Delay and Disruption Claims in Construction (A Practical Approach) (2017)

Delay and Disruption Claims in
Construction
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Delay and Disruption
Claims in Construction
A practical approach
Third edition
Ali D Haidar and Peter Barnes

Published by ICE Publishing, One Great George Street,
Westminster, London SW1P 3AA.
Full details of ICE Publishing representatives and distributors can
be found at: www.icebookshop.com/bookshop_contact.asp
First edition published 2011; Reprinted 2012
Second edition 2014; Reprinted 2017
Other titles by ICE Publishing:
Keating Construction Dispute Resolution Handbook
Edited by R. Gaitskell
ISBN: 978-0-7277-6164-4
Global Risk Assessment and Strategic Planning
J. McLaughlin, M. Ocock, A. Oldfield and B. Trebes
ISBN: 978-0-7277-6094-4
Professional Services Agreements, 2nd edition: A Guide for
Construction Professionals
R. Barnes. ISBN: 978-0-7277-4148-5
www.icebookshop.com
A catalogue record for this book is available from the British Library
ISBN 978-0-7277-6197-2
© Thomas Telford Limited 2018
ICE Publishing is a division of Thomas Telford Ltd, a wholly-owned
subsidiary of the Institution of Civil Engineers (ICE).
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Commissioning Editor: Michael Fenton
Production Editor: Madhubanti Bhattacharyya
Market Development Executive: Elizabeth Hobson
Typeset by The Manila Typesetting Company
Index created by Pierke Bosschieter
Printed and bound in Great Britain by TJ International, Padstow

Contents Preface
About the authors
vii
xi
1 ............................. Introduction 1
1.1. General 1
1.2. Purpose of this book 1
2 ............................. Construction and contract law 3
2.1. Construction law 3
2.2. Contract law 3
2.3. Standard forms of contract 5
3 ............................. Breach of contract and damages 9
3.1. Breach of contract 9
3.2. Damages 9
3.3. Liquidated damages 11
3.4. Burden and standard of proof 15
4 ............................. Obligations as to time 19
4.1. Reasonable time 19
4.2. Purpose of extension of time clauses 19
4.3. Time at large 21
4.4. Time is of the essence 23
5 ............................. Delay and disruption claims 25
5.1. Introduction 25
5.2. Cause and effect 27
5.3. Notices 27
5.4. Records 28
5.5. Building Information Modelling 29
6 ............................. Extension of time claims 31
6.1. Project programming 31
6.2. Critical path and float 32
6.3. Delay analysis 36
6.4. The Delay and Disruption Protocol 39
6.5. Extension of time in period of culpable delay 41
6.6. Concurrent delays 42
6.7. Mitigation 46
6.8. Acceleration 47
7 ............................ Loss and expense claims 51
7.1. Loss and expense 51
7.2. Common loss and expense heads 53
7.3. Global claims 63
8 ............................ Disruption claims 69
8.2. Assessment of disruption costs 71

9 ............................ Standard contract form provisions for time
and cost 77
9.2. NEC4 77
9.3. The JCT forms 80
9.4. The FIDIC forms 81
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Typical claim format 83
10.1. Presentation 83
10.2. Format 84
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case study – a typical extension of time claim
under a JCT contract 91
1. Introduction 91
2. The contract 92
3. Delay overview 93
4. Delay events 94
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case study – a compensation event claim on an
infrastructure project under an NEC3 contract 105
1. Introduction 105
2. The contract 106
3. Overview of the dispute 106
4. Compensation events 107
5. Compensation event no. 39 (CE39) 111
6. Conclusion 111
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case study – delay and disruption claim on an
international contract based on the FIDIC form 113
1. Executive summary 113
2. Contractual and factual analysis 114
3. Factual analysis 116
4. Contractual analysis 119
5. Time impact analysis 124
6. Claim evaluation 127
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case study – delay and disruption on an
international contract 131
1. Executive summary 131
2. Claim events – general 136
3. Delayed events – summary of events 146
4. Damages and losses 147
Index 151
vi

Preface Disputes in construction are expensive and lengthy and they
can fatigue parties due to their exhaustive nature, and delay
and disruption claims are common occurrences on
construction projects. When they arise they need to be
evaluated and managed effectively. There is often much
debate about the approach that should be utilised when
presenting or evaluating a delay and disruption claim. The
purpose of this book is to serve as a legal and practical guide
to the process of delay and disruption presentation and
evaluation.
There have been many developments in this area of law
since the second edition of this book was published. Apart
from some very important case law, which has changed or
clarified our understanding in respect of many of the issues
in this book, the second edition of the Society of
Construction Law’s Delay and Disruption Protocol has been
published. This new Protocol document is reviewed in
Chapter 6 of this book.
Building Information Modelling (BIM) is making a large
impact in the construction and infrastructure industries in the
UK and internationally. The present and potential future
impact of BIM on how delay and disruption claims are
analysed is dealt with in Chapter 5 of this book.
The chapters of this book deal with an understanding of
construction and contract law (Chapter 2), breaches of
contract and the remedies available (Chapter 3), obligations
as to time, delay and disruption claims and extension of time
claims (Chapters 4 to 6) and loss and expense claims and
disruption claims (Chapters 7 and 8). The ways that standard
contract forms deal with extension of time and loss and
expense claims are dealt with in Chapter 9, and a typical
claim format is provided in Chapter 10.
Chapters 11 to 14 present case studies dealing with extension
of time and related losses claims.
This book therefore not only sets out the legal basis of most
claims, but also serves as a practical guide for the
presentation of claims based upon our collective many years
of general experience involved with the construction
industry, and our specific experience of presenting and
evaluating delay and disruption claims.
A key (and in some ways, unique) element of this book is

the recognition that in the international market, while the
tried and tested methods of the more established construction
vii

industry markets are still frequently used either in part or in
whole, often more dynamic approaches to the settlement of
claims are used. Where claims can amount to the equivalent
of many millions of pounds sterling (or more often millions
of US dollars), a painstaking and forensic approach to claims
is often unnecessary and undesirable, and the parties agree
that a more pragmatic approach may be more appropriate.
This approach can prevent the parties from being involved
with extensive and extended (and extremely costly) legal
proceedings (perhaps stretching over several years) and
enables disputes to be settled more rapidly and more easily,
allowing the parties to continue with their normal business
activities within a much shorter time than would have been
the case had a more forensic exercise been undertaken.
Although the construction industry is often considered to be
a dispute-ridden industry, the vast majority of construction
projects are actually delivered within acceptable time and
cost parameters. However, there is still a significant minority
of construction projects that are not, and these projects cause
many of the disputes in the construction industry. Such
disputes often centre on the responsibility for, and the effect
of, delay and disruption events.
There is a great deal of guidance – frequently conflicting –
on the subject of delay and disruption claims, and this is not
helped by the courts, which appear to follow different
approaches when considering delay and disruption matters.
Consequently, it is important that practitioners understand
the principles behind delay and disruption claims and are
aware of the various techniques that are available to carry
out an assessment of those claims, so that an approach may
be adopted that is appropriate to the circumstances of a
particular case. However, it must be noted that most delay
and disruption claims are decided upon the facts of a
particular case, rather than some overriding principle. The
important point is therefore to ascertain the facts and then
apply the law. Consequently, one of the major aims of this
book is to provide the necessary legal analysis and
information regarding the available delay and disruption
analysis techniques to enable all those involved in the
construction process to carry out the appropriate analysis and
assessment of delay and disruption in a cost-effective and
efficient manner.
There is no one ‘right’ way to present a delay and disruption
claim, as every claim is dependent upon many interrelated
issues which affect the way that a claim can or should be
viii

presented. There are, however, many pitfalls that may be
faced in the preparation of a delay and disruption claim, and
these pitfalls can often very easily be avoided if certain basic
principles are understood and followed.
It is hoped that this book will assist the readers to follow the
appropriate path in the preparation of their claims, and will
help them to avoid the pitfalls along the way.
Finally, and importantly, we are both most grateful to all
those that have contributed to our knowledge regarding the
subject matter of this book throughout the years, and we
give special thanks to our families, who have been a great
support to us during the writing of this book.
ix

About the Ali D Haidar
Ali D Haidar has a PhD in Construction Management from
authors South Bank University, a BSc and an MSc in Civil
Engineering from Oklahoma State University, and an MSc in
Construction Law from King’s College London.
Dr Haidar’s experience spans over 30 years in the
construction industry, with great emphasis in recent years on
contract management and claims. His knowledge extends to
programme management, artificial intelligence and
modelling, and lately he has taken a keen interest in Islamic
law. He is the author of many papers and, apart from his
experience in the construction industry, he has lectured at
universities in the UK and the Middle East.
He has been involved in very large claims, totalling
hundreds of millions of US dollars, some of which are noted
in this book. His expertise in assessing and presenting claims
has made him one of the best-known consultants working in
the Middle East.
Currently, Dr Haidar lives in Saudi Arabia with his family, and
works as a contracts consultant at Dar al Riyadh. He is the
author of Global Claims in Construction and Programme
Management – Decision Making and Optimization Techniques.
Peter Barnes
Peter Barnes is a Chartered Arbitrator and a UK Registered
Adjudicator. He has an MSc in Construction Law and
Arbitration from King’s College London and a Diploma in
International Commercial Arbitration from the Chartered
Institute of Arbitrators.
He has been actively involved in the construction and
civil engineering industry for over 40 years, with the past
15 years being spent dealing entirely with claims and dispute
avoidance and/or resolution in that industry. Peter Barnes has
acted as arbitrator, adjudicator, mediator and expert witness in
respect of both liability and quantum claims.
Peter Barnes is the author of JCT 05 Standard Building
Sub-Contract, and co-author of Subcontracting Under the
JCT 2005 Forms, BIM in Principle and in Practice and
Programme Management in Construction. He is based in the
UK near London, and is the co-owner of Blue Sky ADR
Ltd, a practice specialising in claims and dispute resolution
in the construction and civil engineering industry.
xi

Delay and Disruption Claims in Construction
ISBN 978-0-7277-6197-2
ICE Publishing: All rights reserved

http://dx.doi.org/10.1680/dadcic.61972.001
Chapter 1
Introduction
1.1. General
Construction is a unique industry due to it being a fast-moving, complex and dynamic
process which depends on the successful coordination of many separate and distinct parties
to ensure the delivery of a project on time, within budget and to the required standard.
This coordination is dependent upon the application of proper planning, programming and
project controls, used in conjunction with the applicable management techniques.
As it is generally accepted that risk is inherent in construction, it must also be accepted that
delay and disruption are inherent in the construction process and, as such, delay and
disruption need to be anticipated and managed in much the same way as risk is dealt with.
The occurrence of delay and disruption does not mean that the programming or
management functions have failed, but that occurrence should be recognised as being an
event that needs to be properly managed so that the effect of delay and disruption can be
minimised where possible. This normally can only be achieved by a clear identification of
the event that has caused, or will cause, the delay and/or disruption, and a proper analysis
of the effect that the event will have upon the progress of the works on site and/or the
completion date for the project.
The advance of Building Information Modelling (BIM) has had a great impact upon this
entire subject area, and its influence will only increase. Currently, BIM is still in its
relatively early stages, but over the next few years it will become more and more important
in the analysis of delay and disruption. Future editions of this book will no doubt deal with
this subject area in much more depth.
1.2. Purpose of this book

In the modern and developing world, it is recognised more and more that the construction
process is simply part of a much larger process of procuring and obtaining a required
facility (be that an airport, a hospital, a school, an office block or housing stock). The
construction process is therefore often driven by commercial needs and the preparation and
resolution of claims is consequently often dealt with on a more pragmatic basis than was
sometimes the case in the past. Therefore, while the reference to previous case law is
essential to form an understanding of the legal principles behind most claims, it must be
recognised that many of those court cases were decided at times when, perhaps, different
economic and/or commercial pressures applied.
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As noted above, BIM is becoming more and more important. It may change our entire
understanding of contracts, and the way that delay and disruption claims are considered and
analysed. However, that is for the future.
At the moment, in the fast-growing international markets, claims are not always dealt with
using the traditional methods developed in the more established construction markets over
many years. To deal with a claim of very large value by meticulously providing cost
records, and cause and effect of each and every event, would in very many cases be simply
too time-consuming and costly for both parties to contemplate. That is why, particularly in
the expanding international markets, it is not uncommon for ‘loss and expense’ to be dealt
with as a contractual compensation, and for a version of ‘global claims’ to be applied much
more freely. In the UK, however, such approaches would only be considered in the most
extreme of circumstances.
The early chapters of this book deal in a more traditional way with the basic issues of
construction and contract law, breaches of contract and remedies available, delay and
disruption issues, and loss and expense. The case studies in the later chapters, however,
deal with real-life situations and how claims are actually presented in practice. The
approaches adopted in real-world examples often allow the parties to continue with their
normal business activities, and sometimes commence or re-commence mutual trading
relationships, much more quickly than would have been the case had a more forensic
exercise have been undertaken.
This book therefore covers the topic of delay and disruption claims both in principle and in
practice.
ISBN 978-0-7277-6197-2

Chapter 2
Construction and contract law
2.1. Construction law
In many ways, construction law is no different to any other field of law. It is, however,
recognised as being a body of law that relates to those elements of the law that directly
affect the construction and civil engineering industries.
It covers things such as contract law, the law of tort, and construction claims generally; and
it is particularly concerned with the effect that these elements of the law have upon those
participants (including employers, consultants, contractors and subcontractors) involved in
the construction process.
Some types of law only apply in respect of the relationship between particular people or
bodies (this is referred to as civil law) while other types apply to the rights or duties of a
person or a body against the state (this is referred to as criminal law). This book deals only
with civil law matters.
Furthermore, some law (for example contract law) only applies in respect of the
relationship between particular people or bodies, while other aspects of law (for example
the tort of negligence) can have a much wider application. This book deals almost
exclusively with contract law.
2.2. Contract law

The basic principles of contract law are outlined below.
A contract can be considered as being an agreement which gives rise to obligations that are
enforced or recognised by law.
Therefore, the essence of any contract is agreement.
In deciding whether there has been an agreement, and what its terms are, a court usually
looks for an offer to do or to forbear from doing something by one party, and an
unconditional acceptance of that offer by the other party, turning the offer into a promise.
In addition, the law requires that a party suing on a promise must show that they have
given consideration for the promise, unless the promise was given by deed.
Furthermore, it must be the intention of both parties to be legally bound by the agreement,
the parties must have the capacity to make a contract, and any formalities required by law
must be complied with.
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If there is fraud or misrepresentation the contract may be voidable, while if there is a

mutual mistake about some serious fundamental matter of fact this may have the effect of
making the contract void.
Finally, there must be sufficient certainty of terms. Partly due to this, standard forms of
contract are regularly used in the construction industry.
Each of the essential elements of a contract is considered in more detail below.
2.2.1 Offer and acceptance

As stated above, for there to be an agreement the starting point is an offer being made by
one party and an acceptance of that offer by the other party. This is not always as simple as
it sounds, particularly when there have been prolonged negotiations between the parties, but
the courts have developed their own rules for looking at such matters.
In terms of offer and acceptance, the courts adopt what is sometimes known as the ‘mirror
image’ rule of contract formation. That is to say, there must be a clear and unequivocal
offer that is matched by an equally clear and unequivocal acceptance of that offer.
An offer is a statement by one party of a willingness to contract on definite and clearly stated
terms and an acceptance by that party that those terms will be legally binding provided that
those terms are unequivocally accepted by the party or parties to whom the offer is addressed.
There is generally no requirement that the offer be made in any particular form; it may be
made orally, in writing or by conduct. Of course, if a dispute arose in the future then it
would be beneficial for the offer to have been in writing.
In whichever form an offer is made it must be sufficiently definite to be capable of resulting

in a contract if accepted. Its terms and conditions must be clear and unequivocal, and it
must be made with the intention that it is to become legally binding as soon as it is
accepted by the person or legal entity to whom it is addressed.
For an agreement to be reached there must be a clear and unequivocal acceptance to a clear
and unequivocal offer. The acceptance must be unqualified – that is, as noted earlier, it
must ‘mirror’ the offer – and it must be communicated. If the acceptance does not clearly
and unequivocally accept the offer (in other words, if it seeks to add to or vary the terms
contained in the offer) then it is, simply, a counter-offer (not an acceptance), and a counter-
offer has the effect of extinguishing the original offer.
In reality, a counter-offer has the same status as an original offer in the formation of a
contract; and consequently, a counter-offer must itself be clearly and unequivocally
accepted before agreement has been reached.
In respect of construction works in particular, it is common for a whole series of offers and
counter-offers to be made before there is an acceptance. This may be because the parties
are negotiating about the terms or because they are each trying to impose their own terms.
This latter situation is often referred to as the ‘battle of the forms’, and variants of this
battle of the forms are at the base of many disputes between participants in the construction
and civil engineering industries. It really is unnecessary for a ‘battle of the forms’ situation
to arise, and it is certainly unhelpful for such a situation to exist if reliance needs to be
made upon agreed contract terms.
2.2.2 Agreement
As noted above, the essence of any contract is agreement.
The test for the existence of an agreement is objective rather than subjective. In other
words, the existence of an agreement is tested on the facts, rather than on what may have
been perceived to be the intention of the parties. The principal justification for the adoption
of this test is the need to promote certainty.
An agreement is reached either
■ when a statement of agreement is signed or executed, or

■ when one party makes an unambiguous offer capable of being accepted, and the other
party accepts it unequivocally.
If a dispute about the interpretation of a term that has been agreed arises because of an
ambiguity in respect of that term, the contra proferentem rule applies. This is a doctrine of
contractual interpretation which provides that, where a promise, agreement or term is
ambiguous, the preferred meaning should be the one that works against the interests of the
party who proffered the wording in the first place.
2.2.3 Consideration
Other than where a contract is executed as a deed, an agreement requires consideration to
be exchanged between the contracting parties before the contract becomes binding. In the
ordinary building contract situation, the consideration given by the employer is the price
paid or the promise to pay, and the consideration given by the contractor is the carrying out
of the works or the promise to carry them out.
2.2.4 Executed as a deed

As noted above, consideration is not required in the case where a contract is executed as a
deed – meaning where the contract is executed by the use of a corporate seal countersigned
by authorised persons, or by the signature of the company secretary and another director.
Contracts are often executed as a deed because the limitation period for a contract executed
as a deed is 12 years whereas the limitation period for a contract executed under hand is six
years only.
2.3. Standard forms of contract

Contracts can be created in many different formats, and can be produced on an ad hoc basis
for each and every agreement between the parties. However, the approach more commonly
used in the construction industry is for a contract to be formed using a standard form of
contract. There are some obvious benefits in using standard forms of contract, which
include the following.
■ There is no need to produce (and incur the legal costs of producing) an ad hoc contract
for every project.
■ There is a degree of certainty regarding the interpretation of the clauses of the contract
(particularly those standard forms that have been in existence for some time and where
some of the more important clauses may have been tested in the courts).
■ The parties know (with reasonable certainty) the consequences of various possible
courses of action.
■ The allocation of risk between the parties in respect of the (unamended) standard forms
of contract is known with some certainty.
There are many standard forms of contract in use in the construction and civil engineering
industries, and a brief commentary on a few of the more commonly used standard forms is
provided below.
It must be acknowledged that it is common for standard forms of contract to be amended,

and that when amendments are made, the benefits to be gained from using a standard form
are often lost. When amendments are made, the amendments in effect make the contract an
ad hoc contract. As a result, although nominally a standard form of contract is being used,
the distribution of risk between the parties may have been changed entirely. Amendments
may legitimately be made to a standard form contract to make it suitable for use in unusual
circumstances. However, they are often made simply to make the contract more
advantageous to one of the contracting parties.
As the range of possible amendments that could be made to a standard form contract is
vast, it is beyond the scope of this book to consider anything other than the unamended
terms and conditions in the standard forms of contract.
2.3.1 NEC4
NEC4 is a generic name for a family of contracts published for the Institution of Civil
Engineers by Thomas Telford Limited. NEC stands for New Engineering Contract and it is
by this acronym that the contracts are generally known. The main contract and the
subcontract were first published as consultative editions in 1991. First formal editions were
issued in 1993, second editions (NEC2) in 1995, and third editions (NEC3) in 2005. The
fourth edition (NEC4) was published in June 2017, and builds on the content of NEC3 in a
way that has been described as ‘evolution not revolution’.
The NEC contracts were drafted with the stated objectives of achieving flexibility, being a
stimulus to good project management and bringing clarity and simplicity to the contract terms.
It was always intended that there would be a family of NEC contracts, and currently the
NEC4 family includes: Engineering and Construction Contract; Engineering and
Construction Subcontract; Engineering and Construction Short Contract; Engineering and
Construction Short Subcontract; Professional Service Contract; Term Service Contract;
Dispute Resolution Service Contract; and Framework Contract. List of NEC4 suite of
contracts here: https://www.neccontract.com/NEC4-Products/NEC4-Contracts/NEC4-June-
2017-Edition-complete-family-of-contrac.
The Engineering and Construction Contract has six main options
■ Option A: priced contract with activity schedule

■ Option B: priced contract with bill of quantities
■ Option C: target contract with activity schedule
■ Option D: target contract with bill of quantities
■ Option E: cost reimbursable contract
■ Option F: management contract.
There is also a range of secondary options that may be selected for use, and there are
options that enable additional or amended clauses to be added by way of so-called ‘Z
clauses’.
2.3.2 Joint Contracts Tribunal (JCT) contracts

The Joint Contracts Tribunal (the JCT) was established in 1931 and has for almost 90 years
now produced standard forms of contracts, guidance notes and other standard
documentation for use in the construction industry, principally in the UK.
Currently, JCT forms require the agreement of eight constituent bodies (including
representatives of employers, consultants, contractors and subcontractors) before they are
issued by the JCT.
A benefit of the JCT Forms of Contract is that they are tried and tested: there is therefore a
great deal of certainty regarding the meaning of various clauses and as to how the courts
will interpret those clauses (particularly as many of those clauses have at some time or
another been considered by the courts). The traditionally perceived problem with the JCT
Forms of Contract was that they were cumbersome and unwieldy, and were not flexible
enough to cope with modern requirements. However, many of these perceived problems
were dealt with by the publication in 2005 (updated in 2011 and again in 2016) of an
entirely new suite of contracts and subcontracts.
Some of the more commonly used JCT contracts are the
■ Standard Building Contract

■ Intermediate Building Contract
■ Minor Works Building Contract
■ Design and Build Contract.
The JCT works on the basic principle that the type of work to be carried out dictates which
contract should be chosen. In contrast, other standard forms of contract (NEC4, for
example) use the way that payment will be made as the basis for deciding which version of
the contract will be used.
2.3.3 Fédération Internationale des Ingénieurs-Conseils (FIDIC) contracts

FIDIC produces standard forms of contract for civil engineering and construction works
which are used throughout the world. FIDIC contracts are often referred to, with very good
reason, as the international standard form of contract, and FIDIC is recognised as the
leading body for the development of model standard forms of contract for use in the
international construction industry.
The FIDIC standard forms are generally accepted by employers and contractors as
delivering a balanced allocation of risks and providing fair procedures for the
administration of contracts.
FIDIC contracts are widely referred to by their colours, and the full suite of contacts is
sometimes called the ‘rainbow suite’. The present suite of FIDIC contracts comprises
■ the Red Book, which is the Conditions of Contract for Construction

■ the Yellow Book, which is the Conditions of Contract for Plant and Design-Build
■ the Silver Book, which is the Conditions of Contract for EPC/Turnkey Projects
■ the Green Book, which is the Short Form of Contract
■ the Blue Book, which is the Conditions of Contract for Dredging and Reclamation
Works
■ the White Book, which is a form of agreement for the engagement of consultants
■ the Gold Book, which is the Conditions of Contract for Design, Build and Operate
Projects.
ISBN 978-0-7277-6197-2

Chapter 3
Breach of contract and damages
3.1. Breach of contract
A breach of contract is committed when a party, without lawful excuse, fails or refuses to
perform what is required of it under a contract.
A breach of contract does not automatically bring a contract to an end. Instead, it gives to
the innocent party a right to claim damages, and it may give that party the additional right
to terminate performance of the contract. The right to terminate performance of a contract
may be by way of an express provision in the contract (i.e. a contractual termination clause)
or it may be because the breach of the contract is of such a fundamental nature that it is
considered to be a repudiatory breach of the contract (or, if it is stated as being an intention
in the future, an anticipatory repudiatory breach of the contract). If there is a repudiatory
breach of the contract, that repudiation must be accepted by the other party before the
contract can be brought to an end.
3.2. Damages
The purpose of damages is to compensate the innocent party for the loss that it has suffered
as a result of a breach of contract by the other party. The action for damages is always
available, as of right, when a contract term has been breached, other than where it has been
excluded by an express term in the contract. The aim of an award of damages is to put the
innocent party in the same position, as far as is possible by way of a payment of money, as
it would have been had the other party performed its obligations under the contract (i.e. if it
had not breached the contract terms).
When pursuing a claim for damages, it must be shown that there was a term of the contract
that a party breached, and that the damages that were incurred flowed directly as a result of
that breach of the contract term.
Damages cannot be recovered where the loss which the innocent party has suffered is too
remote a consequence of the other party’s breach of contract. The general principle is that
the innocent party can only recover losses that were within the reasonable contemplation of
the parties at the time that the contract was entered into.
The well-known case of Hadley v. Baxendale (1854) 9 Exch 341 is often cited to show that
losses which occur ‘naturally’, or which occur as a ‘usual course of things’, can be
recovered as damages (this is usually referred to as the first limb of Hadley v. Baxendale),
but also that losses which do not occur ‘naturally’, but which were in the reasonable
contemplation of the parties at the time that the contract was made, can also be recovered
(referred to as the second limb of Hadley v. Baxendale).
The details of the Hadley v. Baxendale case demonstrate the above point in practical terms.
In that case, Hadley was the owner of a mill. A crankshaft in the mill broke and Baxendale
was employed to take the crankshaft to be repaired by a certain date. However, Baxendale
failed to deliver the crankshaft by the due date, which meant that the mill could not be
used: this caused Hadley to lose business.
Hadley sued Baxendale for the profits he had lost due to his loss of business. At first
instance, the court found that Hadley could recover his loss of profits and Baxendale was
ordered to pay damages (of £25).
However, Baxendale appealed against this decision, contending that he did not know that
Hadley would suffer any particular or special damage by reason of the late delivery of the
crankshaft. When considering the matter, the appeal court did not allow Hadley to recover
his lost profits, on the basis that Baxendale could only be held liable for losses that were
generally foreseeable, and it did not consider that the lost profits were foreseeable in this
case, although they might have been had Hadley mentioned his special circumstances in
advance. The appeal court decided that the mere fact that a party is sending something to
be repaired does not indicate it would lose profits if that ‘something’ was not delivered on
time.
Although the two limbs of Hadley v. Baxendale, as set out above, are often cited, more
accurately the test is simply a test of remoteness of damages. Under this test, if the
damages claimed are too remote from the breach of contract then, unless the ‘special’
damages resulting from a breach of contract were in the contemplation of the parties at the
time that the contract was formed (which normally means that before or at the time the
contract was formed the ‘special’ damages would need to be drawn to the attention of the
party who would face the financial consequence of those ‘special’ damages), those ‘special’
damages cannot be recovered. It is because of this that contracts will often draw to the
attention of a contractor the likely consequences of a breach of contract by the contractor.
3.2.1 Date of assessment of damages

The general rule is that damages should be assessed as at the date when the cause of action
arises (as Miliangos v. George Frank [1976] AC 443; Dodd Properties v. Canterbury City
Council [1980] 1 WLR 433). However, there are many exceptions to this and it has been
said that ‘this so-called general rule ... has been so far eroded in recent times ... that little of
practical reality remains of it’ (Lord Justice Ormrod, in Cory and Son v. Wingate (1980) 17
BLR 104 CA). Thus ‘where it is necessary in order adequately to compensate the plaintiff
for the damage suffered by reason of the defendant’s wrong a different date of assessment
can be selected’ (Lord Browne-Wilkinson in Smith New Court v. Scrimgeour Vickers
[1997] UKHL 3).
3.2.2 Measure of damages

As noted earlier in this chapter, the purposes of damages is to put the innocent party, ‘so far
as money can do it’ (Robinson v. Harman (1848) 1 Ex Rep 850) back to the same position
as if the contract had been properly performed, on the basis that the innocent party took
reasonable steps to mitigate its losses.
10
The court will similarly take the claimant’s overall position into account in determining the
basis on which damages are to be assessed. It will not generally order the defendant to pay
an amount which will actually make the claimant’s position better than it would have been
if the contract had been performed. As a general rule, damages are based on loss to the
claimant and not gain to the defendant; therefore, in general, punitive damages cannot be
awarded in a purely contractual action since the purpose of damages is to compensate the
claimant and not to punish the defendant.
Philips v. Ward [1956] 1 WLR 471 is a case where a surveyor, in breach of contract, failed
to draw his client’s attention to the fact that the roof timbers of a house, which the latter
was about to buy, were rotten. It was held that the client was not entitled to damages based
on the cost of making the defects good. Such an award would put him into a better position
than that he would have been in if the contract had not been broken. Hence the client was
entitled to recover only the difference between the price that he had paid and the value of
the house when he bought it.
Often the measure of damages is the cost of reinstatement, but that will not always be the
case. Sometimes the measure of damages is the difference in value between the work
actually produced and the work that should have been produced (as Dodd Properties v.
Canterbury City Council). This will apply in particular where the claimant has no prospect
or intention of rebuilding the building, or where it would be unreasonable to award the cost
of reinstatement.
The frequently quoted Ruxley v. Forsyth [1995] UKHL 8, a UK House of Lords case,
related to a swimming pool that was not constructed to the required depth. The swimming
pool should have been constructed to a depth of 7 feet 6 inches (2.3 m), but, when the pool
was completed, its depth was only 6 feet 9 inches (2.1 m).
Forsyth sought damages for the reinstatement costs (i.e. to re-build the swimming pool so
that it was 7 feet 6 inches (2.3 m) deep). However, the House of Lords found that it would
be unreasonable for the claimant to insist on reinstatement because the cost of the work
involved would be out of all proportion to the benefit obtained, and therefore the measure
of damages would simply be the difference in value (sometimes referred to as the loss of
amenity value). Of course, in different circumstances, a court might consider the cost of
reinstatement to be the more appropriate measure of damages. This makes it clear that the
courts decide each case on its own particular merits and circumstances.
3.3. Liquidated damages

An alternative to pursuing a claim for general damages is to insert into the contract a clause
which states the amount of damages that will be payable in the event of a breach of
contract. Such a clause is referred to as a liquidated damages clause. In construction
contracts, liquidated damages are most often used in respect of a contractor not completing
the works on time; if such a breach occurs, the employer seeks to recover liquidated
damages on the basis of a certain fixed financial amount for each week of overrun (or for
some other period of time of overrun as stipulated in the contract).
11
A liquidated damages clause helps to eliminate uncertainty because the parties know in advance
the financial liability that will arise if the contractor fails to complete the works on time.
This acts as a protection for the contractor against un-liquidated general damages claims
and (in theory) enables the contractor to include a risk factor for project overrun in its price.
For an employer, a liquidated damages clause avoids the difficulty, time and expense
involved in proving and assessing the actual loss that it will suffer in the event of a breach.
There are a number of grounds on which a liquidated damages clause may be held to be
unenforceable, including ambiguity, being penal in nature, failure by the employer to
provide for an extension of time in cases where the employer prevents or delays
completion, and failure by the contractor to comply with the contractual procedures.
However, the effect of attacking the validity of a liquidated damages clause is often to
remove the ready-made and pre-set damages mechanism and to substitute it with a liability
to pay general or unliquidated damages, which could, subject to proof and ascertainment,
be significantly higher than the liquidated damages rate. This would depend on the wording
of the contract, and perhaps the reason for the unenforceability of the clause, but there is
likely to be no benefit in attempting to overturn a liquidated damages amount.
In Temloc v. Errill Properties Ltd (1987) 39 BLR 30 (CA) a liquidated damages provision
was included in the contract but the rate of damages was stated to be ‘£NIL’. Rather than
holding that the liquidated damages provision was not applicable, the court decided that it
was applicable, that the rate agreed was ‘£NIL’ and, as a consequence, it was not open to
the employer to claim general (unliquidated) damages instead of the ‘£NIL’ amount agreed
in the contract. Consequently, great care needs to be taken when entering a liquidated
damages amount in a contract.
3.3.1 Ambiguity
As a general rule, liquidated damages clauses must be constructed strictly contra
proferentem. Therefore, where a clause is ambiguous and all other methods of construction
have failed to resolve the ambiguity, the court may construe the words against the party that
drew up the clause in question.
3.3.2 Penal nature

A liquidated damages clause that is found to be penal in nature (i.e. a penalty) is generally
invalid and unenforceable in the UK.
The distinction between liquidated damages and a penalty is a matter of construction for the
court to decide upon, and it is for the party from whom the damages are claimed to show that
the clause is in fact a penalty. (It should be noted that in many international jurisdictions, a
‘penalty clause’ is acceptable and is enforceable, as further identified below.)
In jurisdictions where penalty clauses are not permitted, the use of the words ‘penalty’ or
‘liquidated damages’ in the contract is not conclusive or determinative of whether the
liquidated damages clause is in fact one or the other.
12
The common law position on penalty clauses was established a little over 100 years ago by
the decision in Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd. (1915)
AC 79, which laid down various principles to help distinguish liquidated damages from
penalties. The principles set out in Dunlop Pneumatic Tyre Co. v. New Garage and Motor
Co. Ltd have been refined by the courts since 1915, but the law on liquidated damages has
historically been evolutionary rather than subject to drastic changes.
The traditional test under the old law was that, provided the employer had made a genuine
attempt to pre-estimate its loss (rendering the clause compensatory), the court would be
unlikely to regard it as a penalty; but if the amount of liquidated damages bore absolutely
no resemblance to the loss that may be suffered, was extravagant and unconscionable, and
was intended to deter a breach of contract, then the court would be more willing to construe
it as an unenforceable penalty.
However, two conjoined Supreme Court cases in 2015 (Cavendish Square Holdings BV v.
Talal El Makdessi (2015) UKSC 67 and Parking Eye Limited v. Beavis (2015) UKSC 67)
changed the position considerably.
Prior to the above decisions of the Supreme Court, in order to be recoverable, as noted
above, the predetermined level of liquidated damages needed to represent a genuine pre-
estimate of the employer’s likely loss should a specified breach occur. However, while the
Supreme Court in the above cases was unanimous that the doctrine of penalties should not
be abolished per se, their lordships rejected the traditional test set down in Dunlop
Pneumatic Tyre Co. Ltd v. New Garage and Motor Co. Ltd. The majority in the conjoined
Supreme Court cases referred to above held that the correct approach in modern
commercial cases is to have regard to the nature and extent of the innocent party’s interest
in the performance of the obligation that was breached as a matter of construction of the
contract. The test, formulated by the said majority, was whether the clause in question is
a secondary obligation which imposes a detriment on the contract-breaker out of all

proportion to any legitimate interest of the innocent party in the enforcement of the
primary obligation. The innocent party can have no proper interest in simply punishing
the defaulter. His interest is in performance or in some appropriate alternative to
performance. In the case of a straightforward damages clause, that interest will rarely
extend beyond compensation for the breach, and we therefore expect that Lord Dunedin’s
four tests would usually be perfectly adequate to determine its validity. But compensation
is not necessarily the only legitimate interest that the innocent party may have in the
performance of the defaulter’s primary obligations.
The Supreme Court went on to explain the practical application of this new test in terms that a
penalty clause whose purpose is to punish the contract breaker is likely to be an unenforceable
penalty clause. On the other hand, a clause that is intended to deter a breach of contract is less
likely to be a penalty clause, even if it does not represent a genuine pre-estimate of loss. In order
to determine whether or not a clause is a penalty, the key is to consider whether the liquidated
damages clause is out of all proportion to the employer’s legitimate interest in enforcing the
contractor’s obligations under the contract. If it is, it will be penal and unenforceable.
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The Supreme Court in the above-noted cases made it clear that, as a general rule, if a liquidated
damages clause has been negotiated in a commercial contract made between two parties of
comparable bargaining power, and has survived scrutiny by the parties and their legal advisers,
then there will be a strong initial presumption that the clause is not out of all proportion to the
employer’s legitimate interests in seeking a timely completion. This is the case even if it is
‘penal’ in its nature and impact and even if it is not representative of any actual financial loss the
employer may have suffered, provided that it is intended to deter a breach of contract.
The decision of the Supreme Court above has replaced the century-old test in Dunlop
Pneumatic Tyre Co. Ltd v. New Garage and Motor Co. Ltd with a modern test that reflects
the fact that, in some circumstances, parties have a legitimate commercial interest in
enforcing the performance of contractual obligations which goes above and beyond
compensation for any identifiable commercial losses that they may suffer as a result of the
breach, and are aimed at the deterrence of a breach of contract. In the construction context,
this new test means that the commercial justification for the liquidated damages clause must
be considered at the time the contract is entered into; in particular, whether it is out of all
proportion to the employer’s legitimate commercial interest in the works completing on time.
It must be noted that in countries where civil law applies, the attitude toward contractual
penalties is quite different from the common law approach set out above. The Napoleonic
Code, on which most civil codes are based, allows for penalties to encourage performance
of contractual obligations. In recent years, however, there has been a widespread trend in
civil law countries toward narrowing the scope of such penalties, allowing liquidated
damages that are used to estimate damages in case of non-performance, and penalty clauses
that are used to establish a penalty to be paid in case of non-performance with the intent of
encouraging performance; the latter does not require proof of any real damage.
3.3.3 The failure to provide for an extension of time in cases where the
employer prevents or delays completion
In a case where a contract does not contain a proper mechanism for allowing the employer
to grant an extension of time for a delay caused by the employer or by anyone or anything
which the employer is responsible for, liquidated damages are irrecoverable because under
the provisions of the contract it is not possible to set or identify a revised completion date.
In other words, time becomes ‘at large’, through the operation of the ‘prevention principle’
(the concept of time at large and the prevention principle are dealt with in more detail in
Chapter 4). In such a case, the employer cannot impose a liquidated damages clause. The
leading authority on this point is the decision in Peak Construction (Liverpool) Ltd v.
McKinney Foundations Ltd (1970) 1 BLR 111 (CA). In that case, Lord Justice Salmon
confirmed that a liquidated damages clause could not apply and further commented ‘I
cannot see how, in the ordinary course, the employer can insist upon compliance with a
condition if it is partly its own fault that it cannot be fulfilled’.
3.3.4 The failure to comply with contractual procedures

Obviously, the contract should both reflect the employer’s expectations and be consistent
throughout, otherwise there could be serious consequences for the validity of the liquidated
damages provisions. A typical example of this is the employer’s desire to take possession or part
14
occupation as soon as possible, which, unless the contract specifically allows for this to happen,
means that the employer could risk losing its right to the recovery of liquidated damages should
the contractor subsequently be late. This is best illustrated by the case of Bramall and Ogden
Limited v. Sheffield City Council (1985) 1 Con LR 30. The facts of this case were that the
council had employed Bramall under a JCT 1963 standard form of contract to construct
123 houses. In the appendix the council had stated that liquidated and ascertained damages for
late completion should be paid ‘at the rate of £20 per week for each uncompleted dwelling’.
During the course of the project, the council decided to take possession of the houses as
they were completed, with the architect issuing practical completion certificates, although
the contract did not allow for this since the parties had not agreed or entered into a sectional
completion supplement. The architect also provided various extensions of time, giving an
extended completion date of 4 May 1977, with the last few houses being accepted on
29 November 1977. The final project delay was around 7 months, so understandably the
council decided to apply liquidated damages. This placed the council in a quandary. Did
they deduct for the proportion of houses that were not completed, or should they deduct for
the whole 123 dwellings, since, after all, this constituted the work that was late? The council
opted for the latter option and made a deduction for all 123 dwellings.
On a court appeal from an arbitrator’s decision, Bramall successfully argued that there was
a discrepancy in calculating liquidated damages since, as they were expressed per dwelling,
this could not be reconciled with partial possession as this related to the works as a whole
(i.e. not to individual dwellings), and as liquidated damages must be applied in accordance
with the appendix of the contract to the whole of the works, the liquidated damages
provision must fail. This would still be applicable even if the council had not opted to
deduct all the damages but had decided to prorate the damages to the works completed.
3.4. Burden and standard of proof

