The COVID-19 pandemic has resulted in global business disruption. Whilst the UK construction industry has remained relatively active, it has experienced disruption. 

In its article, “UK construction counts the productivity cost of COVID-19” (ref 1.) Turner Townsend suggested that the UK construction industry was suffering productivity losses of around 35% which were triggering extensive programme delays and costs. As a consequence of this there has been a surge in disputes. 

The three most common forms of dispute witnessed by Treo during this period have been delay, variation and loss of production claims. 

Loss of production claims have always been a major feature of construction disputes. Whilst there are many factors that cause disruption, loss of production claims are and remain difficult to prove.

In the construction industry, productivity is expressed in manhours per unit of work. To be compensated for a loss of production, contractors must be able to measure and demonstrate how change has adversely reduced labour productivity.

During the pandemic, many contractors have had to suspend works, accelerate works, and revise their site operating procedures to mitigate Covid-19 risks. Such factors have caused and/ or contributed to loss of production. As a consequence of this, especially the revised site operating procedures, contractors have been faced with multiple concurrent causes of critical and non-critical delay and disruption and a potential inability to demonstrate cause and effect. 

TREO’s preferred method for valuing loss of production claims is the use of the “measured mile”. A measured mile analysis will show a greater number of manhours per unit of work being expended to achieve the output on a disrupted element of work than an undisrupted element of work or a “measured mile”. But, without detailed records and an analysis to demonstrate causal connection, the contractor runs the risk of its loss of production claim being classified as a global claim because of its inability to demonstrate the actual cause of the loss of productivity. Unfortunately, and in the absence of detailed records, tribunals will be asked to infer that it is “likely” that the loss of productivity was caused by an event for which the respondent is responsible.

So, again we state “records, records, records”. Contract administration is an essential part of every construction project; essential to facilitate the analysis, preparation and defence of well substantiated claims for time and money. Maintaining records as part of the contract administration process to meet the burden of proof and demonstrate causation in construction claims is essential.

Ref 1. https://www.turnerandtownsend.com/en/news/uk-construction-counts-the-productivity-cost-of-covid-19/

Photo by Randy Fath on Unsplash