HK {shuontiacontavees) Escrito cembanicasn Qsearen Ensinesrina & Corsiuction Quantum Inox era comfervicesnacertfavantum-anahaish + Dalav& Disruption Aras Ines a commbar iesteueMby-dirupon-anah ai 1 fazensi Engineering Archtentura echnical ge luinsnua comer colesperiorensicangineesing.schtertualsecrnical areicornonnteioudh Investoatonehte.colhe seine + Sommosssl Bamagas Valuation * Commercial Gamaoge Valuation (tor vehi comborcelexqerteommercialstamagee-and-valia 1 Econom Gamagas htios isha comerceslesaarieommarcialdamagesandualia aniaramic.taranes) {Insure Clara ge haa comers cocbipericommereis.damacessang-valuston/nswance-lsime) * Valunton (aps nia combensicosoxperieommer aidamsoasandual,atonivalinton 4 toletual orogeny ste uw naa comer denloxpon com meriadamaoasandualuston/ntellectuaLeronertll tins ha combardesslenperineenmant contacts © adsisany Aaiveor sna nea comer dcosaciso 1 infistussure & Gaal Sects 1 ffeuire & Capel Dnact ata wen nia come icesoeoninfeructue-capkalprojactal : snisaton fatto iva hls comes cestdveanyintasinucturecapialpriscisktateqy-and-ontmsaton!t : htt na comeerdcaslaveor dina unre cap taLorbiectlerojectdavelooment) 1 commetca sor itis Baya les comes cessor vintaciacture-caa tal oiartsbarameciabad is + infact elie. aden ia coneniesationniasaicse-atialeecsiniastuecebeni * nsamted nin seriens bt b ci ta oiaisinscaratedeoiacson + 1d tah es fantasia + facortso A procs Eaters A bes tos havarheacomiensriee mess esos at isa coowres | Siesta ms ersten nen oseied Servos Industies ExaertCantee CRUX Events News &negrtanteatgaupedwiddidirnicontactHK>A Q search Performing disruption analysis for construction projects Pramod Oommen pramodoommonshia com (maillonamodeammenehka.com) DOWNLOAD POF WP-CONTENT/UPLOADS/202110/DISRUPTION-N-CONSTRUCTION-FINAL DOCK) Disruption on ac jact (htt ps/wwwzhka com/expertise-projacts/constcuction)| may occur during periods when the contractor performed his work ina less efficient manner than was originally planned - it could be due to various reasons like intermittent working, out-of-sequence work or extended working hours, ele. Disruption can manifest within a struction project which has not been subject to critical delay", ie, disruption can apply to sub-critical delays. Disruption claims relate to additional costs incurred by the contractor due to increased expenditure on labour and equipment and not necessarily extra time (ie. critical delay) spent on site owing to an excusable delay event, The primary purpose of this paper is to set the background on circumstances which result in disruption, the cause &effe in any disruption claim and to provide a practical approach to undertake 2 credible disruption analysis. nexus “While prolongation and disruption claims are based on two different concepts, it is often the case that the Contractor’s disruption claim is global which does not attribute or identify specific loss to a breach. The article discusses reasons for this mundane approach and elaborates on two practical methods of performing disruption analysis (based on availability of records).” What is Disruption in Construction? Construction practitioners commonly use the term ‘disruption’ to refer to a loss of productivity caused by unanticipated interruptions to the progress of works. The usual consequence is a reduced rate of work efficiency which leads to an in rease in direct hours spent labour and/or equipment) on the relevant disrupted work. disruption Is caused by the employer, the cookies ‘Sow wept ephedra ta Soa ner eee rer pose dase coowies Servos Ingusties OgertCente CRUX Events Nens &Insigrtorteatgourudwindowainr contactcontractor has often assem compensation for lngs of dis tion ef disrupted hours to be 2tributable to the contractor. even in such Q search Disruption and delay are based on two different concepts; however itis common to refer claims as ‘delay and disruption’ as ‘though to suggest they are the same. A delay relates to lateness in completion of the works or portion thereof (.e, either critical or non-critical delays) while disruption relates to loss of productivity to specific works undertaken. However, itis possible for delay ‘to cause disruption and vice versa, Hence, by way of example, repeated disturbances to the planned work cause disruption which could result in delays asillustrated in the figure below: What are the parameters used to measure Disrupt When labour and equipment costs exceed the planned value, e disruption claim sa plausible solution to recover costs for lost, productivity in performing the works. However, its prudent to consider whether the contractor's plan (budgeted values) to perform the works was realistic; i flawed, the planned effort cannot be relied upon as a valid yardstick against which to measure effect of disruption. In such circumstances, a comparison between the actual effort required to complete the works when disruption is not present (referred to as the ‘measured mile) against the actual effort