3.4.1 Burden of proof
Ordinarily, the burden of proof lies with the party that makes an assertion, hence the legal
maxim ‘he who asserts must prove’.
Accordingly, it is not for a party defending a claim to disprove the claim: it is for the party
pursuing a claim to prove the claim.
However, if the party pursuing a claim adduces sufficient evidence to raise a presumption
that what is claimed is true, the burden of proof will pass to the other party. It is then for
that party to adduce sufficient evidence to rebut the presumption.
Therefore, any claim document should be prepared with the above basic principle in mind.
3.4.2 Standard of proof

The standard of proof required in civil proceedings is referred to as the ‘balance of
probabilities’ principle, whereby the court or tribunal makes its decision on the basis that
something is more likely to have occurred than not.
15
Therefore, if a set of scales is imagined as being the ‘balance of probabilities’, in some

cases there only needs to be 51 per cent of probability on one side of the scales to enable
that side of the scales to succeed over the other side. Naturally, it is necessary for the party
with the ‘burden of proof’ at any particular time to push the scales down to (at least) the
51 per cent level.
This is to be contrasted with the standard of proof in criminal proceedings, which is set at
the much higher level of ‘beyond reasonable doubt’.
When preparing a claim (in addition to the ‘burden of proof’ principle outlined above) the
required ‘standard of proof’ needs to be recognised, particularly as, in certain situations, the
party receiving the claim (i.e. before proceedings are commenced) may appear to expect a
standard of proof more akin to ‘beyond reasonable doubt’ rather than on the ‘balance of
probabilities’.
Another point to note is that when assessing probabilities, the court or tribunal will have in
mind (to whatever extent is appropriate in the particular case) that the more serious the
allegation is, the less likely it is that the event occurred. Hence, the evidence put before the
court or tribunal has to be stronger before the court or tribunal can conclude that the
allegation is established on the ‘balance of probabilities’.
This does not mean that different standards of proof are required where different assertions
are made, but it does mean that the inherent probability or improbability of an event is
itself a matter to be taken into account when weighing the probabilities and deciding
whether, on balance, the event occurred.
In other words, the more improbable the event, the stronger must be the evidence that it did
occur before, on the ‘balance of probability’ basis, its occurrence will be established (as per
Lord Nicholls in Re H (Minors) [1996] AC 563).
It should be noted that ‘more likely than not’ is not necessarily a hard test to pass; and facts
can often be proved to this standard merely by circumstantial evidence, or by one person’s
word being preferred to another’s, although contemporaneous written records are always
more influential.
In all circumstances, some admissible evidence must be produced to support everything

claimed. This illustrates the need for all parties to keep good records, a matter that is
addressed in Chapters 5 and 10.
Cases
Bramall and Ogden Limited v. Sheffield City Council (1985) 1 Con LR 30
Cavendish Square Holdings BV v. Talal El Makdessi (2015) UKSC 67
Cory and Son v. Wingate (1980) 17 BLR 104 CA
Dodd Properties v. Canterbury City Council [1980] 1 WLR 433
Dunlop Pneumatic Tyre Co. v. New Garage and Motor Co. Ltd (1915) AC 79
Hadley v. Baxendale (1854) 9 Exch 341
16
Miliangos v. George Frank [1976] AC 443

Parking Eye Limited v. Beavis (2015) UKSC 67
Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1970) 1 BLR 111 (CA)
Philips v. Ward [1956] 1 WLR 471
Re H (Minors) [1996] AC 563
Robinson v. Harman (1848) 1 Ex Rep 850
Ruxley v. Forsyth [1995] UKHL 8
Smith New Court v. Scrimgeour Vickers [1997] UKHL 3
Temloc v. Errill Properties Ltd (1987) 39 BLR 30 (CA)
17
ISBN 978-0-7277-6197-2

Chapter 4
Obligations as to time
4.1. Reasonable time
Where the contract has no express provisions as to time for completion of the works, the
contractor is obliged to complete the works within a ‘reasonable time’. What is reasonable
is primarily a question of fact and depends upon all the circumstances which might be
expected to affect the progress of the works: both what was anticipated at the outset
(including the anticipated level of resources) and matters that may occur during the project
and over which the contractor has no control. In calculating a reasonable time, all the
applicable circumstances should be taken into consideration, such as the nature of the
works to be done, the time necessary to do the work, the ability of the contractor to
perform, and the time that a reasonably diligent contractor would take to perform a similar
task with similar constraints.
Therefore, what is a ‘reasonable time’ is primarily a question of fact and it must depend on all
the circumstances which might be expected to affect the progress of the works. In British Steel
Corporation v. Cleveland Bridge and Eng. Co. [1981] 24 BLR 100, it was decided that what
constitutes a ‘reasonable time’ had to be considered in relation to the circumstances which
existed at the time when the contract obligations were performed, but excluding circumstances
which were under the control of the contractor. Lord Goff applied these principles by first
considering what in ordinary circumstances a reasonable time for performance would be and
then considering to what extent the time for performance of the contractor should in fact be
extended by extraordinary circumstances which were outside of the contractor’s control. Lord
Goff noted that whether a ‘reasonable time’ has been taken to do the works cannot be decided
in advance, but can only be decided after the work has been completed.
Obviously, to allow a contractor to complete in a ‘reasonable time’ (a period that would be

difficult to determine with any confidence) would not be satisfactory to most employers.
Because of this, the normal position is that a contractor has an obligation, as set out in the
contract, to complete a project in a certain time period or by a certain completion date.
4.2. Purpose of extension of time clauses

The date for completion as set out in the contract would cease to apply if the employer
caused a delay (whether by a breach of contract or an act of prevention) that prevents the
contractor from completing the works by the completion date.
In such a situation, and in the normal course of events, the obligation to complete no longer
relates to a fixed completion date but reverts to being an obligation to complete within a
reasonable time.
19
A consequence of there being no applicable fixed date for completion of the works is that
any liquidated damages provision within the contract becomes ineffective (as there is no
fixed date against which the liquidated damages amount can be applied). Furthermore, the
employer’s entitlement to damages, which would only apply for a delay beyond what may
be determined as a ‘reasonable’ time period for completion (which might itself be very
difficult to establish), would be financial compensation for the losses that the employer
could actually prove to have incurred.
Because of the obvious difficulties, as outlined above, of allowing a contractor simply to

complete in a ‘reasonable time’, most construction contracts provide for extensions of time
to the completion date to be granted to the contractor if particular events occur.
As noted above, the date for completion as set out in the contract would cease to apply if
the employer caused a delay, by a breach of contract or an act of prevention, which
prevented the contractor from completing the works by the completion date (this situation
is normally referred to as the ‘prevention principle’). A consequence of this (among other
things) is that the contractor would only be obliged to complete in a reasonable time and
any liquidated damages provision in the contract would not apply.
The essence of the prevention principle is that the employer cannot hold the contractor to a
specified completion date if the employer has, by an act or omission, prevented the
contractor from completing by that date. In such a case, time becomes ‘at large’ and the
obligation to complete by the date specified in the contract is replaced by an implied
obligation to complete within a reasonable time. The leading authority on this point is the
decision in Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1970) 1 BLR
111. In that case, Lord Justice Salmon commented ‘I cannot see how, in the ordinary
course, the employer can insist upon compliance with a condition if it is partly its own fault
that it cannot be fulfilled’.
However, time can only become ‘at large’ (as a result of the prevention principle, with the
obligation to complete by the date specified in the contract replaced by an implied
obligation to complete within a reasonable time) where the contract does not contain a
proper mechanism for allowing the employer to grant an extension of time for delays that
are caused by the employer or by anyone or anything which the employer is responsible
for.
Conversely, the prevention principle does not apply in the case where there is an express
provision in the contract for the employer to set a new completion date in the case of acts
of prevention by the employer. Where such an express provision does exist in the contract,
the employer can grant an extension of time for acts of prevention, and, because of that, the
employer can preserve its rights to claim liquidated damages from the contractor if the
contractor fails to complete the works by the (extended) completion date.
Consequently, and to avoid the effect of the prevention principle (i.e. to prevent time from
becoming ‘at large’), most construction contracts include express provisions for extensions
20
of time to be granted in respect of acts of prevention by the employer or by anyone or

anything which the employer is responsible for.
The existence and proper operation of such an extension of time provision can therefore be seen
to be more for the benefit of the employer than for the benefit of the contractor. Without such
an express provision existing, the employer would be unable to exercise its rights to recover
liquidated damages if the contractor fails to meet the completion date because of acts of
prevention as described, and time would in effect become ‘at large’. On the other hand, and
because a contractor’s entitlement to an extension of time is a separate issue to its entitlement to
financial recovery, the only real benefit to the contractor in obtaining an extension of time to the
completion date is as relief of its liability for the payment of liquidated damages for delay.
It is important to note that the extension of time provision referred to above only needs to
be able to operate in the case of acts of prevention that the employer has control over. The
inability of the contractor to obtain an extension of time for a delay caused by another
event (inclement weather, for example) would not result in time becoming at large should
the contractor suffer a delay due to that other event.
Contracts may expressly state all the events which are considered an ‘act of prevention’,
being an event which allows the contractor an extension of time. However, many standard
form contracts now contain a catch-all clause which allows the employer to grant an
extension of time in respect of any acts of default by the employer (or persons that the
employer is liable for). This catch-all clause is designed to avoid the prevention principle
from being applied in any event.
4.3. Time at large

The time for completion of works can become ‘at large’ when the contractor has been
hindered or prevented by the employer from completing the works in accordance with the
original contract. This results from a well-established principle of law that ‘no person can
take advantage of the non-fulfilment of a condition the performance of which has been
hindered by himself’. Time being at large does not mean that the contractor has no
obligation to complete the work. Rather, the contractor must complete in a reasonable time.
Even if the employer is not entitled to liquidated damages, it can still recover general
damages, if it can prove that it has suffered a loss as a result of the contractor’s delay.
This principle is also called the prevention principle. The prevention principle can only
apply where the contract does not contain a proper mechanism for allowing the employer to
grant an extension of time for delay caused by the employer or anyone for whom the
employer is responsible. The essence of the prevention principle is that the employer cannot
hold the contractor to a specified completion date if the employer has, by an act or
omission, prevented the contractor from completing by that date. Instead, time becomes at
large and the obligation to complete by the specified date is replaced by an implied
obligation to complete within a reasonable time. It is to avoid the prevention principle
becoming applicable that many construction contracts and subcontracts include provisions
for extension of time.
21
Time for completion of the works can be said to be at large, or made at large, in the
following situations.
■ No time for completion is fixed in the contract.

■ There is improper administration or misapplication of the extension of time provisions
in the contract.
■ Time requirements are waived.
■ When the extension of time provision does not confer power on the project manager or
contract administrator to extend the time for completion of the works on the occurrence
of an event or events which fall within the obligation of the employer.
The leading authority on the point is the decision in Peak Construction (Liverpool) Ltd v.
McKinney Foundations Ltd (1970) 1 BLR 111, in which Lord Justice Salmon said
A clause giving the employer liquidated damages at so much a week or month which
elapses between the date fixed for completion and the actual date of completion is usually
coupled, as in the present case, with an extension of time clause. The liquidated damages
clause contemplates a failure to complete on time due to the fault of the contractor. If the
failure to complete on time is due to the fault of both the employer and the contractor, in my
view, the clause does not bite. I cannot see how, in the ordinary course, the employer can
insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled.
In the Australian case of Gaymark Investments Pty Limited v. Walter Construction Group
Limited [1999] NTSC 143, the contractor (Walter) was delayed in completing the work, by
causes for which the employer (Gaymark) was responsible and which constituted acts of
prevention by Gaymark. Under the provisions of the contract, Gaymark was not able to
grant an extension of time to Walter, nor was it able to set a revised completion date. As a
result, time became at large and Walter was simply obliged to complete the work within a
reasonable time. In his judgment, Bailey J. affirmed that because of the above circumstances,
Gaymark was not entitled to deduct liquidated damages and time was set at large based on
Gaymark’s act of prevention. Bailey J. said
In the circumstances of the present case, I consider that this principle [i.e. the prevention
principle] presents a formidable barrier to Gaymark’s claim for liquidated damages based
on delays of its own making. ... I do not consider that there was any ‘manifest error of law
on the face of the award’ or any ‘strong evidence’ of any error of law in the arbitrator
holding that the ‘prevention principle’ barred Gaymark’s claim to liquidated damages.
In Multiplex Constructions UK Ltd v. Honeywell Control Systems Ltd [2007] BLR 195
TCC, Honeywell argued that time had become at large and that its obligation to complete
its subcontract works within a specified time had fallen away, only to be replaced by an
obligation to complete the works within a reasonable time. Honeywell founded its
argument on the prevention principle. It argued that time had become at large mainly due to
the issue of further instructions and programmes, which meant that there was a delay to the
22
finishing of the works, and that Multiplex had simply failed to operate the extension of time
machinery in the contract and, in the alternative, that machinery had broken down. In
considering this matter, Mr Justice Jackson cast doubt on the application of the Australian
Gaymark case in respect of English law. Mr Justice Jackson made it clear in his judgment
that he did not have to decide whether or not the Gaymark case represented the law in
England, but (on an obiter basis, and referring to various views expressed by other courts
and commentators) he stated his doubt that it did apply.
4.4. Time is of the essence

‘Time is of the essence’ means that performance by one party at or within the period
specified in the contract is necessary to enable that party to require performance by the
other party. Therefore, any delay, reasonable or not, slight or not, will be grounds for
cancelling the contract.
The general rule is that time is not of the essence unless the contract expressly so provides.
There is no general concept of time being of the essence for a contract as a whole. Instead,
the question is whether time is of the essence for an individual term. Time is not considered
to be of the essence unless the parties expressly stipulate that conditions as to time must be
strictly complied with and the nature of the subject matter of the contract or the
surrounding circumstances show that time should be considered to be of the essence.
Time of the essence clauses generally carry far less weight in construction contracts than in
other commercial contracts. The reasons include the fact that construction contracts
typically contain internal remedies addressing delay (principally for the reasons set out
above) and the disproportionate effect of the remedy (i.e. the cancellation of the contract) as
compared to the breach, particularly when a building contract is partially performed.
In addition, most construction contracts incorporate a variety of terms compelling the

contractor to perform its duties in a timely fashion, such as liquidated damages and express
termination provisions specifically addressing delays in performance. These specific clauses
may well override a generic clause declaring time to be of the essence as they raise the
question as to whether the parties intended the clause to operate in a field occupied by an
express provision. Indeed, there is a good argument that where a party stipulates that
liquidated damages will apply, it has declared an intention that damages are an adequate
remedy, meaning the time obligation is not a condition that would entitle that party to
terminate its employment under the contract.
Another difficulty in giving effect to a ‘time is of the essence’ clause in construction

contracts is the sheer number of time references in such contracts, for various duties,
obligations and notices. A missed time deadline in a construction contract may well arise
after substantial performance has been achieved, leading to concerns of unjust enrichment.
Accordingly, there may be reluctance in arriving at an interpretation that permits
termination.
23
In Mount Charlotte Investments Ltd v. Westbourne Building Society [1976] 1 All ER 890,
Mr Justice Templeman sets, obiter dicta, the three conditions that make time of essence as
■ the contract expressly stating that this is so

■ implication because of the special matter (for example, the completion of the project
will allow the commencement of another)
■ notice from the innocent party making time of the essence after the other party has
defaulted under the clause.
In view of these conditions, the insertion of a clause declaring time to be of the essence in
a construction contract, unlike its insertion in most other contract forms, will not normally,
in and of itself, allow the innocent party to rescind or terminate the contract for any breach
of a time condition. In determining the party’s intentions, the court will look to all the
particular terms and circumstances and may very well import little meaning to the ‘time is
of the essence’ clause.
Cases
British Steel Corporation v. Cleveland Bridge and Eng. Co. [1981] 24 BLR 100
Gaymark Investments Pty Limited v. Walter Construction Group Limited [1999] NTSC 143
Mount Charlotte Investments Ltd v. Westbourne Building Society [1976] 1 All ER 890
Multiplex Constructions (UK) Ltd v. Honeywell Control Systems Ltd [2007] BLR 195 TCC
Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1970) 1 BLR 111
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ISBN 978-0-7277-6197-2

Chapter 5
Delay and disruption claims
5.1. Introduction
Construction and engineering projects are subject to considerable risks and uncertainties.
These include the effect of weather conditions, the impact of the ground conditions
encountered on the site, the availability of labour, materials and plant to carry out the
works, the intervention in the project of certain government bodies and local authorities,
and the changes to the scope of the works as required and instructed by the employer.
Such risks and uncertainties frequently cause delay and/or disruption to project programmes
and can lead to a deferral of the completion date of the project.
Some such events may cause disruption to the progress of the works only; some may only
cause delay to an activity or a group of activities on a programme; and some may cause a
delay to the overall project completion date. Some events may cause all three of the above
possible outcomes, and some may cause a combination of the above possible outcomes.
The effect of each event therefore needs to be analysed based upon the facts and the
evidence, and it is often the case that some events may be both delay and disruption
events.
Delay and disruption events can be categorised as two major types, namely ‘excusable’ and
‘non-excusable’ events.
5.1.1 ‘Excusable’ events

An ‘excusable’ delay and/or disruption event is one for which the contractor is excused
under the contract from meeting a contractual completion date or some other contractual
obligation and for which the contractor can therefore receive an extension of time and/or
financial compensation (e.g. loss and expense). In general, excusable events include such
things as unforeseen design problems (in the case where the contractor is not responsible
for design), variations and changes to the scope of the works, and changes to or imposition
of site restrictions. Particularly in respect of delays, this type of delay event is also
commonly referred to as a non-culpable delay event (i.e. a delay event which is not the
liability of the contractor).
5.1.2 ‘Non-excusable’ events

A non-excusable delay and/or disruption event, on the other hand, involves (for example)
lost time caused directly by the contractor’s actions or inactions. In this case, the contractor
is not excused under the contract from meeting a contractual completion date or some other
contractual obligation, and is not entitled to an extension of time or to financial
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compensation from the employer in respect of the delay and/or disruption suffered.
Moreover, the contractor will be responsible for the possible impact its performance has on
other involved parties. If the contract includes a liquidated damages clause, then, in the case
of a non-excusable delay, the owner could recover liquidated damages from the contractor.
If the contract does not include a liquidated damage clause, then, in the case of a
non-excusable delay, the owner could recover un-liquidated or general damages from the
contractor. Generally, non-excusable delay and/or disruption events include the contractor’s
failure to perform work within the agreed time period, poor work performance and
inadequate resources. In respect of delays, this type of delay event is also commonly
referred to as a culpable delay (i.e. a delay event which is the liability of the contractor).
5.1.3 Time and money

Participants in the construction and civil engineering industries often make the mistake of
believing that time and money are directly linked. It is commonly assumed that a financial
claim can only be secured if an extension of time has been granted or, conversely, that a
financial claim will certainly be due if an extension of time has been given.
In reality, neither of these propositions is, strictly speaking, correct. In fact, additional
monies may be recovered even if an extension of time is not applicable, or, alternatively, a
contractor may receive a comprehensive extension of time and still not be entitled to
additional financial recovery.
In respect of the former case, and by way of an example, it could be that scaffolding is
required to remain in place for a longer period of time than originally planned on a work
face which has suffered a non-culpable delay, thereby causing the contractor to incur
additional scaffolding hire costs. The contractor would be entitled to recover the additional
hire costs from the employer. However, because a delay to that particular work face did not
delay the completion of the project as a whole, no extension of time would become due. In
this case, then, additional monies may be recovered where an extension of time to the
completion date was not applicable.
On the other hand, and by way of an alternative example, on a project with no site set-up at
all, which, perhaps, was operated from a central base, the entire works on site could be
postponed for a period of time (which would normally have the direct effect of delaying the
completion date and for which the contractor would be entitled to an extension of time) but
no prolongation costs would be incurred by the contractor because there were no set-up
costs on site during the period of suspension. Therefore, in this (admittedly somewhat
unusual) case, a contractor would receive a full extension of time but would not be entitled
to recover any additional monies from the employer.
From the above examples, it is clear that there may be no direct link between extensions of
time and the recovery of additional monies. Some delay events may create an entitlement to
an extension of time but no entitlement to financial reimbursement, and some disruption
events may create an entitlement to financial reimbursement but no entitlement to an
extension of time.
26
Because of this, and despite the fact that some events may cause delay and disruption and
may create an entitlement to both an extension of time and to financial reimbursement, it is
always advisable (and under some contract forms it is a requirement) that notices of delay
and notices for financial reimbursement are kept separate from each other, or at least that
the different elements are identified separately in a single notice.
For contractors, delay and/or disruption events can result in (among other things) the
imposition of liquidated or general damages by the employer; in increased labour, material
and equipment costs; in extended site and head office overheads; and in costs associated
with loss of productivity.
For employers, delay and/or disruption events can result in (among other things) a loss of
profit, a loss of revenue opportunity costs and increased consultants’ fees.
As the costs for both contractors and employers resulting from delay and/or disruption
events can be extensive, the liability for delay and/or disruption events and the effects
thereof is frequently a subject of much contention between the parties.
5.2. Cause and effect

The following initial points need to be proved in respect of a delay and/or disruption claim
■ that an event actually occurred

■ that the event was one expressly catered for within the contract
■ that the notices required under the contract had been given, and
■ what the effect was, in time and/or financial terms, of the specified event.
In other words, what needs to be shown is the connection between cause and effect – that
is, showing how the latter item on the above list (the delay and/or financial effect) resulted
directly from the first item on the above list (the event that occurred).
Demonstrating cause and effect is often the most difficult part of a claim to satisfy. With
some heads of claim such a connection is relatively easy to identify, while with others it is
rather more problematic.
The connection between cause and effect is largely a matter of evidence and so the
existence of good and accurate records is absolutely crucial for supporting a claim.
Indeed, this is when the quality and extent of the records and documentation made come
into their own.
5.3. Notices
Many forms of contract include a requirement for the contractor to provide, within a
specified time frame of the event or circumstance occurring, notices or early warnings of
events or circumstances that it considers may provide an entitlement to additional time or
payment.
27
The reasoning behind such a requirement is that the employer and its agents need to be
made aware of the events or circumstances as soon as possible in order that they may
consider corrective action or mitigation measures which may be implemented to minimise
their effects.
A contract will often state the precise requirements for a notice and will often prescribe
time frames within which notices must be submitted and provide details of how notices
should be served.
Some contracts provide that the submission of notices is a condition precedent to

entitlement, which means that if a contractor does not comply with the requirements of the
contract in this respect, it will (or at least, may) lose its rights for compensation under the
contract. From the judgment handed down by the court in the WW Gear Construction Ltd
v. McGee Group Ltd [2010] EWHC 1460 (TCC) case, it is clear that if a condition
precedent clause in a contract is correctly framed and that the words used indicate a clear
intention of the parties which is reasonable then the English courts will find that a condition
precedent is enforceable.
5.4. Records
Most contractors, during the course of a contract, collect the type of information necessary
to enable them to particularise delay events. While such information is primarily collected
and recorded for management purposes, having that information also places contractors in a
good position if they need to pursue a claim. Contractors that fail to collect and document
information regarding changes and delay events will be left with few options. Attempting
to collect and assemble data after the event will naturally limit claims to retrospective
accounts and analysis. It should be noted that the courts place a particularly heavy burden
upon contractors in terms of the maintenance and presentation of documentation in support
of any claim for delay and/or disruption. The contractor must maintain accurate and
complete records, and needs to be able to establish the causal link between the client risk
event and the resultant delay or disruption caused and/or the loss and expense suffered.
There is much truth in the old saying that the three most important constituent parts of a
successful claim are records, records and records!
The main categories of records for delay and/or disruption claims are
■ the baseline programme

■ method statements
■ resource schedules
■ revised programmes
■ progress programmes
■ as-built programme
■ notices of delay and/or disruption
■ relevant correspondence, emails and other similar communications
■ instructions
■ requests for information
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■ progress meeting minutes

■ project meeting minutes
■ early warning meeting minutes
■ risk registers
■ site diary
■ labour and plant returns
■ dated site photographs.
5.5. Building Information Modelling

It is apparent that Building Information Modelling (BIM) may have a great impact upon the
matter of delay and disruption claims on construction and infrastructure projects in the
future.
At its most basic level, BIM is a process that is used to design, understand and demonstrate
the key physical and functional characteristics of a building on a ‘virtual’ computerised
model basis. BIM therefore provides the opportunity to concurrently design and visualise
the building in 4D.
At its more advanced levels, BIM is the use of a computer software model to simulate the
construction of and the operation of a building. The resulting model is a digital
representation of the building, from which views and data appropriate to various users’
needs can be extracted and analysed. The information generated can then be used to
improve both the process of delivering the building and the entire life-cycle use of the
building.
BIM will cause a fundamental change in the way participants in a construction project
interact with each other. It will require new and significant levels of collaboration,
information sharing and coordination, from the inception of a construction project through
to its completion. Potentially, all participants in the BIM process will be required to sign a
common legal document: a BIM protocol that establishes the obligations of the parties,
both technical and legal, for the modelling process.
The implementation of BIM provides contemporaneous information that should greatly

assist in the preparation of extension of time and loss and expense claims.
The computerised model may be able to be used, for example, in the following situations.
■ Where alterations to the project have been proposed, the BIM model makes it possible
to view the programme implications of those alterations both retrospectively and,
perhaps more importantly, as a projection of future actions. If parties have early
warning of the potential programme implication of proposed changes, the probability of
a dispute arising will be greatly reduced.
■ If a dispute regarding programming and/or time matters does arise, it should be easier
for a tribunal to resolve such a dispute by referring back to the frozen snapshot views of
the programme dimension of the BIM model. While there may still be disagreements
about the reason for the delays suffered, at least there should be no dispute about the
29
progress on the project at any particular time. One of the major difficulties in any
dispute resolution process is establishing what actually happened and when, and it is
plain that the BIM model should greatly assist in this particular issue.
While BIM is still in its relatively early stages of development, it is apparent that it will
have more and more impact going forward. It is therefore inevitable that this part of the
book will be greatly elaborated upon in any future editions.
Case
WW Gear Construction Ltd v. McGee Group Ltd [2010] EWHC 1460 (TCC)
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ISBN 978-0-7277-6197-2

Chapter 6
Extension of time claims
6.1. Project programming
In the absence of an express term, there would normally be an implied term in every
construction contract that the contractor will commence the works within a reasonable time
of making the contract and will proceed with the works at a reasonable rate. The
completion date of the works within a contract is critical; not only does it have a direct
bearing on the question of whether the employer can levy liquidated damages on the
contractor, it also usually marks the transfer of certain risks or the crystallisation of certain
rights between the contractor and the employer.
There is no implied term that a contractor is required to execute the works with any
particular due diligence and expedition, but only with such diligence and expedition as
would reasonably be required in order to meet the key dates and the completion date in the
contract. Accordingly, the contractor generally has the freedom to plan its work as it sees fit
within the specified time constraints and is not obliged to proceed at a particular work rate.
The contractor must ensure, however, that progress is not so slow that the contractor can be
said to be deliberately putting itself in a position where it cannot complete on time, which
could, in an extreme case, amount to an anticipatory repudiatory breach of contract.
Clearly, commencing, proceeding and completing the works are three of the major
components in any construction project, where time factors are essential in interconnecting
the different variables affecting the process of executing construction in a timely manner.
The relationship between these factors is complex and creates a web of interactive activities
which need to be identified before the start of the works and need to be updated regularly
throughout the project. This is achieved by the use of project programming.
Project programming consists of updating current and target schedules for existing projects
and developing breakdown structures, milestones, target schedules and cost-loaded
schedules for new projects.
Most standard forms of construction contract contain provisions for the contractor to submit
to the employer a programme showing the manner in which the contractor intends to carry
out and complete the works. That requirement may range from a simple request for the
submission of a master programme without prescription as to its form or content (and
which is not binding under the contract), to the requirement that a very detailed programme
(which is a binding contract document) is provided in a stipulated format and with a
specified content.
31
In whatever form it is submitted, the programme is a crucial document for the effective
management of most construction projects. It provides a tool by which actual job progress
against a plan is monitored, thus enabling an early warning of actual and potential delays
which could adversely affect the project completion date.
Therefore, to reduce the number of disputes relating to delay, the contractor should prepare
a programme showing the manner and sequence in which it plans to carry out the works.
The programme should be updated to record both actual progress and any extensions of
time granted.
6.2. Critical path and float

Each activity that is to be undertaken on a project needs to be shown on the project
programme. Some of the activities will be interrelated and linked in that some activities
cannot commence until other activities have commenced or have completed (for example,
plastering to blockwork cannot commence until after sufficient blockwork has commenced
and/or been completed); while other activities will not be related to any other activities.
The path to the Completion Date of the resulting schedule of the linked activities is called
the critical path. If a delay occurs to an activity that is on the critical path then, all other
things being equal, the contract completion date will also be delayed.
Critical paths are widely used in the construction industry to demonstrate the effect of delay
events, and the courts have accepted the use of the critical path method to prove delay, to
identify the causes of such delays and inefficiencies and to assign responsibility for them.
Mr Justice Dyson in Henry Boot v. Malmaison (2000) CILL 1572 TCC confirmed the
importance of the critical path method in establishing causation and also confirmed that a
delay is only relevant when it falls on the critical path. This principle also received support
in The Royal Brompton Hospital v. Hammond (2001) 76 Con LR 148, where His Honour
Judge Seymour, obiter dicta, confirmed that in determining a fair and reasonable extension
of time as a consequence of a delay event, an examination of the actual critical path of the
contractor’s programme should be carried out to establish that the delay event affected, or
was likely to affect, the completion of the works.
US construction case law dominates the references to the critical path method and judges
show a willingness not only to understand the mechanism of a critical path method, but
also to prefer this approach to other programming methods. As a result, the critical path
method is commonly used to prove cause and effect in delay-related disputes.
A key point with the critical path is that it should not be seen as being static, but must be
understood to be a dynamic path that can change depending upon the circumstances of and
the delays encountered on the project in question.
In the US case of Natkin and Co. v. George A. Fuller Co. 347 F. Supp. 17 (W.D. Mo.
1972), one of the findings adopted by the judge in order to reach his decision was that
‘the critical path plan may become obsolete unless it is kept current’. The judge
32
emphasised that the critical path method’s usefulness as a barometer for measuring time
extensions and delay damages is necessarily circumscribed by the extent to which it is
employed in an accurate and consistent manner to coincide with the events actually
occurring on the project. Furthermore, updating the critical path during the life of the
project is incremental and failing to update it in this manner can make the schedule
redundant. This point was further emphasised in another US case, Fortec Constructors v.
United States 8 Cl. Ct. 490 (1985), where it was found that ‘if the critical path method is
to be used to evaluate delay on the project, it must be kept current and must reflect
delays as they occur’.
In addition to the critical path through a programme, there are other various side paths
called non-critical paths. Because these paths are non-critical, there is a period of float
between the completion of one activity and the commencement of a subsequent activity
(where float is the time period before a non-critical path impacts upon the critical path for a
programme).
If affected by improper scheduling or performance delays for a long enough period, the
float on the non-critical paths could be expended. This would result in the previously non-
critical activities themselves becoming critical and could therefore have the effect of
altering the original critical path.
A critical path therefore demonstrates to involved parties about the relative importance of
performing certain activities within the project completion parameters. It indicates to
participants whether their work is critical, non-critical, or has any float associated with its
performance.
In respect of the float on a programme, there are two main types of float: there is activity
float, which is the time available to an individual activity without it affecting a succeeding
activity and/or impacting upon the critical path; and there is terminal float, which is the free
time shown after the completion date shown on a programme up to the contract completion
date.
The parties should expressly address the issue of ownership of float in their contract. Court
cases have found that, in building contracts where this issue has not been considered, there
is no implied term requiring the employer to perform the contract so as to enable the
contractor to complete the works in accordance with a programme showing a completion
date earlier than the contractual completion date (i.e. a programme with a terminal float
period). In Glenlion Construction Ltd v. Guinness Trust (1987) 39 BLR 89 QBD, Glenlion
was the contractor under a JCT form of contract for the construction of a residential
development for the Guinness Trust in Bromley, Kent. The issue which arose was whether
Glenlion was entitled to complete the works in line with its submitted programme, which
showed a completion date before the contract completion date, and if the Guinness Trust
was required to comply with that programme. In court it was held that it was self-evident,
from the conditions of the JCT contract, that Glenlion was entitled to complete before the
date of contract completion, and this was so whether or not Glenlion produced a
programme with an earlier date and whether or not it was required to produce a programme
33
at all. However, crucially, while it was found that Glenlion was entitled to complete the
works before the contract completion date, it was also held that Guinness was not required
to actively cooperate to enable the earlier date to be achieved, but was only required not to
hinder earlier completion. It must be noted that the judgment in this case was founded on
the terms of the JCT contract, and a different conclusion would almost certainly have been
reached had the contract been formed on a different standard form (the NEC4, for example,
as below).
The NEC4 form of contract (and the previous NEC3 edition) clearly states that there is no
reason why the contractor cannot show on its programme a date for planned completion
earlier than the contract completion date, thus including some terminal float in its
programme. NEC4 core clause 63.5 provides that ‘A delay to the Completion Date is
assessed as the length of time that, due to the compensation event, planned Completion is
later than planned Completion as shown on the Accepted Programme’. Therefore, as stated
in the guidance notes to the contract, any terminal float (but not activity float) resulting
from an early planned completion date is preserved. The period of delay to the planned
programme is then added to the completion date to determine the revised completion date
from which delay damages will be applicable. The above principle flows from the fact that
under NEC4, the programme is a contract document and an important tool for the
administration of progress and delay.
Any ambiguous interpretation of float ownership can, of course, be clarified by using the
appropriate express contract terms. The float ownership concept is fundamental to the
analysis of project delay. Both the employer and the contractor want access to the float in a
programme because it affords them more flexibility in their decision-making and use of
resources. However, many contracts do not address this important topic. As a result, neither
the employer nor the contractor has a contractual right to use the float. The now generally
accepted, although sometimes disputed, answer is that the project owns the float. Under this
interpretation, a party is permitted to delay an activity with positive total float provided that
the delay duration does not exceed the total float calculation for that activity, and that the
party’s use of the positive total float occurred prior to the use of that float by anyone else.
The float ownership concept becomes much more complex when the project is late and the
total float calculation in effect becomes negative.
6.2.1 Critical path strengths

The provision of critical paths is widely accepted and used in the construction industry
because they serve as a tool for planning projects. The advantages of using a critical path
method can be summarised as follows.
■ A critical path requires a detailed analysis of the project, and therefore, the programmer
would have a better understanding of the project. This requirement minimises the
possibility of erroneous or misleading schedules.
■ Critical paths are well established and easy to understand, with techniques for drawing
and calculating project durations developed from advanced high technologies and using
standard quantitative software.
34
6.2.2 Critical path weaknesses

When carrying out retrospective delay analysis using critical path analysis, large
programmes with hundreds and thousands of activities can produce unreliable results.
This is because the analyst has made hundreds of assumptions in preparing the
programme and, when considering the impact of an event, would be likely to make many
adjustments to a programme if faced with a potential delay, especially if the delay is on
the critical path.
It is important to recognise that it is easy to manipulate (often inadvertently) a critical path

in order to derive the required end result. Programmers can alter the sequence and the
scheduling mechanism to create preferred results for the party construing it. For example, in
order to make a certain section of the work critical, the programmer can achieve this by
fixing durations of activities or logic links between activities. Equally, if variations have
been issued for a part of the works, it is possible to make that element of the programme
critical. There is also a tendency for those involved in preparing the critical path method to
get lost in the analysis rather than focusing on the important task of establishing the
entitlement arising from the events to be modelled.
Courts have on occasion had difficulty understanding and accepting the logic behind a
critical path method together with other programming issues, such as the processes
commonly used to prove cause and effect in delay-related disputes.
In certain cases, judges have expressed a preference for analysis based on factual evidence,
sound practical experience and common sense, even though such analysis might not be
based on critical path analysis, and some have jettisoned the critical path approach entirely
where it has been based on flawed as-built critical path analysis. A case in point was the
City Inn v. Shepherd Construction (2010) CSIH 68 case, which concerned the construction
of a hotel under an amended JCT form. Matters in dispute included the claimant, City Inn,
seeking a declaration that the defendant, Shepherd, was not entitled to the contended
extension of time (11 weeks), and not even to the extension of time that had been granted
by City Inn’s contract administrator (4 weeks). In reaching its decision, the Inner House of
the Scottish courts (on appeal from the Outer House of the Scottish courts) found that a
common-sense approach must be used when deciding whether or not the cause of a delay
was an excusable event. It added that, although a critical path may be of assistance in
determining causation, it is not indispensable. The court found that, above all, an architect
(for example) should approach the issue of an extension of time entitlement in a fair and
reasonable manner, should apply common sense and should not be overly restricted by a
theoretical critical path analysis (particularly one which, as in this case, was found to be
flawed or incomplete).
The above cases suggest that although critical path method techniques are recognised as
appropriate for delay analysis, it is very important for contractors and employers and/or
their agents to employ techniques that consider what actually happened on site based on
factual evidence. Theoretical delays calculated without taking into account actual project
records are highly unlikely to succeed.
35
Having said this, it must be noted that an architect (for example) cannot move too far away
from carrying out some form of detailed analysis of the delay. This is because in John
Barker Construction Ltd v. London Portman Hotel Ltd (1996) 83 BLR 31 it was
established that, in exercising his duty, an architect must undertake a logical analysis in a
methodological way of the impact of the excusable events on the contractor programme and
that the application of an impressionistic rather than a calculated and rational assessment is
not sufficient.
6.3. Delay analysis

