauses
Note
3 Contracts
3.1 The Construction and Interpretation of Contracts
3.2 Formation of the Contract and Disputed Terms
3.3 Interpretation of Statutes
3.4 Standard Forms
3.5 Modifications to Standard Forms
3.6 Bespoke/Unique Contracts
4 Available Documents
4.1 Documents Likely to Be Available
5 Records and Notices
5.1 Records
5.2 Contemporary Records
5.3 Source Data
5.4 Other Relevant Evidence
5.5 Maximising Recovery
5.6 Missing Records
5.7 Notices
5.8 Time Bar Provisions and Timing of Notices
5.9 Disclaimers and Reservation of Rights
Note
6 Programmes
6.1 Planning and Programming Techniques
Note
7 Delay Analysis
7.1 What Is a Delay?
7.2 Principles
7.3 Validating the Programme
7.4 Techniques
7.5 Methods
7.6 Conversion of Programmes to Alternate Software
7.7 Critical Path
7.8 Extensions of Time
Note
8 Direct Costs of Changes/Variations
8.1 Definition
8.2 Prolongation Cost/Extended Site Expenditure
8.3 Overheads
9 Disruption
9.1 Definition
9.2 Delay and Disruption
9.3 Global Claims
9.4 Methods
9.5 Other Methods
9.6 Disruption Can Be Separated Under Two Headings
9.7 Typical Claim Heads
Notes
10 Presentation
10.1 Introduction
10.2 Typical List of Contents
11 Disruption Claim Examples
11.1 Disruption
Disruption Claim Example Schedule refer to 11.1.15
12 Prolongation Costs
12.1 Prolongation
12.2 HO Overheads
12.3 The Hudson Formula
12.4 The Emden Formula
12.5 The Eichleay Formula
13 Thickening Claims
13.1 Thickening
Index
End User License Agreement
List of Tables
Chapter 7
Table 7.1 Example delay schedule
Chapter 11
Table 11.1 Abstract from contract baseline programme (paving areas only).
Table 11.2 Recorded production levels for the selected baseline areas.
Table 11.3 Incidence of instructed changes/recorded delay.
Chapter 12
Table 12.1 Personnel schedule information.
Table 12.2 Detailed costs and lists of personnel and equipment claimed.
Chapter 13
Table 13.1 Planned staff deployed example schedule.
Table 13.2 Actual staff deployed example schedule.
Table 13.3 Information and instructions received.
List of Illustrations
Chapter 6
Figure 6.1 A simple bar chart.
Figure 6.2 Simple Network Diagram
Figure 6.3 Example of a time location chart
Figure 6.4 Example of a line of balance chart
Chapter 7
Figure 7.1 An example of a delay analysis sheet.
Figure 7.2 Example original planned intent.
Figure 7.3 Example as‐built.
Figure 7.4 Example planned v collapsed as‐built.
Chapter 9
Figure 9.1 Leonard curve – civil and architectural projects.
Figure 9.2 Leonard curve – mechanical and electrical work.
Figure 9.3 Ibbs curve for combined data.
Figure 9.4 Ibbs curve separating out early normal and late change impact.
Chapter 11
Figure 11.1 Computing ‘late changes’ using the Ibbs formula.
Chapter 12
Figure 12.1 Planned staff.
Figure 12.2 Planned graph.
Figure 12.3 Actual staff.
Figure 12.4 Actual graph.
Chapter 13
Figure 13.1 Increase in resources during construction.
Figure 13.2 Workload comparison graph based on activity count of planned and a...
Guide
Cover
Table of Contents
Begin Reading
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Preparing Construction Claims
Stephen C. Hall
Copyright
This edition first published 2020
© 2020 John Wiley & Sons Ltd
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The right of Stephen C. Hall is to be identified as the author of this work has been asserted in accordance with law.
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Library of Congress Cataloging‐in‐Publication Data Applied for
Paperback ISBN: 9781119166603
Cover Design: Wiley
Preface
When I decided to write this book, the main purpose was to pass on my many years of experience to a new audience and provide a manual for identifying and producing construction claims from first principles. This book sets out techniques and advice – it is not intended to be a treatise on the various forms of contracts that exist, as the main elements required to make and successfully prosecute a claim are contained in all forms of construction contracts.