taken to complete the works when those: works were negatively affected (Le, when disruption was present) is likely to be more appropriate. Any disruption claim is challenging to prove without the support of actual records, if absent, any perceived losses on labour or equipment costs may be attriouted to the contractor's own fallures to perform the works. Here, productivity refers to the efficiency level of labour and equipment which can be measured either for labour, hours, ‘equipment, plant hours) or cost (orice per unit), Hence, the failure te keep records for actual manhours (or costs) expended to perform the works with reduced productivity could prove detrimental to a disruption claim, When evaluating delay, the contract terms may provide rules or guidance on methodology and qualifying relevant event(s) which caused delay. On the other hand, for disruption, the contract terms are seldom useful Indisruption claims, the contractor should provide evidence regarding: 1. The trade/progress of work which was disrupted: 2. Impacted (when disrupted) & unimpacted period(s) on work; 3. Additional manpower (& equipment) expended on disrupted trades; 4, Evaluate the difference between the periods analysed; and 5, The cause jevents) which caused disruption to work ms Proj wil alow the contacter ammeasuic.eonduelniis Locks castes outa araurven pein in ime.dnsuch cases, it would possible forthe cet gS, ROO Re HeET ERE? eT UEIIR SUBIR Ty ASIN TSR tions ot oterupgf thenperative far the contractor to maintain site Bie’ fas alttiasiaswhtadamd credible claim to seek disruption costs Iris hows the works were undertaken during impacted and unimpacted periods, and preferably for the whole grgiect, n claims records, records and records. ary, the key to any successful disru Commonly used methods to measure disruption in construction are; Baseline productivity analysis; 2, Earned value analysis (EVA);and 3, Measured mile analysis, I discuss methods 2 and 3in this article. Recommended Practice Statements on Disruption The Society of Construction Law) Protocol (SCL Pratacol) provides useful commentary on disruption as experienced in construction projects: + “The objective of a disruption analysis is to demonstrate loss of productivity and hence additional loss and expense aver and above that which would have been incurred were it not for the disruption events for which the Employer is responsible." + "ulsconcerned with disturbance, hindrance or interruption to a Contractor's normal working methods, resulting in lower 2s, Work ti jan reasonably icular work a iat is carried out with a lower productivity or efficiency in the execution of pay anticipated productivity rate will lead to (a) activity delay: or (b) the need for acceleration; or (c) a combination of both - and therefore, loss and expense." + "When it comes to explaining the cause of disruption it is often the case that the Contactor will rely upon multiple and intermingled disruption events to explain its loss of productivity ané to support its claimed entitlement not loss and expense relating to the impacted work activities“ The Association for Advancement of Cost Engineering’®! (AACE) International 29R-03's interpretation of disruption relates to productivity, + "Aninterference faction or event} to the orderly progress of project or activitylies). Disruption has been described as the effect of change on unchanged work which manifests itself primarily as adverse labor productivity impacts“! iy: However, this is not entirely true and is es, disruption is usually not identified Ithas been widely accepted that disruption i difficult to establish, substantiate or quanti largely due to the contractor not maintaining proper and sufficient site records. In most or alerted as it occurs, its only to when the contractor has found a significant difference between its planned and actual labour and plant costs which is unaccounted for by any variations issued by employer or the contractor's own inefficiencies. In summary, disruption involves a situation where, as a consequence of events attributable to the employer, the contractor's labour and plant productivity were substantially reduced, resulting in contractor having to burn additional labour and plant costs ‘to carry out the works. Legal Background to Disruption ILis ikely that disrupted works relate to sub-critical delays which are not part of a critical path analysis (Le, critical delay) involving lp to recover disruption losses with delays to project completion. As a result, securing a time extension claim (EOT) will not associated with Sm sub-crtical trades. In simple terms, EOT deals with indirect resources, those which are required for ‘HOME ESATA eS SCL USSSUISERNISSS SSSA ame: Sel Se heer Sowers CHUN Herr” NewrsineptoeadeenefvannamnicthThe Hudson's Buitusbeliathessiabring Const HK>A + "The cistinction between delay and cisruption is important, but rarely erticulated, and is to an extent a matter of defin Adie” Delay is