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(CDR-923) Recommended Contractual Methods for Resolving Delay Events Prospectively or Retrospectively

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Primary Author: Mr Patrick M Kelly PSP ARCADIS-US

Audience Focus: Advanced
Application Type: Experience-Based
Venue: 2012 AACE International Annual Meeting, San Antonio, TX, USA

Abstract: The reality of construction projects is that the oft-mandated methodology for granting a contract time extension is ignored during the press of work. This can result in a significant change in the risk allocation between the parties. The traditional risk allocation model requires performing a prospective time impact analysis (TIA), with agreements on time and money prior to corrective work commencing. Yet, when the work is performed before negotiation, the risk allocation has shifted significantly. This paper makes recommendations for two contractual paths for resolution of changes with potential time impacts, to balance risk and responsibility for cost control. The first method, occurring prior to the start of corrective work, uses a prospective TIA to determine entitlement to time, and bilateral negotiation to manage costs. The second method occurs immediately upon completion of corrective work, tracks costs through stringent time and material cost accounting, and determines time through a contemporaneous period analysis. Having two methods for resolution gives project managers additional tools to resolve time-related issues early and prior to contract completion, minimizing potential disputes.