My aim is to simplify and explain a complex subject, and to provide the tools to research and present any construction claim.
Two quotations were my mantra while writing this book:
An expert is someone who has succeeded in making decisions and judgements simpler through knowing what to pay attention to and what to ignore –
Edward De Bono
If you can't explain it simply, you don't understand it well enough –
Albert Einstein
There are many learned books on construction claims that concentrate on understanding the legal entitlement to making a claim under the various contract terms and conditions of contract used in the industry.
This book tries to answer the following questions:
I know I have a claim, but what caused the delay or extra cost, what type of claim is it and what do I need to prepare the claim?
All construction contracts experience changes and unforeseen events that cause the Contractor to suffer delay or incur additional cost. Whether that change event is claimable relies on an understanding of the contract terms. However, preparing and making a successful claim is reliant on the collection of facts and other supporting evidence to prove what happened and detail the additional costs involved. Without evidence to prove the damage suffered, and the delay or additional costs incurred, the claim will fail.
On design‐and‐construct/turnkey–type projects, there is another obstacle to overcome – the belief by many staff that all events are the Contractor's liability, and hence that there is no need to keep records. This culture is incorrect because, even if there is no entitlement to make a claim against the Employer, records are required to avoid or defend against claims from subcontractors.
The research and collection of evidence and facts is closer to a mixture of detective work and the logical presentation of this evidence to demonstrate what happened, how it affected the construction process and why it is claimable. It requires experience and tenacity, as the personnel involved will often be defensive, feeling guilty about not overcoming the problem. When staff do not understand the requirements of the contract, or are inexperienced, there is often a reluctance to admit failure, or perhaps the mistaken belief that the event is not claimable. The inexperience of site staff can be overcome by education and an explanation of why there are clauses that entitle the Contractor to make claims for additional payment and extensions of time, all of which commonly occur on construction projects. The presentation of the facts uncovered is an art form akin to storytelling. It is more of a narrative skill than a technical construction skill in terms of organising the information and writing the claim to show a logical progression of facts and events leading to the conclusion. Successful presentation of the facts in a lucid, clear manner should ensure that your claim is taken seriously and lead to a realistic settlement.
However, all forms of contracts contain a requirement for the Contractor to give some form of written notice of the intent to make a claim, and it is of little value to later learn that you have a valid contractual right to make a claim if no one kept any records, no research was done and, more importantly, no notice of claim was served. Once the contractual entitlement has been established and notice given of the intent to make a claim, the success or failure of almost every claim relies on producing contemporary records to prove what the event actually did. This part of the process relies heavily on gathering facts and records of what happened, and what impact the event or series of events had on the regular and planned progress of the works. The key facts to determine for any claim are: ‘What?’, ‘Why?’, ‘When?’, ‘How?’, ‘Where?’ and ‘Who?’. The application of these six questions to any task form the ground rules for investigating any potential claim event. Once the answers to these six questions are found, all the facts needed to support the claim will have been assembled.
One of the major problems with construction sites is their complexity and the number of different trades and specialities employed on the site. No single construction project is identical to the next, and each project is essentially a one‐off unique design. While this singular design may contain many elements and trades, which have all been carried out before, the details of each element will be different and designed to suit that project alone. Even with something as repetitive as major road construction projects, while there are numerous standard details and specifications, each project will also contain specific changes to the standard documents, and each element will be unique to that project in some way or other, often driven by the geography of the site.
Claims arise owing to changes from the project as envisaged at tender stage compared to what happened on site. Claims have many sources of change, such as varied ground conditions, late design information, correction of errors and/or supply of missing or additional information, site instructions and variation orders, adverse weather, etc.
Other claims arise from disputes about how work is measured, or changes to the content or character of work from that originally indicated. Some claims relate to how additional work instructions should be valued – whether to use existing Bill of Quantities rates or some new rates and prices to be agreed on. Most, but not all, of these measurement disputes will get resolved after discussions, and a complete understanding of the correct measurement rules to apply is paramount when arguing such matters.
