Delay and disruption – what’s the difference?

Introduction

We often get clients telling us they have been delayed and disrupted without realising that these are distinct issues which are assessed differently. The words ‘delay’ and ‘disruption’ are often used interchangeably in construction disputes without parties really knowing the distinction between the two. It is often assumed that delay leads to disruption and disruption leads to delay, thus a cycle of additional time and cost is incurred on projects that go wrong. This is a common misconception.

What is delay?

Delays to construction projects are a common feature of the industry and plenty of time and money is spent arguing over who is responsible.

Whilst delays often occur on activities on a project, not all of these events will delay the project completion date. Those that do are known as ‘critical’ delays. Employer risk events that do sit on the critical path may give rise to an entitlement to an extension of time (“EOT”) and compensation to the contractor. An example of this is when an employer is late giving possession to the contractor. Conversely, delays to activities that do not sit on the critical path, although not extending the completion date, might lead to reduced productivity on that activity (a potential disruption claim).

Where a contractor is in culpable delay, usually there is no entitlement to an EOT or compensation. An example of contractor culpable delay could be a lack of labour to start the works when possession is given to it by the employer.

There are some rare instances of concurrent delay where both the employer and contractor are in delay concurrently and that delay is of similar causative potency. Whilst employers and contractors are often in some delay at the same time, often these delays (a) do not sit on the critical path and (b) are not of equal causative potency. A good example of when a truly concurrent delay arises is if an employer fails to give a contractor possession on time but that contractor is unable to commence the works in any event. In such circumstances, the usual position is that the contractor gets additional time but not money.

The principal benefit of proving a delay claim is (a) it provides relief to the contractor from liquidated damages and (b) it opens the door to the contractor for compensation for its time related costs.

What is disruption?

Contractors’ profit margins are often negatively affected by events on site, making it more expensive to undertake the works than anticipated that do not in themselves cause critical delay to the project.

As noted, it is important to understand that disruption is separate and distinct from delay although both often overlap with one another. Disruption does not always lead to delay (although it often does). As the Society of Construction Law notes, it is concerned with the:

“…disturbance, hindrance or interruption to a Contractor's normal working methods, resulting in lower productivity or efficiency in the execution of particular work activities. If the Contractor is prevented from following what was its reasonable plan at the time of entering into the contract for carrying out the works or a part of them (i.e. it is disrupted), the likelihood is that its resources will accomplish a lower productivity rate than planned on the impacted work activities such that, overall, those work activities will cost more to complete and the Contractor's profitability will be lower than anticipated.”

A contractor might experience various disruptive events in the currency of its works that do not necessarily fall on the critical path and therefore do not extend the completion date e.g. an electrical contractor returns to carry out its second fix activities only to find the dry lining contractor has not closed up the walls (the disruptive event), thus requiring a return visit. Let’s say the electrician loses half a day waiting for the dry liner to complete this activity – it is this half day that is the lost productivity and ultimately, the loss to the electrical contractor. This event occurred on a flat that was not on the critical path at that time meaning it did not cause a delay to the completion date. If then you take that one disruptive event and multiply it by 100 similar such occurrences, it is easy to see how disruption can almost instantly lead to a substantial loss on a project.

In our next article we will examine how to prove these claims.

Posted on 19/10/2021 in Delay and disruption

David

David Daly, Director

David is a Chartered Quantity Surveyor and testifying expert witness with a breadth of domestic and international commercial experience. He is experienced in dispute...

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