Realistic and achievable productivity?

Does the second edition of the SCL Delay and Disruption Protocol clarify the measure of disruption?

When the Society of Construction Law (SCL) first published its Delay and Disruption Protocol in 2002 (the 2002 Protocol), it was received with enthusiasm by construction professionals around the globe, before gaining judicial approval in multiple jurisdictions worldwide – most notably Australia. 

It may be trite advice that any dispute arising out of a contract must be resolved in the manner prescribed by the contract, but the complexities of the construction process often exceed the drafting abilities of even the most skilled and experienced contract drafters. It is this combination of complexity and inadequacy in standard form contacts, as acknowledged by the 2002 Protocol, that provided the fertile ground in which the 2002 Protocol blossomed into a go-to guide for any contractor seeking to prosecute a claim for delay or disruption.

The objective of the 2002 Protocol was to provide guidance on the resolution of disputes that commonly arise between parties to construction contracts, where one party sought an extension to the contract period and/or compensation for additional time or resources expended. The largest part of the 2002 Protocol was devoted to the resolution of delay-related claims; the first 18 of its 21 core principles focus on best practice or principles concerning the assessment or valuation of delay.

Core principle 21, the final core principle of the 2002 Protocol, is succinctly titled “Disruption”, which it defines as being a “disturbance, hindrance or interruption to a Contractor’s normal working methods, resulting in lower efficiency”. The subsequent accompanying guidance is also rather brief when it comes to the assessment of disruption, and provides that:

The most appropriate way to establish disruption is to apply a technique known as “the Measured Mile”. This compares the productivity on an unimpacted part of the contract with that achieved on the impacted part. Such comparison factors out issues concerning unrealistic programmes and inefficient working. The comparison can be made on the man-hours expended or the units of work performed.

The 2002 Protocol is not prescriptive as to how the measured-mile comparison ought to work in practice. Beyond asserting that the objective of the measured mile (or any other method of measuring disruption) is to assess the compensation necessary to place the contractor in the same financial position it would have been had the event complained of not occurred, the 2002 Protocol is absent of detail.

While few construction professionals would argue against the merits of the measured mile as a method for assessing disruption, the 2002 Protocol did not go far enough to achieve its stated aim of being adopted by “most contracts … as the best way to deal with delay and disruption issues”. Focusing on disruption, to compare the productivity on an unimpacted part of the contract with that achieved on the impacted part is not a simple task, and the 2002 Protocol left too many questions unanswered, not least: what is an unimpacted part of the contract?

In 2017, the SCL issued an updated version of its Delay and Disruption Protocol (the 2017 Protocol), to bring the guidance up to date and reflect the evolution of the industry best practices that had developed during the 15 years since its first publication. 

Much like the 2002 Protocol, the 2017 Protocol quickly gained judicial approval (before the second anniversary of its publication in Australia) and continued in the vein of its predecessor to provide construction industry practitioners with a helpful solution to the many lacunae in standard form construction contracts.

While the headline-grabbing differences between the 2002 Protocol and the 2017 Protocol focused on the move from retrospective to prospective methods of delay analysis, the disruption guidance was also furnished with some much-needed detail.

Core principle 18 – replacing the original core principle 21 – is now titled “Disruption Claims”, and provides that: 

Compensation may be recovered for disruption only to the extent that the contract permits or there is an available cause of action at law. The objective of a disruption analysis is to demonstrate the loss of productivity and hence additional loss and expense over and above that which would have been incurred were it not for the disruption events for which the Employer is responsible.

What is disruption?

Before marching headlong into what a disruption assessment ought to look like, it is probably time to pause and first consider: what is disruption? Among the numerous hurdles placed between a disrupted contractor and its compensation is the void of a consensus as to what is really meant by disruption. Most standard form contracts are silent when it comes to disruption – a fact that was acknowledged in the 2002 Protocol. Some standard form contracts do anticipate disruption in the form of an effect of an instruction to vary the works, or by the failure to provide a document that is necessary to proceed with the works, but none of the more commonly used standard form contracts provide a framework for a disruption-based claim or its concomitant relief.

In broad terms, a claim for disruption exists as a breach of an implied term in any construction contract that the employer, and/or those for whom it is responsible, will not prevent or hinder the contactor from performing the works in a regular and orderly manner. 

Core principle 21 of the 2002 Protocol was, rather neatly, the SCL’s definition of disruption. The 2017 Protocol, with the equivalent core principle 18, provides a more comprehensive look at disruption to consider the circumstances under which disruption may be recoverable as a head of claim; the objective to be achieved by a disruption analysis, and the outcome if the objective is successful. 

The 2017 Protocol still provides a definition of disruption in the following guidance from section 18: 

Disruption (as distinct from delay) is a disturbance, hinderance or interruption to a Contractor’s normal working methods, resulting in lower efficiency.

Keating on Construction Contracts (the Honorable Sir Vivian Ramsay and Stephen Furst, Sweet and Maxwell, 2016) similarly defines disruption as a “disturbance of the contractor’s regular and economic progress and/or delay to a non-critical activity”. AACE International defines disruption “as an action or event which hinders a party from proceeding with the work or some portion of the work as planned or as scheduled”. 

While using different terminology, the definitions provided above reach a general accord around loss of productivity: disruption occurs when a contracting party performs an element of its work less efficiently, because of an external factor. Put another way, the output from a fixed body of resources (the input) is reduced, which logically increases the input cost per unit of output.

How one begins to demonstrate and assess the impact of the disruption event(s) will have a material effect on the outcome of the compensation claimed as arising from the disruption event.

It is this combination of complexity and inadequacy in standard form contacts, as acknowledged by the 2002 Protocol, that provided the fertile ground in which the 2002 Protocol blossomed into a go-to guide for any contractor seeking to prosecute a claim for delay or disruption.”
Conrad Bromley, Director, HKA
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