The larger contractual claims and disputes mainly relate to changes to the timing, sequence and duration of work and any resulting delays to completion. Most major disputes arise more about delay claims involving extensions of time and additional payment for delay and disruption than any other cause. Delay claims require detailed research to determine the impact an event had on progress, or whether it caused delay to completion, disruption/production losses and increased site overheads.
The purpose of this book is to provide ideas and guide you through some techniques for finding and uncovering the answers to these questions – and, having gathered all the facts, how to use them to present the argument: concisely, clearly and forcefully.
Introduction
All construction contracts have claims of one form or another. This is driven by the unique nature of the industry, as most major construction projects are one‐off singular designs – unlike manufacturing, where a design can be fine‐tuned to resolve any issues and production optimised to ensure that efficient and regular output is achieved. All forms of construction contracts contain clauses dealing with additional or varied works, delay events and recovery of additional costs. These are needed to accommodate the impact of design changes, errors or omissions, variations and other changes that occur. There are, of course, various types of changes that occur on all construction projects, and the majority of these are resolved without submission of claims or recourse to a formal dispute resolution process.
The practice of making claims is not due to the belligerence of contractors; it is the nature of the construction process itself. All building and civil engineering projects suffer from unexpected events, design revisions and changes during the course of construction. This is not something new; claims for additional payment or extensions of time have been documented and recorded in Case Law for over 100 years. Sometimes the changes that form the root cause of a claim could and should be avoided by more diligence during the design phase, but others are due to unforeseen circumstances or events that can arise during any construction project. Claims are part of the fabric of the contract and arise from the construction process, wherein a design is translated from the two‐dimensional drawings into a three‐dimensional finished project. The various forms of contracts in use all deal with changes to the original project during the construction process and contain rules stipulating the notification and valuation of such changes. Such clauses are wide‐ranging and have evolved into the modern contract forms, which are designed to avoid claims being founded outside the terms of the contract.
Construction projects necessarily involve risks, and the various forms of contracts allocate responsibility for those risks: for example, unforeseen ground conditions, adverse weather, strikes, lockouts, etc., for which each party has obligations under the contract. The original designs, documents, information and tender estimates often contain mistakes. The contract clauses relating to claims, valuation of variations and entitlement to extensions of time all evolved to allocate the liability for such errors or omissions. Some contracts call variations and claims different names (e.g. ‘compensation events’ and ‘change orders’), but ‘what is a claim?’ The answer is simple: a claim is any change to a project that in some way results in additional costs and/or delays that entitle a Contractor to additional payment or an extension of time where a delay to completion has occurred.
Another source of claims is a failure by the Employer to make payments for additional measured works or other valid items claimed in the measured account. If these issues are not resolved, they also become a claim arising from a disputed item or measurement and, at the very least, adversely affect cash flow. In other words, if a new item is claimed in the monthly valuation, and the Contract Administrator agrees with it and, after some negotiations about the price, makes payment, then this is not a claim. If, however, he disagrees and crosses the item out or writes rejecting the item and will not pay for the work claimed, then it is a disputed item and, therefore, a claim – unless, of course, the Contractor withdraws the claim, having accepted the decision of the Contract Administrator. Withholding of payment for works done is also dealt with under all the common forms of contracts as a claim for interest on outstanding payments for work done.
This issue is compounded by the fact that, while many changes and variations can be agreed on with respect to the direct effect of the additional work instructed, the subsequent impact on the programme and overall completion date for the project is more difficult to determine and agree on without further detailed analyses. Claims can sometimes become very emotive, and the Contract Administrator might take the matter personally, especially if it arises from some oversight or poor wording in the contract documents or an error on the drawings. However, a claim should be approached with the same professional manner as all other issues on a construction contract.
Similarly, giving notice of a claim situation should not be shied away from. Most forms of contracts have a procedure that requires the Contractor to give notice. Under certain contracts, failure to give notice within a set timescale can result in the contractor losing all rights to additional payment and extensions of time. Therefore, the contractor should not avoid giving notice; it is not to be viewed as an aggressive act or threat – if a notice has to be given under the terms of the contract, it is merely compliance with that term, and nothing more.