There are various methods of critical path analysis which exist for analysing and
demonstrating the effects of delay events.
The choice of which methodology to use to illustrate objectively the cause and effect within
an extension of time claim is normally dictated by the timing of the analysis, together with
the availability of contemporaneous records and the time and resources available. The
timing is of relevance as a prospective analysis (based upon the likely effect of a delay) and
a retrospective analysis (based upon actual fact) will almost certainly provide different
results. The specific contract may dictate whether a prospective or a retrospective approach
should be followed.
The Society of Construction Law’s Delay and Disruption Protocol (dealt with later within
this chapter) provides guidance as to appropriate methods of delay analysis. In doing so, it
notes that different methods of critical path analysis have the ability to produce very
different results. The selection of a suitable technique requires careful consideration if it is
to achieve the goal of demonstrating the critical effects of the delay events complained
about.
The resolution of disputes regarding the effect of delay and/or disruption events on large
construction and engineering projects increasingly involves the use of delay analysis
techniques to assist in the identification of the causes of critical delay to a project and to
assist in the computation of claims for lost productivity.
In terms of the programme used during the contract and post-contract period, it will not
necessarily establish the impact and extent of delays unless more sophisticated forms of
analysis are adopted and are used on an ongoing basis throughout the project so that the
programme becomes a live working programme. This is because if delay allegations are to
be shown effectively by the contractor and considered properly by the project manager or
contract administrator, it will be found that in most situations a simple bar chart will not
suffice and some better means of indicating quantity output or physical progress, as well as
the passage of time, is essential.
The price of failing to establish a proper programme is well illustrated by the case of
Balfour Beatty Construction Limited v. The Mayor and Burgess of the London Borough of
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Lambeth (2002) 1 BLR 288. In that case, and in reaching his decision that Balfour Beatty
was unsuccessful in its action, His Honour Judge Humphrey Lloyd observed that
Despite the fact that the dispute concerned a multi-million pound refurbishment contract,
no attempt was made to provide any critical path. It seems that Balfour Beatty had not
prepared or maintained a proper programme during the execution of the works. By now,
one would have thought that it was well understood that, on a contract of this kind, in
order to attack, on the facts, a clause 24 certificate for non-completion (or an extension
of time determined under clause 25), the foundation must be the original programme
(if capable of justification and substantiation to show its validity and reliability as a
contractual starting point) and its success will similarly depend on the soundness of its
revisions on the occurrence of every event.
Delay claims are normally demonstrated by a logical interpretation of the events. Such
claims can be supported by documents, letters, instructions and witness statements, or may
extend to the use of computer-aided project management tools.
In essence, what is being sought is the delay which is caused by an excusable event occurring
at the time when it in fact occurred, with the project being in the state that it was in at that
time, and with the contractor responding to it as it did, with an allowance then being made for
any extent to which the contractor has, through breaches of contract, contributed to the
resulting delay. Such contribution might have affected the state of the project at the time the
delaying event occurred or might have affected it afterwards if, for example, the contractor
failed to comply with an obligation to use its best endeavours to overcome a delay.
Mostly, proof of delay is a matter of fact, but sometimes facts alone cannot answer the
question and the law is required to take a position.
There are various approaches used by programming specialists to demonstrate or assess the
delaying effect of particular relevant events. The method that is actually adopted is often
decided upon by factors such as proportionality (i.e. cost of producing the delay analysis as
compared to the total value or amount in dispute) and what information is available in order
to construct the programme and what progress details are required. Some of the more
commonly used delay analysis techniques are outlined below.
6.3.1 Bar chart methodology

Contractors seeking to prove entitlement to time or money often use a bar chart comparing
the as-planned and the as-built programmes. The contractor will then claim relief for the
difference between the end dates shown on the two programmes.
6.3.2 Retrospective critical path method

This analysis has revolutionised the way construction projects are programmed and
managed and the way the effect of delay can be predicted and calculated. Its main advantage
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is the opportunity it provides to link cause and effect at a level of considerable detail. There
are several variations on the retrospective critical path method analysis, including
■ as-planned impacted, which adds client-caused delays into the as-planned programme
■ as-built but for, which subtracts employer-caused delays from the as-built programme.
The two predominant areas of retrospective delay analysis are static and dynamic. Static
critical path analysis is largely inferior to dynamic critical path analysis. It is usually adopted
when the cause is clearly identifiable and there are no complex issues, such as acceleration or
unproductive work, and there is no change in the logic. However, because construction
contracts are themselves dynamic, a dynamic critical path methodology is the preferred route
for retrospective delay analysis. Dynamic critical path methods are classed as time-impacted
delay analysis and are based upon the analysis of delaying events at the time they occur.
6.3.3 Window analysis

In this approach, the construction process is seen as multiple windows during the period of
performance. For each window the programme is updated to take account of delays which are at
the contractor’s risk, any necessary logic or duration revisions by way of mitigation and all
excusable and compensable events during the period since the last update. Thus, each programme
update will incorporate all changes which affected the planned progress of the project during that
period. This method is most effective when used contemporaneously, and is updated regularly
throughout the course of the project. Since each window is only a segment of the contract period,
the result of each window analysis must be summarised and carried forward to the next window.
It is thus only when the last window, closing at actual completion, has been analysed and
summarised that the accumulation of the various changes can be added together to demonstrate
the effect on completion of the various events. In simple terms, what is being constructed is an
as-built programme which shows the impacts of all delaying events as they occur.
For the window analysis to be effective, accurate progress information at the time of the
windows must be available, otherwise the analysis cannot be properly and reliably completed.
The less accurate the programme and progress information available, the more likely the
results obtained will be inaccurate. This will require the original as-planned programme to
be manipulated to deal with any obvious errors.
6.3.4 Snapshot analysis

In a snapshot analysis it is the occurrence of the delay event itself and the cessation of its
operation which dictates what is analysed and at what point in the progress of the project it
is analysed. This is a simple contemporaneous approach to delay analysis which allows
assessment to be made of three important aspects
■ the actual state of progress at the time the delaying event occurred
■ the changing nature of the critical path as a result of the event
■ the effects of action taken, or which should have reasonably been taken, to minimise
delay or prevent subsequent delays.
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6.4. The Delay and Disruption Protocol

Although not generally relevant to any particular contract terms, the Delay and Disruption
Protocol (the Society of Construction Law, Delay and Disruption Protocol) (the ‘Protocol’)
is a document that is often referred to in the context of delay analysis.
The first edition of the Protocol was produced by the Society of Construction Law (in the
UK) in 2002. The aim was to create a practical environment where the number of
disputes could be substantially reduced by the introduction of a transparent and unified
approach to the understanding of programmed works, their records, and identifying the
consequences of delay and disruption. The Protocol contained nothing new, but it
explained in simple terms the enormous value of dealing with the effects of delay to
progress contemporaneously, by means of enforceable contract requirements for competent
critical path method application and progress records that would enable the employer to
manage its own risks.
Apart from providing recommendations and guidance to those involved with drafting
contracts, the Protocol was intended to act as an aid to the interpretation of the delay and
disruption provisions contained in standard form civil engineering and building contracts,
and to act as a guide as to the manner in which contractors ought properly to prepare
delay and disruption claims and how judges and other tribunals ought properly to
determine them.
The second edition of the Protocol was published in 2017 and this edition superseded the
first edition.
The object of the Delay and Disruption Protocol second edition is to provide useful
guidance on some of the common delay and disruption issues that arise on construction
projects, where one party wishes to recover from the other an extension of time and/or
compensation for the additional time spent and the resources used to complete the
project. The purpose of the Protocol is to provide a means by which the parties can
resolve these matters and avoid unnecessary disputes. A focus of the Protocol therefore is
the provision of practical and principled guidance on proportionate measures for dealing
with delay and disruption issues that can be applied in relation to all projects, regardless
of complexity or scale, to avoid disputes and, where disputes are unavoidable, to limit the
costs of those disputes.
It is not intended that the Protocol should be a contract document, and it does not purport
to take precedence over the express terms and governing law of a contract or be a statement
of the law. Therefore, the Protocol must be considered against (and does not override) the
contract and governing law which regulate the relationships between project participants.
Consequently, the guidance in the Protocol is general in nature and has not been developed
with reference to any specific standard form contracts.
Under the second edition of the Protocol there is no longer a preferred delay analysis
methodology where that analysis is carried out at a time distant from the delay event or its
39
effect. However, the second edition of the Protocol does set out various time-distant delay
analysis approaches, which are as follows.
■ Impacted as-planned analysis. This method adds an identified excusable delay event
(or events), either as a separate activity (or activities) or onto the duration of an existing
activity (or activities), into the as-planned programme. The duration of the activity is
derived (where possible) from the resource allowances in the as-planned programme.
The projected new completion date (allowing for the impact of this added activity) is
then compared with the original completion date to assess the extension of time due.
The method has limitations, principally because it does not consider actual progress and
changes to the original planned intent.
■ Time impact analysis. This method involves introducing a delay event into a logic-
linked baseline programme and then recalculating the programme using the applicable
software to determine prospectively the impact of the delay event on the previously
predicted completion date. The baseline programme for each analysis can be either a
contemporaneous programme or a contemporaneously updated baseline programme, as
appropriate.
■ Time slice analysis. This is the first of two ‘windows’ analysis methods. This method
requires the analyst to verify (or develop) a reliable series of contemporaneously
updated baseline programmes or revised contemporaneous programmes reflecting an
accurate status of the works at various snapshots (being the time slices) throughout the
course of the works. Through this process, the progress of the works is divided into
windows. The time slices are typically carried out at monthly intervals. The series of
time slice programmes reveals the contemporaneous or actual critical path in each
window as the works progressed and the critical delay status at the end of each time
slice, thus allowing the analyst to conclude the extent of actual critical delay incurred
within each window.
■ As-planned versus as-built windows analysis. This is the second of the ‘windows’
analysis methods. It is distinct from a time slice analysis in that it is less reliant on
programming software and is usually applied when there is concern over the validity
or reasonableness of the baseline programme and/or contemporaneously updated
programmes and/or where there are too few contemporaneously updated programmes.
In this method, the duration of the works is broken down into windows. Those
windows are framed by revised contemporaneous programmes, contemporaneously
updated programmes, milestones or significant events. The analyst determines the
contemporaneous or actual critical path in each window by a common-sense and
practical analysis of the available facts.
The incidence and extent of critical delay in each window is then determined by
comparing key dates along the contemporaneous or actual critical path against
corresponding planned dates in the baseline programme. Thereafter, the analyst
investigates the project records to determine what delay events might have caused the
identified critical delay. The critical delay incurred and the mitigation achieved in each
window is accumulated to identify the critical delay over the duration of the works.
■ Longest path analysis. This analysis involves the determination of the retrospective
as-built critical path (which should not be confused with the contemporaneous or
actual critical path identified in the windows methods above). In this method, the
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analyst must first verify or develop a detailed as-built programme. Once completed, the
analyst then traces the longest continuous path backwards from the actual completion
date to determine the as-built critical path. The incidence and extent of critical delay are
then determined by comparing key dates along the as-built critical path with
corresponding planned dates in the baseline programme. Thereafter, the analyst
investigates the project records to determine what events might have caused the
identified critical delay. A limitation of this method is its more limited capacity to
recognise and allow for switches in the critical path during the course of the works.
■ Collapsed as-built analysis (or but-for analysis). This method involves removing from
the as-built programme identified excusable delays, to show what the completion date
would have been had those delay events not occurred.
The analysis does not require a baseline programme. Instead, it requires a detailed
logic-linked as-built programme. It is rare for such a programme to exist on a project
and therefore the analyst is usually required to introduce logic to a verified as-built
programme. This can be a time-consuming and complex endeavour. Once completed,
the sub-networks for the delay events within the as-built programme are identified
and are ‘collapsed’ or extracted to determine the net impact of the delay events.
A limitation to this method is that it measures only incremental delay to the critical
path, because the completion date will not collapse further than the closest near
critical path.
6.5. Extension of time in period of culpable delay

There are two schools of thought, or methods, on how an extension of time should be
calculated where an extension of time is granted during a period of non-excusable delay
(i.e. a delay wholly the responsibility of the contractor).
The first method, described as the ‘gross’ method, and preferred by many academics and
some commentators, propounds that if an extension of time is granted because of an event
arising during a period of culpable delay, then the extension of time must begin to run from
the date the event that occurred was given effect. This means that the architect (for
example) must establish a new completion date for the contract which adds the extension of
time from the date of the instruction, thus denying the employer liquidated damages up to
the new completion date. Naturally, many employers find this to be unfair, and this has
traditionally been a contractor-led argument. This argument arises out of the case of Wells
v. Army & Navy Cooperative Society (1902) 86 LT 764.
The second method, known as the ‘net’ method of calculation, was preferred by Lord
Denning (in Amalgamated Building Contractors Ltd v. Waltham Holy Cross UDC (1952)).
In such situations, it is argued that the contractor is only entitled to an extension of time
equal to the time required to carry out the additional work. Effectively, this means that if the
contractor is 6 months in delay and is delayed by one further month due to an excusable
delay event; the completion date would be extended from the original completion date by
1 month only, still leaving the contractor with 6 months of culpable delay and the threat of
liquidated damages. Some contractors would consider this to be unfair as the employer may
be directly responsible for the late excusable delay event, for example by issuing
instructions for extra work. However, in Balfour Beatty Building Ltd v. Chestermount
41
Properties Ltd (1993) 62 BLR 1 QBD, the court confirmed that the purpose of the power to
grant an extension of time was to fix the period of time by which the period available for
completion ought to be extended having regard to the incidence of excusable delay events.
The completion date, as adjusted, was not the date by which the contractor ought to have
achieved practical completion, but was the end of the total number of working days starting
from the date of possession, within which the contractor ought fairly and reasonably to have
completed the works. On this footing, Mr Justice Colman, obiter dicta, in the said Balfour
Beatty case, clarified the issue in regards to where a relevant event arose after the date for
completion and during a period in which the contractor was in culpable delay, the contractor
would only become entitled to a net extension of time corresponding to the specific number
of days of delay occasioned by the excusable delay event (this is sometimes referred to as
the ‘dot-on’ approach to extensions of time). In other words, the occurrence of the new
delaying event would mean that the contractor was still liable for its own culpable delays.
Mr Justice Colman said ‘Accordingly, I conclude on the second question that it would be
wrong in principle to apply the “gross” method, and that the “net” method represents the
correct approach’.
6.6. Concurrent delays

In certain instances concurrent delays can occur. This is a situation where two (or more)
delay events have an impact upon the critical path to completion at the same time.
If these two delay events are both the liability of one of the parties (whether that is the
employer or the contractor) then the question of concurrent delays is not a major concern.
However, the difficult issue in respect of concurrent delays occurs when one of the delay
events is not the liability of the contractor (i.e. it is an excusable delay event), but the other
delay event is the liability of the contractor (i.e. it is a non-excusable delay event). To give
an example, a construction contract might dictate that the risk of adverse weather is the
contractor’s risk but the development planning risk stays with the employer. Both adverse
weather and a delay to development planning approval could occur at the same time, such
that both delaying events are equally responsible for causing a delay. The question that then
arises is how the delay to completion is allocated between the two concurrent delay events.
Concurrency has been, and continues to be, a highly contentious legal and technical subject
in engineering and construction projects. The reason is largely the fact that resolving issues
of concurrency requires the consideration of the interaction of different factors, such as the
time of occurrence of the delays, length of duration and criticality and the legal principles
of causation and float ownership. The resolution of concurrency also requires the
consideration of the views of the parties involved and the mitigation steps taken by them,
such as reallocation of resources, incentives for acceleration procedures and delay-pacing
strategies.
Construction contracts (including major standard forms, such as JCT and NEC4 contracts)
do not generally expressly deal with a situation where there is concurrent delay. Most
simply have a procedure where the contractor is required to give notice and particulars
when a delay event happens that is the risk of the employer. The employer (or typically a
42
contract administrator or certifier) will then be under an obligation to assess what extension
of time may be due to the contractor. In making that assessment, the employer may be
reluctant to grant the contractor an extension of time if the contractor was in delay anyway
for the same period. After all, it can appear harsh on the employer if an extension of time
has to be given to a contractor who is underperforming.
A debate then ensues as to whether the contractor is entitled to any extension of time if the
contractor was also in delay for the same period. The debate can be a lengthy and
expensive process. This is why guidance from the courts was required on the point.
The courts have dealt with the matter of concurrency in many different ways, and some of
the more common approaches used are the ‘American’ approach, the application of the ‘but
for’ test, the ‘common-sense’ approach, the ‘Malmaison’ approach and the ‘apportionment’
approach. Some of the more important of these approaches are explained below. It is
important to fully understand the separation of time and money; it is entirely possible that
an extension of time may be due, but that no loss and expense is due, and vice versa.
6.6.1 The American approach

In the American approach, which is based on US case law, the general view on concurrent
delays is that the employer and the contractor are both responsible for delays to project
completion, in that neither party will recover financial recompense unless and to the extent
that they can segregate delay associated with each competing cause.
6.6.2 The application of the ‘but for’ test

By this test, a party seeks to lay responsibility for project delay on the other party by arguing
that the delay would not have occurred ‘but for’ certain actions or inactions which occurred
before the concurrent delay event. Although such arguments are often made, there appear to
be very few reported court cases that lend support to its use. However, in the case of The
Royal Brompton Hospital NHS Trust v. Hammond [2001] 76 Con LR 148, QBD (TCC), His
Honour Judge Seymour provided some support to the aforementioned test, when he said
However, if Taylor Woodrow was delayed in completing the works both by matters for
which it bore the contractual risk and by relevant events, within the meaning of that
term in the standard form, in light of the authorities to which I have referred, it would be
entitled to extensions of time by reason of the occurrence of the relevant events not
withstanding its own defaults.
6.6.3 The ‘common-sense’ approach

The ‘common-sense’ approach is where the question of causation is treated by the
application of the logical principles of causation. However, in the case of H. Fairweather
and Co. Ltd v. London Borough of Wandsworth (1987) 39 BLR 106, the court, obiter dicta,
considered that applying the common-sense approach to concurrency was not sufficient on
its own merit and that each separate cause of delay should be assessed on its own. Another
weakness of this approach is the common-sense criteria relied on, which could result in
unfair apportionment, particularly where the competing causes are of approximate equal
causative potency. Additionally, the approach may not suffice on projects that sustained
43
multiple overlapping changes or delays with long durations, because of all the assumptions
that must be made regarding the remaining durations of activities being affected and which
mean that the programme becomes too hypothetical to apply.
6.6.4 The ‘Malmaison’ approach

The ‘Malmaison’ approach is named after the Henry Boot Construction (UK) Ltd v.
Malmaison Hotel (Manchester) Ltd [1999] 70 Con LR 32 case. The Malmaison
approach, which is one of the most adopted and accepted by the industry, is that
provided one of the causes of delay in any given concurrency situation affords grounds
for extension of time under the contract, then the contractor should be given an
extension of time notwithstanding any default on his part. The approach sounds
reasonable and just, in the sense that denying the contractor an extension of time in such
circumstances could make it liable to the payment of liquidated damages even though
the project would have been delayed anyway due to employer’s default. In his judgment,
Mr Justice Dyson stated
it is agreed that if there are two concurrent causes of delay, one of which is a relevant
event, and the other is not, then the contractor is entitled to an extension of time for the
period of delay caused by the relevant event notwithstanding the concurrent effect of the
other event. Thus to take a simple example, if no work is possible on a site for a week
not only because of exceptionally inclement weather (a relevant event), but also because
the contractor has a shortage of labour (not a relevant event), and if the failure to work
during that week is likely to delay the works beyond the completion date by 1 week,
then if he considers it fair and reasonable to do so, the architect is required to grant an
extension of time of 1 week. He cannot refuse to do so on the grounds that the delay
would have occurred in any event by reason of the shortage of labour.
6.6.5 The ‘apportionment’ approach

In the absence of there being an identifiable dominant cause, the person assessing the
entitlement to an extension of time may be expected to apply the apportionment approach
to the competing concurrent causes. In determining apportionment in the case of concurrent
delays, the following principles must be followed.
■ Before any claim for an extension of time can succeed, it must be shown that the
relevant event is likely to delay or has delayed the works. Whether the relevant event
actually causes delay is an issue of fact which is to be resolved by the application of
principles of common sense.
■ The decision-maker can decide the question of causation by the use of whatever
evidence they consider appropriate. If a dominant cause can be identified in respect of
the delay, effect will be given to that by leaving out of account any cause or causes that
are not material.
■ Where there are two causes operating to cause delay, neither of which is dominant, and
only one of which is a relevant event, a contractor’s claim for an extension of time will
not necessarily fail. Rather, it is for the decision-maker, approaching the issue in a fair
and reasonable way, to apportion the delay in completion of the works as between the
relevant event and the other event.
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In John Doyle Construction v. Laing Management (Scotland) (2002) CILL 1870, Lord
Young was of the opinion that it may be possible to apportion the loss between the causes
for which the employer is responsible and other causes if it can be said that events for
which the employer is not responsible are the dominant cause of the loss. In such a case it
is obviously necessary that the event or events for which the employer is responsible
should be a material cause of the loss. Provided that condition is met, however,
apportionment of loss between the different causes is possible in an appropriate case, where
the causes of the loss are truly concurrent, in the sense that both operate together at the
same time to produce a single consequence.
In City Inn v. Shepherd Construction (2007) CSOH 190, a Scottish case, the sitting trial
judge was again Lord Young, who adopted the approach of apportionment when it came to
considering concurrent delays. He said, obiter dicta, that if a dominant cause could not be
established between two competing causes, one a relevant event and the other a contractor
default, then the architect or a tribunal could apportion the effects of these delays.
Lord Osborne, in the appeal case of City Inn v. Shepherd Construction (2010) CSIH 68, in
agreeing with Lord Young, said that where there are concurrent causes, it will be possible
for an architect or other tribunal to apportion delay to the completion of the works between
the competing causes, assuming that there is no evidence of a dominant cause.
6.6.6 Summary on concurrent delay

Despite all of these approaches, an analysis of the numerous court cases shows that in
reality the courts deal with each case on its own merits, and there are no hard and fast rules
when it comes to matters of concurrency. It appears that the courts are concerned primarily
with what has actually happened, rather than considering any sort of analysis that may be
based on some speculation about what would or could have been the effect at the time the
event occurred. Judges are really looking to get to the facts in order to find out what really
happened on the site and to identify the real causes of delay. It is important to recognise that
there may be a distinction between what really caused delay on the project and a
contractor’s entitlement to an extension of time in accordance with the terms of the contract.
The position under English law has ebbed and flowed somewhat, and there is presently a
clear division between the way that the Scottish courts and the English courts deal with
concurrent delay events.
In the City Inn v. Shepherd Construction case, referred to above, the Scottish courts
decided that if there are concurrent causes of delay under a JCT-type contract, the issue
should be approached in a fair and reasonable way and responsibility for the delay should
be apportioned as between an excusable event (i.e. a Relevant Event) and a non-excusable
event (i.e. a contractor risk event). In short, the parties share responsibility if there is
concurrent delay. This has become known as the ‘apportionment’ approach.
However, although the apportionment approach sounds sensible, it simply does not follow
the words of the JCT contract. That contract states that when a Relevant Event occurs which
causes a delay to the completion date, the contractor is entitled to an extension of time.
45
There is no scope for apportionment and the words ‘concurrent delay’ or ‘apportionment’ do
not feature in the JCT contract at all. Furthermore, while an apportionment approach seems
like a common-sense approach, it does not provide the parties with certainty as to what
happens if there is a delay. In fact, it creates a great deal of uncertainty. Because of this, and
as confirmed in the Walter Lilly and Company Ltd v. Mackay and Anor [2012] EWHC 1773
case, the English courts have rejected the apportionment approach and have found that if a
Relevant Event caused a delay to the completion date, the contractor is entitled to an
extension of time regardless of any concurrent delay that might be the contractor’s own
fault. In reaching this decision, the court found that the JCT wording simply did not support
the apportionment approach. The JCT forms are pretty clear and, while the contract
administrator is required to grant a ‘fair and reasonable’ extension of time that did not, in
the English Court’s view, allow an apportionment as the Scottish Courts had found. The
reference to the contract administrator being required to grant a ‘fair and reasonable’
extension of time simply referred to the fact that the contract administrator must assess the
length of the extension of time objectively rather than subjectively.
The position was put succinctly by Mr Justice Akenhead under paragraph 366 of his
judgment in the Walter Lilly case referred to above, when he said
There has been a substantial debate between the parties as to how what is called
concurrent (or sometimes concurrent and co-effective) causes of delay should be dealt
with. This debate is only germane where at least one of the causes of delay is a Relevant
Event and the other is not. It relates to where a period of delay is found to have been
caused by two factors. Of course, the debate will depend upon the contractual terms in
question but most of the debate in cases in this country and elsewhere has revolved
around extension of time clauses similar to those contained in Clause 25 where the
Architect has to grant an extension which is ‘fair and reasonable’. The two schools of
thought, which currently might be described as the English and the Scottish schools, are
the English approach that the Contractor is entitled to a full extension of time for the
delay caused by the two or more events (provided that one of them is a Relevant Event)
and the Scottish approach which is that the Contractor only gets a reasonably
apportioned part of the concurrently caused delay.
6.7. Mitigation
The contractor has a general duty to mitigate the effect on its works of the employer’s risk
events. This duty to mitigate does not extend to requiring the contractor to add extra
resources, or to work outside its planned working hours, in order to reduce the effect of an
employer’s risk event, unless the employer agrees to compensate the contractor for the
costs of such mitigation. In other words, mitigation measures are not the same as
acceleration measures. However, it can be argued that the obligation to progress the works
diligently may require the contractor to take some positive action, and a failure to do so
may result in liquidated damages being applied for the additional period of overrun which
could have been avoided but for the failure to take action.
An extension of time is a contractual remedy for acts of prevention and breach of contract by
the employer and for events at the risk of the employer. It may therefore be thought that if the
46
remedy of extension of time is based on causation, then the principles referred to as the duty
to mitigate should apply. It is suggested that there are two situations to consider: the first when
the contractor responds positively and the second when the contractor takes no positive action.
In the first situation, the contractor may react to the qualifying delay by making changes to
its methods of working or sequence of working or it may even accelerate the works. The
issue then is whether the contractor is entitled to recover the loss incurred by this reaction.
The answer to this is that it depends on whether or not the contractor was right to react as it
did. It is suggested that, subject to the express terms of the contract, the contractor has no
obligation or right to accelerate and is not entitled to recover additional costs incurred in
acceleration measures to mitigate the effect of qualifying delays without an instruction from
the employer. Since many contracts contain provisions for the granting of extensions of time
and express terms for agreement of acceleration measures, the unilateral action by the
contractor in giving priority to the fixed date for completion over the cost of working
efficiently cannot bind the employer in those contracts. It is suggested that this interpretation
can be expressed in terms of the reasonableness of the mitigation measures. It is normally
not considered to be reasonable, particularly where there are sufficient contractual remedies
available to the contractor, for the contractor to unilaterally decide to accelerate the works.
In the second situation, the contractor may not react to the qualifying delay and the issue
then is what minimum measures the contractor is required to take in order to mitigate the
effects of the qualifying delay and, if it fails to take those measures, whether this affects the
extent of the contractor’s entitlement to an extension of time. It is suggested that although
the rules of mitigation do not generally apply to construction contracts with extension of
time provisions and provision for recovery of time-related losses, the contractor will have
some obligation to progress the works which will involve an aspect of management of
resources and planning of activities in the circumstances of actual events. Although a
matter of interpretation of the terms of the contract, it is suggested that such an obligation
will usually be intended by the parties to apply equally to events causing qualifying delays.
6.8. Acceleration
One of the methods that contractors will employ to counteract the impact of delay and
disruption is to accelerate the work on the project. This involves speeding up aspects of the
project that have potential to be accelerated, either because of the nature of the task or
because of the resources or capabilities of the contractor. In either case, strengths of the
contractor in one area are being used to compensate for weaknesses in another area.
Acceleration may be achieved by a change in the deployment of resources, or by longer
working hours or additional days of working with the same resources. In some cases, it
may be achieved by simply changing the order or sequence for carrying out the work and
may therefore not cause additional cost.
Despite this latter possibility, acceleration can affect a contractor’s costs in a variety of
ways, such as
■ additional labour and equipment costs arising from reduced efficiency of the expanded
labour force and supplied equipment
47
■ additional delivery charges for material and equipment required at the site outside of
normal work hours
■ costs of additional site facilities
■ additional costs from advancing the date of delivery of manufactured elements
■ overtime charges for operatives, engineers, staff and foremen.
Acceleration measures may be as a result of an employer choosing to reverse the impact of

delays by expressly ordering acceleration in ordered to put the project back on schedule. If
the contract provides for acceleration, payment should be based on the terms of the
contract. If the contract makes no provision, the parties should agree the basis of payment
before acceleration is commenced.
Alternatively, where the employer resists granting an extension of time to a contractor

which the contractor is entitled to for an excusable event, or where an extension of time has
been granted by the employer but for a shorter period than the contractor is entitled to, a
contractor may feel compelled to accelerate the works in order not to overrun the
completion date set by the employer, thereby avoiding exposure to liquidated damages.
This is often referred to as ‘constructive acceleration’ and to recover under this head of
claim the contractor must prove that
■ an extension of time was requested for an excusable delay according to the contract
provisions
■ the employer failed to grant an adequate or any extension of time
■ the employer made it clear that completion was required within the original contract period
(or within the period that the employer had agreed to extend the completion date to)
■ adequate notice had been given by the contractor to the employer advising that the
contractor was treating the employer’s actions as constructive acceleration
■ additional costs had actually been incurred as a result of the constructive acceleration
measures undertaken.
In John Barker Construction Ltd v. London Portman Hotel Ltd (1996) 83 BLR 31, one of
the issues was whether liquidated damages could be imposed when acceleration was agreed
between the parties on the sectional completion provisions of the contract. In this case
delays occurred and it was apparent to all concerned that Barker was entitled to extensions
of time. After negotiations it was agreed that the work would be accelerated and Barker
would receive additional payment. Mr Recorder Toulson QC held that the provisions of the
sectional completion regarding liquidated damages were capable of continuing to have
contractual force for the completion of each section, even though an acceleration agreement
was in place, since it was common ground at the time of the agreement of acceleration that
liquidated damages clause would still have effect.
In Ascon Contracting Limited v. Alfred McAlpine Construction Isle of Man Limited [1999]
Con LR 119, there had been delays due to a number of causes and Ascon claimed for loss
caused by acceleration measures it had undertaken. His Honour Judge Hicks QC affirmed,
obiter dicta, that acceleration had no precise technical meaning. Acceleration which was
not required to meet a contractor’s existing obligations was likely to be the result of an
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instruction from the employer, for which the employer must pay. On the other hand,
pressure from the employer to make good delay caused by the contractor’s own default was
unlikely to be so construed. It was held that there could be both an extension to the full
extent of the employer’s culpable delay with damages on that basis, and damages in the
form of expenses incurred by the way of mitigation, unless it was alleged and established
that the attempt at mitigation, although reasonable, was wholly ineffective.
In Motherwell Bridge Construction Limited v. Micafil Vakuumtecchnik (2002) TCC 81 Con

LR 44, the issue of acceleration was addressed in a long and complicated judgment. One of
the two claims presented by Motherwell was for the acceleration costs for the work in
relation to on-site fabrication for hours worked in excess of normal working hours for a
certain period of the project. His Honour Judge Toulmin noted that Motherwell’s case was
not that it had received any instructions to accelerate, but that it had generally been under
pressure from Micafil to complete earlier and had employed additional resources to that end.
There was no dispute that Micafil constantly urged Motherwell to increase its resources to
meet the requested completion date. There was a term of the contract that if unexpected
delays and difficulties occurred, Motherwell was required to provide additional personnel at
no extra cost at the request of Micafil in order to meet the required completion date. The
judge held, obiter dicta, that the delays and difficulties came within the definition of
‘unexpected’ and that Motherwell therefore could not succeed in recovering damages for
this item.
Cases
Amalgamated Building Contractors Ltd v. Waltham Holy Cross UDC (1952)
Ascon Contracting Limited v. Alfred McAlpine Construction Isle of Man Limited [1999] Con
LR 119
Balfour Beatty Building Ltd v. Chestermount Properties (1993) 62 BLR 1 QBD
Balfour Beatty Construction Limited v. The Mayor and Burgess of the London Borough of
Lambeth (2002) 1 BLR 288
City Inn v. Shepherd Construction (2007) CSOH 190
City Inn v. Shepherd Construction (2010) CSIH 68
Fortec Constructors v. United States 8 Cl. Ct. 490 (1985)
Glenlion Construction Ltd v. Guinness Trust (1987) 39 BLR 89 QBD
H. Fairweather and Co. Ltd v. London Borough of Wandsworth (1987) 39 BLR 106
Henry Boot Construction (UK) Ltd v. Malmaison Hotel (Manchester) Ltd [1999] 70 Con
LR 32
Henry Boot v. Malmaison (2000) CILL 1572 TCC
John Barker Construction Ltd v. London Portman Hotel Ltd (1996) 83 BLR 31
John Doyle Construction v. Laing Management (Scotland) (2002) CILL 1870
Motherwell Bridge Construction Limited v. Micafil Vakuumtecchnik (2002) TCC 81 Con
LR 44
Natkin and Co. v. George A. Fuller Co. 347 F. Supp. 17 (W.D. Mo. 1972)
The Royal Brompton Hospital v. Hammond (2001) 76 Con LR 148
Walter Lilly and Co. Ltd v. Mackay and Anor [2012] EWHC 1773
Wells v. Army & Navy Cooperative Society (1902) 86 LT 764
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ISBN 978-0-7277-6197-2

Chapter 7
Loss and expense claims
7.1. Loss and expense
Because through the operation of construction contracts breaches of contract often arise (for
example the late completion of the works, for a variety of possible reasons), the right to
recover loss and expense is included in many construction contracts as being the means of
recovering costs and/or losses arising from a specified breach (or breaches) of contract. In
some ways, loss and expense can be considered as being a contractual mechanism for the
recovery of what may otherwise be considered as being damages.
Most often, loss and expense claims are pursued by a contractor for losses incurred as a
result of the prolongation and/or disruption of the works.
Loss and expense claims have certain advantages over common law damages claims,
including that
■ there is a clear definition of responsibilities and procedures

■ there is a clarification of the events and the circumstances for claims to be made
■ there is a right to interim payments and/or decisions
■ there is the avoidance of the uncertainties involved in claiming at common law
■ they create a right under the contract to a debt, rather than a claim for damages.
Normally, the inability to recover monies under the express terms of the contract, for
reasons such as not conforming with the procedures required, does not preclude a claim at
common law on the same matters, provided there is the entitlement at common law to
claim damages, and provided that the contractor’s common law rights have not been
specifically excluded by the terms and conditions of the contract.
If a matter stated in the contract as giving rise to an entitlement to loss and expense is a
breach of contract, then the contractor will normally have a right to common law damages.
An example of this would be the late issue of information by the employer.
However, if the matter relied on does not amount to a breach of contract (such as the
issuing of variations) then common law damages may not be applicable.
On the other hand, the preservation of the contractor’s common law rights may entitle the
contractor to make common law damages claims in respect of matters for which there are
no express provisions within the loss and expense clauses.
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The authority on the application of damages arising from the contract both in addition
to and, where appropriate, instead of the express provisions of the contract for loss
and expense is clearly stated in the case of Stanley Hugh Leach v. Merton (1985) 32
BLR 51.
It is important to note that should the contractor need to pursue a claim at common law
because it has not followed the procedures under the contract, then it is possible that the
contractor may be penalised by the court if its non-conformity with the contract procedure
did not allow the employer to mitigate its loss.
In some circumstances the parties may seek to exclude (by means of a contract term) the
parties’ common law rights, so that only the terms of the contract itself govern the
relationship between the parties.
However, it must be remembered that the courts view this course of action with some
caution and, consequently, there must be a very clearly worded term in the contract
excluding the contractor’s common law rights for it to be effective.
Most claims, whether for time or money, involve establishing what is often called the nexus
of cause and effect (i.e. the link between cause and effect). This means that what needs to
be proved is that, because of the occurrence of a particular event, certain things happened,
and as a direct result of those events happening, one of the parties incurred delays or costs
which were not previously contemplated by the parties and which it would not have been
reasonable for the parties to have contemplated.
In order to establish this nexus (or link), which is never an easy task in a construction
situation, records need to be available which show that the circumstances that existed
before an event occurred changed after that event occurred, and that that change in
circumstances could only have been as a result of the event in question.
A claim for loss and/or expense is the means of putting a contractor back into the position
in which it would have been but for the delay or disruption. It is not a means of turning a
loss into a profit (unless, of course, the loss is because of the non-payment of loss and/or
expense). Therefore, where a contractor’s costs are materially different from the rates
quoted in the contract for preliminaries, there must be a good reason for that difference,
otherwise the claimed costs may be disallowed in total or in part on the ground that the
costs claimed are unreasonable.
The settlement in effect mirrors a common law damages claim, therefore an exact
establishment of the contractor’s additional costs must be made. At first sight it might seem
that establishment of those additional costs is relatively easy, but in fact it can be very
difficult. There is an increasing trend in the growing economies of the Middle East and, in
particular, the Far East for a more formulistic approach to be used for this exercise – and
this approach can be successful if it can be shown that the base figures used are a reflection
of the tender allowances and are reasonable in the circumstances.
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Participants in the construction and civil engineering industries often make the mistake of
believing that time and money are directly linked, in that they assume that financial claim
recovery can only be secured if an extension of time has been granted and, conversely, that
it will certainly be due if an extension has been given. As noted in Chapter 5, in reality
neither of these propositions is actually correct. Additional monies may be recovered even
if prolongation is not present and, alternatively, a contractor may receive a comprehensive
extension of time and still not be entitled to additional financial recovery. Therefore, it is
advisable that notices for delay and notices for loss and expense are kept separate.
Delay cost claims are claims for additional time-related costs associated with delays caused.
Therefore, a delay cost claim is a claim for delay costs where a contractor must show that the
cause of the delay is one that entitles the contractor under the contract to payment for the extra
costs incurred. To establish an entitlement to delay costs, a contractor must demonstrate that a
delay to completion of the contract has occurred and must show that the cause of the delay is
one that provides the contractor with an entitlement to extra payment, either under a term of
the contract or for breach of contract by the employer. The claim must be supported by
evidence of the facts on which it is based. To warrant the payment of delay costs, a delay must
affect the critical path and delay completion of the whole of the works or a milestone.
Disruption cost claims are claims for additional costs associated with disruption caused to
the progress of or the execution of the works that do not necessarily affect the completion
date of the project as a whole. In respect of a disruption cost claim, a contractor must show
that the cause of the disruption is one that entitles the contractor under the contract to
payment for the extra costs incurred. To establish an entitlement to disruption costs, a
contractor must demonstrate that a disruption to the progress or the execution of the works
has occurred and must show that the cause of the disruption is one that provides the
contractor with an entitlement to extra payment, either under a term of the contract or for
breach of contract by the employer. The claim must be supported by evidence of the facts
on which it is based.
7.2. Common loss and expense heads

The common heads of a loss and expense claim are
■ on-site establishment costs (site overheads)

■ head office overheads
■ loss of profit
■ increased costs
■ working under different climatic conditions
■ cost of claim
■ interest and finance charges
■ disruption (see Chapter 8).
7.2.1 On-site establishment costs (site overheads)

Where a contract specifies a rate for delay costs that are applicable in the event that the
contractor suffers delay, calculating delay costs is a straightforward exercise once the
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appropriate extension of time has been determined. The contractor is entitled to be

reimbursed at the specified delay cost rate for the period by which the contract time was
extended, subject to any exclusions stated in the contract.
However, where there is no specified rate for delay costs, which is more usually the case,
calculating a contractor’s entitlement can be complex and time-consuming.
A contractor’s on site establishment costs (site overheads) are also commonly referred to as
‘preliminary items’.
Additional expense under this heading is usually ascertainable from the contractor’s cost records.
Such costs may include
■ salaries of site supervisory staff, including accommodation and travelling expenses

