If your client made a scope change that costed you £100k would you be right on it? Most projects I have been on are pretty sharp at claiming this kind of change.
But what about delays? Many projects aren’t as on the ball in this area even though the costs can be significant. I think there are three main reasons for this:
- Unlike a physical scope change which has a clear explicit cost, a change in time requires a bit more abstract reasoning and calculation to both prove and demonstrate its cost.
- The realisation of the cost overrun won’t be felt until the future – “there are bigger fires to fight now, why bother debating with the client about a delay of a few days?”
- Most projects don’t maintain a robust project schedule and are simply unable to quantify the impact the client delay has on their completion date.
How much can it cost?
Let’s take a medium sized infrastructure project of £20-£50m contract value. Liquidated damages can be anything from £5k per day to £20k per day (usually capped at 10-20% of contract value).
This means one week can then easily cost £35k to £140k+ in damages alone if you over run your contractual dates. Not to mention another £50k+ worth of prelim costs.
It is pretty easy to see how a day here and there can add up to a week with the weeks adding up to months so on. So what is really needed is progressive and proactive delay claims so that costs are recovered.
How to get your time back
Clear and contractually compliant programmes
- A clear and regularly updated programme/schedule to demonstrate the delay impact with detailed documentation backing it up. This is something that a lot of projects simply don’t have which means they are at the mercy of the client’s good graces when they ask for a time extension.
- A clear and well explained critical path that allows for the delays to be demonstrated with a clear explanation.
- Site diaries and daily reports – these are fundamental evidence and need to be robust and clear so they can easily back up the events shown on the programme
- Detailed and descriptive early warnings before the events happen – if you didn’t warn about it in a clear way then entitlement for making the claims can be lost!
- Detailed and descriptive NCEs for time when the events happen – if sent too late then the entitlement to claim can be lost if the contract is strictly adhered to. This is often done well for cost only NCEs but not so much for time impacts.
Communication and rapport with the client
- Develop clear and simple explanations of how the critical path operates and how the delay is driving it. Often client representatives don’t have a detailed understanding of how programmes work and this needs to be explained in a clear way without all the jargon.
- Ensuring that your relationship with the client is not confrontational or emotional helps to ensure that they will listen to the facts that you are presenting and collaborate in finding a solution even though it is costing them money.
At the end of the day it’s all about administering the contract correctly so that costs are recovered as change occurs. If there is robust evidence in the form of a quality programme and backup documentation then this can save hundreds of thousands or millions and prevent costly disputes a the end of the project.