Dealing with claims has always been a case of two distinct views. Those who prefer to deal with any issues as and when they arise, and those who prefer to argue and procrastinate. The parties to contracts often seem to prefer to postpone discussion of an issue, or would rather argue than resolve matters (despite all the hype about ‘partnering’ and various other ‘new’ approaches for cooperation between the parties). The problem may be personal to some construction professionals. It starts with embarrassment at having a claim situation arise, perhaps having believed that the contract was ‘iron‐clad’ or ‘claims‐proof’ and having advised the client of this belief. This denial is then followed by a stubborn refusal to accept the reality of the situation and deal with it. Later, when a formal claim is submitted, it is then a case of ‘too little too late’, as the realisation dawns that they have a serious problem that should have been resolved. The newer forms of contract all advocate dealing with claims quickly as and when they arise, resolving issues long before they become disputes. Of course, the better Contract Administrators always took this approach, and their contracts were managed in a fair and reasonable manner, with all changes and claims being resolved without the need for litigation.
The advent of the New Engineering Contract (NEC) in the UK does not alter the basic requirements of giving notice and keeping records. Furthermore, the NEC does not preclude claims for additional costs and extensions of time; it deals with them in a different way – by calling all of them ‘compensation events’. The main difference is that the impact of instructions or changes that result in a revised completion date, disruption and prolongation costs must be included in the quotation for the compensation event.
There are many forms of claims, and I will differentiate between matters more properly described as ‘variations’ and those that are ‘claims’, requiring more formal submissions and procedures. A claim is any item of additional expense or delay, which the other side refuses to accept. Claims are avoided altogether when the item raised is accepted; it only remains to be priced and agreed on in the time‐honoured fashion. There are matters that have to be investigated before the content or form of claim can be determined. All claim issues require the answer to the same six questions: ‘What happened?’; ‘How did it happen?’; ‘Why did it happen?’; ‘Where did it happen?’; ‘When did it happen?’; and ‘Who is responsible?’.
Starting with these six questions, let us address the fundamentals first:
What happened?
Money is invariably involved, and often time as well. Some event has occurred that has caused additional cost, and potentially a delay as well.
How did it happen?
This is a larger question and requires discussion with the site team to find out the facts. It could simply be the issue of site instructions or the discovery of some unexpected event – for example, uncovering an old pipe and discovering asbestos lagging.
Why did it happen?
Was the event unknown to the Contractor, was it due to instructions or was something else to blame – for example, a fire or flood that destroys a section of work that has to be repaired?
Where did it happen?
This is usually easier to find out, and interviewing the site team will resolve where the event was – for example, which floor, or the chainage along the site.
When did it happen?
May not be quite as obvious; it may take time for the realisation that an element of work had cost a lot more or had been delayed.
Who is responsible?
This question requires detailed knowledge of the contract, its terms, work scope, exclusions, etc.
So, having had a progress meeting with the site staff, or having discovered a hole in the finances at the end of the month when the cost reports are published, how do we go about making a claim?
First, and foremost, it does not matter what type of claim we are talking about – claims against the Employer, insurance claims, contra charges or counterclaims against a subcontractor. There is one fundamental thing that must be done immediately when a claim situation arises: ‘Give written notice of intent to make that claim’. All forms of contract and subcontract contain notice provisions, and the worst thing you can do is to find out later that you had a great claim, but that, because you failed to give proper and timely notice, you have lost all rights to make that claim. There are numerous examples of new contracts where the use of ‘time bars or condition precedents’ is becoming more common. These obstacles to payment, etc., may be written into the Standard Form of Contract, or they may have been incorporated by Employer amendments bound into the final contract documents. The incidence of such time‐bar clauses is widespread, and careful note must be made of the contract terms and of any time limits for notice and submission of claims to ensure that they are adhered to, so that the time‐bar clause cannot be invoked. For example, FIDIC Clause 20.1, Contractors Claims, states that failure to give written notice within 28 days of ‘becoming aware’ of a claim issue results in the claim being invalidated, and all rights to additional payment or extension of time are lost. Having given our notice of claim, what do we do next? The purpose of this book is to explain how to go about successfully identifying, recording and making a claim.
