Delay In Construction Projects And Its Consequences

DELAY IN CONSTRUCTION PROJECT AND ITS CONSEQUENCES Author Pradeep Singh M.E.civil (Construction & Management) Email: [email protected]

INTRODUCTION Construction activities in any society consume a great chunk of its resources and in turn create greater magnitudes of resources. It can be looked upon as Infra-structure activity of any civilization. Parties beginning with friendly relations are at each other’s neck and the mood often is to demand “Pound of Flesh”. This leads to “Differences and Disputes”.

SOURCES OF ELEMENTS OF DISPUTES: The problems posing disputes are related to the following areas. 1. Changes include Additions, Alterations, Variations, Deletions. 2. Delays and suspension. 3. Different Site conditions. 4. Unjust enrichment by owners. From the above sources the delay and suspension is the major or can be called as critical reason for dispute. The paper helps to analyze types of delay its consequences etc.

CONSTRUCTION AND CIVILISATION Construction activities in any society consume a great chunk of its resources and in turn create greater magnitudes of resources. It can be looked upon as Infra-structure activity of any civilization. To-day we know of different civilizations through the degree of level of construction they managed- the pyramids, both of Egyptians and Incas, Athenes and Rome, have construction as the measuring rod of their achievements. Construction is in a way synonymous with Civilization. With growing commercialization of human activities, construction too came to be a major commercial activity. Stakes became high as technology advanced. Huge construction projects have become common. Large Roads and Rails systems are taken up. Almost all rivers are harnessed. All sources of energies are tapped. Huge urban centers have sprung up. Increasingly more and more people are getting engaged in construction and allied Industries all over the world.

STRAINS IN CONSTRUCTION INDUSTRY: In such a giant industry, we have a lot of strains due to peculiarly irrational Risk-sharing arrangement coupled with its competitive character.

Thus to-day, we have increasing disputes and differences arising out of

contractual relations between contractors and owners whether owners are individual, firms or public. Construction contracts have very sensitive arrangement of weaving many different agencies to perform various obligations to execute the job as close to one conceived as possible.

Because of complexity of such interwoven responsibilities, superimposed by statutes, monitored by environmentalists, exposed to vagaries of nature and uncertainties of markets, it could be a miracle if any construction project can come out without getting greatly distorted on Time-money or concept scale. All distortions induce strains. Parties beginning with friendly relations are at each other’s neck and the mood often is to demand “Pound of Flesh”. This leads to “Differences and Disputes”. There is one more important observation. There is progressively stiff increase in cost money. Projects were delayed in past but over the delayed period money’s value remained steady so no big burden was felt. Now with cost of money becoming so high rising upwards, time has become a sensitive issue. The rate of inflation erodes the profit of Contractor and hence longer he has to stay, more sensitive he becomes to Time factor and gives up in end putting Delay-Damages Claims.

SOURCES OF ELEMENTS OF DISPUTES: The problems posing disputes are related to the following areas. •

Changes include Additions, Alterations, Variations, Deletions.

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Delays and suspension.

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Different Site conditions.

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Unjust enrichment by owners.

DELAYS Owners and contractors have one common objective: To complete the project in Time and within Budget. It is failure of this objective of Time which leads to failure of Budget and ultimately gives rises to Disputes. “Time” is indicated invariably as of essence to the contract. There are circumstances compelling extension of time which is granted but Time does mean money. It is when the question of money as compensation comes up, there come up several disputes. Often owners pre-estimate their delay losses and name a sum recoverable from the contractor to meet Delay Damages. This provision is called “Liquidated Damages” for delay. Contractors do not find any such clause on their side and are made to dispute for their claims. Delays could be caused by one or more of the following agencies. 1. Owners and his team-mates. 2. Contractor and his team-mates. 3. Nature, i.e. Cause of force majeure type. 4. Society through some change in statutes, Byelaws etc. or through its impact of sociopolitical nature.

However for the subject of this study, it will be proper to restrict our inquiry to the two agencies who are parties to the contract viz. the owner and the contractor. Between these two, delay can occur due to various causes such as,

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1. Defects in documents/design/decision. 2. Incompetence of parties to cope up with the changes. 3. Differing site conditions. 4. Attitude of any one or both the parties. On types of Delay, we have the following types. a) Excusable and non excusable delay. b) Critical and non critical delay. c) Concurrent delay.

EXCUSABLE AND NON EXCUSABLE DELAY Contract lays doom areas of obligations. Failures to meet obligations, give rise to the other party to excuse or not to excuse the delay. The consideration to excuse would be, 1. Non foreseeable situation. 2. Non critical in impact. 3. Concurrent with party’s delay. In general the most common Non Excusable delays are caused due to following causes, 1. Ordinary and foreseeable weather conditions. 2. A subcontractor’s delays. 3. The contractor’s failure to adequately manage and coordinate the project site. 4. The contractor’s financing problems. 5. The contractor’s failure to mobilize quickly enough. 6. Delay by the contractor in obtaining materials. 7. Poor workmanship. Executable Delays could be as follows : 1. Labour disputes. 2. Fire. 3. Unusual delay in deliveries. 4. Unavoidable delays. 5. Compensable delays. 6. Unforeseen delays in transportation. 7. “Other causes beyond the contractor’s control”.

CRITICAL AND NON CRITICAL DELAYS There could be delay in some part of total performance stipulated as contract obligation. However all delays which may not upset total Time frame of the contract and may not be of critical nature. However, there are delays may be small but go to upset the time frame and could be designated as critical.

CONCURRENT DELAYS

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While one party undergoes a phase of delay of its own making, the other party too is delayed not because of delay on other side but due to its own deficiencies, such delay is of concurrent nature and is excusable. Thus a Non critical, Concurrent delay is Excusable and therefore what gives rise to claim for damages is Critical, Non Excusable, Non Concurrent delay.

NON EXCUSABLE DELAYS: BY CONTRACTOR 1. Lack of competence and skill for the job. 2. Inadequate deployment of labour-force. 3. Insufficient financial resources. 4. Failure to supply proper equipment. 5. Bad workmanship-removal and replacement delays. BY OWNER 1. Non-handing over of site and/ or Access. 2. Non-supply of facilities promised in contract. 3. Non-supply of promised materials. 4. Improper of Inadequate Drawings. 5. Failure to make Timely-payments. List of Compensable delay include: 1. EFFECT OF DELAYS: The owner’s failure to coordinate multiple prime contractors. 2. The owner’s failure to provide adequate access to the project. 3. The owner’s failure to provide the right of way. 4. Suspension of the contractor’s performance. 5. Change orders issued by the owner. 6. Any interference by the owner with the contractor’s performance. 7. Delays caused by a third party under the control of the owner, such as the Architect or the Engineer. If Time is really spent on project it has to be converted in money.

FOR OWNER: 1. Delay in use of project. 2. Locked up capital. 3. Escalation in subsequent investment. FOR CONTRACTOR: 1. Delay in getting profit. 2. Idling of resources-men, money, machines. 3. Acceleration losses. 4. Productivity loss due to uncontracted work-period.

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CONCLUSION: A lack of proper homework and input delays the project thereby making loss to the society. Proper inputs and homework are necessary before implementing projects. The owners as well as the contractor should have good knowledge of the law prevailing in the society to avoid any disputes due to delays in project.

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