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Preparing Contractor's Delay Claims

This document outlines the key steps and issues in establishing entitlement and quantifying a contractor's delay claim under an international construction contract. To recover costs for a delay, a contractor must show that the delay was excusable, often due to issues outside their control, and compensable by the at-fault party. This involves identifying the critical path delay, providing proper notice of the delay as required by contract, and documenting increased costs through contemporaneous schedule updates and supporting records. Proving entitlement and quantifying impacts from lost productivity, extended home office and site overhead, and other damages allows a contractor to recover costs incurred due to compensable project delays.

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Mh Shaikh
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448 views9 pages

Preparing Contractor's Delay Claims

This document outlines the key steps and issues in establishing entitlement and quantifying a contractor's delay claim under an international construction contract. To recover costs for a delay, a contractor must show that the delay was excusable, often due to issues outside their control, and compensable by the at-fault party. This involves identifying the critical path delay, providing proper notice of the delay as required by contract, and documenting increased costs through contemporaneous schedule updates and supporting records. Proving entitlement and quantifying impacts from lost productivity, extended home office and site overhead, and other damages allows a contractor to recover costs incurred due to compensable project delays.

Uploaded by

Mh Shaikh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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International Construction

Contract & Claims Management

“A Contractor who presents a


detailed breakdown of reasonable costs incurred
during the delay period is a step closer to
recovery.”

Delays are mostly inevitable on Construction Projects and almost always


accompanied by increased costs.

The Contractor must be prepared to identify and prove those costs which are
recoverable.

To demonstrate its entitlement to compensation, the Contractor must show that


under the governing contractual provisions the delay is excusable and
compensable.

In this document you can find key issues related with establishing both
entitlement and quantum when presenting a Contractor’s delay claim.

Steps of Preparing Contractor’s Delay Claims

1. Identification of the Delay Event

2. Entitlement to Claim
2.1 The Delay is Excusable
2.2 The Delay is Compensable

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International Construction
Contract & Claims Management

3. Notice Requirements

4. Components of a Delay Damage

5. Proper Documentation

1 Identification of the Delay Event

The Contractor should recognize that there is an event that will


cause the project to be delayed.

The activities on the Critical Path will delay


the completion of the Work and the project
schedule identifies which activities are on the
Critical Path.

It is important for Contractors to actively


update and use the schedule to determine
when an event may cause Critical Path delay
and to provide timely notice of delay.

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International Construction
Contract & Claims Management

The schedule is also important for identifying


and demonstrating the impact of the delay
through a comparison between original
as-planned and as-built.

Inaccurate or out of date schedules can


seriously hinder the ability of the Contractor
to identify, establish and ultimately recover on
delay claims.

2 Entitlement to Claim

Under the governing contractual provisions, the Contractor will


be entitled to claim extension of time and delay related costs, if;
● The delay is excusable and
● The delay is compensable.

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2.1 The Delay is Excusable

The Contractor should demonstrate that the


entire delay is excusable under the governing
provisions.

If the Contractor is delayed through no fault of


its own, but also through no fault of the
Employer, then the delay is excusable, but not
compensable.

If the delay is excusable but not compensable,


the Contractor generally is entitled only to a
time extension.

Delays resulting from the following causes are


generally excusable delays;
● An act of the Employer
● Changes
● Labor Disputes
● Fire
● Unusual Delays in Deliveries
● Any other causes beyond the
Contractor’s Control

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Contract & Claims Management

2.2 The Delay is Compensable

For a delay to be compensable, the Contractor


must prove the Employer’s responsibility.

Certain types of excusable delays, such as those


by some action or inaction of the Employer,
may be considered as compensable delays that
entitle the Contractor to compensation for the
additional costs of the delay, as well as a time
extension for the delay.

3 Notice Requirements

The Contractor should understand and comply with the


Contract requirements regarding the Notice, such as;

1. Timing of the Notice.

2. The proper manner of providing Notice.

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Contract & Claims Management

3. To whom notice must be provided.

4. What must be contained in the Notice.

4 Components of a Delay Damage

Components of a Contractor’s Delay Claim include;

1. Increased Material Direct Costs

2. Lost Productivity

3. Home Office Overhead

4. Indirect Costs

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Contract & Claims Management

5. Other Damages directly related to and


attributable to the delay.

5 Proper Documentation

1. The value of developing and preserving


supporting documentation is crucial.

2. One of the most important aspects of


documentation is that it is kept on a consistent
and contemporaneous basis.

3. In the case of the Critical Path Method,


many times, the schedules fail to provide the
information needed to prove the actual delays.

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Contract & Claims Management

4. Historical data is lost, when the baseline


schedule and the periodic updates are not
preserved.

This information is provided for your convenience and does not constitute any “Legal Advice”.
This document is prepared for the general information of the interested persons. This should not
be acted upon in any specific situation without appropriate legal advice.
This information may not be reproduced or translated without the prior written permission of
eayglobal.com

For further information please contact [email protected]

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