Finally, throughout this book, I will emphasise the importance of keeping records to support the claims that may be made by the Contractor, or for use in defending claims from subcontractors. In recent years, with the increasing use of ‘turnkey’ or ‘design‐and‐construct’ forms of contracts, I have noticed that the staff on such projects fail to see the need to keep records, adopting a false view that, because of the nature of the contract, everything is the Contractor's fault. This cannot be further from the truth, since, even with such design‐and‐construct versions of contracts, the Contractor still has rights to make claims for Employer risk events and defend itself from claims made by others – for example, weather delays or force majeure events may still happen, variations to the scope of work may occur and approvals can be delayed.
Of course, there are many circumstances where the employment of experts and specialists, of various disciplines, is essential to winning the day. However, many simpler claims can be successfully prosecuted and suitable ‘negotiated' settlements achieved by following the basic principles set out in this book. The adage that ‘the better the records, the better the claim submission will be, and hence the better the settlement’ always applies.
1Types of Claims
1.1 What Are Claims?
A claim is an application for additional payment and/or request for an extension of the time for completion due to some change that has affected the construction process, content or timing of the works, and caused additional costs for which recompense is sought. Most internationally recognised standard forms of contract and bespoke forms of contract contain similar clauses that detail the Contractor's entitlement to make a claim for additional payment and/or an extension to the time for completion for any variation or change that was not of its own volition and which causes additional costs or delays and is the liability of the Employer/Owner. Variations and instructions issued by the Owner or its representative may result in a change to the contract scope either by requiring additional work or changing the constituents of the work already included – for example, by varying the specified materials that are to be used. Changes to the design may also affect the complexity of the construction process, making the work more difficult, or perhaps altering the planned method of construction and temporary works required. Changes may also be made to the timing of work and sequence of construction. The typical sources of claim can arise from any one or a combination of the following:
Instructions and variations issued.
Late provision of design information or correction of information.
Revised specifications for materials.
Stoppages or suspension of work instructed.
Changes to the access to and egress from the works.
The impact of adverse weather.
Increased quantities of work as compared to those set out in the contract.
Incorrect descriptions of work items in the Bills of Quantities.
Changes in the laws and customs of the country where the project is being built will also result in claims for payment or additional time.
Claims may also arise where the Employer instructs the Contractor to accelerate the works either to recover lost time caused by variations or some other reason (perhaps even political).
The Conditions of Contract will detail what type of events enable the Contractor to pursue claims for extension of time and/or additional payment from the Employer. Some contracts do not recognise claims but deal with them either as variations or by calling them different names such as ‘compensation events’ or ‘change orders’. All forms of contract require two things to be established for a claim to succeed: first and foremost, it must be notified as soon as possible and certainly within any period stipulated under the terms of the contract; and, second, adequate contemporary records must be kept in order to prove the impact of the event in terms of costs and time. The following is a typical list of events or changes that entitle the Contractor to make a claim for time, extra payment or both, that are included in most forms of contract:
An instruction, variation or other substantial change in the quantity of an item of work included in the contract.
A cause of delay giving entitlement to an extension of time.
Unforeseen physical conditions or artificial obstructions (e.g. changes to the ground conditions from those described in the contract or perhaps the discovery of some artefact that has to be preserved).
Adverse or exceptionally adverse climatic conditions.
Unforeseeable shortages in the availability of personnel or goods caused by government actions (e.g. changes in the law, customs regulations, or visa requirements).
Any delay, impediment or prevention caused by or attributable to the Employer, the Employer's personnel or the Employer's other contractors on the site.
Strikes, lockouts, civil unrest or similar unexpected ‘neutral’ events that may entitle the Contractor to an extension of time but not to any reimbursement for the costs associated with the delay.
The important point is that any source of change or delay to the works must be reviewed and a notice given, since, under most forms of contract, there are strict time limits within which a claim notice must be made in order to preserve the Contractor's rights to make a claim for time or money. It is becoming more common to find that many standard contracts contain (or have inserted under amendment clauses) more stringent time bar clauses or condition precedent clauses that, if not complied with, result in the Contractor forfeiting its rights to an extension of time and payment of additional costs. Therefore, it is imperative that, on starting any new contract, the Conditions of Contract be examined to see what amendments have been made to the standard forms of contract.
