Delay Claims: Formulation/Analysis/Management

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Written by
Hendrick Prinsloo

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Published
3 Feb 2023

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Most construction projects have one thing in common and despite our best efforts to try and avoid it, projects are still haunted by it.

As project manager I spent a lot of my time trying not only to avoid it but also to minimize the impact thereof.

Since accepting it as inevitable I spent a number years doing intense research on it to find ways to manage the impact successfully.

Delays not only cause cost and time overruns but it is a major source of claims and disputes in the construction industry.

Contractors often wonder what is the best way to formulate and present delay claims. Architects and owner representatives grapple with the analysis and assessment of delay claims.

What have I learned through my research? Can it be avoided? Very seldom.

Can it be effectively managed? Certainly! Let me tell you how.

As project manager and owner representative of a flagship government office development I was faced with a dilemma. Many delays ranging from very poor soil conditions to significant owner initiated changes plagued the project.

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letter_spacing=”” text_shadow=”no” text_shadow_blur=”0″ text_shadow_color=”” dimensions_medium=”” dimensions_small=”” text_color=”#0f0f0f” animated_text_color=”” highlight_color=”” style_type=”none” sep_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_title_font=””]Atrium – New Flagship Government Office

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How do I ensure that these delays, in most cases excusable delays, are dealt with and analysed in such a way that it is transparent and fair to both the general contractor and the owner.

Being involved in the academics my first thought was to turn to the scholars dedicating their time to construction related research, who most likely would have answers for me.

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[/fusion_title][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” font_size=”22″ line_height=”” letter_spacing=”” text_color=”” content_alignment_medium=”” content_alignment_small=”” content_alignment=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_text_font=””]

After a comprehensive review of the literature available on the analysis and formulation of delay claims my hope for a quick solution was dealt a blow with the following research findings by scholars in the field of delay claims:

Various analytical methodologies have been developed over the years as aids to determine the extent of the delay, but there is limited information on the use of these methodologies in practice, and their impact on the construction process (Braimah, 2008).
Many problems are encountered in practice in the application, preparation and assessment of EOT (Extension of Time) claims. The lack of clear guidance on how to assess EOT claims can be seen as a major contributing factor to disputes (Danuri, Othman & Lim, 2006).

Previous research in terms of the various issues to considered when managing delay claims is fragmentary in nature and it would typically investigate one of the aspects in isolation of the others. Limited information is available in terms of an overall framework or procedure to guide practitioners in the assessment or formulation of delay claims.

Moselhi and El-Rayes (2002) developed a computer-based system, named WEATHER, to quantify the impact of weather conditions on construction productivity, project schedule and associated delays. Although this system will be helpful in the assessment of weather-related claims, it cannot be utilised as an overall decision-support system for claim evaluation because of its narrow focus on only one cause of delay.

Braimah (2008) developed a model for the selection of an appropriate EOT claim-assessment method. The aim of the model was to serve as a tool for assisting practitioners in justifying their choice of delay-analysis method. Scoring multi-attribute analysis, a multi-criteria decision-making method was utilised as the basis for the model. Although this model is a helpful tool in deciding on which of the many delay analytical methods should be utilised for a specific delay, it does not provide guidance on each step in the claim-assessment process.

The UK’s Society of Construction Law is a body comprising highly experienced engineers, architects, quantity surveyors and lawyers. It has developed a Delay-and-Disruption Protocol. The purpose of the protocol is to provide good practice guidance for construction delays and disruptions. Section 3 of the protocol offers high level guidelines on dealing with EOT during the course of the project (SCL, 2002).

It is evident from the literature that there is a need for guidance to simplify the many complexities associated with the EOT claim-assessment process. However, a very limited number of guidance tools are available at this stage for practitioners

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center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” type_medium=”” type_small=”” order_medium=”0″ order_small=”0″ dimension_spacing_medium=”” dimension_spacing_small=”” dimension_spacing=”” dimension_margin_medium=”” dimension_margin_small=”” margin_top=”29px” margin_bottom=”0px” padding_medium=”” padding_small=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” hover_type=”none” border_sizes=”” border_color=”” border_style=”solid” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”true” border_position=”all” first=”true”][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ before_text=”” rotation_text=”” highlight_text=”” after_text=”” content_align_medium=”” content_align_small=”” content_align=”left” size=”2″ font_size=”43″ animated_font_size=”” line_height=”” letter_spacing=”” text_shadow=”no” text_shadow_blur=”0″ text_shadow_color=”” dimensions_medium=”” dimensions_small=”” text_color=”#0f0f0f” animated_text_color=”” highlight_color=”” style_type=”none” sep_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_title_font=””]The need for guidance

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The review of the literature on the formulation and analysis of delay claims was helpful but did not provide a solution to my objective to find a fair, transparent and user-friendly process to guide me in the analysis of the delay claims.

With no solution in sight there was only one option remaining. I had to develop a framework for guidance for the assessment and formulation of delay claims. Because of my involvement in the academics I decided to formalise my research into a PhD.

