Disruption claims in construction

In essence, disruption is a reduction in productivity for which a contractor is not responsible. Restricted or piecemeal site access, out of sequence working and late provision of instructions are all examples of disruptive events which may occur.

Disruptive events usually lead to other problems which further adversely affect productivity on site, such as the crowding of labour, idle labour, and stacking of trades.

What is a disruption claim?

Whilst a reduction in productivity may lead to delay in the progress of the works and it is not unusual for claims for delay and disruption to be brought together, a disruption claim is distinguishable from a delay claim.

The purpose of a disruption claim is to recover additional costs incurred, or the losses suffered, as a result of a disruptive event. It is possible for work to be disrupted and for the works still to complete on time. In such instances, a contractor will not have a claim for an extension of time or loss and expense but it may have a claim for the cost of the reduced efficiency of its workforce and additional costs incurred.

Disruption claims are not for time-related costs and should only include additional task-related costs resulting from the loss of productivity caused by the disruptive event. Disruption claims may fall under categories such as wasted expenditure, additional costs of labour or plant, and unproductive management time.

How to bring a disruption claim?

A contractor considering bringing a disruption claim in England and Wales should first refer to the High Court's guidance set out in the case of Walter Lilly v Mackay to determine whether there is any basis for a disruption claim to be made. In that case, the court advised that in order to succeed in bringing a disruption claim, a contractor has to demonstrate on a balance of probabilities that:

• a disruptive event occurred which entitles it to loss and expense. For example, that such event is a 'relevant matter' under JCT contracts, or a 'compensation event' under NEC contracts. Proving that a disruptive event occurred is purely factual;
• the disruptive event actually caused delay or disruption. It is not sufficient just to demonstrate that a disruptive event happened and expect recovery of additional costs. Evidence and analysis are required to prove that causal link between the disruptive event and the disruption suffered; and
• such delay or disruption caused it to incur loss, expense or damage. Those costs must be evidenced and justified.

Whilst there is no set way to prepare such a claim and it is open to a contractor to determine how best to provide a reasonable assessment of the disruption caused, the following issues are likely to be determinative:

• a baseline of what productivity levels would have been achieved had the disruptive event not occurred, by reference to cost and resource allowed by the tender;
• demonstration that the allowances made in the tender were reasonable;
• the recording and maintaining of contemporaneous documents concerning the disruptive event and its effect on productivity. This is paramount. A claim's credibility is severely affected if there is a lack of contemporaneous evidence;
• compliance with notice requirements under the contract or, where there are no relevant notice provisions, contemporaneously communicating to the other party that a disruptive event occurred, that it has disrupted productivity and that consequently, additional costs will be incurred. Claims made after the event lack credibility;
• consideration of contractor risk events and their impact – the credibility of the claim can also be affected if this is ignored;
• expert evidence – this can be of assistance to supplement, but not replace, contemporaneous evidence. Experts can deploy various different approaches such as sampling or the measured mile to determine quantum of the claim, and;
• preparation of claims on an area by area, activity by activity, or period by period basis. Whilst not fatal, global claims are less credible.