usually used to mean a delay to the completion date, which presupposes that the activity which was delayed was on the critical path, Disruption to progress may or may not cause a delay to overall completion, depending on whether the activity delayed is on the critical path as explained above, but will result in additional cost where labour or plant is under-utlised as a consequence of the event” In the Walter Lilly case "9, Mr Justice Akenhead suggested three elements which will help support a contractor's disruption claim, 1. Events which entitle it to loss and expense; 2. Identifying the events which caused disruption; and 3. That disruption caused loss andor expense to the contractor. The contractor's failure to adhere with the notice provisions within the contact can result in rejection of the disruption claim, especially n contracts with time-bar provisions. In Van Oord and another v Allseas UK Ltd case, the disruption claim was rejected wherein the contractor failed to submit notices, However, in Obrascon Huarte SA v Her Majesty's Attorney General for Gibraltar, the judge did not take an isolated view of the time-bar clause wherein the breach by employer was obvious to him. It 1s good practice to submit relevant notices to prevent disruption claims being time barred and provides strong evidence that an event had occurred. The consequences of the event could be disputed but the record of the event should never be in question. In addition, the contractor must have a legal entitlement under the contract, ie, the disruption event must typically have been caused by an act omission or default by the employer"3) Proving a Disruption Claim The causative agents which result in disruption to construction work are numerous. The causes may include irregular work patterns, densely populated workspaces, extended working hours, lack of quality supervision, poor communication between workers, frequently performing aut-of-sequence work, delayed responses to request for information (RFs), shortage or delayed material deliveries, lack of required approved shop drawings, inclusion of varied works, etc. A project may finish on time but may have experienced a reduction in expected labour and equipment productivity. The effect of disruption or the loss of productivity is quantified as the difference between the planned (or actual unimpacted; in case of measured mile approach) rate of production and the actual rate of production in disrupted period. "1 Earned Value Analysis The current performance of work can be used to forecast cost or schedule overruns ina project by making use of trend data, The budgeted hours to carry out the activities are compared to the actual manhours spent for the work progress achieved (work done). As work activities are progressed, manhours are earned ageinst actual manhours which were spent by the contractor to achieve this work. In simple terms, the earned value EV) measures the manhours earned based on work done, while the actual cost (AC) tells us how much was spent to do this work, The ratio of the two terms will provide us with the cost performance index (‘CPI). Any work with CPI less than or equal to 'Y" indicates that actual costs are less than the earned value (positive cost variance) while CPI greater than 1 indicates thal value spent s lost (negative cost variancel. In the figure below, CPI value of 0.86" implies that for every dollar spent, only US$0.86 was earned, inthis case, the cost variance is the delta between EV and CV, ie, 30 - 35= 5.05) coowses | Satta mses stapmtusstettcutse pase Loses Services IndustiesxaertCantee CRUX. Events News &Inghtanteatgauredwivddiirieontact)(psa hl HK>A Q search Inareal case scenario, the earned value analysis (EVA) must be undertaken as a minimum of four steps which are illustrated with help of the figure below Here, the green line shows the planned curve (budgeted hours for excavation works}, the golden line is ‘the actual hours burnt to perform the works whereas the blue lines the earned hours I based on actual progress achieved for works done. For disruption analysis, the comparison is always between the biue and golden lines and never with the green line Which shows the planned effort required to complete this work. The planned curve has no relevance to disruption analysis except to rely on the budgeted hours to arrive at the earned value, The light blue curve shows the cumulative actual progress (based on earned hours) of the works over a period of time. The (frst step) is to plot the earned and actual curves for the disrupted trade which must be identified. As can be seen, the two curves, willie in same time period, to imply that a direct comparison is possible between what was achieved (earned) and what was spent (actual to perform the work. The (second step) is to isolate time periods which were likely to be disrupted by a relevant cause(s}. i, the disruption event. In our case, we have identified three periods (PI, P2, P3), where