■ labour engaged on a part-time basis on these activities
■ skilled labour wages and overtime expenses
■ general construction plant
■ major temporary works such as dewatering equipment, water supply, shoring and
underpinning
■ small tools and consumables
■ site supply services, including power, water, air and telephones
■ site offices, amenities, workshops and stores
■ site office expenses, including couriers, postage, telephones and copying
■ insurances, security charges and long-service levy charges.
Under this head of claim, what the contractor is seeking to establish is that, because of
events that have occurred and for which the contract provides an entitlement to an
extension of time, actual resources of the type listed above (among others), additional to
those which otherwise would have been necessary, have had reasonably to be engaged on
the project for a prolonged period.
Sometimes it is necessary for the on-site establishment costs to be broken down into delay
costs (due to prolongation) and ‘thickening’ (or extra resource) costs (due to disruption).
The claim is usually for time-related costs – that is, the additional cost associated with the
prolonged use of a particular resource; for example, a 5-week delay will clearly affect the
contractor’s time-related costs, such as site supervision, cabins, hired equipment and so on.
However, this may not always be the case. It may be that that the contractor incurs
additional supervision costs without the overall completion date for the contract works
being affected. For example, additional supervision costs may be incurred by the contractor
during the original contract period, or a contractor may be delayed or disrupted by an
instruction ordering additional work to non-critical items (e.g. scaffold remaining in place
for an extended period to an area of work which was not on the critical path). In such
circumstances, the contractor may be entitled to loss and expense incurred (i.e. thickening,
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as noted above) regardless of whether the additional work delayed the contractor in the
completion of the works.
The prolongation part of the claim must relate to those periods when delay occurred; this
will normally not be the actual overrun period, as it is invariably an earlier delay period
that has caused the works to overrun. For example, if a contractor had a contract period of
60 weeks, but was delayed in week 20 for 1 week, the site overhead costs would need to be
claimed for week 20 (i.e. the week when the delay occurred) and not for week 61 (i.e. the
week when the delay effect became apparent).
In most cases, the actual costs incurred by the contractor are to be claimed. A pro rata of
the tendered allowance for on-site establishment costs clearly does not represent actual cost
and therefore will usually not be successful.
In assessing such an on-site establishment cost claim, several points should be kept in mind.
■ What has to be established in the first instance is that additional resources were
required. The contractor needs to establish with sufficient particularity
– what was included in its tender, and
– that the tender allowance was sufficient.
■ Just because the resources were engaged during a period of overrun does not mean that
the resources are additional. For example, if a contractor originally expected to have
two supervisors on site for 10 weeks but actually only had one supervisor on site for
20 weeks, there would not (on the face of it) be any additional costs.
■ The contractor needs to establish that the additional resources were required due to the
reasons that it is relying on. This may be done in several ways.
– If the claim is for prolongation then it is necessary to show that resources were
retained on site during the periods of delay for reasons outside of the contractor’s
control. This is usually one of the easier points of the claim.
– However, the contractor does not need to have received an extension of time before
it can pursue such prolongation costs during a period in excess of the original
period. Conversely, not all extensions of time circumstances give rise to financial
entitlement, and, even if they do, not all the additional resources may be recoverable.
■ A claim for on-site establishment costs may be pursued in the absence of an extension
of time. If an appropriate resource is required for longer during the original contract
period, or more of them are required for the same period, then they should be recovered
if they can be associated with a specific event.
– This may apply, for example, in the situation where a variation is issued which
results in certain work activities which were programmed to be executed
consecutively now needing to be carried out concurrently, thus requiring two or
more work faces to be operating and needing two (or more) sets of supervisors etc.,
where previously one would have been adequate.
– The contractor then has to establish the cost of the resources. With supervisory staff
this would be ascertained using salary levels, pensions, national insurance, car costs,
petrol, bonus and so on. If agency staff have been used then their actual costs will
be recoverable, provided it was reasonable to use them.
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On projects where the level of construction activity varies significantly between various stages
of construction, the appropriate costs will be those which relate to the periods in which delay
has occurred. To adopt average daily or weekly site overhead rates over the whole contract
duration is not necessarily appropriate. The weekly cost of site overheads is related to the total
work activity being undertaken on a construction site at any time and not only to work on the
critical path. Although a delay to critical work may occur at a period of maximum site activity,
the effect may be to prolong only relatively few activities for additional time. The appropriate
rate for calculation of site overheads is that related to the sequence of activities which were
delayed, together with any consequential effects attributable to the delay.
Some non-critical activities may be delayed by a delay to critical activities on which they
are dependent. These activities may still be non-critical, but they will be undertaken at a
later time. This shift in time may not result in additional site overheads overall, it may
merely cause the overhead costs to be incurred at a later time. Site overheads are broadly
related to the direct cost of the work to be undertaken. For projects with a high labour
content, the cost of supervision will be greater than for projects with a high plant or
material content. Generally, less supervision is required for work where subcontractors are
used compared with work requiring unskilled labour or using the contractor’s own
employees.
One method of assessing on-site delay costs is to evaluate the actual costs incurred. If cost
information is provided by a contractor to justify a claim, then this must be audited to
eliminate all costs that should be included in the direct costs of construction activities.
Generally, there will be very few material costs related to site overheads. Costs that are not
time-related would be deducted. For example, mobilisation and removal costs will be
incurred irrespective of the contract duration. The exception could be where equipment or
staff may be demobilised temporarily at the beginning of a long delay and remobilised at
the end of the delay period in order to save the cost of retaining these resources on the site
for the duration of the delay period.
The actual cost of staff and labour will generally be provided by wages or salary sheets and
the cost of all external plant and services will be substantiated by invoices. These invoices
should be inspected to ensure that no operating charges such as repairs or replacement
parts, fuel or other incidentals are included. The delay cost is the equipment rental charge
only. In some cases, there will be reduced hire rates or even no charge for standby or non-
operational periods. Where contractor-owned plant is involved, invoices may not be
available, so an analysis of the costs claimed will have to be made separately.
The importance of site records to assist in recognising excessive costs cannot be overstated.
Where the client’s representative has maintained good site records, the checking of the
actual times claimed against a contractor’s records is the ideal way of establishing costs and
the best way of accurately assessing the costs.
7.2.1.1 Mitigation
A contractor is required to mitigate costs in the event of delay. Excessive expenditure due
to poor management or inefficiency, if proven, is not recoverable. Specific instances of
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obvious waste or mismanagement would need to be identified in the costs or noted from
site observations. Examples of actions that could be taken by contractors to mitigate losses
include
■ terminating hire of plant not being used or hiring out unused plant
■ laying off workers who are not productive, when this is possible
■ increasing resources (e.g. additional workers or subcontractors), with a net benefit of a
reduced delay impact
■ working overtime
■ reorganising work programmes and the sequence of works.
7.2.1.2 Subcontractors
Subcontractors may well have an entitlement to delay costs from a contractor. In turn, the
contractor may consider that such delays were caused by the employer and may forward
these claims on to the employer. A subcontractor’s delay claim may include delay costs due
to the actions of the contractor and of the employer. The employer must ensure that
subcontractors’ claims are separated and must insist that the contractor’s claim does so.
Contractors are often reluctant to provide such a breakdown and endeavour to recoup all of
a subcontractor’s delay costs from the employer.
It often happens that in the subcontract there is no specified programme and that the
subcontractor has agreed to carry out the subcontract work in accordance with the
requirements of the progress of work under the main contract. In that event, it may be
extremely difficult to prove that a particular act caused delay, since there would be no
baseline programme by which to measure delay. To evaluate such claims, it is necessary to
have the contractor establish the justification and amount of any claim in the same manner
that would be required for the contractor’s own claims. It is also necessary to have a copy
of the subcontract between the contractor and the subcontractor (to check what claims are
justified) and, importantly, to have the contractor certify that the subcontractor has been
paid the entitlement due.
7.2.2 Head office overheads

Head office overheads are sometimes called ‘off-site overheads’ or ‘establishment charges’.
Head office overheads are those administrative and management costs of running the head
office of a contractor’s business over and above the site costs.
Generally, head office overheads will include for
■ purchase and/or rent of office and yards

■ maintenance and running costs
■ transport and mobilisation costs
■ plant workshops, yards and storage areas
■ off-site vehicle expenses, office supplies and taxes
■ company cars
■ depreciation
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■ directors’ emoluments and expenses

■ salaries and other cost of staff
■ administration costs
■ legal and audit fees, and so on
■ advertising, marketing and general administrative costs
■ professional fees.
Most contractors’ head office resources exist to support operations undertaken on site, and
such head office overheads are normally taken as being recovered out of the income from
the contractor’s business as a whole.
Where completion of one project has been delayed, a contractor may claim to have suffered
a loss arising from the diminution of its income from the project reducing the turnover of
its business. Despite this, the contractor continues to incur expenditure on head office
overheads which it cannot materially reduce or, in respect of the project, can only reduce to
a limited extent.
Therefore, but for the delay and disruption, the contractor’s workforce would have had the
opportunity of being employed on another project, which would have had the effect of
contributing to the head office overheads and profit during the overrun period.
There is some authority that a claim on this basis is sustainable.
In J F Finnegan v. Sheffield City Council (1988) 43 BLR 124, Judge Sir William Stabb
said
It is generally accepted that, on principle, a contractor who is delayed in completing

a contract due to the default of his employer, may properly have a claim for
head office or off-site overheads during the period of delay, on the basis that the
workforce, but for the delay, might have had the opportunity of being employed on
another contract which would have had the effect of funding the overheads during the
overrun period.
It should be noted that the entitlement to such general overheads is in itself an arguable
point, although the consensus of opinion is in favour, provided, of course, it can be
established that such overheads would have been recovered were it not for the delay.
However, substantial claims of this kind are rarely made because most contractors are able
to cope with delay on a particular contract using their existing resources, whose cost is
reasonably constant.
In terms of first establishing liability, the contractor must seek to prove that the head office
overhead costs have been incurred as a result of a delay and disruption suffered by the
contractor, for which the contractor is entitled to recompense under the contract. Examples
of this may range from the cost of extra staff recruited because the particular project was in
difficulties, to the cost of extra telephone calls and postage in the period of delay.
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It is suggested that, in order to succeed, a contractor must provide evidence to show that
■ the profit or overhead contribution was capable of being earned elsewhere at the time of delay
■ the profit and overhead percentage is a reasonable one
■ work of the same level of profitability and/or overhead recovery was available during
the period of delay.
In terms of evidencing that there was other work available which, but for the delay, the
contractor would have secured, the contractor might seek to produce declined invitations to
tender, with evidence that the reason for declining the tender was that the delay in question
left it with insufficient capacity to undertake other work.
The contractor might alternatively show from its accounts a drop in turnover and establish
that this resulted directly from the particular delay rather than from extraneous causes. If
loss of turnover resulting from delay is not established, the effect of the delay is only that
receipt of the money is delayed. It is not lost.
If liability is established, then the contractor must establish quantum. When pursuing a
claim for head office overheads, a contractor will frequently rely on the use of a formula to
evidence such quantum.
There are three formulae that are in common usage for the calculation of head office
overheads (and there are many other derivatives from these formulae).
These formulae are
■ the Hudson formula, where the head office allowance in a contractor’s tender, when
reduced to a weekly overhead allowance, is multiplied by the number of weeks of
overrun, to calculate the head office recovery due for the period of overrun
■ the Emden formula, where the head office percentage from a contractor’s company
accounts is applied to the contract sum and, when reduced to a weekly overhead
allowance, is multiplied by the number of weeks of overrun, to calculate the head office
recovery due for the period of overrun
■ the Eichleay formula, which is a variant of the Emden formula.
While the use of formulae has been heavily criticised by many commentators, there is
judicial authority for their use in certain instances. However, whichever formula may be
used, it must be noted that the use of a formula merely provides the means for assessing
quantum. The fact that there was an actual loss, and that this loss flows directly from the
relevant matter relied upon, must first be established.
In the Walter Lilly and Co. Ltd v. Mackay and DMW Developments Ltd [2012] EWHC
1773 (TCC) case, Mr Justice Akenhead made the following observations.
■ A contractor can recover head office overheads (and profits) lost as a result of delay
caused by factors which entitle it to loss and/or expense.
59
■ The contractor must prove, on the balance of probabilities, that if there had been no
delay it would have secured other work, which would have produced a return over and
above cost, representing a profit and/or contribution to head office overheads.
■ The use of a formula is a legitimate and helpful way of ascertaining, on a balance of
probabilities basis, what the return could be.
■ The ascertainment process (under the JCT contract applicable in that case) did not mean that
it must be certain (i.e. sure beyond reasonable doubt) that the overheads (and profit) has
been lost. The ascertainment process simply requires confidence that the loss and/or expense
being claimed had been incurred owing to the delay factors recognised under the contract.
Finally, when submitting claims for head office overheads, care needs to be taken to avoid
any double recovery or overlap with other claims or payments obtained by the contractor,
such as variations, which have been computed by using the contract prices as a basis.
Normally, in such a situation the valuation of the variation will include for an element of
additional head office overheads recovery, and an adjustment therefore needs to be made to
the loss and/or expense claim to ensure that no double recovery is made.
7.2.3 Loss of profit

Although there has been some debate about whether loss of profit is recoverable as part of a
loss and expense claim. If the words direct loss and expense are to be interpreted as equivalent
to the measure of damages at common law for breach of contract (which is generally accepted
to be the case), then there can really be no doubt that a contractor can claim for the loss of
profit that it would have earned on other contracts had there been no delay and disruption to
the project in question, provided that such loss of profit was foreseeable.
Clearly, for a claim of loss of profit to be made, a contractor would need to show, as with
head office overheads, that at the time of the delay the contractor could have used the lost
turnover profitably. The breach by the employer must be shown to have prevented the
contractor from earning income which the contractor would have earned if the breach had
not occurred. A claim for loss of profit does not necessarily fail merely because the contract
in question was unprofitable. The question is what the contractor would have done with the
money if it had received it at the proper time. Even if, at that time, the contractor’s business
was making a loss, a sum analogous to loss of profit is, it is submitted, recoverable if the
loss of turnover increased the loss of business.
Provided that the contractor has mitigated the loss, there may be a permanent loss in
income which is recoverable from the employer as damages. It is irrelevant whether the
income lost is profit or overheads or categorised in any other way. It only has to be shown
to be income lost. In such instances, the real cause of the loss of income is that the
contractor is tied up by the delay. The delay prevents the contractor from earning income.
If, however, the employer pays for the contractor’s resources during the delay period, the
lost income is in effect reimbursed through those payments and there is therefore a limited
basis for a claim. A contractor’s income will vary from time to time and although the delay
on one contract may reduce the income from that contract in one financial year, the income
from that contract will be received in the next financial year and there is often no
permanent loss of income.
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7.2.4 Increased costs

This head of claim usually arises on fixed price contracts (although it can equally apply
where a fluctuation recovery has been agreed) where expenditure on resources due to
increased costs during an extended period is sought.
It is normally accepted that the correct measure is the difference between what the
contractor would have spent on resources and what it has actually spent due to delays
suffered. There are, however, a number of different methods of calculating this head of
claim.
The best way is for the claim to be based on substantiated details of the level of costs that
would have been expended on resources and the actual costs paid for those same resources,
backed up by invoices and other records. However, it is rare in practical terms that such an
analysis could be undertaken economically and the time and expense of attempting to carry
out this exercise may be disproportionate to the likely return. Therefore, an alternative
method would be to use some type of formula approach.
Using a formula approach, the calculation would broadly be as follows.
1. Ascertain the value of resources in the original tender but using actual work values.
2. Find out the rate of inflation for such resources over the original contract period,
normally by using some standard published indices.
3. Calculate how much the cost of resources would have increased during the original
contract period based on the indices obtained. This will then be taken as the amount
deemed to be allowed in the rates.
4. Undertake the same calculation but using the indexed inflation figure over the extended
contract period.
5. The difference between the above two calculations will constitute the increased cost
claim.
7.2.5 Working under different climatic conditions

The need to work in less favourable climatic conditions can lead to a drop in productivity by
the contractor. This is a recoverable head of claim (Bush v. Whitehaven (1888) 52 JP 392).
What the contractor has to establish in this case is that, for reasons of providing an express
contractual entitlement, the contractor has had to undertake work in climatic conditions less
favourable than would otherwise have been the case.
It is not sufficient to show that the work was undertaken during a period of less favourable
climatic conditions; it must also be shown that this fact did actually affect the production
level of the work in question and thereby cause the contractor to incur additional costs.
7.2.6 Cost of claim preparation

Where the preparation of a claim is undertaken by a contractor’s in-house staff, this cost
will often be partly (or completely) reflected in the contractor’s loss and expense claim for
site overheads or head office overheads.
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However, it is common for a contractor to employ a consultant to assist in the preparation

of a loss and expense claim. The general rule is that the costs incurred in taking this action
are generally not recoverable, except and until the matter proceeds to arbitration (James
Longley v. South West Thames (1984) 25 BLR 56) or litigation.
The reasoning behind disallowing this head of claim is that the contractor is obliged, under
the contract, to provide the information required to resolve financial issues, therefore the
work involved in the submission of claims must have been included in his price.
Despite the above, it may be the case that such monies may be recoverable if the employer
requested further information from the contractor which is judged to be beyond the normal
contract requirements. Furthermore, in the Walter Lilly and Co. Ltd v. Mackay and Anor
case, Mr Justice Akenhead concluded (at paragraph 590 of his judgment) that claim
preparation costs could, in principle, be a valid head of a loss and expense claim.
7.2.7 Interest and finance charges

When a contractor incurs loss and expense, this has to be financed by the contractor, either
from its own capital resources or through increased borrowing. In either case, it is clear that
the use of money costs money.
Depending on the rate of inflation (and the interest rates applicable at any point in time)
and the amount outstanding in respect of the loss and expense claim, this might be a
relatively small matter or it could have major implications. In either event, it is a matter of
great importance to the contractor how such interest or finance charges should be
recovered.
Interest in respect of monies owed is often dealt with as an express term of the contract.
Therefore, if it is proven that monies were outstanding in respect of the non-payment or
under-payment of a loss and expense claim, simple interest would be applied in line with
the contract in question.
In the alternative case, finance charges, or the cost of being stood out of one’s money, are a
recoverable head of a loss and expense claim in any event. This was established in the
Court of Appeal case of F G Minter v. WHTSO (1980) 13 BLR 1, CA.
In respect of common law damages, to recover finance charges it is necessary for the
claimant to show that the finance charges fell within the second limb of Hadley v.
Baxendale (1854) 9 Exch 341 (dealt with under Chapter 3); that is, that the finance charges
are special damages that were in the contemplation of the parties at the time that the
contract was formed (refer to President of India v. Lips Maritime [1988] AC 395, HL and
Holbeach Plant Hire v. Anglian Water Authority (1988) 14 Con LR 101).
In England there is statutory provision for the recovery of interest (and compensation)
through the Late Payment of Commercial Debts (Interest) Act 1998, together with its
ensuing regulations.
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7.3. Global claims

A global claim is a claim for financial loss which arises from various different events,
however, the requirement to link cause and effect is largely absent (i.e. individual sums of
money are not claimed for each individual event). Instead, a single global sum is claimed in
respect of the alleged cumulative effect of all of the events.
Sometimes, claimants will base their claims in terms of quantum on the difference between
estimated cost and actual cost, normally with an adjustment for any recovery made within
the variation account. A simple example is as follows:
Total costs incurred by the contractor £1 000 000

Less contract order value £600 000
Less recovery from variations £200 000
Claim for loss and/or expense (i.e. the shortfall) £200 000
The basis of the global claim being advanced is that the total extra cost incurred (e.g. £200 000,
as calculated above) has resulted from numerous events whose consequences had such a
complex interaction that it is impossible or impractical to disentangle them to show cause
and effect.
Unsurprisingly, global claims have been the subject of much controversy over the years and
have been considered in many court cases, and the whole area remains a difficult and
developing area of law.
The general rules being developed in respect of global claims appear to be as follows.
■ In the normal case, individual causal links must be demonstrated between each of the
events for which the employer is responsible and particular items of loss and expense.
■ In circumstances where it is impossible to separate the specific loss and expense caused
by a number of different events which are the responsibility of the employer, then these
can be pleaded as producing a cumulative effect. In these circumstances, it is not
necessary to break down each event and isolate the loss caused by each.
■ Where, however, a significant cause of the loss and expense is a matter for which the
employer is not liable, the global claim must fail.
■ Where it is shown that some of these events (albeit not a ‘significant’ amount in causal
terms) are not actually the responsibility of the employer, the global claim should not
necessarily fail, since it may be possible for the judge or arbitrator to apportion the loss
as between the causes for which the employer is responsible and other causes.
■ It is acknowledged that this could lead to ‘rough and ready’ results.
■ When pleading the claim, the particular events and heads of loss should be set out in
reasonable detail. There will, however, usually be no need in commercial cases to do
more than simply to plead the proposition that the particular events caused the relevant
heads of loss. Causation is largely ‘a matter of inference’ and is frequently based upon
experts’ reports. The consideration of the global claim should wait until this evidence is
before the tribunal.
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■ Generally, the best practice in preparing a claim involving multiple variations, delay,
disruption and extra cost is to follow the guidelines laid down by the courts strictly, so
far as it is possible. A cause and effect claim should be presented where possible, and a
global claim only in respect of any element of the claim where it is simply not possible
or practical to do otherwise.
While it is the case that in the UK, global claims are very much the exception rather than
the rule, in the emerging and fast-growing international markets, global claims are more
often accepted as being a means of reaching a reasonably fast and fair valuation of a claim.
This more liberal approach towards global claims is supported by some earlier court cases
which provided justification for the use of a global claim in certain circumstances. Thus, in
J Crosby and Sons Ltd v. Portland UDC (1977) 5 BLR 121, the court supported an
arbitrator who had said
The delay and disorganisation which ultimately resulted was cumulative and attributable
to the combined effect of all matters. It is therefore impracticable, if not impossible, to
assess the additional expense caused by delay and disorganisation due to any one of
these matters in isolation from the other matters.
Also, in London Borough of Merton v. Stanley Hugh Leach (1985) 32 BLR 51, Mr Justice
Vinelott said ‘The loss or expense attributable to each head of claim cannot in reality be
separated’.
Although the Privy Council, in Wharf Properties Limited and Another v. Eric Cumine
Associates and Others (1991) 52 BLR 1, struck out a global claim in a case where the
claimant had made no attempt to link cause with effect, comments of judges in a variety of
cases since then have suggested that the courts accept that there are certain situations where
global claims may be accepted.
In the case of Bernhard’s Rugby Landscapes Ltd v. Stockley Park Consurtium Ltd (QBD
1997) 82 BLR 81, the court considered all the major cases concerning global claims (at that
time) and as a result produced a summary of the position, as follows.
■ While a court will approach a global claim or a total cost claim with caution, such a
claim is not necessarily bad and, in some circumstances, it may be the only way that a
claimant can establish its loss.
■ A global claim is permissible where it is impractical to disentangle that part of the loss
attributable to each head of claim, and the situation has not been brought about by
delay or other conduct on the part of the defendant.
■ The power of the court to strike out is very limited and should only be used where a
claim is so evidently untenable that it would be a waste of resources for this to be
demonstrated only after a trial.
■ The fundamental concern of the court is that the dispute between the parties should be
determined expeditiously, economically and, above all, fairly.
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Even the Scottish Inner House case of Laing Management (Scotland) Limited v. John Doyle
Construction Limited 11 June 2004 (Inner House, Court of Session, Scotland), which many
people saw as serving the death knell on global claims in the UK, actually supported the
use of global claims in certain circumstances.
In fact, the debate in that case in respect of the use of global claims proceeded on the
‘common ground that such a claim [i.e. a global claim] could in principle be made’.
In respect of causation, Lord MacLean said
it is frequently possible to say that an item of loss has been caused by a particular event
notwithstanding that other events played a part in its occurrence. In such cases, if an
event or events for which the employer is responsible can be described as the dominant
cause of an item of loss, that will be sufficient to establish liability, notwithstanding the
existence of other causes that are to some degree at least concurrent.
Lord MacLean continued to say that
even if it cannot be said that events for which the employer is responsible are the
dominant cause of the loss, it may be possible to apportion the loss for which the
employer is responsible and other causes. In such a case it is obviously necessary that
the event or events for which the employer is responsible should be a material cause
of the loss. Provided that condition is met, however, we are of the opinion that
apportionment of loss between the different causes is possible in an appropriate case. …
Whether it is possible will clearly depend on the assessment made by the judge or
arbiter, who must of course approach it on a wholly objective basis. It may be said that
such an approach produces a somewhat rough and ready result. … the alternative to
such an approach is the strict view that, if a contractor sustains a loss caused partly by
events for which the employer is responsible and partly by other events, he cannot
recover anything because he cannot demonstrate the whole of the loss is the
responsibility of the employer. That would deny him a remedy even if the conduct of
the employer or architect is plainly culpable … . It seems to us that in such cases the
contractor should be able to recover for part of his loss and expense, and we are not
persuaded that the practical difficulties of carrying out the exercise should prevent him
from doing so.
Reference was also made to several cases decided in the USA which accepted a variant of
the global claim approach, and this approach (often referred to as the ‘modified total cost
method’) has been given approval in a California Court of Appeal case (Dillingham-Ray
Wilson v. City of Los Angeles (2010) 182 Cal. App. 4th 1396). The modified total cost
method is a variant of the ‘total cost method’. The total cost method compares the bid price
of the project work with the total cost of the project work as performed, attributing the
entire cost increase to the acts or omissions of the employer. Although advantageous to
contractors, courts (as well as arbitrators and administrative boards) consistently have
declared the method imprecise and frequently have rejected it. However, the modified total
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cost method addresses the shortfalls of the total cost method by segregating the aspects of
the work affected by the employer’s shortcomings. Furthermore, the modified approach
does not blindly accept the contractor’s pre-bid cost estimates or the contractor’s as-
performed job cost records.
The subject of global claims was again reviewed in the Walter Lilly and Co. Ltd v. Mackay
and Anor [2012] EWHC 1773 case. In that case, Mr Justice Akenhead concluded that in
relation to ‘global’ or ‘total’ cost cases, claims by contractors for delay or disruption related
to loss and expense must be proved as a matter of fact. The contractor needs to demonstrate
on a balance of probabilities (1) that events occurred which entitled it to loss and expense,
(2) that those events caused delay and/or disruption, and (3) that such delay or disruption
caused it to incur loss and/or expense. It is open to the contractor to prove these three
elements with whatever evidence will satisfy the tribunal and the requisite standard of
proof.
Any condition precedent clauses need to be complied with, but direct loss and/or expense can
then be ascertained by appropriate assessments. There is nothing, in principle, wrong with a
total or global cost claim. However, there are added evidential difficulties (in many but not
necessarily all cases) which a claimant contractor has to overcome. It will generally have to
establish (on a balance of probabilities) that the loss which it has incurred (namely the
difference between what it has cost the contractor and what the contractor has been paid)
would not have been incurred in any event. Thus, it will need to demonstrate that its accepted
tender was sufficiently well priced that it would have made some net return. It will need to
demonstrate in effect that there are no other matters which actually occurred (other than those
relied upon in its pleaded case and which it has proved are likely to have caused the loss).
The fact that one or a series of events or factors (unpleaded or which are the risk or fault of
the claimant contractor) caused or contributed (or cannot be proved not to have caused or
contributed) to the total or global loss does not necessarily mean that the claimant
contractor can recover nothing. It depends on the impact of those events or factors. An
example would be where, say, a contractor’s global loss is £1 million and it can prove that
but for one overlooked and unpriced £50 000 item in its accepted tender it would probably
have made a net return. The global loss claim does not fail simply because the tender was
underpriced by £50 000; the consequence would simply be that the global loss is reduced
by £50 000 because the claimant contractor has not been able to prove that £50 000 of the
global loss would not have been incurred in any event.
Obviously, there is no need for the court to go down the global or total cost route if the
actual cost attributable to individual loss-causing events can be readily or practicably
determined. It may be that the tribunal will be more sceptical about the global cost claim if
the direct linkage approach is readily available but is not deployed. That does not mean that
the global cost claim should be rejected out of hand.
Therefore, against the above background, it may be that the use of global claims has been
prematurely written off, and it may be that the commercial pressures of the developing and
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fast-growing regions of the world will make the use of global claims (or at least a variant of
global claims) more acceptable within the construction industry generally.
Cases
Bernhard’s Rugby Landscapes Ltd v. Stockley Park Consurtium Ltd (QBD 1997) 82 BLR 81
Bush v. Whitehaven (1888) 52 JP 392
Dillingham-Ray Wilson v. City of Los Angeles (2010) 182 Cal. App. 4th 1396
F G Minter v. WHTSO (1980) 13 BLR 1, CA
Hadley v. Baxendale (1854) 9 Exch 341
Holbeach Plant Hire v. Anglian Water Authority (1988) 14 Con LR 101
J Crosby and Sons Ltd v. Portland UDC (1977) 5 BLR 121
J F Finnegan v. Sheffield City Council (1988) 43 BLR 124
James Longley v. South West Thames (1984) 25 BLR 56
Laing Management (Scotland) Limited v. John Doyle Construction Limited 11 June 2004,
(Inner House, Court of Session, Scotland)
London Borough of Merton v. Stanley Hugh Leach (1985) 32 BLR 51
President of India v. Lips Maritime [1988] AC 395, HL
Stanley Hugh Leach v. Merton (1985) 32 BLR 51
Walter Lilly and Co. Ltd v. Mackay and DMW Developments Ltd [2012] EWHC 1773
(TCC)
Wharf Properties Limited and Another v. Eric Cumine Associates and Others (1991) 52
BLR 1
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ISBN 978-0-7277-6197-2

Chapter 8
Disruption claims
8.1. Introduction
Disruption is disturbance, hindrance or interruption to a contractor’s normal working
methods which may result in loss of efficiency or productivity by the contractor. In the
construction context, disrupted work is work that is carried out less efficiently or
productively than it would have been had it not been for the cause of the disruption. This
may manifest itself as the inefficient and/or less-productive and/or increased use of labour
and plant resources.
Some disruption is a symptom of poor site management, and therefore not all disruption
costs are recoverable by a contractor. However, if the disruption is caused by the employer,
this may give rise to a right to a compensation payment to the contractor, either under the
contract or as a breach of contract.
Disruption costs may be distinguished from delay costs by virtue of the fact that the latter
are a function of time and the former are essentially productivity related. Disruption may or
may not cause a delay to the progress of the works or to the completion date. For example,
if an activity on the critical path of a programme is disrupted, it is possible that the delay
effect of that disruption could be mitigated by increasing the resources so that the critical
path activity is completed in the originally planned programme period. In this instance, no
delay is caused to the completion date, but because of the increased resources, the
productivity achieved by the contractor is reduced; it is that loss of productivity which a
contractor will seek to recover as part of a disruption cost claim.
The above situation is given to illustrate the difference between a delay claim and a
disruption claim, but disruption may occur from, and costs may be recoverable to, non-
critical path activities and/or activities that are not directly affected by the original event
that caused the disruption. Therefore, in a disruption claim, the contractor claims that it
could not achieve its planned output because of the employer’s actions (or because of other
causes which are not the contractor’s responsibility) and hence the extra costs it has
incurred are payable under the contract and/or as damages resulting from a breach of the
contract.
Most standard forms of contracts do not deal expressly with disruption. However,
disruption may be claimed as a breach of the term generally implied into construction
contracts that the employer will not prevent or hinder the contractor in the execution of its
work. A disruption claim must identify specific events that are breaches of contract by the
employer or matters for which the contract specifically provides for extra costs.
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An example of disruption is where the employer ordered a contractor to cease work on a

particular activity for frequent short periods (for example to provide for some necessary
operating function of a plant or building) and the need for such stoppages was not specified
in the tender documents. Another example would be where the employer ordered urgent
variations and groups of workers had to continually move from one activity to another at
short notice, being unable to develop optimum productivity on a particular work activity.
To justify a disruption claim, a contractor must establish that the cause of the disruption
was either a breach of the contract by the employer or an action for which the contract
provides for the reimbursement of extra cost. The contractor must also show that the actual
productivity of the work has been affected.
Clearly, not all disruption attracts the payment of compensation. The contractor may be
entitled to compensation for the effects of lost productivity to the extent that a breach of
obligation exists, a causal link to the offending party can be established, and the effects of
that disruption calculated appropriately.
Even if the employer did cause disruption, and even if the disruption did cause a loss of
productivity, this may not result in an entitlement to additional payment if the contractor
failed to comply with certain contractual requirements and is therefore not entitled to
reimbursement of the disruption costs in any event. A standard normal requirement for the
validity of a disruption claim is that the contractor must give notice of information required
at the time of knowing of the disruption. The contract usually will provide the mechanism
for the notification as the type information required and to whom the notice should be
addressed.
One of the most difficult (and most important) tasks with a disruption claim is to link the
loss suffered with the cause of that loss, particularly if there are a multitude of events and/
or a constant flow of disruptive events.
What makes the position even harder is that there may often be a series of competing
issues, including
■ the instruction and/or later instruction of additional work and/or a change of sequence
of work
■ the conditions under which the works were required to be carried out
■ logistics or access restrictions
■ inadequate supervision
■ insufficient coordination of the works
■ tender deficiencies.
The basic premise of civil law cases is that a case must be proven on a ‘balance of
probabilities’ basis, or, in other words, the case that is more probable than another case
should succeed. This makes things slightly easier, but not drastically so, as a contractor
pursuing a disruption claim still retains the burden of proof in the first place.
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Disruption claims
The factors which can determine the success or failure of a contractor’s claim to entitlement
to compensation due to disruption may be summarised as follows
■ the work that has been affected must be clearly identified

■ the work activities that were affected by the disruption must be specified
■ the extra expense incurred must be explained
■ the contractor must show that the event leading to the disruption and financial loss was
either a breach of contract or an event provided for in the contract for which the
employer is to be made financially liable to the contractor
■ the contractor must quantify the disruption costs using a selected method of
quantification.
Disruption is demonstrated by applying analytical methods and techniques to establish the

loss of productivity arising out of the disruption events and the resulting financial loss. The
objective of a disruption analysis is to demonstrate the lost productivity and therefore the
additional loss and expense that the contractor seeks to recover. This analysis is usually
carried out over a particular period of time in an attempt to determine when lower
productivity was achieved and to review what activities had been affected by the cause of
the disruption.
In addition to the loss of productivity, a disruption claim may also seek to show that
■ resources were standing idle when they should otherwise have been working, thus
increasing the time taken to do the work, or
■ more expensive resources were required to do the same value of work because of a
disruption event (i.e. even though the level of resources was the same, a more
expensive resource – such as agency resources, emergency hire of plant or expensive
gangs – needed to be used).
Accurate and comprehensive project records are vital to pursuing a disruption claim. This
head of claim in particular may be difficult to ascertain due to lack of records and the
difficulty of establishing the nexus of cause and effect.
8.2. Assessment of disruption costs

The principle that applies is that the extra costs incurred, compared with the costs that would
have been incurred had the disruption not occurred, are recoverable by the contractor. There
are several different methods for assessing this head of claim, and few people agree on
which approach should be used. However, in all cases, good records are essential.
As a baseline, the contractor sets out what the actual costs would have been had the
disruption not occurred. This provides the comparator to be used in the calculation of loss.
Because of the competing disruption issues as outlined above, some of which may be the
liability of the contractor, original tender allowances are not always sufficiently reliable for
use as a baseline for productivity. If the tender allowance is used, evidence would need to
be provided to demonstrate the reasonableness of that data for use as the baseline.
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It is usually expected that on a complex project a certain amount of uncertainty and rework
will be expected at various stages of construction. Even when the project is going well,
normal disruptions, made by both the contractor and the employer, will involve a certain
amount of rescheduling and planning and additional costs to rectify. Despite the fact that
these costs are built into the initial tender and will be absorbed without affecting the time
frame or budget, it is possible to drastically underestimate the costs of such factors.
In addition, the contractor must show that it has taken all reasonable steps to mitigate any
loss, such as returning leased equipment, working on other parts of the project that were
not affected by the disruption or redeploying expensive resources so that they were not
unnecessarily sitting idle.
Ideally, what should be established is that productive resources were achieving a certain
level of productivity and/or financial income for the contractor before a particular
disruption event occurred, but that after that particular event occurred, and indeed because
of it, the same level of productivity/financial income could not be achieved.
Take for example the case of a bricklaying contractor. The contract stated that the
contractor would be required to build wall A, followed by wall B, followed by Wall C. In
its tender, the contractor allowed for an output of 60 bricks per hour per bricklayer.
■ Weeks 1 to 4: things progressed well. The bricklayers worked on wall A only, as

planned; output achieved was 65 bricks per hour. The contractor was exceeding the
tender expectations, which illustrated the sufficiency of the tender.
■ Week 5 to 8: things started to go wrong. The sequence of work changed, and the
contractor was instructed by the employer to move the bricklayers from wall A to wall
B to wall C, often all in the same day. As a consequence, the output of the bricklayers
at the end of this period reduced to 50 bricks per hour.
In this case, the disruption claim would be based on the loss of production caused by the
disruption event. In other words, the contractor expected to achieve 60 bricks per hour
(and, based upon the records available, actually achieved 65 bricks per hour) before the
disruption event occurred; but because of the disruption event the contractor’s bricklayers
only achieved 50 bricks per hour. Therefore, the loss of productivity was 10 bricks per hour
(compared with the tender allowance).
Although this is a very simple example, the principle applies for much more complicated
claims.
The above approach in a large part defeats an argument that is often raised in respect of
disruption claims, which is that there was an insufficiency within the contractor’s tender.
This argument is often used when the contractor compares its actual output with the output
allowance that it made in its tender. Where a contract does not prescribe a method for
evaluating disruption costs, a contractor might make a claim for the difference between the
amount allegedly allowed in the tender and the actual cost of the work performed.
However, such an approach falsely assumes that the amount allowed for the work at the
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Disruption claims
time of tender was totally correct and there were no inefficiencies in the contractor’s
management of the construction operations.
A contractor must quantify the disruption costs once it has established that loss of
productivity has occurred. This involves comparing the actual cost with what the cost
would have been were it not for the disruption. The contractor must demonstrate that the
latter hypothetical cost is reasonable. In making such claims, a contractor must also
establish that everything reasonable has been done to minimise the cost of the disruption;
for example, that hired machines were not left idle on the site when the hire could have
been terminated.
As mentioned above, there are various methods for quantifying loss of productivity in a
disruption claim, which may be applicable depending on the nature of the work, the
circumstances and the records available. The main approaches used, each having its own
merits and limitations, are
■ project-specific approach
– ‘measured mile’ analysis
– total cost and modified total cost methods
– earned value analysis
– programme analysis
– work or trade sampling
– system dynamics modelling
■ project comparison approach
■ industry standards approach.
8.2.1 Project-specific approach

8.2.1.1 Measured mile analysis
Measured mile analysis, which involves comparing the actual productivity with what the
productivity would have been had it not been for the disruption, is one of the main proven
methods a contractor applies to quantify costs once it has been established that loss of
productivity has occurred and caused delay. The evaluation of disruption is based on a
comparison of the productivity achieved prior to the disruptive events taking place and the
productivity achieved during the period of disruption. In respect of labour, the productivity
rate for a period of disruption is quantified in lost worker hours, which are multiplied by an
hourly rate to find the loss of labour productivity, or the disruption claim amount.
In its purest application, the measured mile measures productivity over two different
periods for the same type of work performed under the same physical conditions on the
same project. On this basis, any resulting disruption claim will be in respect of actual loss
and expense incurred, instead of with reference to tender allowances. Employers may
disagree with a measured mile calculation by claiming that the baseline productivity
measure – the productivity measured during the period unaffected by disruption – is faulty.
A baseline productivity measure can be inaccurate if the delayed period and the planned
period are not accurate comparators.
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The measured mile analysis should be conducted as follows.
1. Select and analyse the disruption-impacted period.