1.2 Measurement Claims
These are claims arising from incorrect measurement of the works or incorrect quantities stated on which the tender bid was based and which may change the integrity of the rates and prices for the work. For example:
Incorrect application of any standard method of measurement specified in the contract.
Incorrect or misleading descriptions of the work.
Major differences between the original and actual quantities of work to be performed.
Measurement disputes are no longer as common as they once were as many modern contracts are made using a design‐and‐build form of contract. These do not rely on measurement (or re‐measurement of the works performed) and Bills of Quantities; instead, they stipulate the Employer's requirements and specifications for quality and end performance to be met. In such contracts, there are no formal Bills of Quantities, and it is left to the Contractor to provide its own quantities and estimate its price for the scheme. Previously, most construction contracts included references to methods of measurement, Bills of Quantities and the rules of measurement that applied. This still occurs in some contacts, particularly large civil engineering works where the quantities given in the Bill of Quantities are approximate and must be re‐measured on completion based on drawings, instructions and the actual quantity of work performed. While measurement is a practical, partly academic process, the application of measurement rules can cause disputes to arise if the original Bill of Quantities was incorrectly drawn; items for work performed are found to be missing; or misleading descriptions were used, resulting in arguments about the description quality and quantity of work and the requirement for revised rates and prices. Measurement claims also deal with events that arise because of either a change in the character, quantity, timing or nature of the work, or because of considerable differences between the works described in the Bill of Quantities and the work carried out. When disputes arise, these claims rely either on a proper interpretation of the measurement rules applicable to the work, or on the impact of a change that has occurred which has affected the timing, quantity, quality, and price of the item concerned. Correct measurement and/or application of the rules governing measurement of the work is usually a straightforward issue to determine. However, such matters can easily become a large dispute, depending on the quantity of work, the degree of change imposed or revised prices sought for the actual work performed.
1.3 Changes to the Character Timing, Quality and Content
Some contracts contain restrictions on the entitlement to claim revised prices depending on the proportion of increase or decrease in quantities or other changes that occur. The Contractor must make out a case for new rates and prices for the work as actually performed due to the differences identified. These differences can be a change in the timing, season or alterations from the envisaged method of work due to some imposed restraint on how or when the work can be done. Generally, claims for new rates are based on alterations to the character, quantity, quality, timing or method of working. When the Contractor claims that the work has varied, or that the method of work has been changed, this is usually caused by some alteration to the anticipated production rate. The rates and prices can also be affected by the height above ground, the depth below ground, access and egress, and any other relevant factors that would change the price per unit for that work, providing the change was not made by the Contractor or was due to it misinterpreting the type of work described in the contract.
1.4 Revised Rates and Prices
Every rate or price in a Bill of Quantities or estimate is comprised of the following:
Labour.
Plant and equipment (including temporary works equipment).
Materials
Risk.
Overheads and profit.
To derive a unit rate for an item from first principles, there are two main elements/methods used:
1. Work out a production rate or factor for the type of work using ‘norms’ obtained either from internal records and historical project information, or from industry norms, and use that to calculate the unit cost.
2. Work out how long the operation is expected to take for the entire quantity of work described based on experience and norms. Then, by using the cost of the chosen resources, divide the answer by the total quantity to obtain the unit cost. This would be useful for calculation of a long‐term operation such as concrete work on a major project where the concrete gang, plant and equipment (batching plant, distribution plant, vibrating pokers, pumps, etc.) have to be on site from the first pour to the last, and the overall duration divided by the total quantity will provide a more realistic answer than a basic unit rate using norms.
The common factor is always the time required for the work described to derive the unit rate. If the quantity is understated, then, depending on the degree of error, the unit rate may not recover the actual costs. If the design changes (shape height, width, depth, etc.), this may affect the planned temporary works (e.g. formwork and falsework support or perhaps pumping and shoring activities). Other constituents may also change the price per unit as described earlier; changes to the diameter and shape of bar reinforcement or a concrete design mix and aggregate sizes can all influence the unit cost.
