Last edited 22 Feb 2018

Disruption claims in construction

In construction contracts, the term 'disruption' refers to a loss of productivity due to a hindrance or interruption of the progress of the construction works which reduces the rate of efficiency.

If disruption is caused by the employer, the contractor may have grounds to seek compensation. Disruption, and claims arising to try and recoup losses incurred from it, are common on construction projects, particularly on larger and more complex projects.

The difference between disruption and delay is that the latter relates to lateness rather than productivity, although they can often be related. Delays can cause disruptions, and vice versa. Despite their inter-relation, they require a different approach to assessing claims.

When evaluating claims for delay, the terms of the specific contract are the usual starting point, and evidence is required that certain circumstances caused the delay. The terms of the contract are less useful when evaluating disruption claims. Instead, the contractor must provide reasonable evidence that:

  • Progress of the works has been disrupted.
  • Which element of the works and which trades have been disrupted, why losses occurred, and so on.
  • The disruption incurred additional costs.
  • The cause of the disruption constitutes a breach of contract.

Evidence will normally take the form of documented records demonstrating that disruption caused losses. However, this can prove difficult as the contractor can often not detect disruption until after it has occurred. In addition, isolating the loss of productivity to the cause of the disruption can be difficult as it may coincide with several other factors, and the effect of the disruption may be hidden by other issues.

Several methods can be used to estimate loss in relation to disruption, including:

  • Measured mile analysis: Compares actual labour performance between two periods – a normal measured mile period and an impacted period.
  • Baseline productivity analysis: A more conservative estimate used when an unimpacted section of the works is too difficult to isolate.
  • Earned value analysis: Compares the amount and cost of work that was planned to have been done by a particular stage with the amount that has actually been done and what it has actually cost.

NB The term ‘disruption’ can also refer to the impact of new technologies and techniques on an industry. For more information, see Construction is an industry ripe for tech disruption.

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