2. Select and analyse the ‘measured mile’ period (not impacted by disruption).
3. Calculate the loss of productivity.
4. Present the analysis in an acceptable format.
The case of Whittal Builders Co. Ltd v. Chester-Le-Street District Council (1985) 11 CLR
40, the court had to decide the most appropriate method of evaluating the disruption which
had resulted from problems relating to the handover of properties. Of the variety of
methods presented before the court, the measured mile method of evaluating disruption was
the favourite method. Mr Recorder Percival had the following to say.
Several different approaches were presented and argued. Most of them highly
complicated, but there was one simple one – that was to compare the value to the
contractor of the work done per man in the period up to November 1974 with that from
November 1974 to completion of the contract. The figures for this comparison, agreed
by the experts for both sides were £108 per man week while the breaches continued,
£161 per man week after they ceased. It seemed to me that the most practical way of
estimating the loss of productivity and the one most in accordance with common sense
and having the best chance of producing a real answer was to take the total cost of labour
and reduce it in the proportions which those actual production figures bear to one another
– i.e. by taking one-third of the total as the value lost by the contractor. (This roughly
being the difference between the productivity when work was not disrupted i.e. £161 per
man week and £108 per man week when work was disrupted). I asked both (counsel) if
they considered that any of the other methods met those same test as well as that method
or whether they could think of any other approach which met them better than that
method. In each case the answer was ‘no’. Indeed, I think that both agreed with me that
that was the most realistic and accurate approach of all those discussed. But whether
that be so or not, I hold that it is the best approach open to me, and find that the loss of
productivity of labour and in respect of spot bonuses which the plaintiff suffered is to be
quantified by adding the two together and taking one-third of the total.
In the case of John Doyle Construction Ltd v. Laing Management (Scotland) Ltd (2004)
Scots CS 141, the court was asked to express a view as to whether a measured mile
approach in principle is acceptable. A part of the claim related to disruption and the
evaluation was produced by comparing labour productivity actually achieved on site when
work was largely free from disruption with labour productivity achieved when work was
disrupted. It was decided by the court that this method of evaluating a claim was not a total
cost claim and in principle was acceptable.
8.2.1.2 Total cost and modified total cost methods

The total cost method is based on the premise that the resulting project is a cardinal change
from what was originally contracted – that is, the current project is fundamentally different
from the project envisioned by the contract – when other methods of computing losses
cannot be used. Once a cardinal change has been established, the contractor is freed from
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Disruption claims
the terms of the contract and is allowed to recover the reasonable value of labour and
materials, plus reasonable mark-ups for overhead and profit, less what was previously paid.
The modified total cost method refines the total cost method by subtracting from the total
cost any costs incurred by the contractor due to its own inefficiencies. The main criticism
of the total cost and modified total cost methods is that they can be used by contractors to
hide losses not caused by the employer, such as losses due to errors in the contractor’s
tender or defective project management. Employers frequently seek to bar the total cost and
modified total cost methods on this ground. Employers also contend that a contractor’s cost
records are sufficiently detailed that, during the course of a project, the contractor could
have tracked its costs to show an actual causal relationship between the employer’s actions
and the contractor’s loss of productivity. Employers argue that, to the extent that contractors
fail to adjust their accounting systems to track job costs, contractors should be barred from
using these methods.
8.2.1.3 Earned value analysis

This analysis involves calculating the number of worker hours included in the tender
allowance for completing certain work activities and comparing that value with the actual
number of worker hours required to complete those work activities.
8.2.1.4 Programme analysis

This form of analysis uses computer-based project programmes that allow resources to be
loaded onto the individual project activities. This provides the means to allocate and track
resources (principally labour and plant). Based upon the inputs provided, the computer
software assists in calculating periodic percentages of completed works and compares the
planned resources against the as-built resources.
8.2.1.5 Work or trade sampling

In this method, samples of trade or work activities and contemporaneous records or direct
works observations are used to determine the actual disruption suffered.
8.2.1.6 System dynamics modelling

This is a computer simulation approach, in which a computer model of the project is
created which replicates the network of trade relationships and programme activities. The
computer model is initially run with the disruption factors in place, and is then re-run with
the disruption factors removed. The difference between the two outputs is taken to be the
effect of the disruption factors. Obviously, as with all computer models, the output obtained
is only as good as the information put into it in the first place (i.e. ‘rubbish in, rubbish
out’). Also, because this approach is still (relatively) in its infancy, the costs involved are
potentially high, and it may be considered by some to be too theoretical.
8.2.2 Project comparison approach

Project comparison studies are relied upon when there are insufficient records available for
a project-specific study to be carried out. With this approach, productivity on the disrupted
project is compared with that on a similar other project or on the same or similar activities
on another similar project. Obviously, to be at all effective, the two comparison projects
need to be ‘like for like’. Given the wide range of background factors on different projects,
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it will be difficult to find two projects that are sufficiently compatible to make the analysis
meaningful.
8.2.3 Industry standards approach

The industry standards method of quantifying labour productivity is not always favoured by
courts, due to its hypothetical nature. Trade groups for various contractors have published
productivity tables that show how various job site conditions can affect labour productivity.
Particular conditions are scored in terms of their effect on productivity. A contractor can
use, for instance, certain published factors and ascertain how much its productivity was
affected by the disruption caused by the employer. These measurements are then quantified
to show the loss of efficiency and the disruption claim amount. Employers contend that
industry standards are factually distinguishable from the conditions actually experienced on
their particular sites. Nonetheless, industry standards have been used successfully as a way
to measure productivity when actual data are missing or unavailable otherwise.
Cases
John Doyle Construction Ltd v. Laing Management (Scotland) Ltd (2004) Scots CS 141
Whittal Builders Co. Ltd v. Chester-Le-Street District Council (1985) 11 CLR 40
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Chapter 9
Standard contract form provisions
for time and cost
9.1. Introduction
The discussion of matters in respect of delay and disruption claims within this book is
based upon general principles. The actual method used to deal with an extension of time or
loss and expense claim must obviously comply with the provisions on the particular
contract in question.
This chapter explains in outline how three of the more common standard contract forms
deal with extensions of time and loss (or costs) and expense. The standard forms
considered are
■ the NEC4 (the same principles also apply to NEC3)

■ the JCT forms
■ the FIDIC forms.
9.2. NEC4
Most standard form contracts deal with extensions of time, loss and expense, and variations
separately, but in the NEC forms these are rolled up together (under section 6 of the
Engineering and Construction Contract) and are referred to as ‘compensation events’. A
single assessment is made that deals with the entire effect of a compensation event in
respect of time and money.
Events that are compensation events are set out in the contract. There are 21 events listed in
clause 60.1 of the core clauses, a further three in main Options B and D (the bills of
quantities options), and there are others scattered through the secondary Option clauses. In
addition, the employer has the option to add further compensation events in the Contract
Data part 1 and some could also be added in the Z clauses.
The compensation event procedure breaks down into three phases
■ notification
■ assessment
■ agreement (or disagreement) and implementation.
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9.2.1 Notification
For a compensation event that arises from an instruction of the Project Manager or the
Supervisor, for instance to change the Works Information or to search for a Defect, the
Project Manager notifies the Contractor of the compensation event. For all other
compensation events, the Contractor notifies the Project Manager.
A notification of a Compensation Event must be given within a set time period (for a main
contract normally 8 weeks) otherwise the right to a Compensation Event may be lost
forever. The contract sets out whether it is the Employer/Project Manager or the Contractor
that is required to give the notice. If the notification should have been given by the
Employer/Project Manager but was not given in the required time, the case of Northern
Ireland Housing Executive v. Healthy Buildings (Ireland) Ltd (2014) NICA 27 indicates
that the time bar period in the contract may not be binding.
On receipt of a notification of a compensation event from the Contractor, the Project

Manager responds that the matter is not accepted as a compensation event if it
■ is the Contractor’s fault

■ has not occurred or is not going to occur
■ has no effect on the Defined Cost and the Completion Date
■ is not one of the listed compensation events.
In all other cases, the compensation event is accepted in principle, and an instruction is
given to the Contractor to provide a quotation.
If the Project Manager fails to reply to a notification of a compensation event by the

Contractor within 1 week of the notice being given, or such other period as agreed by the
Contractor, the Contractor may notify the Project Manager of that failure. If the failure
continues for a further 2 weeks after the reminder, it is deemed that the Project Manager has
accepted that the event notified is a compensation event and it is also deemed that an
instruction has been issued to provide a quotation. The Contractor provides that quotation
within 3 weeks.
When instructing the Contractor to provide a quotation, the Project Manager may, after
discussion with the Contractor, instruct the Contractor to provide other quotations for
alternative methods of dealing with the event.
In any case, if the effect of the event is unclear, the Project Manager states assumptions on
which the Contractor is to base its quotation. If those assumptions turn out to be incorrect,
the alteration of those assumptions constitutes another compensation event.
9.2.2 Assessment
Under the NEC4 contracts, a quotation has a special meaning. It must deal with all the
effects of a compensation event in terms of both time and money.
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Standard contract form provisions for time and cost
The quotation must be assessed using the procedures in the contract and, when providing
the quotation to the Project Manager, the Contractor must include details of its assessment
and, if the compensation event affects the Completion Date or the Key Dates, a revised
programme for acceptance must be provided.
On receipt of a quotation, the Project Manager must respond within 2 weeks. The Project
Manager’s reply must be one of the following four permitted responses
■ an acceptance of the quotation

■ a confirmation that a proposed compensation event will not be instructed
■ a notification that the quotation has not been prepared properly (with reasons) and
an instruction to resubmit the quotation
■ a notification that the quotation has not been prepared properly (with reasons), together
with a notification that the Project Manager will instead assess the compensation event.
A compensation event is assessed as the effect of the event on
■ the actual Defined Cost for work already done plus the Fee, and
■ the forecast Defined Cost for work not yet done plus the Fee, and
■ planned Completion as shown on the latest Accepted Programme.
The cut-off point between work done and work not already done is the date of the
instruction to provide the quotation (the ‘dividing date’).
The assessment is based on the effect of the event on the Contractor’s cost (as defined in
the contract); that is, it either increases the cost or decreases it.
9.2.3 Agreement (or disagreement) and implementation

When a compensation event is ‘implemented’ it means it is finalised and cannot be changed
by the Parties, only by an adjudicator.
A compensation event becomes ‘implemented’ when
■ the Project Manager accepts the Contractor’s quotation

■ the Project Manager notifies the Contractor of its assessment
■ the Contractor’s quotation is treated as having been accepted by the Project Manager.
If the Project Manager fails to reply to a quotation or to assess a quotation within the
allowed time, the Contractor may notify the Project Manager of that failure. If the failure
continues for a further 2 weeks, the Contractor’s quotation is treated as being accepted.
There is no express sanction for a situation in which both the Project Manager and the
Contractor entirely fail to notify an event which the Project Manager should have notified
save that only notified events are compensation events and that no event can be notified
beyond the Defects Date.
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9.3. The JCT forms

Under the JCT forms, delay notices and loss and/or expense applications are made
separately.
9.3.1 Delay notices

Under clause 2.27 of the Standard Building Contract the Contractor is obliged to serve a
notice of delay to the Architect/Contract Administrator (CA) in the event that ‘the Works or
any Section is being or is likely to be delayed’.
The notice needs to say
■ what the material circumstances of the delay are

■ what the cause or causes of the delay are
■ which Relevant Event from the contract applies
■ what the expected effect on the Completion Date or Sectional Completion Date will be.
Upon receipt of a valid delay notice submitted by the Contractor, the CA, within 12 weeks
of receipt of the Contractor’s delay notice, is to fix a revised Completion Date or Sectional
Completion Date as he estimates to be fair and reasonable, and the CA is to say which
Relevant Event(s) that he relied upon.
No later than 12 weeks after practical completion of the works, the CA is to grant such
extension to the Completion Date as he considers to be fair and reasonable, irrespective of
any specific delay notice having been provided by the Contractor.
The Relevant Events are set out at clause 2.29 of the JCT Standard Building Contract.
There are 15 Relevant Events listed under this clause, and these include
■ Variations
■ deferment of the giving of possession
■ suspension by the Contractor because of non-payment
■ exceptionally adverse weather conditions
■ force majeure
■ any impediment and/or act of prevention by the Employer.
9.3.2 Loss and expense applications

Under clause 4.21 of the Standard Building Contract the Contractor is to notify the CA
as soon as the likely effect of a Relevant Matter on regular progress or the likely nature
and extent of any loss and/or expense arising from a deferment of possession becomes
(or should have become) reasonably apparent to him.
The Contractor’s notification is to be accompanied by or, as soon as practicable thereafter,

followed by the Contractor’s initial assessment of the loss and expense incurred (or expected
to be incurred) together with such information as is reasonably necessary to enable the CA
or the Quantity Surveyor to ascertain the loss and expense incurred.
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Standard contract form provisions for time and cost
The Contractor shall thereafter update his loss and expense assessment and information at
monthly intervals until all information reasonably necessary to allow ascertainment of the
total amount of such loss and expense has been supplied.
Within 28 days of receipt of the Contractor’s initial assessment and information and 14 days
of each subsequent update of them, the CA or the Quantity Surveyor shall notify the
Contractor of the ascertained amount of the loss and expense incurred, each ascertainment
being made by reference to the information supplied by the Contractor.
The Relevant Matters are set out at clause 4.22 of the JCT Standard Building Contract.
There are six Relevant Matters listed under this clause, which include
■ Variations
■ opening up for inspection or testing of any work
■ any impediment and/or act of prevention by the Employer.
9.4. The FIDIC forms

Sub-Clause 20.1 of the FIDIC form provides a procedure for dealing with the notification
of and substantiation of extension of time and additional payment claims, and sets out the
mechanics of the decision-making process of the Engineer in respect of those claims.
The key features of Sub-Clause 20.1 are that the Contractor must give notice to the
Engineer of time or money claims, as soon as practicable and not later than 28 days after
the date on which the Contractor became aware, or should have become aware, of the
relevant event or circumstance. Any claim to time or money will be lost if there is no
notice within the specified time limit.
Supporting particulars should be served by the Contractor and the Contractor should also
maintain such contemporary records as may be needed to substantiate claims.
The Contractor should submit a fully particularised claim within 42 days after becoming
aware of the relevant event or circumstance. The requirement of the Contractor to provide a
detailed claim within a 42-day period is not expressed as a condition precedent, unlike the
initial notice identifying the event or circumstance.
The initial claim shall be an interim claim, and further interim updated claims are to be
submitted monthly.
A final claim is to be submitted, unless agreed otherwise, within 28 days of the end of the
claim event.
Any extension of time or additional payment shall take account of any failure or other
prejudice caused by the Contractor during the investigation of the claim.
Payment Certificates should reflect any sums acknowledged in respect of substantiated claims.
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The interim and final claims are to be considered by the Engineer. The Engineer has 42 days
after receipt of the claim, or the further particulars requested, to respond. This period may be
extended, but only with the approval of the Contractor. The obligation on the Engineer is to
respond because of the use of the word ‘shall’. The Engineer may approve the claim, or if
disapproving the claim must then provide detailed comments. If the Engineer considers that
further information is required, the Engineer still has an obligation to respond in respect of
the principles of the claim within the 42-day (or other agreed) period.
9.4.1 Extensions of time

The provisions that entitle the Contractor to claim an extension of time are contained in
Sub-Clause 8.4. This Sub-Clause allows the Contractor to point out where he has been
delayed by reasons beyond his control. If he could not do this, and the Engineer did not
have the power to give him an extension of time, he would be liable for liquidated damages
for delay.
Furthermore, if the Contractor obtains an extension of time, he may be in a position to

recover his time-related costs of remaining on site longer. However, there is no natural link
between extensions of time under Sub-Clause 8.4 and the recovery of money.
The possible grounds for an extension of time include
■ Variations
■ a cause of delay referred to in the Conditions
■ exceptionally adverse climatic conditions
■ a delay caused by the Employer or a party under the Employer’s control
■ a cause of delay referred to in the Conditions.
Case
Northern Ireland Housing Executive v. Healthy Buildings (Ireland) Ltd (2014) NICA 27
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ISBN 978-0-7277-6197-2

Chapter 10
Typical claim format
10.1. Presentation
The success of a good claim (and sometimes the success of a poor claim) can often turn
upon a well-presented claim document. It is therefore important that claims are presented in
a user-friendly manner and are easy to read and to understand.
Claims need to be produced in top-quality print using a standard recognised font and type
size, with graphics and photographs well produced and with a cover which explains in
summary terms what is inside the claim document and which, in effect, invites the potential
reader to look inside.
Many claim documents do not satisfy this very basic requirement and are presented in such
a fashion to be uninviting at best, and incomprehensible at worst.
It has often been said that the three most essential items for a successful claim document
are records, records and records. However, the presentation of those records is often just as
important as the records themselves. Therefore, the manner of presentation – in the way of
charts, schedules and other presentation formats – requires careful consideration.
A claim is basically a document which sets out to persuade somebody that the claim is
legitimate and is valid.
It is essential that whatever form of claim is being made, the document produced to support
the claim must be of good quality, as a poorly typed and presented document is unlikely to
be successful in helping to achieve acceptance of the claim.
Many claims are drafted in such a way that it is necessary to read through a great deal of
correspondence, site minutes and records to try to understand the case. This can be a fatal
mistake – it is important that the claim can be read and understood without reference to
other documents. Correspondence, site meeting minutes and other records are usually
essential to corroborate the facts referred to in the text of the claim, but they should not be
used in place of the claim narrative.
It should always be borne in mind that if the dispute is referred to adjudication, arbitration
or litigation, it will usually be necessary to provide oral evidence from those involved with
the project. In such a case, there will be a need for documentary evidence, such as
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correspondence, emails and other records, relating to the person with the first-hand
knowledge of the matters in question.
To increase the chance of success, it is essential that a claim document is well prepared and
is presented in an orderly and professional manner. If the claim document is not presented
in such a way, then the recipient of the claim document may believe that the person
presenting the claim document does not really believe in the merits of the claim, and that
they have just ‘thrown the claim together’ in an attempt to gain some unjustified return in
terms of time or money.
10.2. Format
It all starts with the front cover. A front cover of a claim document should contain the
following as a minimum requirement
■ the claimant’s claim

■ the name of the project
■ the claim title or description
■ the date of the claim
■ the revision number or the reference number of the claim.
The purpose of the front cover is not only to create a good first impression, but also to
provide an immediate insight into what is included within the claim document.
The content of a well-presented claim document should be divided into clear sections, each
of which will contribute to a full understanding of the claim. Commonly the division into
sections may be as follows
■ contents
■ introduction and executive summary
■ the parties
■ the contract (or subcontract)
■ the dispute resolution process applicable (if required)
■ the contractual basis of the claim
■ the facts and/or details of the claim
■ the financial evaluation of the claim
■ the redress sought (if required)
■ appendices.
The following sub-sections outline the requirements for each part of the claim document.
10.2.1 Contents
The list of the contents should appear on the first page after the front cover. The inclusion
of a contents page (referenced to page numbers within the claim document) is invaluable
for a reviewer of a claim document, saving them a great deal of time in searching for a
particular topic within the document.
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10.2.2 Introduction and executive summary

When producing an introduction, it must be borne in mind that the person reading the
claim, who may well be responsible for the final ascertainment or may need to make a
decision in respect of the claim, is likely to have very little knowledge of the project or the
background to the issues. Therefore, it is important that the claim document sets out some
important background information, including, among other things
■ the names of the parties to the contract

■ details of the conditions of contract governing the contract
■ the dispute resolution process applicable
■ the tender date
■ the original contract sum
■ dates for possession and completion
■ date of completion certificate
■ details of extensions of time claimed
■ details and amounts of money claimed
■ details of extensions of time awarded
■ details of amounts certified.
It essential to go into sufficient (but not excessive) detail in the introduction so that the
recipient of the claim does not need to search through other documents to acquire the basic
facts.
Often it is very useful to have an executive summary at the beginning of the claim
document. An executive summary is in effect a general overview of the entire claim in a
general and shortened form. It sets out the claim in overview terms so that the recipient of
the document can obtain an understanding of the basis of the claim in one short section.
The executive summary must bring out the key elements of the claim and must highlight how
the claim document satisfies the burden of proof in respect of the claim being promoted.
It is sensible to produce the executive summary after the rest of the claim submission has
been completed, as it is only at that stage that the key points and the critical elements of the
claim can be identified.
10.2.3 The parties

It is important that the parties involved with the claim are clearly identified by name and
address.
Where a party is a limited company, it is often sensible to provide the company registration
number in the event of a change of company name (something which does not affect the
legal entity of the corporate body).
The address to be used is often referred to in the contract, but where that is not the case,
either the registered office address or the last known business trading address should be used.
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10.2.4 The contract

The contract form used should be set out in detail. If the contract is based upon a standard
form contract, then any amendments and/or additions to the standard form should be listed.
10.2.5 The dispute resolution process

The dispute resolution process that is available in the contract or that is being used in the
particular claim submission (e.g. adjudication, arbitration or litigation) needs to be
identified, with a note explaining why that particular dispute resolution process can be or is
being used.
10.2.6 The contractual basis of the claim

It is of vital importance to spell out precisely the contractual basis on which the claim is
founded.
As the claim document may be read by somebody who has no knowledge of the project at
all, it will be helpful to include a description of the works in this section so that the
reviewer will know what type of work was being carried out.
It is extremely useful to include here the full text of the clauses from the contract that will
be relied upon within the claim document. It will not always be possible to complete this
section until after the rest of the claim document has been completed – often it is not until
then that it becomes fully apparent which of the contract clauses will be relied upon.
The inclusion of the text of the contract clauses in this section obviously makes it simpler
for the reviewer to refer to the clauses, rather than needing to refer to a separate document.
However, it should go without saying that any such clause reproduction must be complete
and must be accurate. Inaccurate and/or incomplete reproduction of contract clauses relied
upon can be more detrimental to the claim submission than if the text had not been
included at all.
The claim will normally fall into one of the following categories
■ a claim for an extension of time

■ a claim for loss and expense or extra costs or expense (depending on the form of the
contract) flowing from a remedy contained within the conditions themselves
■ a claim for common law damages resultant upon a breach of the express or implied
terms of the contract.
It is necessary to decide and specify in this section of the claim document the clauses of the
contract that will be relied upon in the claim or, if appropriate, the common law provisions
that apply.
It is also good practice in this section of the claim document to make reference to
contractual notifications that have already been made. Thus, for extensions of time, details
of the notifications provided, the contractual events/relevant events relied upon and the
extended period(s) requested should be provided; and for loss and expense, details of the
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notifications/applications made, the contractual matters/relevant matters relied upon and the
financial amount requested should be provided.
10.2.7 The facts and/or details of the claim

It is also essential to state clearly the facts or events pertaining to the claim.
A tribunal when deciding upon a dispute over a claim will be required to ascertain the facts
and then apply the law. Therefore, this section of the claim document is critical to the
successful outcome of a claim submission.
This section of the claim should also provide the fullest details possible of any claim issue.
The burden of proving any given claim rests with the claimant (i.e. ‘he who asserts must
prove’). To satisfy this requirement means that claims must be adequately documented,
which means that appropriate records must have been kept at the time the relevant work
was executed.
Contemporaneous records carry much more weight than documents produced after the
event, and claims often fail because of a lack of proper substantiating contemporaneous
documentary evidence.
Some of the more obvious contemporaneous records that could be used as supporting
evidence to any claim would include
■ the tender documentation

■ the contract documents (including the specification, schedule of works etc.)
■ work allocation and record sheets
■ daily or weekly record sheets for labour
■ daily or weekly record sheets for plant
■ daily or weekly record sheets for staff
■ record of materials received and issued
■ drawing register
■ correspondence
■ site, progress and project meetings minutes
■ site diaries
■ requests for information
■ confirmation of verbal instructions
■ early warning notices
■ site instructions
■ compensation event notifications
■ architect’s or project manager’s instructions
■ variation account
■ daywork sheets
■ construction programme
■ accepted programme
■ as-built programme
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■ dated photographs
■ dated videos
■ agreed measurements of works ‘covered up’
■ test and inspection plans
■ delay notifications
■ extension of time awards made
■ non-completion certificates
■ practical completion certificate(s)
■ final account details
■ subcontractor records as above (as appropriate).
In respect of delays, for example, the reasons and the causes of the delay should be set out
and it should be explained how the causes of the delay affected the programme and
completion date. This is usually referred to as proving the nexus of cause and effect of
delays – it is one of the most important (and often one of the most difficult) things to do.
Critical path and delay analysis methods can be used to help prove the cause and effect of
the particular delay event. It must be stressed, however, that these methods are only aids to
demonstration and good presentation, and that the basic ground rules must be followed
regardless of these presentation aids.
It is vitally important to remember three phrases which, although related, must each be
considered in its own right. In claims presentation, much confusion results from erroneous
assumptions. The three key phrases are
■ delay
■ extension of time
■ money.
It is very important to remember always that delay does not always bring an entitlement to
an extension of time, and that the granting of an extension of time does not always mean
that a further payment will be due.
In this section of the claim, it would be usual to detail the delays which have been suffered
by the claimant to prove prolongation and disruption to the works. This prolongation need
not necessarily carry an entitlement to an extension of time; for example, where the
programme referred to in the contract shows an anticipated date for completion prior to the
expiry of the contract period.
Before starting this section of the claim, it is advisable to summarise all the correspondence
pertaining to delays. It is also advisable to schedule dates for possession, and to schedule
additional work ordered during the currency of the contract.
As stated earlier, the claim document stands a much better chance of being read if the
person reviewing the claim is not obliged to put down the document to go and search
through other files for documentation. As far as possible the claim document should be
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complete in itself. To this end, when references are made to correspondence in the narrative
of this section, it is essential to attach relevant copies of the correspondence (not all the
correspondence) to the claim document in the form of an appendix. If reference is made to
a programme, it is essential to append a copy of the programme to the claim document,
ideally in such a way that it can be read simultaneously with the narrative. If delays can be
graphically demonstrated by reference to the programme, then this one feature may be far
clearer than a long, rambling narrative.
As noted above, a link must be made between the cause of the problem and its effect.
Presentation of this type of information in a schedule form is advisable as it certainly
makes it easier for others to follow.
10.2.8 The financial evaluation of the claim

In most cases the evaluation of a claim will fall into two parts: costs associated with
prolongation and costs associated with disruption. By far the easiest to consider is the cost
of prolongation. Set out below are some possible heads for the evaluation; obviously they
may not all be appropriate, but it forms a useful checklist
■ remuneration of site staff and incidental travelling expenses

■ plant and scaffolding retained on site
■ temporary power distribution and lighting
■ temporary office and storage accommodation
■ local authority rates on this accommodation
■ electricity accounts for the delay period
■ water rates or accounts for the delay period
■ telephone account for the delay period, including rental and calls
■ additional insurance premiums
■ loss due to carrying out work at a time of the year involving inclement weather
■ attendances on subcontractors over a longer period
■ increased costs (inflation) of labour, plant and material where not otherwise
reimbursable
■ profit and overheads on increased costs reimbursed during the extended period
■ watching, lighting and vandalism
■ safety and welfare measures
■ site clearance and maintenance of temporary roads
■ head office overhead
■ finance charges
■ loss of profit
■ cost of claims preparation.
It must be borne in mind by all involved in claims that absolute proof will be discharged by
the contractor or subcontractor demonstrating their case on the balance of probabilities –
that is, sufficiently to tilt the scales. This, however, must not be taken to mean that amounts
arrived at by theoretical or notional calculations can usually be acceptable, such as
estimates or assessments. Ascertainment involves the ordinary meaning of the word: to find
out as a matter of fact.
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10.2.9 The redress sought

Although this is often the last part of the claim document to be completed, it is usually the
most important part, and it is often the part that is overlooked.
The redress sought section advises the reviewer of the claim document what is being
sought. This may be an extension of time and/or financial recompense; it may request an
interest payment to be made, it may seek recovery of costs, and so on. The important point
is that whatever is being asked for must be clearly set out in this section of the claim
document.
This section becomes even more important when a formal dispute resolution process is
being used as often this section may set the limits of a tribunal’s jurisdiction. The wording
needs to be precise enough, but also wide enough, to allow the tribunal to award the
redress that is being sought. Therefore, in respect of adjudication, for example, if a loss and
expense claim for £500 000 is being sought, then it is usual to seek a payment of £500 000
‘or such other sum as the Adjudicator may decide’, in case the adjudicator decides that the
amount to be paid for loss and expense is not exactly the £500 000 sum being requested.
10.2.10 Appendices
The appendices contain the documents relied upon in the claim submission. It is normal for
the sequence of the appendices to follow the narrative of the claim submission and each
appendix should have a fly sheet explaining in outline terms what is contained within the
appendix (for example, The contract, The relevant correspondence, etc.). The documents in
the appendices must be legible and identifiable.
The appendices should be clearly identified by letter (e.g. Appendix A, Appendix B,

Appendix C etc.) or by number (e.g. Appendix 1, Appendix 2, Appendix 3 etc.). The
documents within an appendix must themselves be clearly identifiable, and this can either
be by way of numbering pages within a particular appendix (e.g. Appendix A Page 1,
Appendix A Page 2, Appendix B Page 1, Appendix B Page 2 etc.) or by way of a
consecutive numbering of the pages throughout all of the appendices.
Whichever approach is followed, it is crucial that the person reviewing the claim (whether
that be a tribunal or simply the party receiving the claim) must be able to quickly and
simply find the required document in the appendices.
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ISBN 978-0-7277-6197-2

Chapter 11
Case study – a typical extension of
time claim under a JCT contract
All numbers, dates and any data provided in this example claim document are hypothetical for
confidentiality.
Appendix numbers are provided as examples only, to show the reader how to structure a
claim.
1. Introduction
The Works involved the demolition and alterations to parts of an existing grade 2 listed
Mill Tower at Queen’s Road, East Swanage. The works also included for the construction
of two attached single-storey flat-roof extensions to provide commercial retail and cultural
space.
The Parties to the Contract were
The Employer: Owner PLC (referred to as ‘Owner’ or ‘Employer’) of Big Road,

Large Town, Herts HH1 9PP
The Contractor: ABC Ltd (referred to as ‘ABC’ or ‘Contractor’) of Little Street,
Smalltown, Herts HH4 6ST
The Works contemplated by the Contract increased substantially in scope and complexity
from that initially required, with 44 instructions being issued by the Contract Administrator
(referred to as the ‘CA’) and numerous further instructions received by the Contractor by
way of responses to requests for information, letter and email correspondence, drawing
issues, inspection sheets and meeting minutes (together referred to as the ‘Variations’).
Some of the individual instructions were subdivided into multiple sections and relate to
more than one matter or change. For example, multiple drawings might be issued on one
instruction by the CA, or multiple instructions may be issued at site meetings or instructed
in correspondence.
Much of the increased scope of works also substantially changed the conditions under
which the works were to be undertaken, impacting ABC’s ability to undertake works
efficiently, thus requiring ABC to employ additional resources and, as a consequence of
delay to regular progress, caused ABC to suffer loss and expense.
91
As a consequence of the delay to the regular progress of the works, the original contract
period of 30 weeks was extended to 57 weeks – an increase of 27 weeks.
This document provides the information necessary for the award of an extension of time to
the Completion Date.
The information provided herein is not exhaustive and ABC reserves the right to amend,
modify, remove or replace any statement made or information provided should it be
necessary to do so in any future proceedings.
2. The contract
Owner appointed ABC as the Contractor under a JCT Standard Building Contract Without
Quantities, 2011 Edition, which was executed on 26 April 2015 (‘the Contract’).
The scope of works was to be as detailed within the ‘Pricing Schedule’.
The Agreement was to be read as a whole – the Conditions stating, at clause 1.3, that the
‘Agreement and these Conditions are to be read as a whole but nothing contained in the
Specification/Work Schedules or the CDP Documents, nor anything in any Framework
Agreement, shall override or modify the Agreement or these Conditions’.
The Date of Possession of the site was 21 May 2015.

The Date for Completion of the Works was 14 December 2015.
The Contract Sum was £1 466 009.78 (one million, four hundred and sixty six thousand
and nine pounds and 78 pence).
Clause 2.27.1 of the Contract states:
If and whenever it becomes reasonably apparent that the progress of the Works or any
Section is being or is likely to be delayed the Contractor shall forthwith give notice to
the Architect/Contract Administrator of the material circumstances, including the cause
or causes of the delay, and shall identify in the notice any event which in his opinion is
a Relevant Event.
Clause 2.27.2 of the Contract states:
In respect of each event identified in the notice the Contractor shall, if practicable in
such notice or otherwise in writing as soon as possible thereafter, give particulars of its
expected effects, including an estimate of any expected delay in the completion of the
Works or any Section beyond the relevant Completion Date.
The Relevant Events are listed under clause 2.29 of the Contract and include:
2.29.1 ‘Variations and other matters or instructions which under these Conditions are
to be treated as, or as requiring, a Variation’
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Case study – a typical extension of time claim under a JCT contract
2.29.6 ‘any impediment, prevention or default, whether by act or omission, by the

Employer, the Architect/Contract Administrator, the Quantity Surveyor or any
of the Employer’s Persons, except to the extent caused or contributed to by any
default, whether by act or omission, of the Contractor or any of the
Contractor’s Persons’.
3. Delay overview
The Works commenced on site on the Date of Possession, 21 May 2015. Thereafter,
Variations were instructed and several Relevant Events occurred which prevented ABC
from regularly progressing and completing those Works by the Date for Completion stated
in the Contract.
ABC has submitted notifications of delay and requests for extension of time (which are
attached at Appendix A). These notifications of delay include:
■ A request for an extension of time dated 20 September 2015, and a further request
dated 12 October 2015 in respect of which the CA granted an extension of time by way
of its letter dated 14 October 2015 extending the Completion Date to 4 January 2016.
An extension of time of 3 weeks.
■ ABC’s notice and request for an extension of time dated 18 October 2015 gave rise to
the response from the CA by way of its letter dated 7 December 2015 confirming an
extension of time to 8 February 2016. An extension of time of a further 5 weeks,
making a total extension of time of 8 weeks granted in total.
■ ABC’s further notice and request for an extension of time was dated 23 January 2016.
The CA issued the Practical Completion Certificate on 21 June 2016, and ABC considers
that it is entitled to an extension of time to that date.
Therefore, ABC considers that it is entitled to an extension of time of 27 weeks (i.e. from
14 December 2015 to 21 June 2016).
The CA has granted an extension of time of 8 weeks as noted above (i.e. to 8 February 2016).
Therefore, ABC considers that it is entitled to a further extension of time of 19 weeks (i.e.
27 weeks claimed less 8 weeks granted).
The Contract dictates that not later than 12 weeks after the date of practical completion the CA
shall, by notice to the Contractor, fix a Completion Date for the Works later than that
previously fixed; fix a Completion Date earlier than that previously fixed; or confirm the
Completion Date previously fixed. The date 12 weeks after the date of practical completion
was 13 September 2016. The CA did not make a further extension of time award by that date,
and ABC did not receive a request from the CA for any further particulars by that date either.
This document therefore sets out below, the issues which are currently in dispute and gives
further information in respect of the outstanding extension of time period requested.
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4. Delay events
4.1 Undefined provisional sums
The nature and full extent of alteration work to the existing building was substantially
uncertain. Preliminaries Section A32/210 required that those sums categorised as undefined
should be excluded from the exercise of programming the Works.
Undefined provisional sums in the total amount of £192 000 were included in the Contract
Sum (as Table 1).
The following analysis therefore introduces the effect of additional work, which had not
previously been allowed for in the scope and construction period. Provisional sums made
financial allowance for the inherently uncertain nature of the work to the existing
building, but the programme effect of the additional work was not allowed for within the
Contract.
Instructions have been issued in relation to provisional sums (including undefined

provisional sums) and other Variations. Direction was given to ABC to cease construction
of certain elements, and events have become manifest which prevented ABC from
completing the Works on time (as Table 2). The delay being analysed in Delay Programme
No. 1 attached hereto at Appendix B.
4.2 Relevant Event delays notified on 18 October 2015

This section covers the delays notified by ABC to this date and the corresponding award of
an extended period confirmed by the CA on 7 February 2016.
The following sections cover Relevant Events which were relied upon by ABC and the
consequent delay to the Works which was suffered as a direct result, but which were not
dealt with in the award made by the CA.
Table 1 Provisional sums included in the Contract Sum
Description Contract ref. Value: £
Property insurance A54/105 5000

Additional demolition/alteration A54/205 5000
Additional concrete repairs A54/205 10 000
Additional works to existing drainage A54/206 2000
Electrical main A54/207 10 000
Water main A54/208 5000
Telecom installation A54/209 5000
Contingency A54/590 150 000
Total 192 000
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Table 2 Summary of events delaying completion of the Works
Item Description Relevant Critical path Notes

Event delay: weeks
1 CAI 22.1 issued in respect of 2.29.1 4 Concurrent with

additional demolition/alteration item 3 below
as shown on As-Built Delay
Programme 00001
2 CAI 27.1 issued in respect of 2.29.1 2
additional concrete repairs as shown
on As-Built Delay Programme 00001
3 CAI 22.2 issued in respect of 2.29.1 0 4 weeks, but dealt with
additional works to existing drainage in concurrent delay
as shown on As-Built Delay under item 1 above
Programme 00001
4 CAI 27.2 issued in respect of builder’s 2.29.1 1 Concurrent with
work for electrical main as shown on item 5 below
As-Built Delay Programme 00001
5 CAI 27.2 issued in respect of builder’s 2.29.1 0 1 week, but dealt with
work for water main as shown on in concurrent delay
As-Built Delay Programme 00001 under item 4 above
Total 7
The CA’s letter dated 14 October 2015 confirmed an adjustment of the Completion Date to
4 January 2016 based upon the delay occasioned by ‘The revised method of cleaning and
removal of paint to the external facades of all elevations’ being a Relevant Event under
clause 2.29.1.
The further letter from the CA on 7 December 2015 confirmed a further revised Date for
Completion of 8 February 2016 stating
The extension of time has been granted on the basis that it encompasses all matters up
to and including the 18th October 2015 (the date on which we received your proposal).
Any additional delays will be dealt with on their own merits and in isolation.
This section focuses upon the Relevant Events which were not dealt with by the CA.
Correspondence from ABC to the CA dated 12 October 2015 and 18 October 2015 gave
formal notification of Relevant Events which had delayed the Works and applied for the
fixing of a later Completion Date (see Appendix A).
Delay events which gave rise to prolongation are set out in Table 3. The delay being
analysed in Delay Programme No. 1 attached hereto at Appendix B.
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Table 3 Delay events giving rise to prolongation
Item Description Relevant Critical path

Event delay: weeks
1 The revised method of cleaning and removal of paint 2.29.1 0

to the external facades of all elevations
2 Late amendment of UKRD scope of works for revised 2.29.1 2
location of incoming supply
3 Revised layout of internal areas as a consequence of 2.29.1 1
the revised location of the UKPN supply
4 Additional brickwork repairs and further making good 2.29.1 1
of brickwork between final coats
5 The consequence of pushing construction programme 2.29.1 1
into the Christmas period as a result of early delays
and external facade works
Total 5
4.3 Relevant events and delays regarding kerbs, paving and landscaping
The issues addressed are lack of access to carry out work, the late release of construction
information, increased complexity, changes of specification and the consequent
resequencing of the construction activities to complete the works.
The drawings upon which ABC contracted regarding external works/landscaping were
■ Drawing 4345/122/CT1 revision B – site constraints layout

■ Drawing 4345/122/CT2 revision A – proposed levels and setting out
■ Drawing 4345/122/CT3 revision A – paving kerbing and edging construction details
■ Drawing 1963-101 revision C – GA hard surface and furniture
■ Drawing 1963-102 revision A – detail tree pit.
The pricing schedule was stated as being based upon drawings which differ from the
Contract Drawings list. Changes to this are recorded in the tender correspondence included
in Appendix 1 of the Contract.
Tender Addendum No. 1 – dated 26 January 2015

Item No. 14 ‘Clarification – all surplus excavated and demolition material to be
removed from site to a suitable tip’
Item No. 27 ‘Clarification – the gravel margin is to be as shown on Drawing
1963/101C’
Tender Addendum No. 2 – dated 6 February 2015

Item No. 4
Paragraph 5 ‘The site boundary is as shown on Drawing 1963/101C’
Paragraph 7 ‘The cut off point for trenches by others shall be the site boundary as
indicated on Drawing 1963/101C’
96
The schedule ‘Site Works – Kerbs, Paving and Landscaping ‘ (attached hereto at Appendix C)
tabulates the following detailed and explanatory narrative of events and compares programmed
durations with as-built activity durations. It shows the Relevant Events and when they
occurred and demonstrates the consequent periods of delay (attached at Appendix B). The
delay being analysed in Delay Programme No. 1 attached hereto at Appendix B.
The issues being as follows.
■ Effluent discharge by others – east side