Changes within bulk earthworks can also dramatically affect the unit cost. For example, on a major road scheme, the earthworks pricing will depend on the anticipated materials to be excavated and embankment construction volumes. Unforeseen changes in the volumes of suitable fill material, unsuitable material, contaminated material, rock, etc., will affect the work carried out, the haul distances and perhaps the equipment being used. Most bulk earthworks projects are priced based on a mass haul diagram that shows where the cuts and fills are located, what they contain and where the material is to be deposited. This provides a method statement in a tabular format that describes the volume, distance travelled and plant used for each material. Changes to the constituents may dramatically change the unit cost and result in a claim for a revised rate for the work. I had a project where the embankments had been overstated in the Bills of Quantities; when this was discovered during construction, it dramatically increased the volume of material to be disposed of in off‐site tips. The volume change represented a little over 10% of the original figures, but when you are dealing with a major project that has a total of 2 200 000 m3 of cut to fill, then suddenly discovering that there is, in fact, a surplus of nearly 250 000 m3 to be removed from site presents a major challenge.
1.5 Access and Possession of the Site
All contracts generally provide for the Contractor to be given unrestricted access to and possession of the site, although this may not be sole possession, as access may be required for the Employer's other contractors and artisans deployed on the project. However, on a complex project where there are several other contractors, access and egress can become a battle for space and progress, as all the contractors want to progress their own part of the works. This is a common issue on major infrastructure or energy projects where there are vast mechanical, electrical, building and civil engineering works, all being carried out concurrently. Typically, claims for interrupted access or delayed access arise for the following reasons:
Delayed or late possession of the site, or parts of the site, contrary to the dates and periods stipulated in the contract.
Disrupted access to the site or obstructions or restrictions caused by others affecting part or all of the site. These can be blockages caused by others, the Employer's agents, its other contractors or workmen, all performing work or temporarily blocking or severing access routes or the availability of particular areas of the site.
Restricted access after work starts may involve altered or restricted working hours imposed.
Restricted traffic routes and/or changes in specified access routes instructed.
The main issue to establish is the duration of the late provision of access or when access became restricted by others or on instructions from the Employer. Written notice of the event, together with documentary evidence for it, is essential where a blockage has occurred because of the occupation of the site or part of the site by another Contractor. It is wise to take photographs showing the blockage and recording the date and time of the incident, and including such pictures in the letter of notice, so there can be no confusion about where and what happened, and it will help prevent the Employer later denying that the incident occurred. The next matter is to record the effect that the loss of access had on the progress of the works, and finally to record the costs incurred due to standing time or relocation of resources while access was not available. If access to the site is stopped for any considerable period, it may be grounds for renegotiation of the contract or termination, depending on the length of the stoppage and the impact it has on the performance of the work.
1.6 Changes
1.6.1 Varied Works
All forms of construction contracts contain clauses about changes and other instructions, and these are variously described in forms of contract as ‘Variation Orders’, ‘Change Orders’, ‘Compensation Events’, ‘Site Instructions’ and so on. They may have slightly different names but they all have one thing in common: they change the scope, quality, quantity, method of working, timing and/or duration of work.
There are two elements under the heading of ‘varied works’:
Claims arising from variation orders instructed, and the timing of such instructions.
Claims arising from work that the Contractor claims have been varied and should properly be dealt with by a variation order.
Types of variation:
Instructions requiring additional work and/or changes to the type or scope of work required.
Changes to workmanship or material specifications from those defined in the contract.
Increases in performance requirements for the scheme.
Changes in the laws of the country, which may alter taxes, import levies, labour costs, etc.
Some of the preceding claims are self‐evident – for example, a change in the labour taxes, VAT (value added tax), and increases in the rate of fuel taxes or import levies by the relevant government. The impact of these changes should be relatively simple to identify as the tax increase would be part of materials invoices or wages costs.
