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Prolongation Cost and How to Segregate Them?

15 replies [Last post]
Wed, 2007-06-06 07:04
Samuel Edo
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I have a situation here and I need your Expert opinion for this case:

For the Case EOT granted to cover the variations instructed by the Engineer, I believe that the Contractor is not entitled for any prolongation cost (which should include site overhead + head office overhead) unless there is a concurrent delay, which it should be analyzed to prove that the delay caused by the client is predominant.

Now my question is:

1- how to prove that the delay by the Contractor is predominant?

2- For the head office, Some formulas can be used (for example Hudson formula), but for the site overhead, actual cost should be paid, so, how to segregate such actual cost of general requirements (site overhead) which assigned for the variations instructed from those assigned to other main works which have been already in delay and completed within the EOT.

Thnx
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Replies

Mon, 2007-06-11 00:56
#1
Raphael Adeyemi, ...
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I guess you are right, in making claims the most important thing to do is to established liability with supporting records (facts). Any approach that considers facts and factual eubstantation will get through. There is no hard rule or formulae per se.


Regrads
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Sun, 2007-06-10 15:04
#2
Faried Khan
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Well Raphael, is it OK to use such Alternative approach?,

I mean Like Samuel said, Normally we would use the long long way of segregation of costs though it is time consuming way, but I think it is logical and rather fair, bearing in mind that even we are using the said formulas but we all know that, they are just formulas give different different results which we don’t know for sure which one is more accurate.

In other words, I think it is enough to use such formulas to calculate one part of the cost (Head Office OH) and seeking more accuracy of using actual records to calculate more realistic cost of the other part (Site Overhead)

What do you think?
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Sun, 2007-06-10 07:41
#3
Raphael Adeyemi, ...
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What I intend to say here is that you can replace the Head Office over head with Site overhead from your facts for HUDSON or any of the formulae I mentioned earlier
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Sun, 2007-06-10 07:39
#4
Raphael Adeyemi, ...
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Yeah Edo, for site overhead, you could apply HUDSON, EMDEN or EICHLEAY formulae,by changing the facts from audited account using specific site overhead - Total annual Site Overhead cost & Profit (from audited account).

Cheers
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Sun, 2007-06-10 03:55
#5
Samuel Edo
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Thank you so much Joseph for your simple and comprehensive answer,

Actually I was so confused because I red a lot about the relevant techniques, and frankly I was lost, the more I red, the more I got confused, because there are so many techniques, namely, As-Planned Vs. As-built, As-Planned Vs. As-Planned impacted, Windows technique, and I don’t know what are the differences and which one I should use!

Well, if I would apply "TIA" Technique as you have explained, if at the end I found for example The "Employer" Delay period is 180 days, and the "Contractor" Delay period for Example is 120 days. In that case and if the Contract is allowing the Payment of Prolongation cost, I should pay the same to the Contractor.

My Question here is:

For the Head office OH we can use "Hudson" Formula as straight forward case, But the Fun is when we calculate the "site" OH, because it is a hell of an exercise to segregate the cost dedicated to only to the variations instructed by the Employer from those dedicated to the Delayed works.

Cheers
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Sun, 2007-06-10 03:53
#6
Samuel Edo
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Thank you so much Joseph for your simple and comprehesive answer,

Actually I was so confused because I red a lot about the relevant techniques, and frankly I was lost, the more I red, the more I got confused, because there are so many techniques, namely, As-Planned Vs. As-built, As-Planned Vs. As-Planned impacted, Windows technique, and I don’t know what are the differences and which one I should use!

Well, if I would apply "TIA" Technique as you have explained, if at the end I found for example The "Employer" Delay period is 180 days, and the "Contractor" Delay period for Example is 120 days. In that case and if the Contract is allowing the Payment of Prolongation cost, I should pay the same to the Contractor.

My Question here is:

For the Head office OH we can use "Hudson" Formula as straight forward case, But the Fun is when we calculate the "site" OH, because it is a hell of an exercise to segregate the cost dedicated to only to the variations instructed by the Employer from those dedicated to the Delayed works.
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Sun, 2007-06-10 03:31
#7
Charleston-Joseph...
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Samuel,

Before you embark on this kind of exercise, please check if "prolongation cost is stated in your contract".

If not mentioned in the contract, then you cannot claim prolongation cost.

In segregating the "employer delays" and "contractor delays is easy and simple.

First you have to indentify which delay analysis are you going to use. There are lots of delay analysis techniques that has advantage and disadvaantage. I will let you choice which one you like base on your experience.

For example, you prefer TIA (time impact analysis).

Prepare two copies of your approve baseline schedule (FIDIC contract as per clause 14).

One copy you update the clause 14 programme incorporating the events that causes delay due to employer

The other copy, you update the clause 14 programme incorporating the events that causes delay due to contractor.

In this way you have now segregated the Employer delay and the Contractor delay.

I hope this will help you.

Cheers,

Joseph
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Sun, 2007-06-10 02:47
#8
Samuel Edo
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Thank you so much Mr.Basheer,

I will appreciate if you would shed some light on the technique to be followed to segregate the "Employer" delayed period and the "Contractor" delayed period, in other words, What so called "Concurrent Delay Analysis", and I think the output of such analysis is to check if you have to pay to the Contractor the Prolongation Cost or not.

I will appreciate your input

Thanks
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Sun, 2007-06-10 02:11
#9
Mohamed Basheer
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Dear Mr.Samuel,
According to my understanding, an EOT is given due to variation is for the whole project and not for the additional works only. The contractor is expected to Update his Clause 14 Programme taking as built data as on data date and to produce a Programme to complete the whole job including variation with in the Extended completion time. Any measures needed to be taken by the contractor to complete his (concurrent)delayed activities within the time available is his responsibility.
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Sat, 2007-06-09 06:29
#10
Anoon Iimos
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Charlie,

you agree with what? i guess i got over a hundred posts already, which one do you agree most?
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Fri, 2007-06-08 15:41
#11
Faried Khan
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Hi Andrew,

I think it’s very interesting case, actually I don’t know what is Samuel’s form of contract but I believe most forms of Contracts don’t discuss in details the case of Concurrent delays (For example FIDIC 4th which is commonly used worldwide), however, I believe currently, most of cases of delay and disruption of construction projects are being interpreted in accordance with SCL Protocol.

I wish you could shed some light on that case, and may Samuel also would advise with the type of his form of Contract.
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Thu, 2007-06-07 19:35
#12
Andrew Flowerdew
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What does your contract say?
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Thu, 2007-06-07 19:35
#13
Andrew Flowerdew
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What does your conract say?
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Thu, 2007-06-07 00:38
#14
Charleston-Joseph...
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Hi guys,

I agree with Anoon.

However we have to be realistic. Driverconsult is engage in ADR (Arbitration, Dispute and Resolution). So, if anyone from said company will reveal his secret then, the company will loss potential jobs. Also, he may lost his job, "confidentiality clause" in employment contract.

ADR is not a science. The name itself nescisitate art, similar to the "ART of WAR" meaning "The art of win and win situation, client win, contractor win, consultant win everyone win. Less than that, then you go to court to settle grievances.

I can say the best approach is to use proportion, proportion the cost.

Cheers,

Joseph
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Wed, 2007-06-06 09:00
#15
Anoon Iimos
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i got the same problem also. I hope some very smart expert (like Mr. David Bordoli) would be kind enough to give some advice.
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