The main objective of this study was to develop a framework with the use of a decision tree analysis to provide guidance for the assessment of delay claims. The framework would assist in providing a platform to standardise the assessment of delay claims. This approach will contribute to expediting the evaluation process; and it will limit the negative impacts associated with any prolonged process for concluding delay claims. As a result of the standardisation, it would also contribute to an improved perception of fairness in the evaluation of delay claims, which would, in turn, hopefully lead to the reduction in claims being subjected to dispute resolution.

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When considering the choice of the research design, I was mindful of the fact that the research is undertaken in the construction industry. Construction Industry disciplines are primarily applied sciences, focusing on the application more than on the mere generation of knowledge (Klosterman, 1983), (Knight & Ruddock, 2009). It was evident that action research, a very specific qualitative approach, would be the most appropriate choice for the research design. Action research is an approach to knowledge creation that results from a context of practice; and it requires researchers to work with practitioners, (Reason and Bradbury, 2001 and Huang, 2010). Focus-groups and interviews with industry specialist were deemed the most effective to gather the required data.

The level of specialist knowledge required excluded participants, who would only have a basic knowledge of the management of delay claims. As a result, it was decided to target those members serving on the technical committees of the organisations responsible for the compilation of construction form contracts. Several focus group consisting of architects, engineers, attorneys and delay claim specialists were consulted during the process of the development of the framework.

[/fusion_text][fusion_imageframe image_id=”1487|full” max_width=”” sticky_max_width=”” style_type=”” blur=”” stylecolor=”” hover_type=”none” bordersize=”” bordercolor=”” borderradius=”” align_medium=”none” align_small=”none” align=”none” lightbox=”no” gallery_id=”” lightbox_image=”” lightbox_image_id=”” alt=”” link=”” linktarget=”_self” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″]https://cdiexperts.com/wp-content/uploads/2023/02/Screen-Shot-2023-02-03-at-1.13.52-pm.png[/fusion_imageframe][/fusion_builder_column][fusion_builder_column type=”1_1″ type=”1_1″ layout=”1_1″ align_self=”auto” content_layout=”column” align_content=”flex-start” content_wrap=”wrap” spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” type_medium=”” type_small=”” order_medium=”0″ order_small=”0″ dimension_spacing_medium=”” dimension_spacing_small=”” dimension_spacing=”” dimension_margin_medium=”” dimension_margin_small=”” margin_top=”” margin_bottom=”0px” padding_medium=”” padding_small=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” hover_type=”none” border_sizes=”” border_color=”” border_style=”solid” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”true” border_position=”all” first=”true”][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ before_text=”” rotation_text=”” highlight_text=”” after_text=”” content_align_medium=”” content_align_small=”” content_align=”left” size=”2″ font_size=”43″ animated_font_size=”” line_height=”” letter_spacing=”” text_shadow=”no” text_shadow_blur=”0″ text_shadow_color=”” dimensions_medium=”” dimensions_small=”” text_color=”#0f0f0f” animated_text_color=”” highlight_color=”” style_type=”none” sep_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_title_font=””]Universal Decision Framework for Delay Claims

[/fusion_title][fusion_text columns=”1″ column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” font_size=”22″ line_height=”” letter_spacing=”” text_color=”” content_alignment_medium=”” content_alignment_small=”” content_alignment=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_text_font=””]

From the onset one of the most important objectives was to develop a user-friendly guideline to assist practitioners to navigate this potential minefield of complexities in the process of the assessment and formulation of delay claims. A number of possible tools were considered but ultimately decision trees were deemed to be the most suitable.

The decision trees are well suited to be utilised as guidance tools in decision-making. One of the main benefits of decision trees is that they are simple and easy to understand. The decision trees make use of a sequential process, in order to consider different decisions. This is very much in line with the process normally followed in the assessment of EOT claims. To be able to apply decision tree principles to EOT analysis it was necessary to identify the decisions taken as part of the evaluation process. The literature, focus groups and interviews identified the following essential decisions required when an EOT claim is to be analysed:

Were the contractual provisions complied with?
Was the delay excusable (owner’s risk)?
Was the delay critical?
Was the delay compensable?

Many of the construction contracts do not specifically mention the term ‘critical delay’, but rather a delay to the practical completion date. For a delay to impact on the practical completion date, it would necessarily have to be critical. An important decision in the EOT assessment process would be to determine whether the claim event delayed the practical completion date; and therefore, it can be categorised as critical. An important consideration in the decision tree would therefore be whether the delay is critical.

The term excusable delay is a well-defined concept in the literature. However, although the notion of excusable delays is captured in some of the clauses of the construction contracts under consideration, the term ‘excusable delay’ is not explicitly mentioned. Perhaps for this reason most of the focus-group participants found the term foreign. After highlighting the fact that, in essence, the term alludes to the process of determining whether the contractor is responsible for the delay, consensus was reached that it should be considered during the EOT assessment process.

One of the main considerations in the EOT-assessment process is to determine whether the contractual provisions were complied with. There are instances where contractual compliance to specific clauses does not lead to an outright rejection of the claim. These instances were highlighted in the focus groups and were considered in the decision trees for the different forms of contract. If it was established that an EOT should be awarded, an important consideration at that stage would be whether a compensation was payable to the contractor.

