Summary

Let's look at a real life case study of a delay claim where the Contractor was delayed by the Owner and was awarded an excusable, non-compensable time extension. The project was an airport renovation where the security check-in point was being remodeled. There were several different "sub-projects" being performed under the "airport renovation" master planned project so this security check-in renovation was just one of the sub-projects. Some of the details of the project have been changed to ensure the identity of the project is not revealed as some of the information may still be sensitive.

Also, always refer to the project specifications as that will give you the directions on how to report a delay claim on your specific project. This article is only for information purposes and is not meant to give directions on how you should report a delay claim on your project.

So, whose side were you on?

I was representing the Contractor and putting together the delay claim. The Owner in this case was the airport operations.

So what happened? What was the claim about?

The project was stopped after the subcontractor's bids were received from all qualified bidders and the Contractor found that the bids received were significantly higher than the engineer's estimate. This kicked off a value engineering exercise between the Contractor and the Owner to review if there were any areas of the project's scope that could be reduced or removed to save on cost.

Claim Methodology

When putting together a delay claim, most of the time I follow the same process:

Claims can become more complex if the delay is compensable. If so, the team will have to determine the cost per day to run the job so that the Contractor can be made whole for the additional time they had to spend beyond the original contract date. However, in this 'case study' we won't review how to determine the compensability portion since this was a non-compensable delay.

Let's go through each one of the steps listed above to see how this delay claim came together.

Create a Timeline of the Delay Event

First thing to do is to list out the activities that make up the "delay event". In this case, a simple excel table will work as we identify when the delay event started, what happened after the delay event started, and when did the delay finish where it was no longer impacting the Contractor's base scope. The following table shows a simplified version of the timeline we came up with for the delay event:

What you'll see shortly is that the original bid period was delayed which prevented the Contractor from awarding subcontracts. This was caused by the Owner wanting to run through a value engineering exercise to reduce the scope of the project and save on cost.

How do you come up with the timeline?

The tools used to come up with the timeline are typically formal project documents and correspondence between the project team which may include RFIs, Change Orders, Change Order Requests, Notice of Non Compliance, Daily Reports, Stop Work Notice, and Inspection Reports. Also, email correspondence between parties can often show the date of when major events started and/or ended. This step in developing the time impact is usually the most tedious and time consuming as it requires putting together a historical timeline (if the delay is forensic) of what happened that everyone agrees on. Once the timeline is put together and vetted by the project stakeholders, it's usually downhill from there.

Choose the Correct "Pre-Impacted" Schedule File

Typically you would choose the schedule file that immediately preceded the delay event. Since the delay event started October 1st, 2015, we would typically use the September 2015 schedule update as the pre-impacted schedule. However, the project was just starting out and we only had the Baseline Schedule to use as the pre-impacted schedule. We could have created a September 2015 schedule update to be used, but the Owner agreed that the Baseline could be used instead.

Once the pre-impacted schedule file has been identified, I like to show the critical path prior to the delay being inserted into the schedule.

From the pre-impacted critical path above, we can see that the subcontractor bidding process was driving the longest path as that was preventing the start of construction on the job.

Insert the Delay Event Timeline into the "Pre-Impacted" Schedule File

We'll now insert the activities from our first step into the pre-impacted schedule file, and make sure they are linked up correctly. In this case, I simply added a new "Issues & Impacts" WBS section and inserted the new activities into it. To tie in my delay sequence, I added a relationship between "Re-Bid Project" and the existing "SubContract Execution" activity. Lastly, I extended the subcontractor bidding activity to finish on September 30th, 2015 to match what actually took place.

In the image above, the yellow bars represent the "pre-impacted" schedule and the red bars show the schedule after accounting for the delay event. Based on the post-impacted schedule, we can see that the substantial completion date was delayed from July 14th, 2016 to January 9th, 2017 or, 173 calendar days.

Consider Any Concurrent Delays

This is a step that is often overlooked, but it's important to note if there were any other concurrent delays as this affects the compensability of the claim. In our 'case study', there were no concurrent delays so it makes this step easy. But just know that a delay claim most likely won't be resolved without considering whether other events were delaying the project concurrently. When I'm representing the Owner's side and reviewing the Contractor's claim, Contractors often don't consider the delays that they may be responsible for and this is where the Owner will focus their attention and poke holes in the claim.

Validate that the Delay was a Critical Path Delay

We can see from our post-impacted schedule that the substantial completion date was delayed by 173 calendar days after we accounted for the delay event. Some projects have multiple contract milestones so it may not be as clear-cut as this example.

Also, many times you'll find that your delay period runs a certain number of days, but the delay to the milestone is considerably less than the delay period. This may be because there was available float to the delayed activities, and they only became critical after the float was consumed. Just something to consider...

Create a Report

Once we've gone through the exercise of creating the delay timeline, inserting it into the schedule, and determining that it is a critical path delay, we can now create a report to state our claim. I won't share the specific report that I wrote but below is an outline that I typically follow to try and logically lay out the claim so as to not confuse the reader and to make it clear what the Contractor is claiming. It goes without saying but this is not the only way to put a claim together and your situation is unique and may require different information.

I'll usually add tables and graphics to visually show the impact as it's often easier to understand a graph or an image rather than text. Once the report is finished and has been vetted by the project team, it gets submitted to the Owner and the fireworks begin!

Conclusion

We submitted the claim seeking a non-compensable time extension of 173 calendar days. Why non-compensable? Since this was a sub-project to a larger project, the general conditions were already covered by the "parent" project. As a result, the delays to this project didn't extend beyond the larger project and therefore were not compensable. However, the Owner did accept our delay claim and the contract was extended by 173 calendar days. Yay!

Feel free to ask questions in the comment section below!