Often, productivity losses are associated with changed work or variations. Dealing with the calculation of proper compensation for this loss can be particularly challenging. Key industry resources or authorities may be helpful as a starting point. Beyond the industry resources, skilled analytical work may be needed.
My discussion is bifurcated / divided into situations using United States law and situations using English law. The US law discussion can be found in a previous post. It is important to note that McLaughlin and McLaughlin [M&M] is not a law firm and is not intending to provide legal advice. M&M is a consulting firm providing (among other services) non-legal expertise in dispute resolution and litigation support. For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.
In the UK, two commonly used references are:
- Delay and Disruption in Construction Contracts, Keith Pickavance
- The Society of Construction Law Delay and Disruption Protocol, Society of Construction Law
Another useful resource is published by AACE International. This AACEI document is the Practice Guide, Estimating Lost Labor Productivity in Construction Claims, AACE International Recommended Practice No 25R-03. This resource is particularly useful in selecting methodologies as well as other references and terminologies.
Other relevant references or resources are discussed in our (M&M) prior post titled: Productivity Calculations – Change Order / Variation Impact (Introduction – United States and Canada).
In order to achieve common understanding, several terms and definitions follow:
Disruption – “Disturbance, hindrance or interruption of a Contractor’s normal work progress, resulting in lower efficiency or lower productivity that would otherwise be achieved. Disruption does not necessarily result in Delay to Progress of Delay to Completion.” [SCL Protocol]
Impact – “The effect that a change has on an activity or the effect that a change to one activity has on another activity.” [SCL Protocol]
Variation – “An expressed or implied instruction for change…Although variations usually affect the content or quantity of the work, they can affect a project’s layout or space configuration and can also affect C’s [Contractor’s] programme and/or sequence of work through changes in programmed deliveries of developer-supplied equipment of work.” [Pickavance]
Regarding impact resulting in disruption, Pickavance contends:
“Variations in particular or ‘unplanned changes’ in general, are probably the most common cause of lost productivity, although quantification of loss caused by variations is more often than not dealt with by estimation than by calculation.” [Pickavance, p 664]
Based on the premise that variations (or changed work) are a common cause of significant impacts to productivity, acceptance and methods of calculation or quantification are essential. Methodology varies and the sources discussed above treat the matter in some detail. The general preference is direct contemporaneous analysis or measured. Prospective methodologies tend to differ from retrospective approaches. The form of analysis varies and will be discussed in later posts.
The references and resources I discussed previously represent a starting point for understanding and analyzing impacts associated with variations (changed work). Actual analyses are complicated and require consideration of many factors. In subsequent posts, I will discuss some of these considerations and factors. Careful and thoughtful analyses are required in order to achieve fair and equitable compensation (money, time and other considerations) to the contractor(s) in situations where changed work / variations are significant.