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De-Constructing Delays and Disruptions

TASK FORCE TACKLES AN EVER-INCREASING PROBLEM

BY KATIE KUEHNER-HEBERT

As the costs to resolve delays and disruptions on construction projects reach new heights, contractors can seek guidance from a white paper recently published by the AGC Delay and Disruption Task Force, a group comprised of 11 members appointed in 2016 by then-AGC President Mark Knight. The paper details the nature of the problem of delays and disruptions and practical ways to limit the scope. Knight’s goals were to raise awareness of the problem, to help everyone manage their ongoing risk of time-consuming and costly disputes, and to spur discussion of new and better ways of avoiding and resolving such disputes.

“How to Avoid and Resolve Disputes over Delays and Disruptions: Practical Suggestions and a Call for Further Discussion” can be found in its entirety at http://www.nxtbook.com/naylor/NGCS/NGCWPaper/index.php.”

“The task force was created following  a number of conversations within the AGC among member firms who all shared a frustration with the way in which delay and disruption claims were handled and resulted,” says the group’s chair, David Hecker, group general counsel for the Kiewit Corp. in Omaha, Nebraska, a member of multiple AGC chapters.

The frustrations focused generally on how long the issues took to resolve, how expensive it was to resolve the issues due to the involvement of damages and scheduling consultants, how unsatisfactory many resolutions have been for both parties after going through the long and expensive process, Hecker says.

“The task force wanted to identify ways to help the parties resolve these very real issues more efficiently and effectively,” he says.

When the task force first met, the members examined delay and disruption on construction projects from “a 50,000-foot perspective,” noting that both public and private projects suffered delay and disruption and that the contract terms addressing delay and disruption varied widely, says task force member, Carole Bionda, vice president at Nova Group Inc. in Napa, California, an AGC of California member.

“Given the breadth of the problem, the task order determined that, at this particular time, the best approach would be to educate AGC’s members and the owners and contacting authorities of the problem, and to suggest best practices to mitigate delay and disruption,” Bionda says.

There is no one single fix to the challenges presented by projects which significant delay and disruption issues, Hecker says. Appropriate resolution depends upon a variety of factors, including the size and complexity of the project and the claim, the ability of the owner and the contractor to work together to resolve issues and the availability of relevant and useful cost, schedule and other project data.

“The issue wasn’t that the task force sought to avoid delays and disruptions — the task force’s assumption was that such issues are to some extent inevitable in this industry,” he says. “The task force’s focus was to try and improve the process for resolving disputes over delays and disruptions when they do occur.”

Some of the best practices outlined in the white paper include how contractors can work with their clients to mitigate delays and disruptions, including holding “kick-off meetings” and “schedule risk workshops” – and what contractors should do on their own, including providing project managers with “cheat sheets” that include triggers for notifying clients about delays and disruptions.

The white paper also details best practices on drafting contract terms and conditions, providing notice of an issue, tracking and/or estimating additional costs and quantities, sharing the cost of uncertainty, and seeking contractual provisions expressly reserving their right to equitable adjustments for any delay or disruption that the client causes, particularly where the impact is a cumulative one resulting, for example, from multiple changes orders.

“It is possible that additional work will be done in the future to make recommendations on specific issues and challenges contractors and owners face related to delay and disruption claims — such as how to measure impacts to labor productivity or how to assess and evaluate project delay using appropriate schedule methodology,” Hecker says.

There may be an uptick in interest or concern on a given issues expressed by members at meeting and/or inquiries made of AGC staff, Bionda says.

“AGC rightly prides itself on addressing the needs and concerns of its members, and its staff members are able to gauge relatively quickly if an issue or concern resonates with a number of members,” she says.