Delayed projects are likely to be a significant feature of the coming months, as productivity reduces or changes as a result of COVID-19.
The original cause of a delay may well be the pandemic. Yet many may be surprised to find that will not be enough to satisfy most contracts or secure payment or extensions of time.
Much talk in the first few weeks of lockdown was of ‘Force Majeure’. There were many webinars, each examining the legal terms that might support a claim for loss and expense as a result of COVID-19.
However, it soon became clear that quoting legal terms is not enough when dealing with contractual matters. It is crucial to prove direct cause and effect for each discrete event. So for example, while COVID-19 may be a contributing factor, a project may encounter delay from:
- A lack of resources / labour as a result of increased illness.
- Reduced productivity as a result of social distancing or increased PPE / sanitizing measures.
- Problems with supply chain caused by differing lockdown regimes in other countries.
- Increased costs of materials or resources.
- Or any number of reasons we might expect to see outside these unprecedented For example: poor management, change instructions, adverse weather, unforeseen ground conditions, etc.
Nothing has changed significantly (if at all) in the way contracts approach assessment of delay, disruption and cost escalation. Each has specific requirements. For example: issuing a revised programme for assessment by the Project Manager in NEC4, or the notification of Relevant Events in JCT contracts.
There are many ‘conditions precedent’ to entitlement which must be met. Common to most of them is that they will usually need a clear demonstration of the cause, and then the effect of any change upon the project.
How can we show such a cause and effect?
As noted above, it is unlikely to be good enough to say “COVID-19 happened, so the project is five months late”. What if the project was already behind time at before the arrival of the virus? What if other projects similarly affected, are on time and on budget? How can it be demonstrated that certain events affected a project?
The answer, as always, lies in records. Record keeping has been top of the list of challenges for those trying to assess, prove or dispute claims for loss and expense for as long as we at Lindford can recall.
How should records be stored and managed?
Much time and cost can be lost in the legal and dispute resolution process if records are not created, managed and stored correctly. Keeping records alone is not enough, if entitlement is to be demonstrated and unnecessary costs avoided.
Records need to have structure. Ideally, the moment an issue or change arises, all records associated with that matter should be kept apart, whether tagged electronically or stored in a separate location. It should be easy to identify when a discrete issue or delay has started, finished and what its impact was.
It is important to note that anything could be a record that might be useful, including:
- Drawings, CAD or BIM data
- Site records and diaries
- Emails and correspondence
- Instructions and variations
- Photographs and videos
- Labour records
- Plant and equipment records
However, with all these things, just having them will not be enough. Photographs should be dated and exact positions noted. Site data should be dated, costs noted, times and locations all need recording.
Consider the interpretation of data, if it is ever needed for the purposes of a forensic retrospective investigation. For example, with electronic records:
- Minimise duplication
- Keep fields in documents in a consistent structure. Names, dates, times, quantities, locations all in separate fields.
- Try to minimise the opportunity for ambiguity
- Try to minimise the opportunity for incorrect spellings through enforced drop-down fields
In the case of paper records, the analysis will likely be more complex, but paper is still a feature of many projects. Fortunately, it is becoming less common as the industry modernises. In such cases, try to find ways to ensure those records will translate to structured electronic data if possible.
There is a plethora of technology available to help support and reduce the cost of record keeping. From tools such as Openspace.ai which records site progress through photographs and links with BIM models to demonstrate change visually, to ShapeDo which compares series of drawings over time to identify any changes. There are tools for snagging and document/email management that ensure structure.
It would be impossible to list them all here, but it is worth seeking out the right software that can help you to reduce costs. Generally, if something is being done electronically that is repetitive, then it should be automated.
With the right tech and structure in place from the outset, costs should be minimised. There should be no need to wade through a sea of documentation seeking the ‘silver bullet’ of evidence, as is often the case in complex disputes. Well managed records can be the difference between a dispute resolved or financial failure.
Edward Carolan, Director, Lindford Consulting
Edward is a founding director of Lindford Consulting. He is a Chartered Quantity Surveyor, with over 30 years’ experience of construction and engineering projects. Edward provides Expert Quantity Surveying services and works with parties who need help with contractual and commercial issues relating to Extensions of Time and/or entitlement to additional payment. Edward's experience includes the provision of quantity surveying opinion and advice, forensic investigation; valuation of works; loss and/or expense; cost audit; contractual and commercial advice.