2nd December 2014

Dr. Khaled Ahmed Al-Naas

Delay and Disruption in the Construction of Mega Projects

FUTURE CONCRETE2014 QATAR

Background

Generally projects face delay and disruption especiallythe mega/complex projects due to different causes.

Minor disruption can cause delay and unanticipatedcost.

Contractors usually overlook the possible disruptiondue to changes because the focus is mainly on theadditional quantities or duration of work rather thanthe impact of the disruption on the overall costs ofperformance.

Delay

1. Excusable Delay – Employer’s delay.

2. Non-Excusable Delay – Contractor’s Delay

3. Compensable Delay – Employer’s delay.

4. Non-Compensable Delay – Contractor’s Delay or otherwisestated in the Contract.

5. Concurrent Delay - when the owner and contractor areconcurrently delay the work

Types of Delay in Construction:

Delay in general could be defined as

“to act slower than desired/planned”.

Disruption

Any disturbance, hindrance or interruption of a contractor's normal work progress, resulting in lower efficiency/productivity that would otherwise be achieved. Disruption does not necessarily result in a delay to progress or delay to completion

Types of Disruption:-1. Compensable Disruption – the disruption made to the

Contractor’s performance due to causes beyond thecontractor’s control.

2. Non-Compensable Disruption – the disruption made to thecontractor performance due to causes within thecontractor’s control.

YOUR PLAN

REALITY

Objective

Improve the awareness of the different partiesinvolved in the construction industry about thedelay and disruption.

Questionnaire Analysis

The questionnaire has been designed in twoParts. Part one concerning the personalinformation of the participants and containsfive questions. Part two consists of 25questions in relation to the knowledge andtechnical information about disruption.

Questionnaire Analysis

The questionnaire was distributed to one hundred two (102)professionals across forty five (45) companies covering all typesof organization involved within the construction industry.Seventy one (71) responses have been received representingthirty eight (38) companies in different rules andresponsibilities.

The details of the participants in terms of role in constructionindustry, years of experience, position and geographical workingarea are shown in the following graphs

Questionnaire Analysis (Cont’d)

Contractor44%

Consultant21%

Engineer/PMC14%

Employer21%

Role in Construction Industry

Part One – Personal Information

Questionnaire Analysis (Cont’d)

Scheduler/Scheduling Consultant

30%

Engineer/Designer25%

Claims/Dispute Consultant21%

Others (Contract Admin., Cost Control)

24%

Current Position in Construction

Part One – Personal Information

Questionnaire Analysis (Cont’d)Part One – Personal Information

0-5 years6%

6-10 years18%

11-20 years35%

Over 20 years41%

Experience in Construction

Questionnaire Analysis (Cont’d)Part One – Personal Information

Egypt37%

Middle East63%

Geographical Working Area

Questionnaire Analysis (Cont’d)Part Two – Technical Information

Part two consists of 25 questions in relation to the knowledgeand technical information about disruption.

All answers from part two of the questionnaire confirmed thatthe concept of disruption is not fully understood in theconstruction industry

Questionnaire Analysis (Cont’d)Part Two – Technical Information

Q. No. Question Agree DisagreeDon't

knowTotal Agree% Disagree%

Don't

know%

1The concept of disruption is fully

understood in the construction industry.24 47 0 71 34% 66% 0%

2Construction Projects are normally

facing delay and disruptions.65 6 0 71 92% 8% 0%

4 Proving disruption is an easy task. 11 60 0 71 15% 85% 0%

5The Contractor has the sole

responsibility to prove disruption.39 30 2 71 55% 42% 3%

6All disruptions made to the Contractor's

work are compensable.8 61 2 71 11% 86% 3%

7

Contractor's approach for global

disruption claims to recover damages

are normally accepted by the Engineer /

Employer.

13 53 5 71 18% 75% 7%

8

In case of concurrent disruption events,

the Employer is responsible to segregate

the excusable events from those of

which are not?

52 16 3 71 73% 23% 4%

9

Excusable and compensable disruption

events are those attributable to

Contractor risk events?

34 33 4 71 48% 46% 6%

Delay and Disruption

Proving delay and/or disruption is not an easy task and it is atime consuming process especially in the mega/complexprojects with thousands of activities, lots of details andinterfaces with the involvement of many stakeholders.

