CONSTRUCTION
5 STEPS TO FORMULATE A SUCCESSFULL DELAY CLAIM
FORMULATION | ANALYSIS | MANAGEMENT
Miguel de Cerventes Savedra one of the greatest novelist and writers of all time said that “delay always breeds danger”
This remark made in the 16th century still holds true today, especially in the construction industry. It is very seldom that a construction project is not impacted by delays and additional cost. The management of delay and cost claims can be contentious and as a result delays are one of the most predominant causes of disputes in our industry. How do we traverse this minefield of complexities successfully?
Claims were always one of the most difficult issues I had to deal with in the projects I was involved in over the past 20 years. I was so passionate to find a sensible and easy to understand way to formulate and construction claims that I embarked upon a journey that culminated in a new model developed by means of PhD research process. During the research I had the opportunity to test and refine the model with the assistance of thought leaders and specialists. I have distilled the main themes of the model in 5 easy steps which I will now share with you.
Dr Hendrik Prinsloo is an expert witness and specialist in the analysis construction delay claims
STEP 1 – DESCRIBE THE DELAY
A short concise description of the delay should be provided explaining the cause and effect. For example: late information from the owner (cause) resulted in the late start of the excavation (effect). The description should include the following information: when did the delay occur; where did the delay occur and why did the delay occur.
STEP 2 – EXPLAIN WHY YOU HAVE THE RIGHT TO CLAIM
When claims are analysed the first consideration is normally to determine whether the contractor has the right to claim. Written construction contracts normally provides for the contractor to submit a claim when specific events have occurred. In the case of delay claims most contracts would stipulate specific circumstances that will be categorised as excusable delays and would provide the right to the aggrieved party to claim.
Not all projects have the benefit of a written agreement. In smaller projects where a more informal approached are followed claims normally arise because of a deviation from the initial promise or deliverable. It can be that the initial promise or deliverable was agreed in a verbal discussion between the parties.
No matter the bases of the agreement the right to claim should be explained. In the case of a written agreement the specific contract clauses explaining the right to claim should be quoted and a brief description on how the circumstances giving rise to the claim complies with the clause(s) in the contract.
If no written agreement was entered into an explanation of how the actual promise or deliverable deviated from the initial agreed promise or delivery should be provided. In addition, the right to claim should then be motivated by explaining the reason for the deviation.
STEP 3 – SHOW COMPLIANCE WITH CONTRACTUAL PROVISIONS
Construction contracts would usually have specific provisions that have to be comply with for a claim to be successful. Normally a notification should be provided when the contractor becomes aware of the delay and a claim should then be submitted after some time. Provisions in terms of the notification may for example include a process governed by certain time restrictions or time bars.
This section of the claim should firstly provide a description of the contractual provisions that have to be complied with and would secondly have to explain how the provisions were adhere to.
STEP 4 – EXPLAIN THE IMPACT ON THE COMPLETION DATE
The risk allocation in most construction contracts would only make provision for the extension of the contractual completion date in the case of a delay impacting on the completion date. In other words only delays to activities on the critical path (critical activities) will delay the contractual completion date and would constitute a valid delay claim.
Firstly, it is important to clearly show that the delay indeed impacted on a critical activity. Secondly, the severity of the impact should be quantified. Several methods like the time impact analysis, window analysis, as-planned but for, as-planned v as-built and impacted as planned can be utilized to quantify the delay. However, a detailed description explaining and quantifying by means of a simple calculation how the impact on a critical activity resulted in a delay to the completion date is sometimes much more effective.
STEP 5 – CALCULATE COMPENSATION
Construction contracts normally allow for compensation to be paid to the contractor for excusable delays for circumstances where the risk lies with the owner. In this section a calculation should be provided on how the compensation due is calculated. The calculation should be informed by the principles set in the contract.
The claim should be concluded by clearly summarising the request made by means of the claim. For example: In terms of clause ….. of the contractual agreement we request that the completion date should be extended with … days changing the current contractual completion date from ………to ……….. and that compensation of …….. should be paid.