2. Construction Claims and Disputes
• Construction Delay Claims
• Labor Productivity Claims
• Design and Construction Defect Claims
• Force Majeure Claims
• Acceleration Claims
• Suspension and Termination Claims
• Differing Site Conditions Claims
• Change Claims
3. Construction Delay Claims
• Common points of contention
– Impact to the critical path, quantification
– Root-cause of the delay and entitlement
– Additional compensation
4. Labor Productivity Claims
• Some of the most contentious claims in
the construction industry
• Typically measured as labor hours per
quantity of material installed
• Loss is experienced when a contractor, or
a particular crew, is not accomplishing the
anticipated or planned production rates
5. Primary challenges –
• Identifying the root cause of labor
productivity issues
• Quantifying associated labor productivity
losses
• Corroborating the cause-and-effect
relationship
• Establishing entitlement to damages
6. Productivity Analysis
• Measured Mile Analysis
• Earned Value Analysis
• Work Sampling
• Comparable Work Study
• General and Specialty Industry Studies (Mechanical
Contractors Association of America [MCAA], Construction
Industry Institute [CII], Business Roundtable, etc.)
• Total Cost Method
• Modified Total Cost Method
• Time and Motion Studies
7. Defects Claims
• The owner chooses materials or hardware or provides
owner-furnished material, which is not sufficient for the
purpose intended.
• The architect/engineer specifies the incorrect material,
or fails to specify the materials to be used.
• The contractor’s quality control and workmanship is poor
or the contractor didn’t follow the proper
construction/installation guidelines.
• The contractor/subcontractor uses substandard materials
in an effort to reduce costs.
• The material supplier’s product is insufficient or
defective.
8. Force Majeure Claims
• Essentially free both parties to a
construction contract from liability or
obligation for failure to perform in the
event of extraordinary circumstances
– Acts of God
– Severe weather
– Labor strikes
– Natural disasters
– Governmental actions/changes in law.
9. Acceleration Claims
• Typically encountered on construction
projects when the contractor makes
efforts to recover the project schedule
after the project has suffered delays due
to causes it believes are beyond its control
– Working overtime
– Implementing a new shift
– Providing additional labor
– Adding other resources (i.e., equipment)
– Re-sequencing work activities
10. Suspension and Termination Claims
• Suspension occurs on a construction
project when an owner instructs a
contractor to temporarily stop work on all
or a portion of the project.
• Termination occurs when an owner
instructs a contractor to permanently stop
the performance of work and leave the
site.
11. Suspension Claims
• Often require a schedule delay analysis to
evaluate the impact to the project’s critical
path
• Elements of Cost
– Standby or idle time
– Demobilization/remobilization
– Other actual costs incurred due to the
suspension
13. Termination for convenience
• The reasonable cost of work performed prior to
termination, including profit
• Anticipated profits on uncompleted work
• Justifiable and reasonable termination costs
including project wind-down costs
• Other costs as may be mutually agreed
14. Termination for cause
• Failure to pay labor, subcontractors, vendors, or
material suppliers
• Failure to meet the project schedule or diligently
perform the work
• Defective or deficient performance
• Failure to follow applicable laws or regulations
• Failure to consistently follow safety
requirements
15. Termination for cause – Owners view
• Extended project duration and overhead costs (e.g.,
replacing one contractor with another almost invariably
results in overall project delays)
• Loss of use
• Loss of profits or deferred production
• Liquidated damages or actual damages for delay
• Cost to complete the project if the final project costs
exceed the value of the terminated contract less
amounts paid to the terminated contractor
16. Termination for cause – Contractor
• Costs to bid the project
• Mobilization and demobilization costs
• Anticipated profit on the project
• Costs for work performed but not paid
• Home office overhead costs
• Winding-down costs
• Damages for loss of good will/loss of future business due
to potential negative publicity following termination
• Betterment issues – changes or upgrades included in the
owner’s cost-to-complete damage model that are above
and beyond the contractor’s original scope of work
17. Differing Site Conditions Claims
• Commonly known as changed conditions
or concealed conditions
– Occur when conditions at a construction site
differ materially from those that existed at the
time of contracting or as represented in the
contract documents
18. Change Claims
• Unclear bid documents
• Owner directed changes
• Late, incomplete, or defective drawings; specifications, and other
contract documents
• Preferential changes by the owner
• Misinterpreted contract requirements by the parties
• Differing site conditions
• New or revised codes/standards
• Rework
• Impacts/changes to the construction means and methods
• Scope additions
• Acceleration and/or schedule changes
• Constructive changes
19. Critical Path Analysis
• Windows Analysis or Contemporaneous
Period Analysis
• Time Impact Analysis (TIA)
• Collapsed As-Built
• Impacted As-Planned
• As-Planned vs. As-Built
20. Windows Analysis or Contemporaneous
Period Analysis
• Retrospective schedule impact analysis
technique that generally utilizes
contemporaneous schedule updates, in
conjunction with as-built facts related to a
delay or change, to quantify impacts to
the as-built critical path associated with
the change or delay
21. Method
• Typically begins with the baseline construction schedule,
and then proceeds chronologically from update to
update, tracking progress along the critical and near
critical paths
• For each analysis period, the prior update becomes the
baseline for the analysis of delays or accelerations
• Compares start dates, finish dates, and durations of the
activities and identifies changes to schedule logic
between analysis periods
• Depends on reliable baseline schedule information,
contemporaneous schedule updates, and as-built
schedule information
22. Time Impact Analysis (TIA)
• Similar to the impacted as-planned
analysis, which forecasts or predicts a
delay’s effect on a project’s completion
date
23. Method
• Involves the insertion or addition of
activities indicating delays or changes into
an updated schedule representing
progress up to the point when a delay
event occurred to determine the impact of
those delay activities
24. Collapsed As-Built
• Retrospective technique that begins with the as-
built schedule and then subtracts activities
representing delays or changes to demonstrate
the effect on the completion date of a project
but for the delay or change
• Applied in cases where reliable as-built schedule
information exists, but baseline schedule and/or
contemporaneous schedule updates either do
not exist or are flawed to the extent that they
are not reliable to support a delay analysis
25. Method
• Involves identifying project delays or
changes
• Subtracting activities representing these
delays or changes from the as-built
construction schedule
• The result demonstrates when a project
would have been completed but for the
delays or changes
26. Impacted As-Planned
• A technique which forecasts or predicts a
delay’s effect on a project’s completion
date
• Generally restricted to the quantification of
delays for contemporaneous requests for
time extensions
27. Method
• Involves the identification and insertion or
addition of activities representing delays
or changes into the baseline schedule to
determine the impact of those delay
activities
28. As-Planned vs. As-Built
• A retrospective method which involves
comparing the baseline, or as-planned,
construction schedule against the as-built
schedule or a schedule that reflects progress
through a particular point in time
• Typically utilized when reliable baseline and as-
built schedule information exists, but the
contemporaneous schedule updates either do
not exist or are flawed to the extent that they
are not reliable to support a delay analysis
29. Method
• Vary from a simple graphical comparison
to a more sophisticated implementation
which considers the start and finish dates
and relative sequences of the various
schedule activities
– Simple variation is similar to a comparison of
a monthly update to the baseline schedule
– Complex variation compares logic changes
and duration adjustments