Drawing 101C showed path and edging to be installed under a separate contract to the
east of the Mill Tower. This is now the bespoke circular metal commemorative feature
inset into paving and lit and to which the ABC external paving was to abut.
This east area was inaccessible until after the Christmas holiday as the contractor
working in the adjacent site had caused effluent to discharge into the Mill Tower site
boundary. The Contract afforded from the Employer unencumbered use of the site by
ABC at all times when the works programme required. The Employer had failed to
ensure this right and had thus prevented regular progress of the Works.
Clause 2.29.6 recognises this as a Relevant Event, being ‘any impediment, prevention
or default, whether by act or omission, by the Employer’.
Photographs appended show the extent of the effluent discharge and record the adjacent
contractor with pipework attempting to overpump its failed drainage system (attached at
Appendix D).
The presence of the effluent delayed the commencement of the site works to the east
side of the building by some 3 weeks which, as the attached schedule ‘Site Works –
Kerbs, Paving and Landscaping’ shows, is concurrent with the delay in receipt of
information required to construct the Works.
The effluent did, however, preclude ABC from striking scaffold from this facade, a
matter which is addressed in later sections of this document.
■ West side – material compound within ABC site boundary – occupied by others
Full possession of the site by ABC is required under the Contract.
While establishing the detailed setting out for the east side of the site, ABC had
required access to the full site boundary to the west side of the building. A large area
had been cordoned off as a material compound and for pedestrian access to the adjacent
doctor’s surgery by the contractor on the adjacent site, with the full knowledge of the
Employer. This area had not yet been handed over to ABC.
Drawing 4345/122/CT1B notes that the ‘Compound area storage/Welfare facilities are
to be shared with the contractor to the adjacent site’, and preliminaries clause Al2/200
also states that ‘The contractor shall note that the overall compound area may be shared
with another contractor and shall keep within the area designated for this contract’.
However, there is no drawing or statement within the Contract which identifies that ABC
will not be afforded unencumbered access over the site for the duration of the Works.
Others had the benefit of the compound area for a significant time but this does not
detract from the obligation of the Employer to give access to progress the Works. The
ABC construction programme revision A showing progress on 5 February 2016
indicated that site works were to commence on 14 December 2015, but the area clearly
was not available on that date. It was finally handed over to ABC on 12 February 2016.
97
Clause 2.29.6 recognises this as a Relevant Event, being ‘any impediment, prevention
or default, whether by act or omission, by the Employer’.
The schedule ‘Site Works – Kerbs, Paving and Landscaping’ (attached hereto at
Appendix C) records the delay caused to the west side of the site as being 4 weeks. As
this runs in part concurrently with the 3-week delay to the east side, and as this portion
is the largest area to be constructed, it had the effect of an additional 1-week delay to
the overall commencement of this element of the works.
■ Levels and setting-out (east side)
The Mill Tower site is bounded on all sides by hard landscaping. The external paving
on this Contract is required to marry into these existing levels.
A new drawing, ‘Drawing E01 revision P8 – external levels and pavement proposals’,
was issued on 14 December 2016 under CA instruction No. 31, incorporating existing
levels from surveys by others for ABC to work to.
ABC carried out its own detailed site surveys upon receipt of the level survey provided
and highlighted errors and anomalies which required resolution.
Setting out information was requested for the edgings to the east side of the site. These
were originally shown as straight edgings with radiuses at the change of direction. Drawing
E01 revision P8, however, indicated compound curves and contained no setting-out data.
In response, setting-out drawings 1963/104 and 105 were issued to ABC on 5 February
2016.
However, emails of that date record that the said drawings did not contain the required
information (email dated 5 February 2016 is attached at Appendix B).
ABC was thereby instructed to set out to Drawing E01 revision P10.
At this time, revision P9 had been issued to ABC under CA instruction No. 33 on
10 January 2016, but not revision P10.
The kerbs to the east side of the tower, which required coordinates to set out to, were
absent from revision P9 and found later to be absent from revision P10 as well.
Drawing E01 revision P11 was issued on 8 February 2016 (under CA instruction
No. 39) which gave the setting out co-ordinates.
Drawing E01 referred ABC to note 7 on the landscape consultant’s drawings, which
stated ‘refer DJA drawing for exact paving and kerb layouts’. These drawings had been
commissioned by the Employer to satisfy the planning conditions.
On 8 February 2016, ABC was therefore able to commence setting-out to the east side and
had the information to enable the procurement of necessary materials for the site as a whole.
Revised levels for the area of paving to the west of the Mill Tower were issued to suit the
existing levels built previously by the contractor on the adjacent site as Drawing CT2
revision D issued on 27 February 2016.
The setting-out dimensions on Drawing E01 revision P11 were found to be incorrect. ABC
requested an inspection and was instructed on 11 March 2016 to work to revised drawings
when issued and to adjust the edgings as required.
Drawing E01 revision P16 was issued on 13 March 2016 under CA instruction No. 44
to correct the dimension errors.
98
The issue of the instructions referred above are Relevant Events under clause 2.29.1.
The schedule ‘Site Works – Kerbs, Paving and Landscaping’ (attached hereto at
Appendix C) records the initial delay caused to the commencement of the east side of the
site, awaiting sufficient information in order to construct, as being 3 weeks. The further
delay occasioned on 13 March 2016 delayed works by a further 1 week. This runs
concurrently with the 1-week delay for paving specification changes, as described below.
■ Additional drainage
On 10 January 2016, drawings 19035/D01/C4 and D02/C3 were issued. These
introduced additional drainage runs, connections and adoptions, which required works
externally and within the building. Diary entries record that these changes were
complete and were tested and witnessed on 15 February 2016.
These additional works, which by their nature were required to be carried out before
surfacing could commence, are shown on the schedule ‘Site Works – Kerbs, Paving and
Landscaping’ (attached hereto at Appendix C) to have caused a 4-week delay to a possible
commencement. Relevant Event clause 2.29.1 applies. These works did indeed impact
upon completion of the internal works (as described in following sections); however, any
delay to the site works is seen to be concurrent with other Relevant Events noted above.
■ Change of paving specification
During the inspection of 11 March 2016, ABC was instructed to halt all further deliveries
of paving slabs and return those which had already been delivered to the supplier.
The paving reference on the DJA drawings contained ‘an incorrect reference number’.
The Employer arranged for two loads of new slabs to be delivered free issue to ABC on
site on 13 March 2016. Works therefore ceased and labour was employed to re-pallet
and assemble redundant materials for collection. Further deliveries followed.
The manufacturer’s instructions regarding the installation of the conservation paving
supplied by the Employer were forwarded to ABC by email on 14 March 2016.
The fifth load of conservation paving slabs was delivered with the amount for the final
load awaiting confirmation and call-off (as ABC’s email dated 19 March 2016 confirmed).
The final call-off for conservation slabs was notified by email on 18 April 2016.
Although the Employer did facilitate replacement slabs in a timely manner, the progress
of the Works was delayed.
Clause 2.29.1 confirms the Relevant Event in this instance: ‘Variations and any other
matters or instructions which under these Conditions are to be treated as, or as requiring,
a variation’.
A 1-week delay is recorded on the schedule ‘Site Works – Kerbs, Paving and
Landscaping’ (attached hereto at Appendix C) in this regard.
■ Changes and works introduced adjacent to and outside the site boundary.
It is noted above that the ABC survey carried out upon receipt of Drawing E01 revision P8
highlighted errors and anomalies. In addition to setting-out issues, problems at the boundary
were addressed. For the purposes of explanation, the additional works entailed are identified
on the attendant sketch ‘Landscape anomalies SKI’ (attached hereto at Appendix B).
With reference to the landscape anomalies sketch:
Note A Area of existing kerbs adjacent the doctor’s surgery to the south-west side of
the site. From the photographs also appended it is clear that the existing
99
edgings were uneven and not level. ABC was instructed to remove the
existing precast concrete kerbs and install new conservation kerbs.
Note B The area of paving designed adjacent the entrance doors to the retail and
culture pods would have given rise to ponding. ABC laid the paving in these
areas to suit the drainage to the site and door entry levels.
Note C The existing path running the full length of the north of the site contained an
Acco drain which was found to be incomplete. ABC was instructed to install
new Acco drains to the missing section set to suit the levels and falls of the
sections which existed. The gradients of the new paving to the Mill Tower site
were laid to ensure drainage to the new and existing Acco installations.
Note D The area to the east of the site could not be commenced until the setting-out
information was provided. This was issued on Drawing E01 revision P11 on
8 February 2016 with subsequent revisions culminating in P16 on 13 March 2016.
Note E Soft landscape areas introduced, being the areas in which a trellis was to be
installed by others. ABC was instructed to dig fill material away from the
footings in order to expose the foundations so that the Employer’s direct
contractor could view the footings and design the trelliswork accordingly.
Photograph of trellis as installed by others to one of the two pods is attached
at Appendix B.
Note F Existing kerbs to a portion of the south boundary were re-laid as they were
found to be displaced by others.
The combined effects of resolving levels to areas A, B and C and the constraints of the
existing car park levels to the west of the site naturally changed the resultant gradients
of the central area and paving was laid to suit.
It should be noted that the location and extent of landscaping, gravel borders and feature
paving changed markedly from the drawings upon which the Contract was based and a
substantial area of resin-bound gravel was introduced to the east of the site in lieu of paving.
The changes and additional works contributed to the overall prolongation of site works.
The Relevant Events for the additional work noted above are under clause 2.29.1.
The additional works noted above were largely carried out during the same period and
contributed to the delay of 1 week recorded against item 8 on the schedule ‘Site Works –
Kerbs, Paving and Landscaping’ (attached hereto at Appendix C), which includes the
requirement for whole paving modules, which is described below.
■ Additional design constraints – whole paving module layout
The DJA drawings introduced for the construction of the external paved areas required
setting-out to only whole slab modules. This included landscaping beds, paved features,
paved inset inspection covers, edgings and tree pits. The drawings also indicated
symmetry to be maintained to the fabric of the building.
The engineer’s drawings showed levels but these did not take account of the exacting nature
of the paving module requirements. The landscape designer’s drawings showed perfect
theoretical symmetry, but they took insufficient account of the engineering falls, cross-falls
and boundary constraints which existed. ABC was instructed to resolve these issues and
additional time and resource and considerable setting-out input were required to do so.
The practical process of paving, therefore, involved setting out kerbs and edges for
levels and as the best guide for location, installing paving up to the margins, adjusting
100
levels highlighted on the anomalies sketch referred to above, adjusting edgings to the
building and tree pits to suit whole paving modules, and then the removal and
repositioning of a significant proportion of the boundary edging to suit the paving
modules as the final task. These exacting demands were not shown on documentation at
tender stage (and the financial implications of this had not therefore been priced).
The ABC programme update of 5 December 2015 was based upon the contract
documentation, having no knowledge of the revised requirements when it was issued
(the dates of drawing issues confirm this).
The issue of Completion Programme revision A allowed 4 weeks for ‘external
groundworks’ and it can be seen from the as-built information recorded on the ‘Site
Works – Kerbs, Paving and Landscaping’ schedule that paving did indeed take the
allotted 4-week period. However, level issues which had been left to ABC to resolve,
additional work to the perimeters and the resultant need to demolish, reposition and
relay boundary edgings to suit whole paving modules added a further 1 week to the
period for construction of this element.
Photographs of the final completed site works are attached at Appendix B, in which it is
clear to see the departure from the original scheme and the exacting nature of the
completed work.
The Relevant Event for the increased and exacting specification of the work noted
above is under clause 2.29.1: ‘Variations and any other matters or instructions which
under these Conditions are to be treated as, or as requiring, a variation’.
Item 8 on the schedule ‘Site Works – Kerbs, Paving and Landscaping’ (attached
hereto at Appendix C), which includes the additional works noted previously, records
a 3-week delay.
A summary of the delays to ‘External Works – Kerbs, Paving and Landscaping’ is set out
at Table 4.
4.4 Relevant Events and delays regarding consequential delays to the

external envelope, and the delay to site works preventing remedial
works from commencing
The presence of effluent and the remediation works carried out by other contractors
employed directly by the Employer delayed the striking of scaffolding to the external
facades on the east side.
Completion Programme revision A reflected this, showing scaffold coming down in the
new year of 2016. This was started on the west elevations.
Although the delay to site works due to effluent ran concurrently with other Relevant
Events, the external envelope was directly impacted because external render and decoration
could not be completed without scaffolding being removed. This was part of the non-
critical elemental delay analysis.
It is clear that had full construction information been issued and full possession of the site
been afforded to ABC, then paving works and the fabric of the external facade would have
been complete by 12 February 2016.
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Table 4 Summary of delays to the external works
Item Description Relevant Critical path Notes

Event delay: weeks
1 Effluent on site 2.29.6 3 Concurrent with items

2 and 3 below
2 Awaiting possession of west side of site 2.29.6 1 4 weeks, but 3 weeks
concurrent with item
1 above
3 Awaiting information to set out east 2.29.1 1 week, but concurrent
side of site with item 7 below
4 Additional drainage instructed 2.29.1 4 weeks, but
concurrent with items
1 and 2 above
5 Paving specification changed 2.29.1 1
6 Revised levels issued for the west side 2.29.1 1
of the site
7 Revised setting-out drawings issued 2.29.1 1
Total 7
Had effluent not been present, this date may have been brought forward by a further 4
or 5 working weeks.
ABC was directed to open up work for inspection and thereafter remove work not in
accordance with the Contract and reinstate in full compliance.
However, in this instance ABC was prevented from doing so until external works were
complete, and was further prevented from completing the task as a direct result of making
ready for and remobilising after a public opening ceremony being held at the Mill Tower.
That the defects were the responsibility of ABC to rectify is not a matter of dispute.
However, the period during which remedial works could take place was dictated by matters
and instructions out of ABC’s control and this caused ABC to spend additional time and
cost in rectification works which otherwise would not have been necessary.
4.5 Relevant Event summary

The summary of the above Relevant Events accounting for the shortfall of 19 weeks in
respect of the extension of time is set out in Table 5.
Therefore, ABC is seeking a further 19 weeks’ extension of time to the Contract

Completion Date from the extended date granted by the CA to 8 February 2016 to the
practical completion date of 21 June 2016.
102
Table 5 Summary of relevant events
Item Description Relevant Event Critical path Notes

delay: weeks
1 Undefined provisional sums 2.29.1 7

2 Relevant Event delays as notified 2.29.1 5
on 18 October 2015
3 Delays relating to kerbs, paving and 2.29.1 and 2.29.6 7
landscaping
4 Consequential delays 2.29.1 and 2.29.6 4 weeks, but
concurrent with
item 4.3 above
Total 19
103
ISBN 978-0-7277-6197-2

Chapter 12
Case study – a compensation event
claim on an infrastructure project
under an NEC3 contract
confidentiality.
claim.
1. Introduction
The Water Board (‘WB’) awarded the Lucas project to BS Construction Limited (‘BSC’)
for a Contract Sum amount of £3 991 160.
The Lucas project is a contract to provide design and construction services to five of WB’s
existing assets, all located in the Grimsworth area. The asset locations are
■ Blandworth (‘BW’)
■ Mount End (‘ME’)
■ Soakwell (‘SW’)
■ St Kings (‘SK’)
■ West Hill (‘WH’).
The water from all five pumping stations is currently treated for cryptosporidium using
membrane plants at BW and ME. Following the approval of ultraviolet (UV) irradiation as
an effective treatment for cryptosporidium, BW and WH source waters have been identified
as suitable for treatment using UV instead of membranes.
The Contract detailed a sequence in which the works were to be undertaken and subsequently
completed, in some cases facilitating the commencement of the next site, as detailed below.
■ Install UV treatment at WH to treat the abstracted water and replace the borehole
pumps so that treated water can be pumped directly into the district.
■ Divert the water abstracted at SW to ME to use the spare capacity in the ME
membranes released by removing the WH water.
■ Disconnect and cap the SK raw water main.
■ Convert BW to UV treatment.
■ At BW, the existing pedestrian footbridge is to be removed and the surfaces made good
once the UV treatment plant has been commissioned.
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This sequence meant that BW could only be commissioned after SW and WH had been
completed. SK and ME could be worked on at any time, dependent only upon the WB’s
network activities and permissions.
BSC has carried out the Works, but a dispute exists as to how much BSC is entitled to be
paid under the Contract.
2. The contract
The NEC3 Engineering and Construction Contract (ECC) with main Option A applies.
Secondary Option X5 (Sectional Completion) has been chosen, as stated in the Contract
Data Part 1 – 1 General.
Further, in the Contract Data Part 1, the dates (and data) (as set out in Table 1) are
provided.
The Accepted Programme identified in the Contract Data is MW70809 Lucas Contract
Programme revision 2.
3. Overview of the dispute

The dispute between the Parties in respect of the account is £1 757 282, as set out Table 2.
In addition, a deduction for delay damages (liquidated damages) of £23 020 was made by
WB from Payment Certificate No. 19 as set out in Table 3.
Table 1 Summary of Contract Data Part 1
Section (part) Starting date Access date Completion date Delay damages:
£ per day
Blandworth 22 March 2015 3 June 2015 10 April 2016 300

Mount End 22 March 2015 3 June 2015 27 March 2016 Zero
Soakwell 22 March 2015 3 June 2015 25 February 2016 Zero
St Kings 22 March 2015 3 June 2015 14 January 2016 Zero
West Hill 22 March 2015 3 June 2015 7 March 2016 170
Table 2 Summary of the dispute
BSC’s proposed WB’s valuation Difference: £

‘final account’: £ no. 19: £
Original Contract works 3 991 160 3 918 286 72 874

Compensation events 2 585 378 900 970 1 684 408
Gross total 6 576 538 4 819 256 1 757 282
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Case study – a compensation event claim on an infrastructure project under an NEC3 contract
Table 3 Summary of claim for delay damages
Section (part) Extended planned Certified Completion Overrun Delay Delay

Completion Date period: damages: damages
days £ per day (total): £
Blandworth 20 November 2016 18 December 2016 28 300 8400

West Hill 5 November 2016 30 January 2017 86 170 14 620
Total 23 020
4. Compensation events
As noted above, the dispute between the Parties (excluding the deduction for delay
damages) is £1 757 282, as set out in Table 2.
Also, as noted on Table 2, the largest part of the dispute (i.e. £1 686 408) relates to the
valuation of compensation events, and this part of the dispute can be further broken down,
as in Table 4.
In respect of the extended period to the Accepted Programme, BSC has claimed for a total
period of 88.8 weeks, as Table 5, and has valued the Defined Cost (for the prolongation
costs) in respect of the 76-week extended period claimed in the sum of £1 362 165, as
Table 5.
BSC’s approach in respect of the valuation of compensation events has been to follow the
wording of the NEC3 Option A, and BSC has therefore dealt with each compensation event
in isolation from any other compensation events.
In its previous correspondence, BSC sets out its position quite clearly, and said;
The approach adopted in preparing this document is based on the intention of the NEC
Contract, i.e. ‘The assessment of a compensation event is always of its effect on the
Prices, the Completion Date, and any Key Date affected by the event’ (NEC Guidance
Note, June 2005, p. 68), whereby all effects of a CE [compensation event] should be
understood and agreed at the time of the event, where practicable. Further the Society of
Construction Law (SCL) Delay and Disruption Protocol (October 2002, p. 7, item 12
Table 4 Valuations of compensation events
BSC’s proposed WB’s Valuation Difference: £

‘final account’: £ No. 19: £
Compensation events (valuation of works) 1 223 213 505 043 718 170
Compensation events (prolongation costs) 1 362 165 395 927 966 238
Gross total 2 585 378 900 970 1 684 408
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Table 5 Prolongation period and costs claimed in BSC’s ‘final account’
Compensation event Prolongation period: weeks Prolongation amount: £
CE12B 8.8 127 226

CE25 8.8 149 758
CE39 15.8 227 840
CE40 2.4 29 394
CE54 0.4 7755
CE60 6.4 144 118
CE71 11.6 167 179
CE93 7.4 106 984
CE144 5.2 76 443
CE145 9.8 145 847
CE149 4.2 62 506
CE152 3.8 54 610
CE157 4.2 62 505
Total 88.8 weeks (being the total of the above) less 1 362 165
adjustment for BSC’s assessment of concurrent
delays of 46.7 weeks = 42.1 weeks.
‘After the Event Delay Analysis’) states ‘The protocol recommends that in deciding
entitlement to EoT [extension of time], the adjudicator, judge or arbitrator should so far
as is practicable put him/herself in the position of the CA [Contract Administrator] at the
time the Employer Risk Event occurred’. The SCL protocol is recognised throughout the
construction industry as providing best practice guidance in such matters.
Other considerations such as BSC’s mitigation of CEs are not included herein as this
exercise is designed to show the contractual impact of any change to demonstrate
entitlement in the first instance. This will substantiate the effects of the delay and
entitlement against BSC’s Contract programme of works (see previous paragraph) at the
time of the delay using the last Accepted Programme.
The impact of each CE at the time of occurrence, i.e. in chronological order, has been
considered and is supported by a relevant programme showing the effect of said impacts
on BSC’s planned work programme at that point in time and taking it through to its
logical conclusion.
Each CE referenced herein has previously been submitted to WB (in the main, any
‘new’ value submission has been suitably annotated) whereby there lies a degree of
value difference between the parties. The narrative accompanying each CE will seek to
establish why BSC believes it is entitled to the value being requested based on the
Contract documents and principles associated therewith. Where any values have
changed from previous submissions an updated CE quotation and a supporting
programme to evidence any prolongation costs claimed therein have been provided.
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In contrast to the above, WB’s approach, while not being expressly spelt out, appears to be
to consider and value the compensation events collectively and retrospectively.
Using this incorrect approach, WB has allowed an extension of the time period of 32 weeks
(224 days), as set out in Table 6.
Certificates for Completion of sections have been issued by WB as set out in Table 7.
As a consequence of the above, delay damages (liquidated damages) of £23 020 have been
deducted by WB from Payment Certificate No. 19, as set out in Table 8.
Table 6 WB’s allowances for extension of time
Compensation event Period of delay Period: days
CE12B From Completion Date in Contract, 57

10 April 2016 to 6 June 2016
CE87 From 7 June 2016 to 16 September 2016 102
CE93 From 17 September 2016 to 5 November 2016 50
CE94 From 6 November 2016 to 20 November 2016 15
Total 224
Table 7 Sectional Completion certified by WB
Section (part) Programmed Completion Date (as stated Certified date of Completion
on the certificate of sectional Completion)
Blandworth 20 November 2016 18 December 2016

Mount End 28 August 2016 8 August 2016
Soakwell 20 November 2016 20 November 2016
St Kings 14 January 2016 14 January 2016
West Hill 5 November 2016 30 January 2017
Table 8 Delay damages deducted by WB
Section (part) Planned Completion Certified date of Overrun Delay Delay

Completion period: damages: damages
days £ per day (total): £
Blandworth 20 November 2016 18 December 2016 28 300 8400

West Hill 05 November 2016 30 January 2017 86 170 14 620
Total 23 020
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The above two approaches need to be set against the relevant dates noted in Table 9.
Therefore, BSC is claiming for prolongation costs for the period up to the last certified
Completion Date. BSC says that this is the answer that is reached if the prospective
approach is used when considering compensation events individually rather than the
retrospective and collective approach adopted by WB.
In respect of compensation events, the NEC3 ECC Option A says, inter alia
63.3 A delay to the Completion Date is assessed as the length of time that, due to
the compensation event, planned Completion is later than planned Completion
as shown on the Accepted Programme. A delay to a Key Date is assessed as
the length of time that, due to the compensation event, the planned date when the
Condition stated for a Key Date will be met is later than the date shown on the
Accepted Programme.
63.6 Assessment of the effect of a compensation event includes risk allowances for
cost and time for matters which have a significant chance of occurring and are at
the Contractor’s risk under this contract.
Therefore, based on the above clauses of the NEC3 ECC Option A (and other similar
clauses), BSC’s interpretation must be correct.
However, and notwithstanding this position, BSC is aware that an adjustment for the
concurrent effect of compensation events may be necessary, and it expressly states this
position, within its Compensation Event Clarification documents. Thus for CE39, for
example, the Compensation Event Clarification document says
Item 9 This CE quotation impacts time and prolongs the Contractor’s work. However,
the Contractor acknowledges that other CE quotations, currently under review
by the Project Manager, may impact upon and/or run concurrently with any
additional time and costs entitlement awarded under this CE with regards to the
overall effect on prolongation agreed by the Project Manager.
Item 14 The effects of this compensation event are as illustrated within the Contractor’s
pre/post-impact programmed based on the last accepted programme being
Table 9 Period for claim of prolongation costs
Period of ‘delay’: days Date
Contract Completion Date 10 April 2016

Extension of time granted by WB 224 20 November 2016
Last certified Completion Date 295 30 January 2017
Total prolongation period claimed by BSC 295
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Revision 6. This quotation, and supporting programme, does not include for
any further CEs that have arisen as a direct consequence of finding unidentified
services and pipework to the external UV outlet pipework. This CE quotation
only extends to the condition of change and scope as defined within the Project
Manager’s original instruction.
5. Compensation event no. 39 (CE39)

In respect of CE39, BSC claims a prolongation period to the Accepted Programme of
15.8 weeks, and a prolongation Defined Cost amount of £227 840.
However, WB allows no extended time to the Accepted Programme for CE39 and allows
no prolongation costs in respect of CE39 at all.
The reason for this complete difference between the Parties is primarily because of the
difference of approach adopted. BSC has adopted a prospective (i.e. looking forward)
approach to the assessment and valuation of compensation events on an individual basis
(which is the approach fundamentally set out in NEC3 ECC Option A), whereas WB has
adopted a retrospective (i.e. looking back) and collective approach to the assessment and
valuation of compensation events. This relates not only to the extended time claimed by
BSC, but also, to a large extent, to the valuation of resources etc.
CE39 was for the following instruction.
Provide further quotation for works as detailed on PMGCE-021 dated 07/12/2013,

which is a clause 60.1(8) change of decision to PMGCE-016 Lucas Contract Tank
Number 2 Lucas Break Tank Option 7 Including Project Manager’s Assumptions.
To redirect the flows at Blandworth from the UV plant through to a pipework

connection between contact tank 1 and contact tank 2 once the UV plant has been
commissioned and proved through the Blandworth membrane plant. Complete the
design of the new break tank solution, but do not proceed to procure or construct the
solution until instructed to do so.
BSC valued the compensation in line with the method set out in the NEC3 Contract. BSC’s
assessment is set out in Table 10.
The same approach has been used by BSC for all other compensation events, and BSC’s
compensation event assessments for all compensation events are set out at Appendix B to
this document.
6. Conclusion
Based upon the above, BSC considers that it is entitled to £1 362 165 for the prolongation
cost aspect of the compensation events, and is entitled to an adjustment to the planned
Completion Date of 42.1 weeks (i.e. 295 days), as set out in Table 11.
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Table 10 WB’s assessment of compensation event no. 39
CE39 Valuation: £
Early warning reference EWN 006

Project Manager’s instruction PMI 020
Price summary
Design staff 10 561.25
Percentage for design overheads 18% 1901.02
Site staff (for prolongation and for cost of works) 243 212.84
Percentage for people overheads 15% 36 481.93
Equipment 9937.00
Materials 32 771.14
Sundries 0.00
Subcontract 45 931.58
Sub-total 380 796.75
Insurance 1.20% 4569.56
Fee 4.50% 17 135.85
Total 402 502.17
Submitted under clause: 60.1(1)

Effect on total of the Prices: £402 502.17
Effect on Completion Date: 15.8 weeks to planned Completion as compared with Accepted
Programme ref. MW70809 Lucas Contract Programme Revision 2
Table 11 Prolongation period and costs claimed in BSC’s ‘final account’
Compensation event Prolongation period: weeks Prolongation amount: £
CE12B 8.8 127 226

CE25 8.8 149 758
CE39 15.8 227 840
CE40 2.4 29 394
CE54 0.4 7755
CE60 6.4 144 118
CE71 11.6 167 179
CE93 7.4 106 984
CE144 5.2 76 443
CE145 9.8 145 847
CE149 4.2 62 506
CE152 3.8 54 610
CE157 4.2 62 505
Total 88.8 weeks (being the total of the above) less 1 362 165
adjustment for BSC’s assessment of concurrent
delays of 46.7 weeks = 42.1 weeks.
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ISBN 978-0-7277-6197-2

Chapter 13
Case study – delay and disruption
claim on an international contract
based on the FIDIC form
confidentiality.
claim.
1. Executive summary
This is a delay and disruption claim relating to the Works at Project B called ‘the Project’.
Contractor B called ‘the Contractor’ entered into a contract with the Client A called ‘the
Client’ or ‘the Employer’ via a contract and letter of intent dated 11 October 2012. The
Contractor contends that he was subjected, as detailed in the claim particulars herein, for
damages and losses amounting to 7 million US dollars.
1.1 Claim summary

This claim is composed of two parts, namely a delay claim and a disruption claim, as
summarised below.
1.1.1 Delay claim

This part of the Claim will prove that the Contractor is entitled to a time extension and
damages due to excusable events up to 20 June 2015. It is without a doubt that the
Contractor was delayed because of fundamental changes to the design imposed by the
Client, his consultant and the operator and the increased scope of work related to, but not
limited to, the facades works and the additional areas to be built.
The steps taken in the claim to substantiate the delays are as follows.
1. Identify all events leading to the delays.

2. Produce all relevant correspondence and related documents that prove that the events
are excusable. This included all letters, minutes of meetings and emails.
3. Identify accurately the difference between the concept design prior to signing the
project and the actual design after the design changes were made.
4. Create a time impact study – as planned.
5. Calculate all damages related to the delays.
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The retrospective critical path method is used for this delay analysis. This analysis is used
to show how the effect of a delay can be predicted and calculated. Its main advantage is the
opportunity it provides to link cause and effect at a level of considerable detail. There are
several variations on the retrospective critical path method analysis, including
■ as-planned impact, which adds client-caused delays into the as-planned programme
■ as-built but for issues, which subtracts employer-caused delays from the as-built
programme.
The as-planned impact study will be utilised as the project is not completed. The cut-off
date used for the impact analysis is 25 February 2016.
1.1.2 Disruption claim

The events that the Contractor will prove have occurred and which caused delays and
losses are summarised as follows.
B001: The hotel building
■ Cancel the hotel’s second facade skin and maintain only the glass facade.
■ Change all ground-floor functions, including the health club and the swimming pools.
■ Change the room mix and number of keys and change the stairs and elevators in all
floors.
■ Cancel the two panoramic elevators and the escalators in the building.
B002: The convention centre
■ Cancel the second facade skin and maintain only the glass facade.
■ Increase the basement area and add a tunnel connecting the services to the hotel.
■ Enlarge the ground-floor treatment plant and improve other ground floor services.
■ Cancel the escalators in the building, increase the number of elevators and add a formal
staircase.
■ Increase the first-floor area and increase the service area on the ground floor.
B003: The office building
■ Cancel the second facade skin and maintain the glass facade.
■ Change the main stair leading to the basement, increase the exhibition areas and add an
external side exit stair.
■ Change all internal partitioning in the office floors.
■ Add a roof canopy, and at the main entrance.
2. Contractual and factual analysis

2.1 Contractual analysis
The Contractor, herein, acknowledges the presence of the agreement and Letter of Intent.
However, through this claim the Contractor contends that the contract agreement signed
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Case study – delay and disruption claim on an international contract based on the FIDIC form
between the parties was erroneously presented by the consultant. Appendix 2 comprises
part of the Conditions of Contract for Plant and Design-Build (1st edition, 1999), namely
the Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant
and for Building and Engineering Works Designed by the Contractor. However, the Plant
and Design-Build Contract is not suitable for this type of project, which comprises
mainly high-end hotel towers with an operator intervening in the design and quality
aspects.
The FIDIC Yellow Book – Plant and Design-Build Contract (1st edition, 1999), FIDIC
Conditions of Contract for Plant and Design-Build – is recommended for the provision of
electrical and/or mechanical plant, and for the design and execution of building or
engineering works. To use them for this type of project, they should have been edited to fit
the purpose, which is not the case.
Alternatively, the Particular Conditions should have been elaborated upon, which again is
not the case. The Particular Conditions have only undergone minor modifications.
In essence, FIDIC has long been renowned for its standard forms of contract for use
between employers and contractors on international construction projects, in particular
■ Conditions of Contract for Works of Civil Engineering Construction: The Red Book
(1987).
■ Conditions of Contract for Electrical and Mechanical Works including Erection on Site:
The Yellow Book (1987).
■ Conditions of Contract for Design-Build and Turnkey: The Orange Book (1995).
During its past work in updating the Red and Yellow Books, FIDIC noted that certain
projects fell outside the scope of the existing books. Accordingly FIDIC not only updated
the standard forms, but also expanded the range, and in 1999 it published a suite of four
new Standard Forms of Contract which are suitable for the great majority of construction
and plant installation projects around the world.
Therefore, under the usual arrangement for the present type of contract, the Contractor
designs and provides, in accordance with the Employer’s Requirements, plant and/or other
works, which may include any combination of civil, mechanical, electrical and/or
construction works. The Conditions of Contract for Plant and Design-Build for Electrical
and Mechanical Plant and/or for Building and Engineering Works Designed by the
Contractor should not have been used: The Plant and Design-Build Contract should have
been amended heavily to suit these types of contract and to make it a workable contract.
Also, the Particular Conditions of Contract did not fundamentally alter the Contract and
therefore, in principle, the Plant and Design-Build Contract is the Contract that the parties
have to contend with, despite its fundamental flaws.
2.2 The Employer’s Requirements – design process

It is clearly stated in the scope of work and the specifications for this project that the
Contractor shall document structured processes for the design of the project in a Design
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Plan, in accordance with formal design stages. The Contractor shall submit to the Engineer
for review relevant design information as identified within each stage.
The Design Plan shall be prepared for all of the Contractor’s design activities and shall
define
■ the organisation of the Contractor’s design team, with particular reference to the design
interferences
■ the specific allocations of responsibility and authority given to identified design staff,
with particular reference to the review and verification of design specification, drawings
and calculations
■ the specific methods of design necessary to identify relevant method statements.
Based on the approved concept design, the Contractor shall prepare and submit the design
documents as per following stages
1. Schematic design (35%)

2. Design development (65%)
3. Final design (90%).
Issued for construction (IFC) drawings shall be issued to the Engineer for information,
incorporating the Engineer’s comments on the final design. During all design stages the
Contractor shall make available any design information to the Engineer for his review if
requested by the Engineer.
Alternatively, the Contractor may submit design documents in packages to suit procurement
and construction priorities and as agreed with the Engineer. The list and file formats of all
documentation to be submitted by the Contractor as part of each design stage shall be
provided to the Engineer for review within 14 days prior to the commencement of each
design stage.
Each design stage submission shall be complete and comprehensive and follow best
practice guidelines/protocols, such as those followed by RIBA or AIA. Sufficient
information and calculations are to be submitted so as to fully and comprehensively
describe the design at each respective stage. Amendments/revisions from previous stages
are to be clearly clouded and drawings given appropriate revision numbers.
3. Factual analysis
3.1 B001: the hotel building
Issue 1: Cancel the hotel second facade skin and maintain only the glass facade
All building facades were redesigned in line with the client’s requirements, including
removing the second skin for the hotel facade and providing a glass building. The designer
provided numerous design proposals for all buildings and the design included rechecking
facade energy performance and LEED credits. Also, the Client requested that the sizes of
glazing panels for all buildings be increased, which requires revising glass build-up for
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high wind speed while maintaining the operator’s acoustic requirements. The references for
the facade design changes are described below. The documents reviewed consist of the
following.
■ Minutes of meetings (MOM) – Employer’s review meeting on 21 December 2012.