disruption was in play Le, Identify periods with delta (gap) between the eared and actual curves, The delta would imply the contractor had to spent actual hours in excess of the earned value to achieve the same quantum of work, ie, to imply that the contractor had worked in an unproductive manner to perform the works. The (third step) is to identify events which are likely to have caused disruption within the three time periods. Ifno such events are available, the disruption is likely to have been caused by contractor issues related to learning curve, unskilled workers, delayed ‘materials resulting in idling manpower or simply because the budgeted manhours were wrong. If events do exist, say for time- period P3, itis necessary to understand how and why they could or have caused disruption to the works. Also, itis necessary to check if notices were sent to employer citing disruption to the works in P3, this will help the contractor to assign plausible events to the disrupted works which were disrupted in P3. The (fourth step) is to determine the della value between earned and actual curves for P3. In this context and with the help of, reliable records, it should be possible to populate how the actual hours were spent by contractor in this period. Any hours which are solely lable to contractor must be isolated from delta value, say, idling men waiting for correct shop drawings or non- availabilty of scaffold material. In addition, a suitable tactor for inefficient working as per industry standard may also be deducted ‘from the overall disrupted hours. Adopting these steps will help provide a credible earned value analysis to arrive at the true disrupted hours. In most cases, within the contractor's disruption claim, the effect of disruption is equal to the delta between total planned and actual value, its easy to see why could be construed as a global claim which is devoid of any cause-and-effect argument. Measured Mile Approach ‘The measured mile approach involves the comparison of productivity rate achieved for periods when work was not impacted by disruption events (this being the ‘measured mile) to the productivity rate on identical activities or periods impacted by the iro rents | nae ie a st eae ae rates within tha SEEHEroiect. Services Industies ExaertCantee CRUX Events News &Inghtontaatgaupeld winds veontact)red by the parties) from the , However, the approach could be limited when (a) there are no affected area /period or (othe affeteg ‘upt to provide a reliable measured mile (c) no similar activities exist to allow for a like-for-like comparison and (a) no contractual entitlement to compensation exists. 7 In Amey LG Ltd v Cumbria County Council, 4) the Judge Stephen Davies noted that: + “What is referred to as the ‘measured mile’ approach... ought to have been verified by being able to demonstrate that the planned outputs had actually been achieved in some cases where the disrupting events did not occur... ought to have been relatively easy, by reference to the contemporaneous records which were produced, to have conducted a cross check ona suitable sample basis. It seems to me that it would ... have been a reasonably easy exercise to demonstrate this...to undertake an appropriate sampling exercise, which would have ensured that any risk of individual variations would have been picked up and catered for” ‘As with the previous method, the first task is to identify the disrupted trade and second task isto plot the actual productivity Indices for the work. In the example shown below for piping works, the blue curve shows the cumulative actual progress for the piping works while the golden curve's the productivity index which is calculated as the ratio of actual hours expended to the work ‘output (example, units installed), The dotted golden line is the trend line for the productivity index for the piping works. Alow productivity index is proof (though not absolute) of cost overrun to perform the works which could be attributed to various reasons but nevertheless itis not absolute proof of disruption. What does the figure tell us about disruption? The portion above the trend line shows periods where productivity for the work was better in relation to other periods which are below the trend line. Asis evident, this method does not take into consideration ‘the budgeted hours to arrive at the disrupted hours, rather, it relies solely on actual performance. In this method, the comparison of productivity over periods of time helps to establish periods of time which were likely to have been adversely affected by events. In this case, there are three distinct periods (P1, P2, P3) where productivity falls below the trend line, the intial learning period is ignored. The unimpacted period of performance above the trend line is the ‘measured mile’, which is used as the yardstick to establish whal the contractor's cost performance should-have-been or would-have-been (to establish a base productivity rate). Under