Disruption claims are notoriously difficult to prove. This is not because disruption is unusual. 
On many projects the disruptive events, i.e. the Causes, are obvious while the work is being carried out, e.g. late information, restricted access, instructed resequencing, congestion due to Others, excessive design changes, stop/start working and the like.
Nor is failure necessarily because the contractor has no contractual entitlement. In many cases there may be a perfectly arguable contractual basis of entitlement for the notified events. The real difficulty is converting what happened on site into a claim which demonstrates why productivity deteriorated, which work was affected and what loss can properly be attributed to the relevant events, i.e. the Effects.
Linking the Causes to the Effects and thus establishing the causal nexus is the essence of a successful disruption claim.
What Do We Mean by Disruption?
The SCL Delay and Disruption Protocol treats disruption as a loss of productivity arising because works are disturbed, hindered or interrupted. The important distinction is that disruption is concerned primarily with efficiency rather than completion time. A contractor may therefore suffer significant disruption even where there is little or no equivalent critical delay.
This distinction matters because disruption is still often treated as something which follows automatically from a successful delay claim. Establishing that Employer events delayed the works does not, by itself, establish that those same events caused the additional labour or plant cost incurred during the same period.
If a labour team takes 1,500 hours to perform work which would otherwise have required 1,000 hours, the disruption exercise is concerned with explaining the additional 500 hours. Poor productivity may have resulted from Employer events, but it may also have arisen from estimating errors, poor supervision, rework, labour problems, changes in means and methods or the contractor’s own performance.
Failure in Establishing the Causal Nexus
In my view, this is the primary reason why so many disruption claims fail. The terminology is old, but the principle remains entirely current. Keating and the older global claims authorities refer to the need to establish the causal nexus between the events relied upon and the loss claimed. In practical terms, this means demonstrating the connection between the disruptive events and the resulting productivity loss in a way which can be understood and tested.
This is where the gap often appears. On one side, the contractor may have extensive records of Employer responsible events which have been properly notified and well documented. On the other, the contractor may be able to demonstrate a substantial labour overrun or measurable deterioration in productivity. The existence of both does not establish that one caused the other.
The analysis therefore has to connect the relevant events with the activities, work fronts, crews or periods in which productivity was affected and, as far as reasonably possible, distinguish those effects from other causes of inefficiency. This becomes particularly difficult where numerous events overlap over a long period and the claim is presented at a broad project wide level.
Measuring Productivity Loss
The SCL Protocol distinguishes between productivity based and cost based methods and generally favours project specific studies where the available records allow them.
Measured mile analysis remains one of the stronger approaches because it compares productivity on affected work with productivity achieved on identical or sufficiently similar work undertaken in unaffected, or materially less affected, conditions. Its main advantage is that the benchmark comes from the project itself rather than from a tender allowance, external study or industry norms. Its weakness is that genuinely comparable work is often not available. Differences in complexity, location, labour composition, access, weather, learning curve or sequence can materially affect the comparison.
Earned value analysis can also be useful where reliable labour and progress information exists, although care is required where financial value is used as a proxy for physical output. Variations, different rates and changes in work mix can distort the result. Work sampling can provide useful evidence of productive and nonproductive time where carried out contemporaneously, while system dynamics modelling may assist where numerous interacting events make simpler methods inadequate.
None of these methods removes the need to explain what caused the identified productivity loss and importantly – what links the Cause to the Effect.
Why Planned versus Actual So Often Fails
Planned versus actual analysis remains common because the necessary information is usually available. The contractor planned to expend a certain number of hours, actually expended considerably more and then seeks to recover the difference.
The problem is not simply that the original estimate may have been optimistic. More importantly, the comparison does not explain why the additional hours were incurred. The difference may include estimating error, learning effects, poor supervision, rework, subcontractor inefficiency, labour shortages or contractor caused resequencing in addition to genuine Employer caused disruption.
The same difficulty affects total cost and modified total cost approaches. They begin with the difference between what was expected and what actually occurred and then seek to attribute some or all of that difference to compensable events. In some cases the records may leave little alternative, but demonstrating a cost overrun is not the same as demonstrating its cause.
Why So Few Claims Ultimately Succeed
Poor records certainly contribute to the problem, but the issue is usually not their quantity. Major projects produce enormous amounts of information. What matters is whether labour input can be related to output and whether both can then be related to the events said to have affected productivity.
The common weakness is that the calculation is often stronger than the causal analysis. Contractors can usually demonstrate that more labour was used than expected and can often show that productivity deteriorated. What proves more difficult is establishing how much of that deterioration resulted from particular compensable events rather than other project or contractor related causes.
This difficulty becomes more acute once the matter proceeds to arbitration or litigation, where the methodology, comparators, assumptions, underlying records and causal links will all be examined closely.
That is ultimately why so few disruption claims succeed. In many cases the disruption and contractual entitlement may both have been real, but the claim failed to establish a sufficiently reliable causal connection between the events relied upon, the resulting loss of productivity and the amount claimed.
davidbrodiestedman@dispute-iq.com
Disclaimer:
This article has been written by David Brodie-Stedman. The opinions expressed are solely those of the author and do not necessarily represent the views of DisputeIQ Claims Settlement Services LLC.