To facilitate the preparation of well supported claim for delayand/or disruption, the contractor is recommended to follow thefollowing steps:

Delay and Disruption

1. Preparing well structured baseline programme2. Proper reporting system3. Proper programme updates4. Accurate programme revisions whenever required5. Defining and introducing the delays to the programme

updates6. Identifying the concurrent delays and splitting between the

contractor and employer delays7. Defining the contractual basis for the entitlement

Main Causes for Delay & DisruptionEmployer’s Risk Events

1. Delay in handing over the job site2. Different physical conditions from those provided during

the tender stage3. Changes to the original contract scope4. Late engineering deliverable5. Late procurement deliverables6. Frequent revisions for engineering deliverable7. Delay in approval above the contractual allowance8. Delay in payment9. Out of sequence deliverables;

Main Causes for Delay & DisruptionEmployer’s Risk Events (Cont’d)

10. Suspension of the work;11. Changes to project specifications;12. Existing underground utilities may differ from the as-built

drawings received.

Main Causes for Delay & DisruptionEmployer’s Risk Events (Example)

Plan

1- PMC to deliver the 9 vessels before casting the foundations2- Casting foundations on Axe (A) and install the vessels3- Casting foundations on Axe (B) and install the vessels4- Casting foundations on Axe (C) and install the vessels

Installation using Crane 160 ton – Monthly Hire Rate= QR 115,000

Installation Duration= 6 daysEstimated cost= QR6000 X 6 days=36,000 QR

Actual Installation using Crane 500ton – Monthly Hire Rate= QR 450,000

1- Delivery delay (25 days) + partial delivery + out of sequence delivery2- Vessels on axe (C) delivered first and the rest3- PMC instruction to cast all foundations to install vessels on axe (C).4- Installing the remaining vessels using higher capacity crane

Installation Duration = 25 + 2(Stand by + installation) = 27 daysActual cost:1- QR6000 X 2 days = QR 12,0002- QR450,000 X 27/30= QR 405,000Total = 12,000 + 405,000= 417,000Disruption cost= 417,000-36,000 =QR 381,000

Main Causes for Delay & DisruptionContractor’s Risk Events

1. Wrong assumptions;2. Poor planning and or site management;3. Unrealistic activities duration or interrelationships;4. Low productivity of resources;5. Lack of manpower and machinery resources;6. Poor quality of work; ( extensive remedies)7. Commitment to HSE requirement; 8. Financial issues9. Late delivery of the required materials.

Type of Disruption Claims

• Global Disruption Claims

• Detailed Disruption Claims

Global Disruption Claim

Type of Disruption Claims

Advantage

It does not need to perform detailed analysis which makes the claimpreparation process being quicker and cheaper.

Global claims may be defined as those where a global or composite sum,however computed, is put forward as the measure of damages or ofcontractual compensation where there are two or more separate mattersof claim or complaint, and where it is said to be impractical or impossibleto provide a breakdown or sub-division of the sum claimed between thosematters

Global Disruption Claim

Type of Disruption Claims

Disadvantages

1. It does not provide the link between each defined disruptionevent and the actual damage incurred due to each event.

2. It does not segregate the disruption occurred due to eventswithin the contractor’s control from those of which are within theemployer's control.

3. It does not provide proper cause and effect analysis for eachdisruption event.

Detailed Disruption Claims

Type of Disruption Claims

Detailed claims may be defined as those where the contractor is able toestablish and provide the causal link between the Employer risk event andthe resultant loss suffered.

Advantages

1. Provides the link between each defined Employer risk event and theactual damage incurred due to each event.

2. It segregates the disruption occurred due to events within theContractor’s control from those of which are within the Employer'scontrol.

Disadvantage

It needs to perform detailed analysis which makes the claim preparationprocess being lengthy and costly.

Conclusions

1. The concept of disruption in the construction industry is not fully understood.

2. Preparing the extension of time and disruption claims is not an easy process. It must start during the planning phase.

3. The contractor has the sole responsibility and the burden of proving the extent of the delay and disruption for which it seeks compensation.

3. In case of concurrent delay, the contractor is entitled for extension of time without any reduction due to the contractor risk events.

Conclusions (Cont’d)

5. The contractor cannot recover damages for delay attributable to employer risk events if the contractor delayed the work concurrently unless the contractor can segregate and clearly define the portion of the delay due to the causes within its control from those of which beyond its control.

6. Global disruption claims are normally denied by the employer because they do not provide the details required to prove each disruption event.

Thank You