Decision trees address decisions in a sequential manner. As a result, it is necessary to determine the sequence in which the above decisions should be made.

The decision on whether the delay is compensable can only be made once all the other decisions have had a positive outcome and it is established that additional time should be awarded. Therefore, this decision should be considered last. A logical approach would be to sequence decisions in terms of the consequence of the outcome of the decision. If a specific decision would lead to the rejection of the EOT, it would make sense to consider this decision first.

However, it is not possible to decide which of the three remaining decisions should be addressed first, by merely looking at the outcome of the decision; because a negative response to any of the first three decisions would result in the EOT not being awarded. The degree of effort required in making a decision in each of the three questions differs. In practical terms, it would make sense to consider the decision that would require the least amount of effort first. Should this first decision result in the claim not being awarded, time would not unnecessarily be spent on decisions that require more effort to consider.

To determine whether the general contract clauses were complied with would normally not be a very involved process; as the facts presented in the EOT claim submission would be evaluated in terms of the relevant contract clauses. It is therefore proposed that the compliance with contract clauses should be considered before a determination is made on whether the delay is excusable. The following sequence of decision making provides for the most effective solution:

Decision 1 – Were the contractual provisions complied with?

Decision 2 – Was the delay excusable?

Decision 3 – Was the delay critical?

Decision 4 – Was the delay compensable?

If the decisions required in the EOT claim analysis process are translated into a decision tree, the decision tree can be formulated as follows:

[/fusion_text][fusion_imageframe image_id=”1478|full” max_width=”” sticky_max_width=”” style_type=”” blur=”” stylecolor=”” hover_type=”none” bordersize=”” bordercolor=”” borderradius=”” align_medium=”none” align_small=”none” align=”none” lightbox=”no” gallery_id=”” lightbox_image=”” lightbox_image_id=”” alt=”” link=”” linktarget=”_self” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″]https://cdiexperts.com/wp-content/uploads/2023/02/Claims-graph.png[/fusion_imageframe][/fusion_builder_column][fusion_builder_column type=”1_1″ type=”1_1″ layout=”1_1″ align_self=”auto” content_layout=”column” align_content=”flex-start” content_wrap=”wrap” spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” type_medium=”” type_small=”” order_medium=”0″ order_small=”0″ dimension_spacing_medium=”” dimension_spacing_small=”” dimension_spacing=”” dimension_margin_medium=”” dimension_margin_small=”” margin_top=”” margin_bottom=”” padding_medium=”” padding_small=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” hover_type=”none” border_sizes=”” border_color=”” border_style=”solid” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”true” border_position=”all” first=”true”][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ before_text=”” rotation_text=”” highlight_text=”” after_text=”” content_align_medium=”” content_align_small=”” content_align=”left” size=”2″ font_size=”35″ animated_font_size=”” line_height=”” letter_spacing=”” text_shadow=”no” text_shadow_blur=”0″ text_shadow_color=”” dimensions_medium=”” dimensions_small=”” text_color=”#0f0f0f” animated_text_color=”” highlight_color=”” style_type=”none” sep_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_title_font=””]

Figure 1 – Universal Decision Tree for EOT Claims

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The principles defined as part of the universal decision tree framework can be applied in the process of assessing EOT claims by developing decision trees for each step informed by the provisions of the construction contract utilised. Further articles on how decision trees can be of benefit to analyse delay in terms of specific form contracts will be published soon.

[/fusion_text][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ before_text=”” rotation_text=”” highlight_text=”” after_text=”” content_align_medium=”” content_align_small=”” content_align=”left” size=”2″ font_size=”43″ animated_font_size=”” line_height=”” letter_spacing=”” text_shadow=”no” text_shadow_blur=”0″ text_shadow_color=”” dimensions_medium=”” dimensions_small=”” text_color=”#0f0f0f” animated_text_color=”” highlight_color=”” style_type=”none” sep_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_title_font=””]Conclusion

The main benefit of the decision-support framework is that it would provide a guideline with clear and easy to follow steps to assess any EOT claims. This could be of assistance to practitioners that are responsible for the assessment of EOT claims on projects.

The decision-support framework would also provide insight for contractors into the process of the assessment of EOT claims. This would lead to a better understanding of what is required to substantiate EOT claims, and to better quality claims being submitted.

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Written by Hendrik Prinsloo. Check out his article on Linkedin here:

[/fusion_title][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ before_text=”” rotation_text=”” highlight_text=”” after_text=”” content_align_medium=”” content_align_small=”” content_align=”left” size=”3″ font_size=”” animated_font_size=”” line_height=”” letter_spacing=”” text_shadow=”no” text_shadow_blur=”0″ text_shadow_color=”” dimensions_medium=”” dimensions_small=”” text_color=”” animated_text_color=”” highlight_color=”” style_type=”none” sep_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” fusion_font_variant_title_font=””]References:[/fusion_title][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” font_size=”” line_height=”” letter_spacing=”” text_color=”” content_alignment_medium=”” content_alignment_small=”” content_alignment=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=””]

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