EP 13 - Managing delay and disruption

Delays are the biggest cause of provocation on a project; no one likes to admit liability due to the potential commercial consequences – this leads to regressive discussions with neither party willing to back down and, sometimes, underhand behaviours making it harder for less commercially savvy contractors to claim an extension of time and the associated loss and expense.

Let’s take a look at how to protect your commercial risk and the relationship with your client.

Firstly, all contractors need to protect their own commercial interests, and it all starts before you’re even in contract, and it’s your programme - here’s what you need to do:

• Scheduling and programme: Most subcontractors agree to a semi-flexible period to carry out the work, but there’s no definition of the scheduling, i.e. what areas are available, and will there be multiple visits? With this in mind, make sure you have agreed on the number of visits and the scheduling of the works, and also discuss and agree on how your proposed programme fits in with their main programme .
• Lead-in periods: It’s critical to agree on the lead-in periods you need to commence on-site and other significant lead-in periods for items you need to procure. As mentioned in one of my previous videos, you need to define this early on in your tender return and make sure this is carried forward into your agreement, so the client can’t just click their fingers and expect you to start yesterday and start blaming you for not being on-site.
• Information release schedule: If you’re a main contractor working on JCT contracts, you’ll be familiar with an information release schedule; however, when it comes to subcontracting or low-value principle main contracting roles, an IRS may not be so familiar. If your works involves managing multiple subcontractors and you need finalised information and approval to assist with timely procurement and delivery – an IRS helps manage this, and it clearly identifies issues with design information when it’s delivered late

Now you’ve defined your programme requirements for delivering the project - you and the client are accountable for making sure you meet the programme obligations you’ve set out.

You’re now in delay; what should you do? Here are your next steps:

Notification: you’re contractually obliged to notify delays promptly to clients, and this can feel overly formal and contractual; here are some steps to break it down:

• Phone call: Sending a letter or email about a delay without prior consultation to the key stakeholders will go down like a fart in a lift; no one will say anything, but you’ll be getting judged by everyone in that lift! The first step is to call the relevant stakeholders to discuss the delay and let them know you’ll follow this up later on to confirm the impact and any possible mitigation.
• Paperwork: If you have labour and plant on site that’s been disrupted, you will want to get this recorded ASAP. You can do this with a daywork sheet recording all the resource you had on site that day and the reasoning for the delay – sending this on the day and getting it signed will prove invaluable when it comes to claiming costs.
• Email: Emails are saturated, but where there’s a delay, you need to have all the records you can. In your email to notify, refer to the conversation you had that day and who with, and send any relevant information backing up the claim.

Now you’ve amicably notified, it’s time to formalise the delay – here’s the next steps:

• Face-to-face:As you all know, I love a face-to-face meeting, and when things get tough, it’s no different. I’ve been on projects where there are lots of different delays coming from multiple sources, and one of the best ways to carve out a way forward is by arranging a meeting with the stakeholders to discuss mitigation and how to get things back on track.

  Addressing issues together in a meeting is far more collaborative than pointing the finger over emails, and you’ll be viewed as the pragmatic party trying to get the job built rather than trying to absolve yourself of any liability. Don’t forget to minute the discussions and send them to the client to confirm what was agreed and discussed.

• The Letter: Letters are formal, especially in this day and age, but when it comes to delays and loss and expense, the only way to set this out is in a formal letter detailing the delay. If you’ve followed the above steps, then the client will be expecting you to formalise the extension of time claim.

There will probably be further meetings and discussions after you’ve submitted the claim, but if you’ve followed the above steps, you’ll get to an agreement far quicker and with your client relationship still intact.

Here are some other tips on how to act and what to say during a delay scenario:

• Mitigate: One of the keywords you should be using throughout is “mitigation” – mitigation is your contractual obligation, and it will give your client some comfort that you’re using your best endeavours to reduce the impact on the project.
• Your next step: Delays are sensitive because someone is picking up a bill they didn’t know about – always communicate your next step with the client, whether its an email, letter or a meeting request meeting – this open dialogue means the client is informed throughout the delay, and there will be no unforeseen delays or costs coming their way.
• Delay and disruption tracker: when there are multiple sources of delays to your work, the best way to visualise the impact is with a delay and disruption tracker - and just for you guys, I’ve created a FREE delay and disruption tracker template complete with an extension of time notification letter to help you on your next project that has a delay – you can download it in the link below.
• Don’t absorb in silence: It’s quite common for contractors to absorb minor delay costs and put the client relationship first before claiming additional costs. Unfortunately, people have short memories, and your goodwill will soon get lost. You should still record delay and disruption and even put it in your application to refer to the time lost and costs absorbed by your business. If the client is being tough later down the line, you can easily refer to all that goodwill earlier in the project.

The Takeaway:

Open and transparent dialogue throughout a delay will go a long way to help not only protect your commercial interests but also your relationship with the client.

Remember to always call or discuss the delay and impact before you formally put it in writing – this was you’re managing the expectation of the client, and an extension of time and associated costs won’t come as a surprise.