June 18, 2018
Although the term “delay damages” is often referred to in construction change order requests, requests for equitable adjustments, and claims, it is often misunderstood or not properly defined. So, what exactly are “delay damages?”
Unfortunately, the answer to this question is not as simple as you may think. It’s reasonable to conclude that the term “delay damages” is simply defined as “damages that are caused by delay.” But this definition depends on the how one defines the term “delay.”
For example, when the term “delay” is defined as only critical project delay (a delay that is responsible for extending the project’s duration), then the term “delay damages” is often narrowly defined as only the damages that result from the project’s extended duration.
The damages that would result from a critical delay include the following full complement of delay damages:
- Extended field office overhead
- Unabsorbed home office overhead
- Liquidated damages
- Idle labor and equipment costs
- Labor and material cost escalation
- Other costs
If delay is defined as both critical and non-critical delay (a delay that is not the cause of an extended project duration), then some, not all, of the potential delay damages above may be recoverable. Because a non-critical delay does not extend the project’s duration, extended field overhead costs,
June 04, 2018
While the previous posting described the importance of updating the project schedule, this posting identifies essential project schedule information that should be included in a schedule update submission. Clear and timely communication is a key contributor to success on construction projects. These recommended schedule update submission items will ensure that the contractor is effective in communicating its plan for completion, and will promote an environment of trust, transparency, and confidence among the project team.
A contractor’s schedule update submission should, at the very minimum, include a detailed narrative, the native electronic schedule file, and a small collection of printouts. Each of these items is discussed in more detail below.
Detailed Schedule Update Narrative
A properly prepared and detailed update narrative is a valuable tool not only for the contractor, but for the entire project team. By identifying the project’s current status, critical path, and forecast completion dates, and by describing the project’s current problems, upcoming issues, and potential solutions to those problems and issues, the update narrative can be a vital communication vehicle for the project team.
Although the reporting of unresolved change orders, delays, and other project issues in the update narrative may not satisfy the contractual, statutory, or legal notice requirements, reporting of these issues in the update narrative, on at least a monthly basis, should serve to ensure that the project team was aware of these
May 21, 2018
On construction projects, time equals money. When construction projects finish late, both contractors and owners potentially incur additional, unanticipated time-related costs. It often happens that well before the project actually finishes, the project team is aware that the project will finish late. A properly updated project schedule is the only time-management tool available to the project team that can reliably forecast the project’s late finish date.
Unfortunately, toward the end of projects, as the pace of work intensifies and as the project team focuses their efforts on solving problems and completing the work, the project schedule is too often ignored. As a consequence, the project schedule is not updated and submitted on a monthly basis, as required by the contract or per project schedule management best practices.
Just as a properly updated project schedule is the only project management tool that forecasts when the work will be complete, it’s also the only time-management tool on the project that can be used to reliably identify and measure how, and to what extent, the project was delayed.
Predictably, and as Murphy’s Law dictates, the project is nearly always delayed whenever the project schedule is not updated and submitted. Therefore, to ensure that the current schedule update always represents the current plan for completion, contractors should also prepare and submit periodic schedule updates in accordance with the contracts. Additionally, contractors should
May 07, 2018
Delay Analysis Principle No. 5:
Activity delay and project delay are not the same thing.
Too often, contractors and analysts submit time extension requests, or delay claims, that attempt to measure or calculate “project delay” by comparing how much later an activity starts or finishes, compared to when it was depicted to start or finish in the project’s schedule, without regard to whether the activity is even on the critical path.
As noted in Delay Analysis Principle No. 1, and reiterated in Principle Nos. 2 through 4, “only delays to the project’s critical path will delay the project.” The proper way to think about activity and project delay is that a delay to a critical activity is what causes the delay to the project. Conceptually, activity delay is the “cause” and the project delay is the “effect.”
So, when a critical activity starts late, finishes late, or progresses more slowly than expected, that activity delay could cause a delay to the project’s completion date, which is the “project delay.” It is this project delay that is the ultimate result of a critical activity’s late start, late finish, or slow progress.
More importantly, when a project includes an incentive/disincentive clause or a liquidated damages clause, the payment for the earned incentive, the assessment of the disincentive amounts, or the liquidated damages are calculated from a specific contract milestone date. Therefore, when calculating project delay to a specific contract milestone, the analyst should calculate the delay by measuring how many days late the milestone
April 23, 2018
Delay Analysis Principle No. 4:
The critical path can and does shift.
No matter how large or small your project is, no project is built “exactly” as it was planned. You’ve heard the cliché: the best-laid plans of mice and men…. No matter how carefully a project is planned, it is impossible to predict every problem or obstacle that might be encountered. To address these challenges, we need a project scheduling tool that we can adjust to the ever-evolving project conditions.
Similarly, even if a contractor was able to prepare the best possible construction plan and schedule, the plan will change or need to evolve in response to things like weather, design changes, and subcontractor performance issues over the duration of the project. The only constant in life and construction is change. In fact, construction contracts are specifically written to deal with unanticipated changes as they arise.
If we accept that the contractor’s construction plan will change over the course of the project, then the natural extension of this concept is to accept the fact that the critical path is dynamic in nature and may change, or shift, during the project in response to the project’s changing conditions.
Shifts to the critical path depend on how the project is planned; how the project work progresses or does not progress; and the changes that are made to the schedule logic and activity durations.
When managing a project, it is essential to identify when the critical path changes, or shifts, to make certain that