The Client and the operator commented that the current proposals for the screen were
unacceptable and that the architectural concept (including the introduction of
alternatives) required immediate detailed consideration.
■ MOM – Employer’s review site meeting on 13 January 2013.
Screen presentation at the site meeting: the Contractor presented a ‘discussion
document’ for the purpose of agreeing the way forward. The document showed the
facade without the screen and with a less-obstructive option.
■ Engineer’s letter dated 19 January 2013 requesting the removal of the second skin to
the hotel building.
■ The facades presentation dated 20 January 2013 to the Client responding to the Client’s
request, while indicating the concept design as a valid option for final Client approval.
■ The Engineer’s NA (non-acceptance) for the hotel facade schematic design on
transmittal dated 27 January 2013; the ‘not accepted’ design was based on the contract
concept design.
■ Facade presentation dated 3 February 2013, including a new design proposal by the
Contractor without the second skin; the proposal was accepted at the meeting verbally,
then rejected the next day also verbally. Both by the Client.
■ MOM – Employer’s review meeting on 5 March 2013.
Facade presentation at the Client meeting. The Contractor presented a number of
updated facade designs – one based on Client direction and Engineer collaboration and
two as unilaterally directed internally by the Contractor.
■ MOM – Employer’s review meeting on 30–31 March 2013 and 1 April 2013, including
complete discussion of facade design.
■ The Engineer’s acceptance with notes to the revised concept design as artistic
illustrations only.
■ The Engineer’s acceptance for the hotel building facade schematic design transmittal
dated 11 May 2013.
■ The Contractor design presentation on 7 July 2013, recommending the use of insulated
spandrel panels to be able to pursue LEED.
With the hotel facade final detailed design still ongoing, based on the Client’s request and
approvals, the building HVAC design loads were considered in the selection of the facade
glazing system. Facade lighting and BMU system are being finalised, based on the
approved facade design; targeting of LEED Silver is still being considered.
Issue 2: Change all ground-floor functions, including the health club and the
swimming pools
Based on the Client and operator requirements, extensive changes for the hotel interior
layouts for all ground-floor areas were carried out, including changing lift cores. The
changes included increasing the spa and gymnasium areas and relocating and increasing the
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areas of most of the offices and the staff facilities. The references to the Client/operator
requests are as follows.
■ The Engineer’s email dated 5 November 2012, which included the operator’s area
requirements.
■ MOM – workshop on 14–15 November 2012.
It was indicated that the current architectural layouts did not match the operator’s area
requirements (including guest rooms, public areas, staff and support areas,
administration office and banquet areas). The Engineer requested that the programme be
updated to reflect layout amendments as per the operator’s requirements.
■ MOM on 22 November 2012.
The Client and operator agreed to enlarge the spa area to create a sense of luxury and to
relocate the plant rooms away from spa areas.
■ MOM on 17 December 2012.
It was agreed that a further increase of the spa area needed to be considered.
■ Operator’s email dated 21 January 2013, clarifying the programme and area requirements.
■ MOM on 12 February 2013.
New spa design was presented, new requirements were added; additional areas were
required for the hotel administration offices and staff facilities.
■ Engineer’s email dated 5 February 2013, confirming that redesign was required to have
double height at the entrance lobby and tea lounge at the first floor and reduce the
junior ballroom area at the second floor.
■ Client/operator’s email dated 23 February 2013, with design comments for the spa areas.
Issue 3: Cancel the two panoramic elevators and the escalators in the building
■ Engineer’s email (lifts between convention centre and hotel) dated 2 January 2013,
including vertical transportation verification for the waiting time.
■ Engineer’s email (hotel public floors elevators) dated 6 January 2013, including the
agreement with the Client to relocate the two scenic elevators to be within the right-hand
core.
Issue 4: Cancel the escalators in the building and increase the number of
elevators and add a formal staircase
■ Engineer’s email (lifts between convention centre and hotel) dated 2 January 2013.
This had an impact as the escalators were cancelled, thus reducing (from the Client’s
and operator’s perspective) the quality of the facility. Elevators were provided to cater
for the required vertical transportation traffic. Elevators were required to comply with
local authority regulations.
Issue 5: Increase the first-floor area and increase the service area in the ground
floor
■ MOM – workshop on 17 December 2012 to increase the storage areas.
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3.2 B003: the office building

Issue 1: Cancel the second facade skin and maintain the glass facade
■ MOM – in which the Contractor presented a 3D drawing showing an updated facade

design. The Client commented that the design compared to a dated precast ribbon
window design and rejected it, although it was according to the contract concept design.
■ Facade presentation dated 3 February 2013 to the Employer, including new design
proposal by the Contractor without the second skin.
■ Facade presentation at the Client meeting dated 5 March 2013. The Contractor
presented a number of updated facades.
■ Facade presentation on 17 March 2013 to the Employer. The office building facade
design was rejected.
■ Client’s emails for the office facade design comments on 7, 8 and 9 April 2013.
■ The Engineer’s ‘approved except as noted’ for the office building facade schematic
design transmittal dated 30 April 2013.
■ MOM – Employer’s review meeting with regard to changing the main stair leading to
the basement and increasing the exhibition area.
■ Client’s email dated 9 January 2013 accepting the addition of the sunken garden and
exit stair from the exhibition basement floor, as per civil defence request.
Issue 2: Change all internal partitioning in the office floors
■ Client’s email dated 28 October 2012 for his detailed office planning requirements.
Issue 3: Addition of roof canopy
■ Refer to the facade design changes noted above.
4. Contractual analysis
There have been many deviations of the Contract, which has caused much duress for the
Contractor and burdened him with losses and damages beyond what he had bargained for.
In relation to the claim submitted, we hereby clarify some of the points that must be
addressed in this claim.
4.1 Contract documents – priority

The Particular Conditions of the Contract are clear about the priority of documents, as follows.
Sub-Clause 1.5 Priority of Documents

Delete as written and replace with the following:
‘The documents forming the contract are to be taken as mutually explanatory of one
another. For the purposes of interpretation, the priority of the documents shall be in
accordance with the following sequence:
(a) The Contract Agreement (if any),
(b) The Particular Conditions,
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(c) The General Conditions,

(d) The Appendix to Contract,
(e) The document titled ‘Amendments to Employer’s Requirements’,
(f) The Employer’s Requirements,
(g) The document titled ‘Clarifications to Contractor’s Proposal’,
(h) The Contractor’s Proposal.’
The Employer’s Requirements are listed as (f), where they are sixth in the list of documents.
The Engineer must provide precedence to the other five contract documents, namely
(a) the Contract Agreement (if any)

(b) the Particular Conditions
(c) the General Conditions
(d) the Appendix to Contract
(e) the document titled ‘Amendments to Employer’s Requirements’.
Therefore the Engineer is required to implement the contract documents by giving priority
to the Contract Agreement and then the Particular Conditions and then the General
Conditions, in that order.
4.2 Lump sum contract

The major changes that occurred, mainly as mentioned above, were fundamental to the
project. This affected the spirit of the project, especially the lump sum provision as stated
in the General Conditions.
The relevant sub-clause of the Contract clearly states the following.
4.11 Sufficiency of the Accepted Contract Amount

The Contractor shall be deemed to:
(a) have satisfied himself as to the correctness and sufficiency of the Accepted Contract
Amount, and
(b) have based the Accepted Contract Amount on the data, interpretations, necessary
information, inspections, examinations and satisfaction as to all relevant matters
referred to in Sub-Clause 4.10 [Site Data] and any further data relevant to the
Contractor’s design.
Unless otherwise stated in the Contract, the Accepted Contract Amount covers all the
Contractor’s obligations under the Contract (including those under Provisional Sums, if
any) and all things necessary for the proper design execution and completion of the
Works and the remedying of any defects.
The Contractor has placed his bid and priced this project based on the conceptual
design and the contract documents as stated in the Particular Conditions, and accepted
the associated risks with his price. The contract bid is a lump sum and, therefore, to
deviate from this principle is a cause of economic duress for the Contractor. The events
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that occurred and caused the Contractor delays and losses are summarised as
instructions to
■ cancel the hotel second facade skin and maintain only the glass facade
■ change all ground-floor functions, including the health club and swimming pools for the
hotel
■ change the room mix, number of keys and the stairs and elevators in all floors of the hotel
■ cancel the two panoramic elevators and the escalators in the building for the hotel
■ cancel the second facade skin and maintain only the glass facade for the convention
centre
■ increase the basement area and add a tunnel connecting the services to the hotel for the
convention centre
■ increase the ground-floor treatment plant and the other ground-floor services for the
convention centre
■ cancel the escalators in the building and increase the number of elevators and add a
formal staircase for the convention centre
■ increase the first-floor area and increase the service area on the ground floor for the
convention centre
■ cancel the second facade skin and maintain the glass facade for the office building
■ change the main stair leading to the basement and increase the exhibition areas, adding
an external side exit stair for the office building
■ change all internal partitioning in the office floors for the office building
■ add a roof canopy, and at the main entrance of the office building.
These events have changed the principle of sufficiency of tender and the lump sum and have
burdened the Contractor with risks beyond what he must have expected and bargained for. It
should be noted also that these events took place in such a way as to benefit the Client at the
expense of the Contractor, which can be rewarded under the doctrine of restitution.
4.3 Engineer’s role and determination

The Particular Conditions state the following.
Clause 3 – The Engineer
Sub-Clause 3.1 Engineer’s Duties and Authority

Add the following at the end of this Sub-Clause:
‘The Engineer shall obtain the specific written approval of the Employer before taking
action under the following Sub-Clause of these Conditions:
(a) Sub-Clause 8.4 (Extension of Time for Completion)
(b) Sub-Clause 10.1 (Taking Over of the Works and Sections)
(c) Sub-Clause 10.2 (Taking Over of Parts of the Works)
(d) Sub-Clause 11.9 (Performance Certificate)
(e) Sub-Clause 13.1 (Right to Vary)
(f) Sub-Clause 13.3 (Variation Procedure)
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(g) Sub-Clause 13.5 (Provisional Sums)

(h) Sub-Clause 20.1 (Contractor’s Claims).
Notwithstanding the obligation on the Engineer to obtain approval as set out above, if,
in the opinion of the Engineer, an emergency occurs affecting safety of life or of the
Works or of adjoining property, he may, without relieving the Contractor of any of his
duties and responsibilities under the Contract, instruct the Contractor to execute all such
work or to do all such things as may, in the opinion of the Engineer, be necessary to
abate or reduce such risk. The Contractor shall forthwith comply, despite the absence of
approval by the Employer, with any instruction of the Engineer. The Engineer shall
determine an addition to the Contract Price, in respect of such instruction, in accordance
with Sub-Clauses 3.5 (Determinations) and 13.3 (Variation Procedure) and shall notify
the Contractor accordingly, with a copy to the Employer’.
And the relevant sub-clause of the General Conditions states the following.
3.1 Engineer’s Duties and Authority.

The Employer shall appoint the Engineer who shall carry out the duties assigned to him
in the Contract. The Engineer’s staff shall include suitably qualified engineers and other
professionals who are competent to carry out these duties.
The Engineer shall have no authority to amend the Contract.
The Engineer may exercise the authority attributable to the Engineer as specified in or
necessarily to be implied from the Contract. If the Engineer is required to obtain the
approval of the Employer before exercising a specified authority, the requirements shall
be as stated in the Particular Conditions. The Employer undertakes not to impose further
constraints on the Engineer’s authority, except as agreed with the Contractor.
However, whenever the Engineer exercises a specified authority for which the
Employer’s approval is required, then (for the purposes of the Contract) the Employer
shall be deemed to have given approval.
Except as otherwise stated in these Conditions:

(a) whenever carrying out duties or exercising authority, specified in or implied by the
Contract, the Engineer shall be deemed to act for the Employer;
(b) the Engineer has no authority to relieve either Party of any duties, obligations or
responsibilities under the Contract; and
(c) any approval, check, certificate, consent, examination, inspection, instruction, notice,
proposal, request, test, or similar act by the Engineer (including absence of disapproval)
shall not relieve the Contractor from any responsibility he has under the Contract,
including responsibility for errors, omissions, discrepancies and non-compliances.
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4.4 Determinations
The General Conditions state the following.
3.5 Determinations
Whenever these Conditions provide that the Engineer shall proceed in accordance with
this Sub-Clause 3.5 to agree or determine any matter, the Engineer shall consult with
each Party in an endeavour to reach agreement. If agreement is not achieved, the
Engineer shall make a fair determination in accordance with the Contract, taking due
regard of all relevant circumstances.
The Engineer shall give notice to both Parties of each agreement or determination,
with supporting particulars. Each Party shall give effect to each agreement or
determination unless and until revised under Clause 20 [Claims, Disputes and
Arbitration].
The Engineer must determine the claim and the Engineer ‘shall consult with each Party in
an endeavour to reach agreement. If agreement is not achieved, the Engineer shall make a
fair determination in accordance with the Contract, taking due regard of all relevant
circumstances’.
In his report for assessing the variation order submitted in July 2013, the Engineer stated
that the Client refusal is paramount to his decision, which in itself is a Contractual breach
and falls outside the doctrine of duty of care.
In his report, the Engineer stated the following.
■ In his summary on page 1 the Engineer states that all the documents refer to the
contractual documents, as he refers to the Employer’s Requirements. The Employer’s
Requirements do not apply here and the doctrine of mistake applies as in a unilateral
mistake. All the increases occurred to satisfy the operational requirements. This must be
taken under General Conditions, Clause 13.
■ On pages 6 and 7
– Point 2 falls under the doctrine of betterness and is covered under General
Conditions, Clause 13, and the lump sum doctrine.
– Point 3 falls again under the doctrine of mistake as the 35% is completely
misunderstood by the Engineer.
– Point 4 (MEP works): the Engineer states that all the design was coded C and he
uses this as an excuse for refusal.
– Rest of Point 5 falls under fair and reasonable and the Engineer should have asked
for further substantiation. This process falls completely under fair and reasonable in
that the Engineer allowed only one item to be accepted, which is an act of
misrepresentation.
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4.5 Failure by the Engineer to issue variation orders

The amended General Conditions are clear that in cases of variations the Engineer must
follow Clause 13 (Variations and Adjustments).
13.1 Right to Vary

Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over
Certificate for the Works, either by an instruction or by a request for the Contractor to
submit a proposal. A Variation shall not comprise the omission of any work which is to
be carried out by others.
The Contractor shall execute and be bound by each Variation, unless the Contractor
promptly gives notice to the Engineer stating (with supporting particulars) that the
Contractor cannot readily obtain the Goods required for the Variation. Upon receiving
this notice, the Engineer shall cancel, confirm or vary the instruction.
13.3 Variation Procedure

If the Engineer requests a proposal, prior to instructing a Variation, the Contractor shall
respond in writing as soon as practicable, either by giving reasons why he cannot
comply (if this is the case) or by submitting:
(a) a description of the proposed work to be performed and a programme for its execution,
(b) the Contractor’s proposal for any necessary modifications to the programme
according to Sub-Clause 8.3 [Programme] and to the Time for Completion, and
(c) the Contractor’s proposal for evaluation of the Variation.
The Engineer shall, as soon as practicable after receiving such proposal (under Sub-
Clause 13.2 [Value Engineering] or otherwise), respond with approval, disapproval or
comments. The Contractor shall not delay any work whilst awaiting a response.
The Engineer’s reluctance to issue Variation Orders is clearly a case of lack of duty of care.
5. Time impact analysis

5.1 Introduction
Time impact analysis (TIA) is a method whereby the impact of any event is inserted into a
programme to weigh its effect versus the original plan. It is by far the most forward-looking
technique that is used for delay dispute analysis. TIA is the method recommended by most
experts for conducting reliable delay analysis studies. This method does not rely heavily on
very accurate periodic updates, but rather on properly sorted documentation.
Once the delay events are identified, each event is given a sequential number and a
description. Throughout each event review, the analyst can identify a definite event start
date and a completion date
■ the start date is definite as it signifies the point in time when the initiating party issued a
written communication
■ the completion date is identified when the Contractor has a clear scope of work that
allows him to proceed.
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Once the delay events are identified, along with their durations, then they are inserted into
the ‘baseline programme’ as either activities (delay activities) or milestones (delay
milestones), depending on the preference of the analyst. If they are inserted as activities,
their respective start dates should mark the initiation dates, and finish dates should mark the
latest dates of event effect. If they are inserted as milestones, then they should be inserted
as finish milestones with the date set according to the event finish date.
Afterwards comes the stage for identification of the most logical successor. Logical successors
can be selected based on trade, area, activity etc. They can also be identified based on the
‘contemporaneous method’, as described above. In certain cases, the delay activities or delay
milestones are linked in finish-to-start mode, to the relevant logical successor. Similarly to the
‘window analysis technique’, each delay event is analysed alone to calculate its individual
impact on the global completion date. Then all delay events are analysed collectively,
whereby contemporaneous and concurrent delays are displayed for further analysis.
5.2 Impacted versus the baseline programmes

Having inserted the delay events into the baseline programme, the corresponding floats,
and consequently the critical path, were affected. Every corresponding delay event was
linked to its logical successor activity, in a finish-to-start relationship. Obviously, the start
of this successor activity would have shifted by an equal number of days, equivalent to the
duration of the preceding delaying event. Consequently, the finish date would shift also
equally in the future. In this case, two scenarios can happen.
■ The first scenario is that there is float at the end of the shifted activity equal to or greater
than the number of delay days. In this case, the critical path would not be impacted, and the
delaying event would not be admitted for a claim, as the float will be absorbed by all Parties
on a first-come first-served basis. Hence, it is not the exclusive right of the Contractor.
■ The second scenario is the delicate one, when the subsequent float is less than the
duration of delay or, at worst, zero. This happens when the impacted activity falls on
the critical path, or is near critical. In this case, it is inevitable that the critical path is
elongated by the time equal to the number of delaying days, minus the float that existed
when the baseline programme was compiled. This is when the delaying event becomes
admissible with a TIA, notwithstanding whose responsibility it is.
5.3 Extension of time entitlement analysis

This analysis relates exclusively to two major delay events, and does not take into account
all the delay events experienced throughout the project lifetime. Others shall be prepared
and presented in subsequent applications.
It is evident from the analysis and narrative presented for the below delay events that the
majority of delays and disruptions were due to risk events which were the liability of the
Employer.
5.4 Time impact effect

Only two disruptive events are considered for the purpose of this case study.
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Disruptive event 1: Cancel the hotel second facade skin and maintain only the glass
facade
The methodology used is as follows.
1. Insert new WBS name ‘Delay in External Facade’ to the baseline schedule.
2. Insert new impact activity ‘IMPC-DE1-01’ with a description ‘Client review &
approval for facade detailed package’.
3. The event started on 21 November 2012, being the first Client and Operator changes to
the Contractor’s concept design, and these comments and changes extended to the cut-off
date of this claim, 25 February 2016 (the contract completion date).
4. A new filter was created to summarise all the activities related to external facade. It
is worth noting that according to the baseline schedule the average total float for
design = zero; for material submittals = 163 days; and for construction = 27 days.
5. The new impact activity was linked with the activity code ‘MGNGNLAAH015’ and the
activity name ‘Approve first skin curtain walls for exterior cladding (hotel)’ to the
baseline schedule with (FS) relationship.
6. Consequently, the impact of this event has shifted the project completion date from 14
April 2013 to 20 June 2015 with total float (minus 433 days).
Disruptive event 2: Variation due to area changes between the contract and final
design by increasing the area of the hotel by 12%; the original duration will increase
on a pro rata basis by 58 days (increasing the structural original duration by 520 days)
1. Insert new WBS name ‘Delay due to increase hotel area’ to the baseline schedule.
2. Insert new sub-WBS name ‘Delay in structural works’ to the baseline schedule.
3. To avoid changing the durations of activities on the original baseline schedule, a new
fragment was created with activity ID ‘IMPC-DE2-01’ and activity description ‘Extra
concrete works’ with activity duration 58 days.
4. A new filter was created to summarise all the activities related to concrete works. It is
worth noting that according to the baseline schedule the average total float for concrete
works = 3 weeks.
5. The impact activity was linked (FS) with predecessor activity ID ‘SP2HLFDAA005’, activity
description ‘Structural shop drawings review/approval’, and (FS) with successor activity ID’
CP2HLB1GD040’, activity description ‘Conc. work for columns & walls elements’.
6. Consequently, the impact of this event has shifted the project completion date from 14
April 2013 to 22 April 2015 with total float (minus 8 days).
5.4.1 The impact of time delay

The Contractor would like to state that the execution period of the project was delayed as
such:
■ project duration from 14 April 2013 until 20 June 2015 = 797 days.
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The actual duration of the Works was from 15 October 2012 (actual start) until 14 April
2015 (actual contractual completion) = 978 days.
The cut-off date for the disruptive events is 20 June 2015, as per the time impact study in
this section. The Contractor hereby proclaims that he is entitled to delays and damages for
all events that occurred after 20 June 2015.
6. Claim evaluation
6.1 Delay damages
The damages related to the delays are calculated and submitted within the claim. They are
calculated for the delay period as set out above. They will, in principle, be as follows.
■ Delay costs – site indirect costs

These were calculated from the estimated completion date. They include site indirect
costs, including supervision and management staff and site office expenses. Full
supporting documents are attached at Appendix C to this document.
■ Loss of opportunity
Not applied for the purpose of this claim.
■ Main office indirect costs
These include office staff fully or partly dedicated to the project.
■ Equipment depreciation costs
These will be calculated from the delay period. All demobilisation and remobilisation
costs will be added as well. They will include depreciation costs.
6.2 Disruption claim

For this part, the claim will prove that these disruptions occurred due to the following
reasons.
(a) Area changes

These are the increased areas due to the Owner’s requirements and instructions. The
damages as presented in this claim submission are final and reflect the actual damages
that the Contractor has incurred. The reduction in these calculations reflects the fact
that the design is final and the reduction reflects the actual area computations
accordingly.
(b) Changed height of building
The reduction in these calculations reflects the fact that the design is final and the
reduction reflects the actual area computations accordingly in comparison to the
Contract concept drawings.
(c) Material changes – upgrades
All computations are based on the final design and actual calculations in comparison to
the contract specification and concept design.
(d) MEP to all buildings
Changes and increased costs of all mechanical and electrical works due to higher and
upgraded specifications.
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(e) Design costs

These reflect the actual costs incurred by the design consultant and supported by actual
invoices.
(f) Elevator changes
These reflect the final changes as per the Engineer’s email of 23 June 2013.
(g) Variation due to changing the specification for kitchen equipment
This item has been completely deducted since, following the operator and Contractor
meetings, it was agreed to reduce the area of kitchens dramatically. Therefore, this item
has been annulled and the Contractor acknowledges that he has no right for
compensation in this regard.
(h) Variation due to changing the specifications for lighting fixtures and sanitary ware
This item has been completely deducted as the final design shows that the Variation has
been reduced since the submittal of the previous variation orders in 2013.
(i) Variation due to changing the acoustical specification in the concept design
The separation wall between guest rooms was designed to be ‘200 mm hollow concrete
masonry units (CMU) for non-load bearing walls’ in order to achieve an acoustic
performance of 45 STC. In the final design, the design was changed to be ‘200 mm
hollow block filled and reinforced + 15 mm plaster both sides + gypsum cladding with
air gap 25 mm both sides’ to achieve an acoustic performance of 55 FSTC.
(j) Variation due to updated design in the steel structure, cladding and canopy.
This variation order is updated to include the specifications and increased quantities for
the updated design for the steel structure.
6.3 Damages calculation methodology used
(a) Variation due to area change

The methodology used is summarised as follows.
1. A full remeasurement is provided in the claim to show the Contractor’s rights for
the increased area.
2. This was done to verify the actual costs of pricing. It is to be used as a method of
measurement.
3. The quantities of increased areas as calculated from the IFC (issued for
construction) drawings and the concept design are checked.
4. The actual costs were calculated by multiplying the remeasured priced rates by the
increased area to show the extra costs.
(b) Variation due to height

The methodology uses a calculation showing the difference in height. The method to be
used is to show the concept design as presented during tender and then compare it with
the newly issued design.
1. Show the design as approved.

2. Provide all correspondence to show the instruction for the changes.
3. Create a schedule with the changes by showing the exact differences.
4. Apply unit rates that are accurate.
5. Obtain the actual costs.
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(c) Variation due to material change

The methodology used is to highlight the items affected by the new instructions and
show the difference by inserting a cost as per the concept design and Contract and
new cost as per what is required and instructed. The methodology used is as
follows.
1. Identify as per specifications and Contract the proposal for the actual requirements.
2. Provide the documents that show as a proof the new instruction.
3. Identify the concept and final design drawings that effect the change (i.e. drawing
numbers and dates) and highlight the changes in each drawing.
4. Provide purchase orders and receipts for the new item.
5. Calculate the difference and add overhead costs.
(d) Variation of MEP for all buildings

1. Identify as per specification and Contract the proposal for the actual requirements.
2. Provide the documents that show as a proof the new instruction.
3. Identify the concept and final design drawings that effect the change (i.e. drawing
numbers and dates) and highlight the changes in each drawing.
4. Provide Purchase Order and receipts for the new item.
5. Calculate the difference and add overhead costs.
(e) Design cost variation

The documents provided show all receipts by all consultants and additional overhead
costs.
(f) Variation to updated elevator specifications
1. Identify the actual requirements as per specification and the proposal.

2. Provide a complete breakdown of the changes.
3. Identify the items that were in the original quotation.
4. Identify the new items and obtain accurate prices from the supplier and show all
supporting documents.
5. Calculate the total of the new additions and changes.
(g) Kitchen equipment

This was annulled as explained earlier within this claim document.
(h) Changes in specifications for lighting fixtures and sanitary ware
This was annulled as explained earlier within this claim document.
(i) Changes in acoustical specifications
This was calculated as the difference between the concept design and the final design,
with actual take off and applying market unit prices.
(j) Updated design of the steel structure, cladding and canopy
The quantities and support carried out by subcontractors are provided and show the
Contractor is correct. This includes the variation for the cladding and canopy.
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6.4 Funding costs

These will be the daily delay and disruption costs multiplied by 8% (financing charges) and
calculated for the average delay period.
6.5 Bank charges and financing costs

In addition, and with respect to the issue of funding the additional costs, the Contractor
maintains that he is entitled to receive payment for the losses he has suffered on the project.
These financial charges/fees are calculated on the basis of the prevailing bank overdraft rate
as applicable and include bank charges, guarantee and bond charges and insurance.
6.6 Damages incurred due to above disruptions

As summarised above, the Contractor faced enormous difficulties from the outset and these
are explained in detail in this claim document. Hence, this claim is for loss and expense
amounting to 7 000 000 US dollars, as detailed in this section.
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ISBN 978-0-7277-6197-2

Chapter 14
Case study – delay and disruption on
an international contract
confidentiality.
claim.
1. Executive summary
1.1 Claim statement
1.1.1 Contract information
Project D: The Project (in one of the Gulf States)

Client C: The Client or the Employer or the Work Owner
Contractor D: The Main Contractor or the Contractor
Contract: Duration 1095 days (36 months)
Contract amount: USD 563 000 000
Contract start date: 18 July 2009
Contract end date: 17 July 2012
Contract form: Ad hoc conditions of contract.
1.1.2 Summary
The object of this statement of claim is to set down the circumstances which were beyond
the Contractor’s control which caused unavoidable disruptions and delays to this project
and which subsequently caused additional expenditure and financial losses to the
Contractor.
This claim should be read in conjunction with the Contractor’s interim claim submitted in
February 2015 and its exhibits 1 to 12 (called the ‘interim claim submission’ herein).
The Contractor sets out, in this updated disruption and delay claim, the fact that the design
was substantially revised a year after the start of the Project. There were also immense
changes to the design during the construction of the Project, and large changes in the scope
of works occurred, together with the late provision of power and chilled water. Power was
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connected in July 2014 and chilled water was also connected in July 2014, after the
original Completion Date, which was 17 July 2012, and this caused immense losses to the
Contractor as detailed in this claim.
Other events which had great effect on the delays of the project – namely, the large number
of revisions the Contactor needed to make to the design due to the design’s incompleteness,
the direct involvement of the Client in appointing subcontractors, and the deductions and
additions of works beyond the contractual limits and what is reasonable – have all been
described in the interim claim submission in February 2015 and are further highlighted in
this claim.
One of the main issues that the Contractor encountered during the execution of the Project
was the late issue of the final design. The Client issued the final design, which was
incomplete, a year after the Project started. The new IFC (issue for construction) drawings
were fundamentally different to the tender drawings. This had heavy implications on the
costs and completion time of the Project, which resulted in the following.
■ The final design was incomplete, which resulted in the Contractor submitting 6623 shop
drawings up to date, significantly more that he had allowed for in his tender (3789 shop
drawings). This had a huge impact on the time element and the design review costs, and
especially the time taken for the approval process of the submitted shop drawings. The
Contractor had to have a full team of designers at his site office and main office for
design review as well as the appointment of two consultancy offices.
■ The Contractor issued 1909 technical queries to date due to the incompleteness of the
design, which had an impact on time, as explicitly detailed in the February 2015
submission.
■ Due to the many changes in the design, and as the Employer intended to stay within the
tendered price (lump sum), the Employer instructed 63% of the bill of quantities (BOQ)
items to be deleted from the scope of works and 101% to be added to the scope,
which itself is in contradiction to Article 36 [Increase and Decrease of Contractor
Obligations]: ‘Any authority may increase the obligations of the contractor within the
scope of the contract to an extent not exceeding (10%) ten percent of the total value of
the contract or decrease such obligations to an extent not exceeding (20%) twenty
percent. The Implementing Regulations shall set forth the necessary controls.’
■ The Contract for the Project stipulated in the General Conditions Article 43
[Amendments, Additions and Cancellation]: ‘The Work Owner may, during the contract
performance, increase the works amount may percentage that may exceed (20%) twenty
percent of the total contract amount or decrease the amount of contract works by a
percentage not exceeding (20%) twenty percent of the total contract amount and in
either case adjust the contract amount accordingly.’
■ Crucially, the Employer has directly negotiated, without the presence of the Contractor,
with subcontractors and suppliers which is in itself a clear deviation of the Contract
and the standard practices in the industry. This is also clearly an Owner Default under
General Conditions Article 58 [The Work Owner’s Default]: ‘The Work Owner shall
execute the contract conditions in good faith … If the Work Owner breaches any of the
contract conditions or fails to pay in due date, the Contractor shall be entitled to claim
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Case study – delay and disruption on an international contract
compensation for losses resulting from this default or breach’. The intention of this
clause was to limit the effect of the new design on the lump sum tendered, whereas the
Client has taken the burden of undue influence on subcontractors and suppliers in order
to minimise the effect of the new design and its deviation from the contract design and
keeping the budget within the lump sum.
■ This is a clear case of economic duress exercised by the Employer on the Contractor
and other parties executing the Project. Economic duress may apply to the formation of
the Contract, at the commencement of the performance of the Contract or subsequent
variations of the Contract. The pressure must be of a nature that is coercive and was a
significant cause inducing the party to losses more than he anticipated when signing the
Contract. The injured party’s conduct must be affected in a significant way by the
duress, and a reasonable alternative must not be available at the time of the duress.
■ The late connection of the mains electricity and chilled water, with its impact on the
completion date. The late provision of the chilled water also caused much damage to
the Contractor’s finishing and wood works as he was instructed to carry out the works
without ambient temperature. This fact has been confirmed by the Engineer in his
Letter ref 08300 dated 7 September 2014. Furthermore, that this letter was issued in
September 2014, more than 2 years after the contract Completion Date, shows the
lateness in the provision of the chilled water, which is critical to the completion of
the works – a clear indication of this effect. Moreover, the Main Contractor can
demonstrate that the doors were stored in air-conditioned storage and that the Client has
instructed to fit the doors without ambient temperature.
The following summarises the essential points where the Employer was at default by
misinterpreting the Contract for his own benefit.
A. Design changes – impact

The many changes in the design and the scope of works have attributed to the loss and
expense of the Main Contractor. This was manifested by the facts that the project final
design (IFC) was completely modified compared with the contract design; the revised
Project layout has been completely changed compared with the original layout and the
revised drawings are completely different from the contract drawings. This resulted in
the following.
■ The final design was not submitted until a year after the start of the works. This
element is a clear deviation of the Contract and the standard practices in the
industry which has rendered this Contract frustrated.
■ The large change in the scope of works, mainly the civil works and
electromechanical works, as detailed in the interim claim submission.
B. The late instruction of the interior design package

The interior design package has been added to the contract scope of work in February
2011. On 31 January 2011, the Client issued interior design drawings and specification
to the Contractor along with the instruction to proceed with the execution of the interior
design works as a variation to the contract scope in accordance with the relevant terms
and conditions of the Contract. Accordingly, the Engineer instructed the Main
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Contractor to incorporate the interior design works in its scope of works and to proceed
with the execution of the works as per the issued documents. The Engineer also
instructed the Contractor to notify the Employer and the Engineer of any discrepancies
found between the interior design drawings/specifications and any other documents
issued earlier for execution.
C. Financial issues – variation orders and unpaid interim payment certificates
Other disruptions were also critical to the performance of the Contractor, such as the
unapproved variation orders amounting to 111 579 272 USD, as detailed in Appendix D,
the financial problems and their effect, as detailed in the February 2015 submission, and
their effect on the Contactor’s cash flow. Furthermore, the Client has failed to make
timely payment against the interim payment certificates issued since the interim claim
submission in February 2015, as detailed in Table 1.
D. Other contractors’ disruption (Contractor A and Contractor B)
In the period after the contracted date, the Work Owner entered into contracts with
other contractors for external works and furniture, fixtures and equipment works, adding
more modifications to the Main Contractor’s scope of works and so causing further
hindrance to the execution and completion of the Works. The abovementioned other
contractors have caused major disruptions to the Contractor’s work progress which
consequently resulted in the prolongation of work completion and, in turn, increased the
Contractor’s financial cost to complete the revised scope of works. The Client’s other
contractors commenced their works on site in 2013 and are still executing their scopes
of works until the date of this claim statement.
The purpose of the claim is to reach a settlement with the Client to compensate the
Contractor against the losses which resulted from the modifications, interference and
undesired circumstances accompanying the execution of the works and the resulted
prolongation time for the execution of the works.
1.2 Damages due to delays and disruptions

The summary of the claim for time and costs is as follows.
■ Extension of time to the contract time of completion ending on 17 July 2012 is 1628
(one thousand, six hundred and twenty-eight) days ending on 31 December 2016 due to
Table 1 Submission and payment of interim payment certificates (IPCs) after February 2016
IPC Submission Approved/ Paid by the Client Delay to

no. submitted payment
Amount: Main Amount: Payment date
amount by after first
USD Contractor USD
consultant: submission:
letter dated
USD days
46 15 817 114 6 June 2015 12 893 031 3 426 861 13 April 16 312
47 21 604 845 22 August 2015 21 604 845 7 252 846 29 October 16 434
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events that have occurred after the interim claim submission in February 2015 and
detailed in this revised claim (Appendix B).
■ Delay and disruption damages are computed and supported in the claim particulars and
the attached exhibits for the period from 12 July 2012 to 31 December 2016.
■ The total damages for delays and disruptions are 309 075 841 (three hundred and nine
million, seventy-five thousand, eight hundred and forty-one) USD.
The breakdown of damages detailed in this claim is as follows.
A. Site indirect costs (143 716 298.90 USD)

These were calculated from the Completion Date 17 July 2012 to 31 December 2016.
They include site indirect costs, including supervision and management staff and site
office/general expenses. Full supporting documents are included in this claim document
(Appendix C1).
B. Main office indirect costs (4% of the total project value 33 481 448 USD)
This will include office staff fully or partly dedicated to the Project.
This will be 563 000 000 USD/1095 days (contract original duration) (× 4%) = 20 566
USD.
Main office indirect costs for the delay period to 31 December 2016 (1628 days) =
20 566 USD/day (× 1628 days) = 33 481 448 USD.
C. Verification, engineering and redesign costs (10 663 104 USD)
These will be related to all expenses encountered by the contractor due to the issuance
of a primitive design package (Appendix C2).
D. Equipment costs (12 432 348.26 USD)
These are from the Completion Date 17 July 2012 to 31 December 2016. They will
include depreciation costs (Appendix C3).
E. Disruption costs (34 851 347 USD)
These will be the difference between the number of labour hours allocated in Tender B
Interior Design compared with the number of labour hours consumed on site. Labour
rental is added (Appendix C4).
F. Funding costs (43 176 796 USD)
This will be the daily delay costs multiplied by 12% (financing charges) and calculated
for 814 days (average period of delay).
G. Bank charges and financing costs (18 595 092.75 USD)
In respect to the issue of funding the additional costs, the Contractor maintains that he
is entitled to receive payment for the losses he has suffered on the Project. These
financial charges/fees are calculated based on the prevailing bank overdraft rate as
applicable and include bank charges, guarantee and bond charges and insurance
(Appendix C5).
H. Losses due to Owner’s omissions of work (3 902 356.86 USD)
These are the losses for overhead and profits for items deleted from the scope of works
which constitute 63% of the total contract amount. They are calculated based on the
amount of each item deleted from the BOQ multiplied by 20% (overhead and profit)
(Appendix C6).
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I. Additional tax due to changes in labour legislation (7 757 049.86 USD)

A new levy system was introduced to be applied from 15 November 2012 (Appendix C7
details the damages due to the additional tax).
J. Claims for work executed and not paid (unapproved variation orders) (111 579 272
USD)
The Contractor hereby requests payment for all work carried out and not paid. These
items of work are summarised in this claim and relate to variation orders executed and
not yet approved (Appendix D).
1.3 Summary of losses and damages

The total amount claimed for delay and disruption damages for the period 12 July 2012 to
31 December 2016 is 420 655 113 (four hundred and twenty million six hundred and
fifty-five thousand, one hundred and thirteen) USD. This comprises
■ damages: 309 075 841 USD

■ requests for variation orders not paid: 111 579 272 USD.
Finally, the Contractor looks forward to the Client’s fair review of this claim statement and
requests the Client to compensate the Contractor against the extra costs incurred due to the
mentioned modifications to the Contract.
2. Claim events – general

This section is divided into two parts
■ a summary explanation of events as have been detailed in the previous submission in

February 2015
■ a summary of events after the interim claim submission in February 2015, showing
delays to April 2017. However, all damages are calculated up to 31 December 2016.
2.1 Summary of events (as included in the February 2015 interim

submission)
These events, as detailed in the interim claim submission, give the Contractor rights for an
extension of time up to 18 October 2014.
The events are as follows.
A. Late release of revised IFC drawings by the Employer

Civil and structural IFC drawings
Interior/finishing IFC drawings
Mechanical, electrical and plumbing (MEP) IFC drawings
B. Changes introduced to the Contractor’s original scope of works
Civil and structural works
Interior/finishing works
MEP works
Imposed coordination with IHG (Intercontinental Hotel Group)
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C. Late review and approval of the Contractor’s documents

Technical queries
Shop drawings
Material submittals
Material inspection requests
D. Unforeseen conditions
Late approval of firefighting drawings and fire alarm drawings by civil defence
Delay in chilled water supply and electricity provider approval for permanent power
supply
E. Economic duress and financial problems encountered by the Contractor
Late certification and payment of progress applications
Late issuance of variation orders
Indirect nominations of subcontractors and suppliers by the Employer.
2.1.1 IFC drawings disruptions due to late release of revised IFC drawings by
the Employer
The fact that IFC drawings were not issued until August 2010 (i.e. over one year from the
contract commencement date or after the elapse of one-third of the contract duration)
suggests that there is delay by the Engineer/Employer in release of IFC drawings.
The chronology of events outlined below confirms the above facts in relation to the late
release of IFC drawings.
The Contractor has encountered on the Project events which were unforeseen and caused
delays and disruptions to his planned schedule to complete the Contract Works as per the
baseline schedule.
The delays and disruptions to the Contractor’s programme of work have been caused as a
result of the following actions and inactions by the Engineer and/or Employer.
■ Late release of IFC drawings that is not in accordance with the baseline programme
approved by the Engineer and Employer.
■ IFC drawings issued to the Contractor contain numerous errors, discrepancies and
ambiguities, which in turn have had an adverse impact on the Contractor’s ability to
complete its shop drawings and subsequently caused delay to procurement and
construction activities.
■ Multiple revisions of IFC drawings were issued by the Engineer/Employer and as a
result the Contactor had to revise his shop drawings thereby causing delay and
disruption to his programme of engineering works.
On 16 December 2009, via reference 0148, the Contractor, in reference to the revised
drawings issued by the Engineer via letters 0065-09 and 0077-09, informed the Engineer of
137
his findings which emerged from his review of revised drawings. The Contractor put on
record the following.
■ The project concept design was completely modified compared to the Contract design.
■ The revised project layout has been completely changed compared to the original
layout.
■ The revised drawings are completely different from the Contract IFC drawings.
Due to the abovementioned fact (i.e. late release of the IFC drawings), the Contractor has
encountered various disruptions and delays that have jeopardised his efforts to complete the
works and which were totally beyond his control and responsibility. The Contractor hereby
seeks compensation for the delay time and its costs, in line with Contract terms and conditions.
The original Contract project commencement date was 18 July 2009. Accordingly, the
contractor had assigned his team and started mobilising to the site, as per the planned
baseline schedule. The Contractor was supposed to proceed with the design verification for
structural and architectural works on 18 July 2009, with a duration of 35 days, to complete
on 29 August 2009, and to prepare the shop drawings which are the Main Contract activity,
and to acquire the Engineer’s approvals that are essential in executing the Works.
On 16 November 2009, the Engineer forwarded revised IFC drawings for foundations
issued by the Employer together with an instruction to commence work on site, stating that
these drawings shall supersede all the previous issued drawings. It is to be noted that the
revised foundations drawings, which were the basis for enabling the Contractor to start
work on site, were issued 122 days after the Contract start date.
The records of correspondence show that the late action and/or inaction of the Engineer/
Employer has disrupted and delayed the engineering activities, specifically in issuing the civil,
interior design and MEP IFC drawings, which are the basis for enabling the Contractor to
execute the Works. Where changes have been implemented by the Employer resulting in the
redesign of the original Contract drawings, the issuance of the IFC drawings is the contractual
obligation of the Employer. The additional requirement for the Contractor to coordinate with
IHG (hotel operator) necessitated the Contractor to raise numerous technical queries, which
confirms that the IFC drawings issued to the Contractor were not satisfactory. The release of
the revised IFC drawings was initiated on 16 November 2009, while the Contract
commencement date was 18 July 2009.
During the construction phase, it was essential for the Employer to assist the process by
releasing the IFC drawings on a timely basis, to enable the Contractor to prepare the shop
drawings and material submittals for the Engineer’s approval prior to execution on site;
otherwise, it was inevitable that serious disruptions and delays to the progress would occur
and consequently delay the progress of the planned sequence of works, jeopardising all the
Contractor’s efforts.
138
The effects of the numerous delays that have occurred on the Project include, but are not
limited to, the following.
■ Disruptions and delays to the Contractor’s planning and execution of the Contract
Works.
■ Disruptions and delays to the Contractor’s engineering and technical team involved in
the production of shop drawings and material submittals.
■ Disruption and delays to the production of shop drawings.
■ Abortive works and multiple revisions of shop drawings to account for the new
comments on and revisions to IFC drawings previously issued by the Employer.
■ Disruptions and delays to the procurement schedule due to the delay in the shop
drawings submittal and approval.
■ Disruptions and delays to ongoing activities to allow for delays and variations that were
introduced along with the revised IFC drawings.
■ Activities not able to proceed and progress as originally planned due to the late issue of
IFC drawings.
■ Allocation of additional resources to coordinate, assess and control the effects of the
delays.
■ Management, labour and equipment resources required for longer periods than
originally anticipated in the Contract.
■ Disruption and delays such that the Contractor has been denied the opportunity to plan
and execute the Works in an economic manner.
These delay events include late action of the Employer in releasing the IFC drawings,
which is under the Employer’s obligation as per Contract Article 2 [Subject and Purpose of
the Contract], where it is clearly stated that the Contractor is required to implement the
Project based on the Contract terms, and Article 3 [Contract Documents].
TIME IMPACT
The impacts of the delays have been enumerated in the interim claim submission on the
basis of a time impact analysis.
Civil and structural drawings

