Search

THE ANALYSIS AND VALUATION OF DISRUPTION

Complaints of ‘disruption’ and additional costs are routinely made during the course of a
construction project, yet they remain notoriously difficult to prove.

One of the main reasons for this is that productivity losses are often difficult to identify and distinguish at the time they arise, as opposed to other money claims which are more directly concerned with the occurrence of a distinct and compensable event together with a distinct and direct consequence, such as an instruction for a discreet variation during the progress of the works or a properly notified compensation event.

As such, most claims for disruption are dealt with retrospectively and the claimant is forced to rely on contemporary records to try and establish a causal nexus for identified losses (cause and effect) which are all too often inadequate for the purposes of sufficiently evidencing a loss of productivity claim. When this happens the claimant is often forced into the situation where it advances a weak global or total cost claim of sorts to try and recover some of its losses. The cause and effect burden of proof is the same for a claim for loss of productivity as for any other claim insofar as the claiming party must first establish that the event or factor causing the disruption is a compensable risk event under the contract. To do this, the contract needs to be reviewed to understand the basis of the agreement as certain productivity issues may have been foreseeable and therefore accounted for within the claimant’s productivity allowances.

The contract may also identify if a party expressly accepted certain productivity risks. Where courts and tribunals have a clear focus on linking cause and effect, claims for disruption will come under greater scrutiny. It is unlikely that contractors and subcontractors will succeed where their claims for disruption are based simply on a global overspend on labour or plant for the whole of the contract working period. Sufficient detail is required to isolate the cause of the disruption complained of and evaluate the effects of that disruption.

Complaints of ‘disruption’ and additional costs are routinely made during the course of a construction project, yet they remain notoriously difficult to prove.”
Derek Nelson , Partner , HKA

This publication presents the views, thoughts or opinions of the author and not necessarily those of HKA. Whilst we take every care to ensure the accuracy of this information at the time of publication, the content is not intended to deal with all aspects of the subject referred to, should not be relied upon and does not constitute advice of any kind. This publication is protected by copyright © 2017 HKA Global Ltd.

RELATED ARTICLES