No claim is more difficult to quantify than one for lost labor productivity caused by delay and disruption. Delay may force work to be performed under more difficult conditions. It may be inclement weather. It may be a jobsite congested with multiple trades. Delay may also cause work to be performed in a start-and-stop fashion or out of sequence.
There is no question these situations reduce efficiency and productivity, increasing the cost of accomplishing the work. But the impact is cumulative and pervasive. It is difficult to isolate, document, and quantify individual cost elements. Sometimes it is possible to use a “measured mile analysis,” comparing productivity before the delay event with productivity after the event. This is not always feasible, however. There may be no relevant points of comparison.
In a recent case out of the state of Washington, a subcontractor was allowed to use the “modified total cost method” of pricing a lost labor efficiency claim. The prime contractor had protested that the sub was simply taking the difference between its bid price and its actual costs and attributing the entire cost overrun to the prime. But the subcontractor withstood this challenge because its claim consultant had evaluated the reasonableness of the labor estimate in the bid, assessed respective responsibility for the delay, and evaluated the reasonableness of the sub’s actual labor costs on the project.
What is your opinion? Do you think total cost pricing of claims has its place under appropriate circumstances? Or is it so inherently imprecise that it allows finders of fact to indulge in conjecture and speculation. I welcome your comments.
Featured in Next Week’s Construction Claims Advisor:
- Unlicensed Sub Recovers Payment from Prime
- Displaced Sub Sues Union for Constraint of Trade
- Prior Assessment Did Not Create Conflict of Interest