The Three Essential Elements of a Disruption Claim: A Common-Sense Approach
In the construction industry, disruption claims provide a pathway for contractors to recover losses caused by inefficiencies on a project.
For such claims to succeed, they must adhere to the "common-sense" approach, which requires proving three critical elements:
1. Client-Driven Events Occurred Which Entitle the Claiming Party to Loss and Expense
The first step is demonstrating that specific client-driven events occurred that entitle the claimant to seek compensation for disruption. These events must be actions or decisions by the client that directly affect the contractor’s ability to carry out the work efficiently. Examples of such events include:
Late variations: Changes to scope or design after work has commenced, leading to rework or adjustments to planned activities.
Delayed approvals: Failure by the client to provide timely consent for plans, designs, or materials.
Defective information: Errors or omissions in design documents or specifications issued by the client.
Late access: The client’s failure to provide the site or critical areas within agreed timelines.
The claimant must prove that these events fall within the contractual framework, triggering the right to recover costs. This requires detailed documentation and adherence to contractual notice requirements.
2. The Client-Driven Events Caused Disruption to Activities
Next, it must be established that the identified client-driven events caused measurable disruption to specific project activities. This involves demonstrating how these events interfered with the planned sequence of work or reduced productivity. For example:
A late variation requiring rework can delay downstream activities.
Delayed approvals might stall critical path tasks, leaving resources idle.
Defective designs can lead to inefficient troubleshooting and corrective measures.
Proving this element requires detailed project records, such as baseline schedules, site diaries, and communications, to illustrate how the disruption originated from the client’s actions.
3. The Disrupted Activities Caused Loss and/or Expense
Finally, the claimant must show that the disruption to activities caused actual financial loss or additional expense. This involves quantifying the impact on labour, equipment, or material efficiency. Key methods for substantiating this loss include:
Measured mile analysis: Comparing productivity levels during unaffected periods with those during the disruption.
Activity-based costing: Calculating the additional costs incurred due to inefficiencies directly linked to the disruption.
It is vital to isolate the impact of client-driven events from other project inefficiencies to strengthen the claim. Accurate records and expert analysis are essential to meet this requirement.
Conclusion
For a disruption claim to be successful, the claiming party must demonstrate the following:
Client-driven events occurred, entitling them to claim for loss and expense.
These events caused disruption to planned project activities.
The disrupted activities resulted in quantifiable loss or expense for the claimant.
By focusing on these elements and maintaining meticulous records, contractors can establish a compelling disruption claim.
At Accura Consulting, we specialise in helping contractors prepare and substantiate disruption claims. With our expertise in forensic analysis and construction law, we ensure your claims are robust, well-documented, and credible.
Contact us today to find out how we can support your next project.
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