How to track and resolve loss of construction productivity claims

Owners and contractors are expecting a rise in claims around lost productivity on construction projects due to COVID-19 impacts. Arcadis’ David Lee shares recommendations for improving your prospects to successfully resolve these impacts and possibly accelerate production during the pandemic.

Productivity is being put under a magnifying glass, and everyone is tracking where it is lost and looking for opportunities to gain production. With the industry in flux, it is more important than ever that your organization is tracking production and mitigating lost productivity in this new and uncertain operating environment.

Document, clarify and confirm

People build projects and we’re human, imperfections and all. So it is inevitable that projects experience some degree of inefficiency even during the best of times. But the impacts caused by the pandemic are not a “hall pass” for unrelated project delays and inefficiencies like late deliveries or equipment breakdowns. It is crucial to identify and segregate COVID-19-related issues from other unrelated problems by documenting real time conditions, problems and progress. Don’t leave it to memory – I’m not sure about you, but the past few months have been a blur. Contemporaneous documentation can help separate the COVID-19 impacts from the rest so the loss of productivity can be tracked by crew size, procurement, or the actual production due to either social distancing or government restrictions. Every claimed impact should be documented.

The lack of critical documentation can undermine your ability to resolve claims in the future, and I’m already seeing it happen. For one client, a contractor claimed delays due to the pandemic and the contractor’s time impact analysis claimed it was shut down in early March. However, the inspector’s daily reports clearly indicated that the contractor was working through that period. Had the owner not been prepared with documented facts, the owner may have granted additional time if they just took the contractor’s word for it. It is also important for project owners to be proactive as to the specifics of productivity loss in documentation.

Now is the time to collect, assess and verify everything that might be useful in future negotiations. The owner is far more prepared to then review claims against the project schedule. A claimed pandemic impact is not a hall pass — a forensic schedule analysis should be performed to assess how the pandemic negatively impacted the critical activities in the longest path for the project schedule so the entitlement of time extension can be logically analyzed and reasonably granted to the project.

Look for opportunities to mitigate impacts

Work might be impacted on many sites, but there may also be opportunities to accelerate progress and improve production as COVID-19 restrictions actually open work windows to work that would otherwise have been performed under more stringent conditions. Remember also that contractors typically have a duty to mitigate delays and they must identify and quantify the costs of these opportunities. It is clearly important to identify what has been impacted and lost from this pandemic. It is even more crucial to identify what resources can be added to mitigate the impacts in the project.

Making up time during the pandemic isn't far-fetched. For one major client, work windows for a transit project were originally relegated to off-hours construction to avoid causing traveling public inconvenience. When many of the local businesses closed and residents quarantined, public inconvenience was no longer an issue. With expanded work hour windows, several key activities were completed ahead of schedule. It is the contractor’s duty to mitigate by seeking opportunities to complete other remaining activities that are not impacted by the pandemic.

Consider new and continuing concerns

There is still much to be resolved and a lot to be settled. Many contractors are submitting notices that they have been affected, but they are understandably waiting to know the extent of the impacts. Very few have moved one step further to state specifics of how they have been damaged or delayed, and these specifics should be requested in documentation promptly.

Make no mistake, a wave of claims will be coming. It’s easy to anticipate some arguments already. For example, is it really a force majeure delay if an owner decides that some “essential” projects should continue while other projects are not and are shut down?
Even a greenlight to return to work might cause issues. For an owner that had every or many projects shut down, restarting all at once might be beyond its capabilities. Prioritizing restarts would be based on resources, not mandates, creating a whole new set of claims.

Plus, there are future projects to think about. Contract language is bound to change. Distinctions on whether future waves can be expected is murky territory, but the industry should prepare for a new set of risk allocation.

Access the COVID-19 Response Strategy Series

With infection rates spiking, it’s clear we’re not out of the woods yet. Keep in mind that this is a shared struggle, and the best dispute resolution is always a win-win for both parties. Be open and collaborative with records so that every team is on the same page. For more on working through the pandemic, download our COVID-19 Response Strategy Series. These guides will help you navigate contract considerations around continuing projects, stopped projects, and projects restarting after a shutdown.

David Lee

Construction Claims Analyst +1 213 797 5282 Ask me a question
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