the measured mile approach, the entire productivity hours lost within the three periods are in theory claimable based on disruption events which exist in those periods, However, as previously stated there are deductions to be made, firstly, any hours which are solely lable to contractor issues must be segregated and thereafter, a suitable factor must be applied for contractor’ inefficient working, The measured mile is not always 2 go-to or adopted method for various reasons. Ifthe contractor has not maintained site records, ‘then establishing a base productivity level will not be possible. Also, ifthe disruption was severe through the course of the project cor works, there may beno undisrupted measured mile to compare with. In other cases, if the works are complicated, there may be no typical section to allow a like-for-like comparison of the productivity levels for the works carried out coowres | Stasis mses tey santana Loses Services Industies ExaertCante CRUX. Events News &ingrtonteatgaunedwindansirveontact)GAgsHistorr In summary, itis advisable to adopt a rational approach for disruption analysis ( isru suitable method to evaluate effect of disruption. The two commonly used methods for disruption analysis are earned value analysis and measured mile approach, However, no one size fits all, the right method must inevitably be adopted toilustrate Qseren tion-analysisf) wherein itis necessary to understand the circumstances surrounding disrupted working and choose a os//wmwhka com/services/ex disruption to the works wherein care must be taken to avoid a global approach. In any event, the availabilty of records ingredient to any successful disruption claim. disruption events and daily log to measure disrupted manhoursis a vit The contractor cannot get past the onerous question as to whether it was possible to divert (only cost of re-mobilzing resources will be allowed under disruption and utilize resources in an efficient manner to work elsewhere in areas which were not subject to disruption. {A disruption ciaim isto retrieve loss of direct hours spent on unproductive interrupted working which results in loss of efficiency and reduced productivity hence, actual datas inevitably required to support this argument. The disruption claim must nave a contractual basis, i. the disruption event must have been caused by an act omission or default by the employer. The result for 2 ‘sts with no extension of time, unless the event caused successful disruption claimis almost always an award for disrupti critical delay to the completion of the works, which willbe determined separately through a suitable form of delay analysis. About the author Pramod Oommen holds a bachelor's degree in mechanical engineering (B.Tech) and master's degree in construction law (LLM) with over 20 years of work experience in the construction industry. He has a wealth of knowledge working in commercial buildings, international airports, oil & gas, power plant and other infrastructure projects, ad Arab Emirates, Sultanate of Oman, State of Qa’ Kuwait, Indonesia, and Jepan. In the last nine years, he's worked solely as delay analyst on prolongation and disruption clzims, He He has worked in contractor and consultant roles in Un 1, Saudi Arabia, holds multiple certifications as Project Management Professional (PMP), Planning and Scheduling Professional (PSP), Certified Cost Professional (CCP) and RICS Expert Determiner. Pramod is well versed in most forms of forensic delay analysis techniques and has helped contractor's win time extension and compensation claims. He is familiar with the Society of Construction Law (SCL) protocols, AACE! recommended practice 28R-03 and FIDIC suite of contracts, cooxres | Sires mcr urtmeewems eon ncn oseied Seroes Industies ExaertCante CRUX Events News &lnsgrtanteatgaupedwinddidirvcontact)nee ba com HrdiKrchies Q search inthe UK ane avereas (pean sel org unlsboushhstory nest 4 SCL Protocol (Section $5) 5 SCLProtecl Section 85, [AACE non-profit organization founded in 156 tthe University of New Hmpshit, USA which provides recommen practice (2) the construction nuatry (htpuilawwninocin comieomaarylsacesiternational Waker ily & Company Limited I) Ges Patric Cyr Mackay 2} DMW Cevelegments Limited 201 EWHC'7TS[TCC} raoss ewe 2074 rec 2 ove] EwHC 1028 TO, 15 _Lvkag 3.8 2012) How to make eatned value work on your projet, Paper precontod a PMIP lbbal Cngress202.-North America, Vancouver, Sith 1 The eatned value xestimated by muliphing the actual progres recorded for the aethvty at any given asin in ime and the budgeted value units forthe 8 pow EWwHC 2946 This publication presents views, thoughts or opinions af the author and nat necessariy those of HKA, Whist we take every care to ensure the accu -y ofthis information at the ti ication, the content isnot intended toes! al aspects ofthe subject refered to should not be ried upon and does not constitute adv of any kind. 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