JCT Claims

Question 1

What is the difference between disruption and prolongation claims? How can a contractor claim for disruption? JCT

Answer 1

Prolongation - additional cost incurred as a result of completion of works being delayed (usually by Emp).

Disruption - Loss of productivity due to hindrance or interruption

For a disruption claim, evidence must be provided to show that:
• Progress of the works has been disrupted.
• Which element of the works and which trades have been disrupted, why losses occurred, and so on.
• The disruption incurred additional costs.
• The cause of the disruption constitutes a breach of contract

Question 2

Detail the various heads of claim when producing a loss and expense claim and provide examples of how each item may be quantified

Answer 2

CA responsibility to ascertain L&E, Often MC submits claim and QS checks it. MC will divide up into different headings /costs;

Site establishment costs or overheads
o Prolongation costs and Disruption costs (site accommodation, running costs etc)
o If MC owns any items, have to demonstrate actual cost, not based on hire cost

Head office overheads
o Difficult to calculate - can use formula

Others: Uneconomical working, Uneconomical procurement, Loss of profit, Acceleration, Interest, inflation

Question 3

What would you claim if you received an instruction to divide a room into 2 separate rooms when the project was almost complete?

Answer 3

Would be disrupted and prolonged as requires both extra time and cost
o Bigger impact at the end of a project
o E.g. Floor may be done, now have to break it up and put up partition and doors etc, may need to rewire. All these people will be offsite so need to bring people in for a small part of work – NOT COST EFFECTIVE or TIME EFFECTIVE

Question 4

Can the cost of producing the claim be included within a loss and expense claim? Why? JCT

Answer 4

No

Not doing anything over and above what the contract has asked you to do, just submitting evidence, straightforward process

Question 5

Why are overheads and profit difficult to claim? JCT

Answer 5

Head office overheads can be difficult to prove

- When MC puts tender in, profit head office head office generates is divided into all jobs
- Costs of head office have to be put on tender costs in order to survive
    - Under JCT have to prove them – IMPOSSIBLE

Can use Hudson formula to entitlement on the balance of probabilities

Question 6

What does the MC have to demonstrate within a L&E claim. Give examples of the 4 elements.

Answer 6

• Evidence
• Cause – what has occurred (variation, late payment)
• Effect – likely cost
• Entitlement – i.e. it’s a relevant matter

Question 7

How does JCT deal with these? How does NEC4 deal with these?

Answer 7

JCT
o VARIATIONS (MC receive AI to carry out variation, valued using contract rates, added to interim valuation)
o EXTENTION OF TIME (MC claims separately, CA has 13 weeks to assess)
o LOSS AND EXPENSE (may have occurred additional costs)

NEC- Compensation events – if the contractor believes a compensation event has occurred, he will put a notice in.

Question 8

Give me examples of types of instructions that may be issued that may allow a MC to claim L&E

Answer 8

Postponement of the works

Expenditure of undefined provisional sums – MC did not know context, couldn’t programme

Opening up of the works – if works pass the test essentially, MC claim for those losses due opening

Discrepancies between documents