Guidelines for the Management of Delays, Disruptions and Compensation
General Guidelines
(Project managers must manage claims for extensions of time (EOT) and resulting compensation claims effectively at the time of occurrence, to the extent possible. The cost of preparation of delay claims is normally not reimbursable, unless the contractor can demonstrate that they has been subjected to additional cost as a result of unreasonable actions or inactions of Public Services and Procurement Canada (PSPC) in dealing with the claim, or has been forced to use extraordinary measures to substantiate their case, for example, having to hire specialist consultants, etc.)
- Ensure the claimant furnishes a detailed statement of the facts upon which the claim is based, how the claim is calculated, and copies of documents verifying all disbursements. (A claim is a request for compensation to cover losses, expenditures or damages sustained as a result of neglect or delay caused by PSPC, or unexpected soil conditions, payable as per GC6.2 of the contract.)
- Ensure the contractor has given written notice of their intention to claim within ten (10) days of the date of the actual event leading to losses (as per GC6.2)
- Ensure that after having given appropriate notice, the contractor submits a written claim for losses within (and not after) thirty (30) days of the date of issuance of the final certificate of completion
- Ensure accurate, current and detailed project records. (Many EOT's can be avoided if the parties monitor and record progress of the works throughout project delivery)
- Practice diligence in maintaining/updating records of major activities, specifically those that may lead to delays/disruptions/disputes. (Accurate records reduce the cost of analyzing delays and provide more certainty as to causes, timing and responsibility for delays)
- Issue formal notifications in cases where the contractor is behind schedule, providing improper site safety, poor quality workmanship, etc. (This ensures the Property Manager is in a better position to take formal/legal action against defaulting contractors and able to defend against exaggerated claims)
- Update the master plan and detail schedule as changes occur to reflect any changes or disruptions that may impact any part of the project and any delays that may cause time extensions. (The regular updated schedule becomes the as-built schedule at the completion of the project)
- Streamline the approval process to the extent possible
- Ensure regular status reporting. (This is of prime importance during the entire construction period)
Delay Guidelines
(Delays result in prolongation and additional cost. Responsibility for the cost of delay is contentious. Causes of delay, fall into three categories: caused by PSPC, caused by the contractor or caused by a neutral cause "force majeure". Delay claims paid to contractors may be recoverable from the consultants if it is determined that consultant errors and omissions were partly or entirely responsible for the events that led to damages.)
- Identify and quantify the exact causes of delay at the time of occurrence when the events are current rather than months or years later during a claim settlement
- Utilize the project's approved baseline schedule as the main tool to justify the time impact, hence the delay period and its effects on the completion date
- Ensure that the contractor utilizes the master plan/detail schedule to demonstrate delays, disruptions and the time impacts of changes to the work via change orders
- Obtain mutual agreement with the contractor at the time of occurrence (or as near to it as possible) - failing which, the dispute is to be settled promptly by the dispute resolution methods included in the contract
- Ensure EOT's are only granted to the extent that a delay caused by PSPC is predicted to reduce to below zero the total 'float' on the activity paths affected by this delay. (i.e. if the contractor has a 'float' (*) of ten days for a particular activity and PSPC has caused a delay of up to ten days, no extension should be granted, whereas, if the delay is for 15 days, an EOT should be granted for 5 days.) (*) float is the amount of time by which an activity or group of activities may be shifted in time without causing delay to a contract completion date
- Issue an EOT to the contractor (as per GC6.5) once causes of delay are clearly documented. (This relieves the contractor of liability for damages for delay (as per GC5.10) for any period prior to the extended contract completion date and establishes a new contract completion date which prevents time for completion of the works from becoming endless)
- Ensure in cases where contractor delay to completion occurs concurrently with a PSPC delay, that the contractor's concurrent delay does not reduce any EOT due
- Ensure contractors respect their duty to mitigate the effect on its works of delay caused by PSPC. (This does not extend to requiring contractors to add extra resources or to work outside their planned working hours. Where contractors are directed to accelerate work due to delay caused by PSPC, they are entitled to additional compensation)
- Be aware of financial consequences. (EOT's do not necessarily lead to additional compensation nor does additional compensation for change orders (extras) automatically lead to an EOT). Delays result in additional costs, and identifying responsibility for such costs is contentious, and can lead to disputes/claims. The majority of contractor costs for prolongation is for the extended use of time-related resources and is over and above the direct cost of changes of the works)
- Pre-establish pricing methodology with the contractor for changes. (Where possible the fixed price of a change should include the direct costs of labour, plant and materials, time-related costs, an agreed EOT and the necessary revisions to the schedule)
Disruption Guidelines
(Disruption to construction work may or may not lead to late completion of the work. It is possible for work to be disrupted and for the contract to be completed on time. In this situation, the contractor will not have a claim for an EOT, but it may have a claim for the cost of the reduced efficiency of its workforce, if it can demonstrate that the disruptions were caused by PSPC.)
- Segregate contractor inefficiencies from disruptions caused by PSPC. (Costs of inefficiencies are not to be compensated)
- Provide compensation for disruption caused by change orders as soon as possible after completion of the change order work, and include these costs in the calculation of the change order value (where practicable)
- Be aware that the contractor may be entitled to a time extension and additional compensation for disruptions caused by PSPC which delay completion
Compensation Guidelines
(The granting of an EOT does not automatically lead to entitlement to compensation and vise versa)
- Once compensation for prolongation is due, the evaluation of the sum due is made by reference to the period when the effect of the delay caused by PSPC occurred, and not by reference to the extended period at the end of the contract
- Ensure that compensation for prolongation includes only for work actually done, time spent or loss and/or expense actually suffered, which is over and above the direct costs incurred for changes to the work (CO's)
- Be aware that contractor head office overhead is also compensable when the contractor can demonstrate that it is required above and beyond the actual site costs
- Be aware that the date on which interest begins to be calculated will be the latest date on which the amount due would have become payable. This 'due date' will be the date that a payment becomes due and payable following the application of a progress claim covering the specified work or loss
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