■ Baseline Project completion 17 July, 2012
■ Forecast Project completion 03 August 2013
■ Time impact 382 days
Interior design/finishing drawings

■ Interior design IFC drawings initiated 06 February, 2011
■ Baseline Project completion 17 July 2012
■ Forecast Project completion 12 June 2013
139
MEP Drawings
■ Baseline Project completion 17 July, 2012
■ Forecast Project completion 30 June, 2013
2.1.2 Numerous changes introduced into the Contractor’s original scope of

works
The redesign of the Contract IFC drawings coupled with additional requirements of the
Employer during the construction phase resulted in numerous changes to the Contractor’s
original scope of works.
The untimely changes introduced caused major delays on the Project wherein the Contractor
has been required to submit proposals and quotations for the Employer’s approval.
The Contract states that the Contractor needs to consider the time period required for the
changes to the finishing and interior layout; however, the instruction for the Contractor to
proceed with the interior design work was contrary to the assumption made by the
Contractor in his approved baseline schedule.
■ Civil and structural works: Changes include those to the operable partitions (431 days
of delay), glazing and curtain walling (431 days of delay) and kitchen and laundry
equipment (420 days of delay). A simple example being where the Engineer forwarded
the kitchen and laundry equipment specification on 29 June 2010 (i.e. 347 days after
the Contract start date).
■ Interior design/finishing: On 6 February 2011 the Engineer, via an Employer’s letter
wherein the Owner issued interior design drawings and specification to the Contractor,
instructed the Contractor to proceed with the execution of interior design works as a
variation to the Contract scope of works. The time impact was 251 days.
■ Electromechanical works, including conveying system: On 30 October 2010 (i.e. after
5 months) the Engineer approved a material submittal without considering that the
delivery of the material to site would take around 600 days, as informed by the supplier.
■ MEP works, including heating, ventilation and air-conditioning (HVAC) works: On
31 May, 2012 the Engineer forwarded the Employer’s approval on the HVAC shop
drawings revised by the Contractor based on his commitment to redesign the HVAC
system. This approval on the shop drawings was issued before 2 months from the
Contract Original Completion Date.
Article 43 of the Conditions of Contract provides that Employer shall have the authority for
alteration, additions and omissions to the Contractor’s scope of works and may instruct the
Contractor to make any variation of the form quality or quantity of the Works or any part
thereof. The Employer has exercised his rights by instructing the changes. A substantial
number of changes have been introduced by the Engineer/Employer for which both the
quantum and untimely issue has caused devastating delay and disruption to the Contractor’s
programme and progress of the Works.
140
Hence, the Employer
■ has instructed additions, changes and variations to the Contract’s mandatory

requirements as a build-only contract, and
■ has not provided the revised design drawings incorporating changes, but has instead
asked the Contractor to design and submit proposals, and
■ has exercised his rights to issue such changes to the Contractor’s scope of works, but
■ has not issued the relevant official variation order and/or issued the relevant extension
of time for completion of the Work, and
■ has not made any adjustment to cover the costs of the changes and the associated time.
It must be emphasised that the Employer’s approach of introducing massive changes

while deliberately overlooking the time implications of those changes is in contradiction
to the Tenders Regulations (i.e. the conditions as set out in the tender documents),
wherein assigning new work to the Contractor within a period that does not allow the
execution thereof in the remaining Contract period will entitle the Contractor to an
extension of time.
TIME IMPACT
Operable partitions
■ Forecast Project completion 01 May 2013
Glazing and curtain walling

■ Forecast Project completion 21 September 2013
Kitchen and laundry equipment

■ Forecast Project completion 10 September 2013
Interior Design/Finishing
Where on 6 February 2011 the Engineer forwarded the Employer’s letter wherein he issued
interior design drawings and specification to the Contractor along with the instruction to
proceed with the execution of interior design work as a variation to the contract scope of
works. The time impact is 251 days, as follows.
■ Forecast Project completion 25 March 2013
141
Conveying system
■ Forecast Project completion 15 July 2013
LPG system
■ Forecast Project completion 18 October 2014
2.1.3 Mechanical – plumbing works including HVAC works

On 31 May 2012 the Engineer forwarded the Employer’s approval on the HVAC shop
drawings revised by the Contractor based on his commitment to redesign the HVAC
system. This approval on the shop drawings was issued before 2 months from the
Contract’s original Completion Date.
TIME IMPACT
Mechanical – plumbing works
Mechanical – HVAC works

■ Forecast Project completion 08 March 2014
Low-current system
■ Baseline Project Completion 17 July 2012
■ Forecast Project Completion 05 April 2014
Operator requirement
■ Forecast Project completion 11 May 2014
2.2 Late approval of Contractor’s submittals by the Engineer/Employer

2.2.1 Technical queries
The Contractor submitted numerous technical queries over the unsatisfactory/incomplete
revised IFC drawings issued by the Employer. It is to be noted there is no float assumed for
this form of submittal in the baseline schedule and the large number of submittals was due
to the discrepancies found in the IFC drawings issued by the Employer.
142
Additional delay has been incurred due to the late approval/late response to the Contractor’s
submittals. The time impact on the baseline schedule has been incorporated with other
events in the overall delay analysis.
2.2.2 Shop drawings

The Contractor’s shop drawings submittal approval was delayed by the Engineer, where the
Engineer adopted long review periods prior to returning submittals to the Contractor for
resubmission/execution. This delay in approval of the shop drawings by the Engineer
caused substantial delays on the Contract completion period. The impact is incorporated in
the Overall Delay analysis report.
2.2.3 Material submittal

The approval of Contractor’s materials submittals was delayed by the Engineer/Employer,
where the Engineer adopted a long review periods, against the agreed time frame of 15
days for the first submittal and 7 days for the revised submittals. This delay in approval
resulted in slow progress of the Works as the Contractor was not able to proceed with the
execution of work on site. The late approval of the materials submittals by the Engineer/
Employer caused substantial delays on the Contract completion period due to the delayed
procurement process. The impact is incorporated in the overall delay analysis report.
2.2.4 Materials inspection requests

The Contractor’s material inspection request (MIR) submittal approval was delayed by the
Engineer/Employer holding the Contractor from proceeding with the installation/execution works
on site. The impact of this delay and disruption is incorporated in the overall delay analysis.
2.3 Unforeseen conditions

2.3.1 Civil defence, electricity provider and chilled water
Delays to the Project completion occurred due to unforeseen events: namely, delay in
providing the civil defence-approved firefighting drawings, to be provided by the Employer/
Engineer; and late supply of chilled water, under the Employer’s obligation, and late approval
by the electricity provider of the permanent power supply, pertaining to the late issuance of the
building permit. These events have caused delays in the overall completion of the project
because the Contractor could not perform his obligations under the Contract terms and
conditions. The time impact for these events is 529 days. Pursuant to Articles 11 and 58 of the
General Conditions of Contract, the Contractor claims for an extension of time for Project
completion and for cost reimbursement, as compensation for the delays and disruptions
encountered which were totally beyond the Contractor’s control and liability.
TIME IMPACT
Late approval of firefighting drawings by civil defence
■ Forecast Project completion 18 January 2014
143
Delay in chilled water supply and electricity provider approval

■ Forecast Project completion 28 December 2013
2.4 Summary of events (after the February 2015 submission) – selected

correspondence
2.4.1 Delayed payments
Contractor’s letter – Ref 8960 dated 23 February 2016
… above mentioned subject, you are kindly reminded that we are requesting you to
release our already approved Payment Certificates [PCs] # 45 and 46 with amounts
(USD 8,929,876.10) and (USD 3,426,861.10) respectively.
Noting that the PCs were submitted by Contractor and approved by the Engineer
after complying with his comments not to exceed the limit of 95% of Client current
approved revised Contract amount (USD 656,012,584.94) received via your letter
08300 dated 09 August 2015 with attachment of Employer’s letter # 572 dated
3 August 2015.
2.4.2 Client’s subcontractor’s delays

Contractor’s letter – Ref 9442 dated 09 May 2016
The Engineer is kindly requested to advise Contractor B to be more careful about timing
as their postponing schedules are delaying our works and Project handing over. The
planned rooms to be handed over are 44 out of 128 rooms on the first and second floors.
Contractor’s letter – Ref 7964 dated 09 September 2015
Reference to the subject, please note that the Client’s Contractor B did not handover his
areas of work back to Contractor in order to complete our pending works. Contractor
handed over all the guest rooms (total 299 rooms) at both Towers B and D to Contractor B.
The handing over process started on 24-Oct-13 (refer to our letter # 4040 dated 24-Oct-13)
and completed on 10-Aug-2015 (refer to our letter 7824 dated 11-Aug-15). Based on the
above, the Main Contractor cannot be held responsible for these occurred delays in the
Project works. We reserve our right to claim for the related time and cost implications
without prejudice to any of our rights under the Contract.
Contractor’s letter – Ref 7103 dated 26 April 2015
Moreover, it is unfortunate that to date you are still disregarding our letters requesting
the enforcement of the integrated schedule with a well-defined sequence of activities
to avoid the hindrances at site that are delaying unreasonably the progress of our
work.
144
2.4.3 Water leak detection

Contractor’s letter – Ref 8115 dated 07 October 2015
Reference to the subject and to your comments on TQ # HCl-PB-171 dated 10 June 2014,
you are kindly informed that the precision units were not part of our scope of work as
these rooms were not compliant as per IFC drawings. Note that, Contractor will proceed
with the subject modification after receiving official approval from the Client on the cost
and time implications related to such works, which require three (3) weeks.
2.4.4 Traffic marking

Contractor’s letter – Ref 9049 dated 05 March 2016
Note that, Contractor will complete the said works after receiving formal approval from
the Employer; refer to letter ref 829 dated 15-Nov-15 received under Consultant letter
ref 4454-15 dated 16-Nov-15 without prejudice to any of our rights under the Contract.
2.4.5 Speed bumps

Reference to the above mentioned subject, please find attached herewith (1) soft and
(1) hard copies related to the variation order related to speed bumps/division-10 for an
additional amount to the contract of 1,590,076.99 USD only.
Note that, Contractor will complete the said works after receiving formal approval from
the Client without prejudice to any of our rights under the Contract.
2.4.6 Mechanical plumbing – main building

Contractor’s letter - Ref 9904 dated 26 July 2016
Further to your [the Engineer] letter ref 3097 dated 14 July 2014 and to our letter ref. 5577
dated 19 July 2014 (copies attached), please find attached herewith (1) soft and (1) hard
copies of the variation order [VO] change in VO series from submitted VO no. 5.4 to
approved VO no. 7.1 in accordance with the agreed assessment during the joint meeting
held on 25 July 2016 at the Engineer’s site offices … and in accordance with negotiations
and agreement reached between all the parties in the meeting held on 03 February 2014 at
the Client’s offices, refer to our letter ref 4632 dated 03 February 2014 (copy attached).
The agreed net amount of the subject VO is 8,960,464.08 USD only. You are hereby
requested to forward the same to the Client for final approval without prejudice to any
our rights under the Contract.
2.4.7 Paint skylight

Contractor’s letter – Ref 8635 dated 28 December 2015
Reference to the material submittal # MTS-FlC.i-AR-325 Rev. 1 dated 14 December 2015

(copy attached), please find enclosed the Variation Order from the skylight supplier via
their letter ref 11606 dated 23 December 2015 for painting work to skylight steel structure
amounts to 2,317,500.00 USD.
145
Note that, Contractor will proceed with the subject works after receiving official
approval from the Employer.
2.4.8 Epoxy paint

Contractor’s letter – Ref 10042 dated 10 August 2016
Reference to Engineer letters ref 5241 and 5247 dated 08 and 09 August 2016
respectively; we are re-submitting herewith the Variation Order related to epoxy coat
finish ref. EXY1 for rooms and corridors (floors and walls up to 1.5 m height) for the
locations confirmed by the Engineer though TQ-AR-1078 and the non-toxic epoxy coat
ref. EXY3 for concrete water tanks, this includes supporting documents…
2.4.9 Delay in power connection

Further to our letter ref 8977 dated 24-Feb-16 and subsequent reminders, we would like
to remind you for the unavailability of power at site to date, which will affect the testing
and commissioning activities, in addition to the chilled water system and the battery for
all UPS at site, as highlighted via our above mentioned letter.
We would like to notify you that the testing and commissioning activities have been
completely stopped on site since 20-Feb-16 due to the above issue.
In addition, we would like to refer to Operator letter ref 4827 dated 13-Mar-16 and the
observation in his letter stating that A/C is not functioning in the hotel, causing damage
to the wooden furniture installed in the rooms, i.e. cracks in the closets’ veneer, which is
due to the unavailability of power supply and which may also affect all completed
finishing works in the building.
3. Delayed events – summary of events

3.1 Final submission – events post-February 2015 submission: examples
The time impacts of delayed events are as follows.
Mechanical – plumbing works

Epoxy finish
■ Forecast Project completion 16 April 2017
Approval of electrically operated fire pump – UL listing

146

Supplying submersible drainage pump VO 11.5

■ Baseline project completion 17 July 2012
■ Forecast Project completion 26 April 2016
Speed bumps VO 12.8

Traffic marking
■ Forecast Project completion 28 July 2016
Skylight repaint
■ Forecast Project completion 18 February 2016
4. Damages and losses

The damages for the period 17 July 2012 to 31 December 2016 are computed within the
following categories.
4.1 Delay/site indirect costs (site indirect costs)

These are calculated from Completion Date 17 July 2012 to 31 December 2016 (1628 days
delays). They include site indirect costs and office overhead costs. Full supporting
documents are included in this claim (exhibit C1 up to 31 December 2016). These costs
relate to the site overhead costs as follows.
Total site Staff 128 872 442.88 USD

General expenses 14 843 856.02 USD
Site indirect costs 143 716 298.90 USD
[Exhibit C1 – Monthly breakdown of the site Indirect costs from August 2012 to December
2016]
4.2 Main office indirect costs

These will include office staff fully or partly dedicated to the Project and are calculated on
the basis of 4% of the total project value.
These will be 563 000 000 USD ÷ 1095 days (Contract original duration) (× 4%) = 20 566
USD per day.
147
Main office Indirect costs for the delay period to 31 December 2016 (1628 days) = 20 566
USD per day (× 1628 days) = 33 481 448 USD.
4.3 Verification, engineering and redesign costs

These will be related to all expenses encountered by the Contractor due to the issuance of a
primitive design package. Total: 10 663 104.00 USD.
4.4 Equipment depreciation

These are calculated from Completion Date 17 July 2012 to 31 December 2016 (1683 days
delays). They include depreciation costs. Total: 12 432 348.26 USD.
[Exhibit B2 – Equipment costs from August 2012 to 31 December 2016]
4.5 Disruption costs

These will be the difference between the number of labour hours allocated in the tender bid
and the number of labour hours consumed on site. These will be also tied up with the
activities affected by delays. Hired-in labour is added after the Completion Date. Total:
34 851 347.60 USD.
[Exhibit B3 from 1 July 2015 to 31 December 2016]
4.6 Funding costs

These will be the delay costs and equipment costs multiplied by 841 days (average period
of delay) multiplied by 12% (financing charges) as set out in Table 2.
Total: (143 716 298.90 USD + 12 432 348.26 USD) × 12% × (841/365) = 43 176 796 USD.
4.7 Interest rates, financing costs and insurance

In addition, and with respect to the issue of financing, the Contractor maintains that he is
entitled to receive prompt payment for the losses he has suffered on the Project. Accordingly,
the Contractor, hereby, reserves his right that, in the event of failure by the Employer to make
Table 2 Calculation of financing costs
Cost items: USD

Delay costs 143,716,298.90
Main office overhead costs –
Equipment costs 12,432,348.26
Financing cost recovery
Financing period: days 1628
Effective period: days 841
Overdraft rate per year: % 12%
Funding cost per effective period: USD 43,176,796
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reasonable and prompt payment of these additional costs, the Contractor will be entitled to all
the financial charges/fees incurred upon the unpaid sums. These financial charges/fees will be
calculated based on the prevailing bank overdraft rate as applicable. These financial charges/
fees include bank charges, guarantee and bond charges and insurance.
Interest, financing costs and insurance losses from August 2012 to December 2016 are
18 595 092.75 USD.
[Exhibit B.5 – Insurance breakdown from August 2012 to 31 December 2016]
4.8 Losses due to Owner’s omissions of work

These are the losses for overhead and profits for items deleted from the scope of works,
which constitute 60.19% of the total contract amount. The losses must be compensated
under Article 58 of the Contract.
The Works Owner’s defaults are as stated in Section 5 note 4 of the interim claim
submission. These losses are calculated based on the amount of each item deleted from the
BOQ multiplied by 20% (overhead and profit) and total 3 902 356.46 USD.
[Exhibit B7 – Details the damages due to Owner’s omission of works]
4.9 Additional tax due to changes in labour legislation

Prior to the date of change in labour legislation (15 November 2012) the yearly tax that
must be paid was 100 USD per foreign national employee per year. The new labour
legislation will translate to a yearly fee of 2500 USD per foreign national employee. This
will be an increase of 2400 USD per employee for each time the employer renews their
iqama (i.e. this will be a yearly tax for each renewal of iqama for all foreign workers).
Total: 7 757 049.86 USD.
[Exhibit B8 – Additional tax due to changes in labour legislation]
4.10 Damages summary

A summary of damages, in the sum of 309 075 841 USD, is set out in Table 3.
4.11 Variations not paid

A summary of variation orders not paid, in the sum of 111 579 272 USD, is set out in Table 4.
4.12 Total claim damages

Total delay and disruption damages claimed for the period 12 July 2012 to 31 December
2016 are 420 655 113 (four hundred and twenty million, six hundred and fifty-five
thousand, one hundred and thirteen) USD. These damages are divided as follows.
Damages 309 075 841 USD

Requests for variation orders not paid 111 579 272 USD
149
Table 3 Summary of damages
Type of damages Amount: USD
A Delay/site indirect costs 143 716 298.90

B Main office overhead 33 481 448.00
C Verification, engineering and redesign costs 10 663 104.00
D Equipment costs 12 432 348.26
E Disruption costs 34 851 347.60
F Funding 43 176 796.00
G Interest etc. 18 595 092.75
H Losses due to Owner’s omission of work 3 902 356.46
I Additional costs due to changes in legislation 7 757 049.86
J Claim preparation costs 500 000.00
Total damages 309 075 841.83
Table 4 Summary of variation orders not paid
Ref. no./ Latest submittal Description Amount: USD

VO no. date
9 6-Oct-16 Interior design and tiling works (part 1) 37 691 385.14

10.1 14-Jun-14 Items removed from interior design and tiling 20 580 858.25
works
10.2 24-Sep-14 Steel nosing for stairs 126 624.21
10.3 14-Dec-14 Additional excavation and backfilling 82 877.87
10.4 9-Dec-14 Changes from paint to stone 81 460.58
10.5 23-Oct-13 Additional concrete works (various items) 6 057 715.20
10.6 13-Jul-13 Variation order for minor additional works due 1 565 222.34
to changes by TQs
10.7 6-Dec-14 Additional steel works (related to various 2 479 359.98
subcontractors)
10.8 19-Nov-16 Variation orders for various electrical and 10 663 150.52
HVAC systems (4.2 + 5.7)
10.9 19-Feb-15 Modifications approved by the Client 9 273 434.11
10.11 8-Dec-15 Various related to wood cladding 8 259 668.16
10.12 19-Nov-16 Additional associated civil works for the 2 530 816.96
additional electrical and HVAC works
10.13 20-Jun-15 Additional decorative paint finish to KEL’s 190 000.00
scope of works
10.14 7-Sep-14 Civil defence requirement cost impact (2) 998 862.40
10.15 19-Apr-14 Additional variations for skylight construction 3 079 107.20
11 Diverse Other requested contract items modification 7 918 729.61
Total 111 579 272.53
150
ISBN 978-0-7277-6197-2

Index
acceleration total cost method, 74–75

in general, 47–49 work or trade sampling, 75
costs, 47–49
mitigation, 46–47 balance of probabilities principle, 15–16, 60,
acceleration costs, 47–49 62, 70, 89
acceptance Balfour Beatty Building Ltd v. Chestermount
engineer, 117 Properties Ltd (1993) 62 BLR 1 QBD,
offer, 3, 4–5 41–42
access, lack of, 96–102 Balfour Beatty Construction Limited v.
activity float, 33 The Mayor and Burgess of the London
agreement Borough of Lambeth (2002) 1 BLR 288,
in general, 5 36–37
as essence of contract, 3 bank charges, 130, 135, 149
JCT contracts, 7 bar chart methodology, 37
NEC3/4, 79 battle of the forms, 4–5
offer, 4 Bernhard’s Rugby Landscapes Ltd v. Stockley
Akenhead, Justice, 46, 59–60, 62, 66 Park Consortium Ltd (QBD 1997) 82 BLR
ambiguity, 12 81, 64
appendices, 90 Bramall and Ogden Limited v. Sheffield City
as-built critical path analysis, 40–41 Council (1985) 1 Con LR 30., 15
as-built programme, 28, 37–38, 40–41, 114 breach of contract
Ascon Contracting Limited v. Alfred McAlpine in general, 9
Construction Isle of Man Limited [1999], contractors, 10
48–49 damages, 9–11
as-planned programme, 37–38, 40, 114 liquidated damages, 11–14
as-planned versus as-built windows analysis, 40 loss/expense claims, 51, 53
assessment loss of profit, 60
costs British Steel Corporation v. Cleveland Bridge
in general, 71–72 and Eng. Co. [1981] 24 BLR 100, 19
calculation formulae, 59–60, 61 building information modelling (BIM)
earned value analysis, 75 in general, 29
Eichleay formula, 59 delay/disruption claims, 1–2, 29–30
Emden formula, 59 protocol, 29
Hudson formula, 59 burden of proof, 15, 16, 70, 85
industry standards approach, 76 but-for analysis (collapsed as-built analysis),
modified total cost method, 65–66, 75 38, 41, 114
programme analysis, 75
project comparison approach, 75–76 calculation formulae
project-specific approach, 73–75 head office overheads, 59–60
system dynamics modelling, 75 increased costs, 61
151

case studies redress sought, 90

FIDIC contract, 113–130 sections, 84
claim evaluation, 127–130 summary, 85
contractual analysis, 114–115, 119–124 claims
Design Plan, 115–116 burden of proof, 15
factual analysis, 116–119 standard of proof, 15–16
summary, 113–114 see also claim documents; delay/disruption
time impact analysis, 124–127 claims; global claims; loss/expense claims
international contract, 131–150 climatic conditions, 61
claim statement, 131–134 collapsed as-built analysis (but-for analysis),
damages and losses, 147–150 38, 41, 114
damages due to delay/disruptions, Colman, Justice, 42
134–136 commercial needs, 1
summary of events, interim submission, common law
136–144 damages, 51–52, 60, 62, 86
summary of events, after interim penalty clauses, 13
submission, 144–146 see also civil law
summary of events, final submission, compensation events (NEC3/4)
146–147 in general, 77
JCT contract, 91–103 assessment, 78–79
contract, 92–93 case study, 105–112
delay events, 94–103 implementation, 79
delay overview, 93–94 notification, 78
introduction, 91–92 completion date
NEC3/4, 105–112 critical paths, 32–34
compensation events, 107–111 extension of time provisions, 15, 19–21
conclusion, 111–112 reasonable time, 19–20
contract, 106 time at large, 21–23
dispute overview, 106–107 see also extension of time
introduction, 105–106 concurrent delays
cause/effect in general, 42–43
delay/disruption events, 2, 27, 38, 52, 88 approaches to
global claims, 63, 64 American, 43
City Inn v. Shepherd Construction (2007) application of but for test, 43
CSOH 190, 45 apportionment, 44–45
City Inn v. Shepherd Construction (2010) common-sense, 43–44
CSIH 68, 35, 45 Malmaison, 43–44
civil law in English v. Scottish Courts, 45–46
in general, 3 in JCT contracts, 45–46
basic premise, 70 Conditions of Contract for Plant and
penalty clauses, 14 Design-Build (Yellow Book), 8, 115
see also common law consideration, 3, 5
claim documents, 83–90 construction law, 3–4
appendices, 90 constructive acceleration, 48–49
contract, 85 contract documents, 119–120
contractual basis of claim, 85–86 contract law, 4
details of claim, 87–88 contractors
dispute resolution process, 85 acceleration, 47–49
financial evaluation of claim, 89 breach of contract, 10
front cover, 84 damages claims, 52
introduction, 85 delay/disruption claims
parties, 85 disruption claims, 69–71
presentation, 83–84 early warnings, 27–28
152

Index
FIDIC contract, 82 costs

JCT, 80–81 acceleration, 47–49
NEC3/4, 78–79 assessment
delay/disruption events in general, 71–72
concurrent, 42–43 calculation formulae, 59–60, 61
culpable, 25–26 earned value analysis, 75
impact on, 27 Eichleay formula, 59
non-culpable, 25 Emden formula, 59
extension of time provisions, 19–21 Hudson formula, 59
float ownership, 34 industry standards approach, 76
liquidated damages clause, 11–13, 14–15 modified total cost method, 65–66, 75
loss/expense claims. see loss/expense claims programme analysis, 75
mitigation, 46–47, 56–57 project comparison approach, 75–76
project programming, 31–32 project-specific approach, 73–75
reasonable time, 19 system dynamics modelling, 75
records/documentation, 27, 28–29 total cost method, 74–75
on-site establishment costs, 53–57 work or trade sampling, 75
terminal float, 34 bank charges, 130, 135, 149
time at large, 21 disruption. see disruption costs
contracts establishment charges, 57–60
agreement as essence, 3 financing, 130, 135
breach. see breach of contract funding, 130, 135, 148
claim documents, 85 preparation claim, 61–62
consideration, 3, 5 reinstatement, 11
executed as deed, 5 on-site establishment, 53–57
failure to comply, 14–15 counter-offer, 4–5
FIDIC criminal law, 3
in general, 8 critical paths
case study, 113–130 in general, 32–33
extension of time, 82 delay, case studies, 95, 96, 102, 103
payment claims, 81–82 strength of, 34
fixed-price/lump sum, 61, 120–121 weaknesses, 35–36
float, 33–34 culpable delay events
fraud, 4 in general, 25–26
implied term, 31 extension of time, calculation of, 41–42
international, case study, 131–150 damages
JCT in general, 9–10
in general, 7 assessment date, 10
ascertainment process, 60 breach of contract, 9–11
case study, 91–103 calculation methodology, 129–130
concurrent delays, 45–46 common law, 51–52, 60, 62, 86
delay notices, 80 liquidated, 11–15
loss and expense application, 80–81 measure, 10–11
terminal float, 33–34 see also delay/disruption claims;
misrepresentation, 4 loss/expense claims
NEC3/4 damages claims (common law), 51–52
in general, 6–7 deed, contract executed as, 5
case study, 105–112 delay analysis
compensation events, 77–79 in general, 36–37
terminal float, 34 methods used
programme in, 31–32 bar chart methodology, 37
standard forms, 5–8 collapsed as-built analysis, 38, 41
contract sums, 94 impacted as-planned analysis, 38, 40
contra proferentem rule, 5, 12 longest path analysis, 40–41
153

as-planned versus as-built windows case studies, 135, 148

analysis, 40 entitlement to, 53
retrospective critical path method, recoverability, 69, 70
37–38 v. delay costs, 69
snapshot analysis, 38 documents. see contract documents; records/
time impact analysis, 40 documentation; claim documents
time slice analysis, 40 double recovery, 60
window analysis, 38, 40 Dunedin, Lord, 13
Delay and Disruption Protocol, 36, 39–40 Dunlop Pneumatic Tyre Co. Ltd. v. New Garage
delay/disruption claims and Motor Co. Ltd. (1915), 13–14
BIM, 1–2, 29–30 Dyson, Justice, 44
commercial needs, 1
delay analysis. see delay analysis early warnings, 27–28
FIDIC contract earned value analysis, 75
in general, 81–82 Eichleay formula, 59
case study, 113–130 Emden formula, 59
international contract, case study, 131–150 employers
JCT contract acceleration, 48–49
in general, 80–81 contractor’s loss of profit, 60
case study, 91–103 delay/disruption claims
NEC3/4 early warnings, 28
in general, 77–79 NEC3/4, 78–79
case study, 105–112 delay/disruption events
see also claim documents; disruption concurrent, 42–43
claims; global claims; loss/expense culpable, 25–26
claims impact on, 27
delay/disruption events extension of time provisions, 19–21
in general, 1, 25 float ownership, 34
case studies, JCT contract, 94–103 liquidated damages clause, 11–15
cause/effect, 2, 27, 38, 52, 88 mitigation by contractor, 46–47
concurrent delays. see concurrent delays project programming, 31–32
culpable reasonable time, 19
in general, 25–26 time at large, 21–22
extension of time, calculation of, 41–42 see also engineers
delay analysis. see delay analysis Engineering and Construction Contracts, 6–7
FIDIC contract, 126–127 engineers
non-culpable, in general, 25 acceptance, 117
records/documentation, 27, 28–29 claims, 81–82
delay notices (JCT), 80 contract documents, 120
Denning, Lord, 22, 41 design information, 116, 133–134, 137–138
design information, 116, 133–134, 137–138 extensions of time, 82
Design Plan, 115–116 role, 121–124
Dillingham-Ray v. City of Los Angeles (2010) variation orders, 124
182 Cal. App . 4th 1396, 65 see also employers
dispute resolution process, claim documents, 85 establishment charges, 57–60
disruption claims, in general, 69–71 extensions of time
disruption costs acceleration, 48
assessment claims, case study, 91–103
in general, 71–72 clauses, 14, 19–21
industry standards approach, 76 FIDIC contract, 82
project comparison approach, 75–76 financial reimbursements, 26–27
project-specific approach, 73–75 mitigation, 46–47
154

Index
Fédération Internationale des Ingénieurs- international contracts, case study, 131–150

Conseils (FIDIC) international markets, 2
contracts interpretation, of term, 5
in general, 8
case study, 113–130 J Crosby and Sons Ltd v. Portland UDC
extension of time, 82 (1977) 5 BLR, 121, 64
payment claims, 81–82 J F Finnegan v. Sheffield City Council (1988)
F G Minter v. WHTSO (1980) 13 BLR 1 CA, 43 BLR, 124, 58
62 John Barker Construction Ltd v. London
financing costs/finance charges, 62, 130, 135 Portman Hotel Ltd (1996) 83 BLR, 31, 48
fixed-price/lump sum contracts, 61, 120–121 John Doyle Construction Ltd v. Laing
floats, 33–34, 125, 142 Management (Scotland) Ltd (2004), 74
formulae, calculation John Doyle Construction v. Laing Management
head office overheads, 59–60 (Scotland) (2002) CILL, 1870, 45
increased costs, 61 John v. London Portman Hotel Ltd (1996)
Fortec Constructors v. United States 8 Cl. Ct. 83 BLR, 31, 36
490 (1985), 33 Joint Contracts Tribunal (JCT)
fraud, 4 contracts
funding costs, 130, 135, 148 in general, 7
ascertainment process, 60
Gaymark Investments Pty Limited v. Walter case study, 91–103
Construction Group [1999] NTSC, 143, concurrent delays, 45–46
22–23 delay notices, 80
Glenlion Construction Ltd v. Guinness Trust loss/expense application, 80–81
(1987) 39 BLR 89 QBD, 33–34 terminal float, 33–34
global claims, 63–66
in general, 63
Laing Management (Scotland) Limited v.
approaches to, 64–66
John Doyle 11 June 2004, 65
cause/effect, 63, 64
Late Payment of Commercial Debts (Interest)
general rules, 63–64
Act 1998, 62
international markets, 2
law. see common law; construction law;
modified total cost method, 65–66
contract law; criminal law; civil law
Goff, Lord, 19
liquidated damages clause
gross method, 41
in general, 11–12
ambiguity, 12
Hadley v. Baxendale (1854) 9 Exch, 341, breach of contract, 11–14
9–10, 62 contractors, 11–13, 14–15
head office overheads, 57–60 employer, 11–15
Henry Boot Construction (UK) Ltd v. penal nature of, 12–14
Malmaison Hotel (Manchester) Ltd reasonable time, 20
[1999] 70 Con LR, 32, 44 Lloyd, Humphrey, 37
Henry Boot v. Malmaison (2000) CILL 1572 London Borough of Merton v. Stanley Hugh
TCC, 32 Leach (1985) 32 BLR 51, 64
H. Fairweather v. London Borough of longest path analysis, 40–41
Wandsworth (1987) 39 BLR, 106, 43–44 loss and expense application (JCT), 80–81
Hicks, Judge, 48–49 loss/expense claims
Hudson formula, 59 in general, 51–53
double recovery, 60
impacted as-planned analysis, 38, 40 financing costs, 62
implied term, 31 head office overheads, 57–60
increased costs, 61 increased costs, 61
Institution of Civil Engineers, 6 loss of profit, 60
155

overlap, 60 parties, claim documents, 85

preparation costs, 61–62 Peak Construction (Liverpool) Ltd v.
on-site establishment costs, 53–57 McKinney Foundations Ltd (1970)
v. common law damages claims, 51–52 1 BLR, 111, 19–20, 22
working under different climatic conditions, penalty clauses, 12–14
61 Percival, Recorder, 74
lump sum/fixed price contracts, 61, 120–121 Philips v. Ward [1956] 1 WLR, 471, 11
pre-liminary items, 53–57
MacLean, Lord, 65 preparation, loss/expense claims, 61–62
measured mile analysis, 73–74 presentation, claim documents, 83–84
misrepresentation, 4 prevention principle, 14, 20–21, 22
mitigation profit, loss of, 60
in general, 46–47 programme analysis, 75
on-site establishment costs, 56–57 project programming
modified total cost method, 65–66, 75 in general, 31–32
money, linked with time, 26–27, 53 critical paths
Motherwell Bridge Construction Limited v. in general, 32–33
Micafil Vakuumtechnik (2002) TCC 81 failure to provide, 36–37
Con, 49 strength of, 34
Mount Charlotte Investments Ltd v. Westbourne weaknesses, 35–36
Building Society [1976] 1 All ER, 890, 24 floats, 33–34
Multiplex Constructions UK Ltd v. Honeywell non-critical paths, 33
Control Systems Ltd [2007] BLR, 195,
22–23 reasonable time, 19, 20
records/documentation, 27, 28–29
Napoleonic Code, 14 see also claim documents
Natkin and Co. v. George A. Fuller Co. 347 reinstatement costs, 11
F. Supp. 17 (W.D. Mo.), 32–33 retrospective critical path method, 37–38
NEC3/4. see New Engineering Contract The Royal Brompton Hospital v. Hammond
(NEC3/4) (2001) 76 Con LR 148, 32, 43
net method, 41 Ruxley v. Forsyth [1995] UKHL, 8, 11
New Engineering Contract (NEC3/4)
Salmon, Justice, 14, 20, 22
in general, 6–7
Seymour, Judge, 32, 43
compensation events
site overheads, 53–57
in general, 77
snapshot analysis, 38
assessment, 78–79
Society of Construction Law’s Delay and
case study, 105–112
Disruption Protocol, 36, 39–40
implementation, 79
Stabb, Judge William, 58
notification, 78
Standard Building Contract (JCT), 7, 80–81, 92
terminal float, 34 standard forms, 5–8
non-critical paths/activities, 33, 56 standard of proof, 15–16
non-culpable delay event, 25 Stanley Hugh Leach v. Merton (1985) 32 BLR
notifications, 27–28, 78 51, 52
subcontractors, 57
offer, acceptance, 3, 4–5 summary
off-site overheads, 57–60 case studies
on-site establishment costs FIDIC contract, 113–114
in general, 53–56 international contract, 136–147
contractor, 53–57 claim documents, 85
mitigation, 56–57 system dynamics modelling, 75
subcontractor, 57
Osborne, Lord, 45 Temloc v. Errill Properties Ltd (1987) 39 BLR
overlap, loss/expense claims, 60 30, 12
156

Index
term, interpretation of, 5 undefined provisional sums, 94

terminal float, 33–34
Thomas Telford Limited, 6 variation orders, 124
time Vinelott, Justice, 64
extension of Walter Lilly and Co. Ltd v. Mackay and DMW
acceleration, 48 Developments Ltd [2012] EWHC, 59–60
clauses, 14, 19–21 Walter Lilly and Company Ltd v. Mackay and
FIDIC contract, 82 Anor [2012] EWHC, 1773, 46, 62, 66
financial reimbursements, 26–27 Wells v. Army & Navy Cooperative Society
mitigation, 46–47 (1902) 86 LT 764, 41
at large, 21–23 Wharf Properties Limited and Another v.
linked with money, 26–27, 53 Eric Cumine (1991) 52 BLR 1, 64
see also reasonable time; time is of the Whittal Builders Co. Ltd v. Chester-Le-Street
essence clauses District Council (1985) 11 CLR, 74
time entitlement analysis, 125–126 window analysis, 38, 40
time impact analysis, 40, 124–127, 139 work/trade sampling, 75
time impact effect, 126–127 WW Gear Construction Ltd v. McGee Group Ltd
time is of the essence clauses, 23–24 [2010] EWHC 1460 (TCC), 28
time slice analysis, 40
total cost method, 74–75 Yellow Book (Conditions of Contract for Plant
Toulmin, Judge, 49 and Design-Build), 8, 115
Toulson, Recorder, 48 Young, Lord, 45
157

Delay and Disruption Claims in Construction (A Practical Approach) (2017)

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Delay and Disruption Claims in

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Ali D Haidar and Peter Barnes

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A key (and in some ways, unique) element of this book is

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ICE Publishing: All rights reserved

1.2. Purpose of this book

ICE Publishing: All rights reserved

2.2. Contract law

Therefore, the essence of any contract is agreement.

If there is fraud or misrepresentation the contract may be voidable, while if there is a

Each of the essential elements of a contract is considered in more detail below.

2.2.1 Offer and acceptance

In whichever form an offer is made it must be sufﬁciently deﬁnite to be capable of resulting

An agreement is reached either

■ when a statement of agreement is signed or executed, or

2.2.4 Executed as a deed

2.3. Standard forms of contract

It must be acknowledged that it is common for standard forms of contract to be amended,

The Engineering and Construction Contract has six main options

■ Option A: priced contract with activity schedule

2.3.2 Joint Contracts Tribunal (JCT) contracts

Some of the more commonly used JCT contracts are the

■ Standard Building Contract

2.3.3 Fédération Internationale des Ingénieurs-Conseils (FIDIC) contracts

■ the Red Book, which is the Conditions of Contract for Construction

ICE Publishing: All rights reserved

3.2.1 Date of assessment of damages

3.2.2 Measure of damages

3.3. Liquidated damages

3.3.2 Penal nature

a secondary obligation which imposes a detriment on the contract-breaker out of all

3.3.4 The failure to comply with contractual procedures

3.4. Burden and standard of proof

3.4.2 Standard of proof

Therefore, if a set of scales is imagined as being the ‘balance of probabilities’, in some

In all circumstances, some admissible evidence must be produced to support everything

Miliangos v. George Frank [1976] AC 443

ICE Publishing: All rights reserved

Obviously, to allow a contractor to complete in a ‘reasonable time’ (a period that would be

4.2. Purpose of extension of time clauses

Because of the obvious difﬁculties, as outlined above, of allowing a contractor simply to

of time to be granted in respect of acts of prevention by the employer or by anyone or

4.3. Time at large

■ No time for completion is ﬁxed in the contract.

4.4. Time is of the essence

In addition, most construction contracts incorporate a variety of terms compelling the

Another difﬁculty in giving effect to a ‘time is of the essence’ clause in construction

■ the contract expressly stating that this is so

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5.1.1 ‘Excusable’ events

5.1.2 ‘Non-excusable’ events

5.1.3 Time and money

5.2. Cause and effect

■ that an event actually occurred

Some contracts provide that the submission of notices is a condition precedent to