The SCL’s "Delay and Disruption Protocol", episode 6
Disruption Claims
Disruption Event is the event that interfere with contractor’s
work. It hinders or interrupts the work to suspend, to change working method or
to slow down with lower efficiency getting lower progress. The disruption claim
is, therefore, related to the loss of productivity of any work that cannot be
done in accordance with the programme reasonably planned due to the cause of
Disruption Events that to be responsible
by a party.
Example of Disruption Events includes the provision of
piecemeal site access, out of sequence works, design changes, unforeseen ground
conditions, untimely approvals or instructions from the CA, as well as all other
causes from non-compliance with contractual obligations by a party. In addition
to having a direct impact on the work, the disruption may also cause other
indirect effects, like crowding of labor, stacking of trades, dilution of
supervision through fragmented work gangs, fatigue by overtime works or
repeated learning cycles that reduce productivity.
However, the loss of productivity from other causes which
are the responsibility of the Contractor such as poor planning, poor
supervision to workers, repetitive works due to defects, lack of good
coordination with subcontractors, or error of estimation in the tender
allowance, cannot be substantiated for Disruption claims.
Disruption Analysis
Disruption analysis is normally a calculation of the contractor’s
loss of productivity that results in extra costs in addition to normal
operation if there were no such interruptions from the employer. It must start
with an analysis of what works are affected. The affected works are to be done
by which resources? What are the resource rates in the way they normally work? When
efficiency of the affected work was dropped by what falling rate? Then the
analyst takes those information into account to calculate damages/losses from
increased costs that should be compensable. So, keeping of good project records
regarding the information of planned and actual resources working rates is,
therefore, extremely essential for the analysis for disruption claim.
Disruption analysis involves direct costs, i.e. direct labor
and task-specific plant that were interfered with the productive work. It may
also involve indirect costs, such as the increase of supervisory staff or
standing plant as a result of the disruption event.
Method of Disruption Analysis
SCL divides the method of Disruption Analysis into two
types, i.e. the productivity-based methods and cost-based methods. Each types
contains different analytical ways with different accuracy and reliability. SCL’s
explanation on each method can be summarized as follows:
1. Productivity-based methods
Productivity-based Methods analyze on the basis of a comparison
between theoretical or planned productivity and actual measured productivity to
calculate the loss of productivity and then calculate the cost incurred by such
loss for that resources. Whereas, Cost-based methods analyze on the basis of a
comparison between the cost of resource that was allowed according to the plan
and the actual costs incurred to calculate the increased costs from the disruption
without measuring productivity.
SCL introduces 3 methods of the productivity based analysis by
the order of reliability and acceptance in the industry. They are 1.Project-specific
studies, 2.Project-comparison studies, and 3. Industry-studies
respectively.
1.1 Project-specific studies
(A) Measured mile analysis: It is the
most widely accepted method rather than any others. But to use this method, it requires
productivity data from better or more completed recording system on site than
other methods. With completed data from well record keeping. this method only
considers the effects of disruptions that the employer is responsible for at
the time of occurrence and, therefore, eliminate any arguments about the
validity of original productivity assumptions at the tender stage and the deficiency
of the contractor's own performance.
The approach of this method is to compare the records of
productivity rates of a work done in an area during a period that work is not
disturbed by Disruption events with the records of productivity rates of a work
done in the same or similar area during a period that the work was affected by
the disturbance. It must be compared on the same basis. For example, the productivity
during a learning curve period at the beginning of a work should not be used as
a baseline for comparison with the disrupted work during skillful performance.
Or in case there is none of any area that work is not disturbed by Disruption
events, it is best to use the least disturbed area and period as the baseline.
And if there are any other causes that are not within the Employer’s responsibility
involved, if the contractor continues to claim on disruption even with less
credibility, the contractor should adjust the calculation, taking into account of
the causes to be responsible by itself as well.
(B) Earned value analysis: The approach
of this method is to compare the man-hours planned to complete a work in the tender
allowance with the actual man-hours spent to complete the work. For example, in
the tender allowance, the contractor planned to use 20
man-hours to pour 10 cu.m. concrete to earn the progress value of a work. But
in fact it takes up to 35 man-hours to pour the 10 cu.m. concrete
to earn the value of the work, the number of man-hours increased is, therefore,
a productivity loss.
(C) Program analysis: This method has
the same approach as the Earned value method, but it requires a programming software
that can put numbers of labor, equipment and cost into each task as a resource-loaded
programme. Then the Update programmes with % progress of work and number of
resources used can report the amount of resources actually used in comparison with
those as planned to calculate productivity loss.
(D) Work or trade sampling: SCL does
not clearly explain the approach of this method but just explain that in order
to use this method, the records from observations to determine productivity
must be kept along with the interview made by the witnesses who give words
about changing of the construction methods or the number of craftsmen and labor
in various tasks. The data will be used to analyze productivity loss.
(E) System dynamics modeling: SCL explains
that this modeling is a computer program that simulates the 'but-for' scenarios
for disrupted project but this method is rarely used. SCL explains the approach
that this method calculates actual labour hour expenditures from the as-built
programme that records the impact of disruption and then pull out disruption
events from the programme to compare and calculate productivity loss for the whole
project.
1.2 Project- comparison studies
The Project- comparison studies relies lesser on project
records, so it is suitable for applying with a project which data may not
adequately record disrupted situations or the data sources are dis-organized
and not be able to use all Project-specific Studies methods as mentioned above.
This method compares the disrupted project with other projects having the same
or similar kind of works that are not disrupted and can be compared on the same
or similar basis.
1.3 Industry studies
This method relies on results from industry-wide Research to
assist in the analysis. This method is also used by a project with absence of
sufficient and well organized data to be able to use the Project-specific
Studies methods and the same or similar projects cannot be found to be compared
on the same or similar basis like Project-comparison studies method.
Examples of studies in the industry include the research of
MCAA (The Mechanical Contractors Association of America), which collects the % of
productivity drop resulting from the impact of different kinds of disruption
events or the research by The Chartered Institute of Building called the
"Effects of Accelerated Working, Delay and Disruption on Labor
Productivity," or the research by other organization like the NECA
(National Electrical Contractors of America), the US Army Corps of Engineer, or
the academic study of various universities etc.
2. Cost-based
methods
A claim using the Cost-based method of disruption analysis
is considered to be a Global claim that weighs less credible than
productivity-based methods so it should be used only when there is insufficient
data to be used to calculate productivity losses, or be used only for
comparison with other methods. Cost-based methods use simple approach to find the
difference between the labour wages actually paid by the Contractor and the labour
amount received from progress payment made by the employer. The difference is
the loss to be claimed. If the contractor can deduct the claim amount with its
own error of man-hour estimation in tender allowance and can deduct the effect
from its own disruption events that the contractor must take responsibility by itself,
it will make the claim more reliable even though the claim cannot explain in
detail of cumulative productivity losses from each disruption events. The most
important issue of Disruption Claim is to proof that disruption causes of the
claim is truly the responsibility of the Employer.
Next episode will talk about AACE International (the
Association for the Advancement of Cost Engineering), another organization in
the United States who publishes Recommended Practices for the industry like SCL
of the UK. If interested, please follow .....
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