1.6.2 Changes to Scope
Changes in quality, scope, quantity, timing and/or character of work are raised where the Contractor believes that the work has been varied from that envisaged at the time of tender. In other words, a claim is made that there was a change between the work described in the contract and the actual work performed, or the conditions under which it was performed. This is a claim for an alleged change, which has been caused or imposed on the Contractor, sometimes by the Employer's agent/Engineer, demanding the use of materials of a higher quality or altering work methods to suit personal preferences. The Contractor must first set out what the change is as compared to what was stated in the contract in the drawings and specifications, or set out in the Employer's Requirements, and ensure that records are kept justifying the additional costs claimed. By way of an example, there was a case1 where such issues were resolved in arbitration by the arbitrator awarding sums for the extra work and variations that the Engineer had failed or refused to instruct. This was taken to the Court of Appeal on the grounds that, unless the Engineer had instructed work, an arbitrator could not award payment. However, the Contractor won its case for additional payment as the Court determined that the arbitration clause allowed the arbitrator to rectify the deficiency by awarding that such instructions should have been confirmed. Consequently, the Contractor was awarded payment for the variations that the Engineer had refused to instruct. The changes complained of included payment for higher‐quality materials that had been insisted upon, and for additional work that had been carried out, all of which were beyond what was set out in the original contract.
1.6.3 Quality of Materials
The reasons for such imposed changes can be specification errors or the insistence of the Contract Administrator on something more than was specified in the original contract documents – for example, materials of a higher quality than originally specified or reasonably implied by the contract. It is not uncommon to find the Contract Administrator insisting on the use of a material from a preferred source, or preferring another (alternative) material that is better or of higher quality or price than was detailed in the Specification. Where this occurs, it should be a matter of determining what material was used and/or instructed as compared to the material described in the original specification on which the Contractor priced the works. This type of claim requires disclosure of the Contractor's tender information and quotations, together with details of the specifications used for materials to compare with the cost of the alleged alternative materials procured based on the alleged instructions or directions of the Contract Administrator.
1.6.4 Design Changes/Increased Scope of Work
Design claims usually arise where the Engineer or Architect issues a new or revised drawing that changes some aspect of the work. Such changes should require a variation order, but sometimes are merely issued and not always with a covering letter or instruction asking the Contractor to comply with the new drawing.
For example:
Additional quantities of work to be performed or changes to its location.
Increased depths or height of work that may also change the temporary works needed during construction.
Delays caused by the time taken for the Engineer/Architect to respond to queries about design errors or omissions.
Delays caused by scheduling errors relating to reinforcing bar.
One of the more difficult arguments to manage is a claim for what is termed ‘scope creep’, especially where the project is a design‐and‐build contract and the Employer or its agent want more work or an increased quantity of work or higher‐quality materials than detailed in the original Contract Specification and/or implied by the Employer's Requirements documents. It is not unusual for a Contractor to pursue a claim for increased scope and/or increased complexity as compared to the information available at the time of tender. However, as with all claims, this argument must be proven, and the change identified and linked to the effect it causes. It is vital to see the original contract information to establish the type of work required, and its quantity and complexity in terms of the shapes to be constructed and their constituents. If, at the time of tender, the Contractor has drawings, specifications, Bills of Quantities and bending schedules that clearly depict the work required, these can be compared to the drawings issued for construction to show whether the work content has changed. Increased complexity can be caused by several factors – for example:
Reinforcement changes:
Changes to the mix of diameters of reinforcing bars, their shape codes and sizes.
Changes to the number of bars or weight/per cubic metre of concrete may increase disproportionately (smaller diameters).
Change in the ratio of straight bars to bent bars and overall bar lengths may differ.
These changes must be carefully analysed to show how the alterations made would impact on the time required for installation and/or the costs of the material. The shape code of reinforcement may change, resulting in more bent steel than originally envisaged; or, for example, the introduction of smaller‐diameter closed links may make the installation slower and reduce production, consequently increasing the man hours per ton.
Formwork changes:
Sizes of shutters measured as compared to those used may change.
More small‐section formwork than previously indicated; subtle small elements that were not envisaged at the time of tender.
The ratio of formwork to concrete volumes will indicate if the overall size of concrete pours has changed.
Shapes to be constructed may become more complex, perhaps requiring more or varied temporary support work than envisaged.
