This is a hold-up

Construction contracts allow the contractor to recover loss and expense that has been incurred as a result of variations or other changes by the employer. The familiar territory of clause 26 of the JCT contract, which covers loss and expense caused by matters materially affecting the regular progress of the works, sets out the list of reasons for which the contractor can claim. Although most contractors claims under clause 26, they can, of course, demand damages for breach of contract at common law.

Either way, in order to be able to recover losses, the contractor has to show that there has been a breach of the contract or that one of the matters set out in clause 26 has occurred. They then have to show that this had an effect. Lastly, they have to show that there has been a loss incurred as a result. Only when each of the links in the chain is established will the entitlement to loss and expense have been proved.

The headings under which claims are generally presented will be familiar to anyone who has been on the receiving end of one. They include, for instance, site running costs, additional staffing, head office costs, finance charges and disruption. Each of these brings its own particular challenges in terms of recovery.

The JCT contract is silent on disruption as an element of a claim. The position is simply that "losses" may be claimed, and if disruption has occurred, then this may be one of those losses.

The trinity of event, effect and loss is difficult to show for disruption. Disruption is seen as a mystical, confusing area. In fact it is a common sense area – it is all about the difference between what you did achieve and what you could have achieved if the project had continued as planned. Mostly, it is about loss of productivity.

The traditional "Bob the Builder" approach to the disruption element of a claim was to calculate roughly the labour proportion of the works and then to pluck a percentage from thin air by which it might have been affected (5% seems as though it might be right, or shall we put it in at 10% today?). An alternative and allegedly more sophisticated approach was to split the labour cost into trades, and make the calculation using differing percentages on each trade. Both approaches are really only useful for inflating the claim. In reality they do not stand scrutiny.

So, what is the answer? Half of one might be to look at numerous studies of the effect of disruption on productivity. Unfortunately, there aren't numerous studies. In fact, the only one that I have come across that has any real meat was carried out by the Mechanical Contractors Association of America. This looked at the causes of disruption and gave percentage ranges for the loss of productivity. Make your own mind up whether this is useful.

A better answer might be to look at actual productivity rates for trades. How many cubic metres could an operative dig before the disruption? What was it during the period of disruption? What is the difference? This is a far more effective approach but it depends on being able to access records of time, and people. These frequently either do not exist, or they live at subcontractor level where, in our fragmented industry, they can be inaccessible.

The real answer is inescapable – if you want to prove and recover disruption you have to do just that. You must look at the issues that gave rise to the loss of productivity. These could be unavoidable overmanning, work being carried out in less than ideal conditions, different trades working less than efficiently in the same area, double handling of materials, and so on. Each of these will have an effect which must be calculated and costed.

Of course, it would be great if there was a way to shortcut the need to detail all the elements of disruption. It might be possible. Rumour has it that in the retail sector, they can predict what the drop in sales in a store will be as a result of disruption during a refurbishment programme. This is several steps away from construction, but it shows what can be done.