Jack Russell answers some key questions on the Delay and Disruption Protocol, published by the Society of Construction Law:
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Why is such a protocol needed?
In our industry, the evaluation of entitlements to additional time and money has been the subject of prolonged disputes, with the parties quoting all manner of fanciful arguments for and against. The protocol provides a set of common benchmarks and strategies. This could assist in resolving contractual problems as the job proceeds, and so minimise end of job disputes.
Is use of the protocol compulsory?
Use of the protocol is not compulsory. However, it is open to the parties to incorporate the protocol, in whole or in part, into the original contract documents. A special supplement is already available for use with JCT forms of contract. In any event, people will tend to refer to the protocol for guidance or for support.
What are the essential elements?
Essential elements include:
- Agreement as to what and when site notices and records to be used.
- Early agreement of a detailed baseline programme.
- Regular monitoring with progress reports.
- Prompt identification and recording of time and money events as they become apparent.
- Interim adjustment of time and money as the works proceed.
- Final resolution to be carried out in a timely manner.
What about variations?
The protocol recommends that all financial and programme effects of variations be agreed before the works proceed. However, unless such a procedure is written into the contract, the sub-contractor should be careful not to delay the project by refusing to carry out variations until the prices are agreed.
How are prolongation costs valued?
The protocol states that 'preliminaries' should be based on actual costs incurred at the time of delay, rather than the tail end over-run. Use of tender allowances as a basis is discouraged. This is good news, and reflects long-established case law, despite the resistance shown by many clients' representatives.
Who owns the 'float'in the programme?
The protocol says that general float is there for the benefit of the project. In other words, the client owns the float. If the sub-contractor wants to retain ownership of float within his programme, he should show specifically marked contingency allowances.
What about concurrent delay?
Where separate delays occur side by side, one the client's fault and one the sub-contractor's fault, this should not be used by the client to refuse the latter's entitlements to extension of time. However, financial compensation is only allowed if it can be clearly demonstrated that the costs relate to the client's delay.
Are 'global claims' allowed?
Global claims are discouraged by the protocol, which takes the view that, if the claimant has given notices and maintained his programme and site records, it should be possible to evaluate time and cost effects of individual events. However, the protocol recognises that this is not always possible, and suggests a "measured mile" approach (ie productivity on a 'good'area compared with that on disrupted areas). In the absence of a "good" area, then it may be possible to use statistics from a similar project. It may also be relevant to utilise published research regarding gang strengths, working hours, winter working etc.
What about acceleration?
The principal contracts and sub-contracts make no provision for acceleration. In most cases, the protocol recommends that acceleration measures and costs should be agreed in advance. As to the common practice of making retrospective claims for acceleration costs after the event, (ie "constructive" acceleration), this is to be discouraged. If a sub-contractor finds himself faced with the necessity to accelerate because of the client's refusal to grant an extension of time, the protocol recommends that he refer the matter to adjudication.
Can overheads be recovered?
The protocol recommends that the claimant should record the expenditure of managerial time by direct costing to the project and the specific event. As to the use of formula, the claimant should be able to demonstrate that he has actually suffered a reduction in overheads recovery during the prolongation period, and that he has been prevented from recovering the overheads elsewhere (ie because his resources were retained on the over-run project).
What are the pros and cons?
If a sub-contractor diligently follows the recommendations from the outset of a project, he will be in a much stronger position to protect his entitlements. However, there will be a need for additional site staff, particularly planners. My concern is that smaller sub-contractors may not have the necessary resources or expertise, and so lose their entitlements.
J.R. Consultants
Web: www.jrconsultants.co.uk
This article was originally published in Electrical Times magazine (May 2004) by Highbury Business Communications - a Voltimum UK Media Partner.
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