Hi Daya,
You can either reach me through my website (www.rosmartin.com) or by direct e-mail, which is stuart@rosmartin.com

Joe - thanx very much for the Leonard Study reference. I did find the Revay Report stuff a long time ago (also on other interesting subjects); thanx for helping to shake up my two remaining brain cells!

Cheers,
Stuart

www.rosmartin.com

Intersting discussion.

I will have something to say later.

Try this link for Charles Leonard essay:
http://www.danzpage.com/Research/Leonard%20Study-Effect%20of%20Change%20...

Hope you enjoy it

Joe

Hi Daya,

I am not too sure if an example is best; it is as much a case of principle rather than anything else. In the case of an LS Contract, the Contractor will have resourced and priced his execution of the Works in the most efficient and economic manner. His resourced time schedule will set out the most efficient method by which he plans to undertake and complete the Works.
If his execution of the Works is constantly disrupted by the unplanned and continual introduction of unforeseeable additional work, then it becomes impossible for him to maintain his planned level of efficiency. If the number of man-hours being spent on unscheduled additional work becomes excessive relative to the original number of man-hours required for the planned work, then a loss of productivity in labour use will result.
The Leonard Study (1987) confirms that, for example, in a civil/architectural contract, there will be a 20% reduction in labour productivity where the amount of time spent on additional unplanned work represents 40% of the total contract hours. Where the amount of extra unscheduled work represents 10% of the total contract hours, the amount of labour productivity is about 12%.
When you think about it, this makes sense.
If a Contractor had to pour 50 cub. metres of concrete in columns and walls, this could probably be done efficiently with, say 200 man-hours. However, if, after he had started to pour the concrete, an instruction were received to increase the amount of concrete by an extra 5 cub. metres (10% of the original total), this would disrupt the flow of the original work. If the Contractor then also received a further later instruction to add yet another 5 cub. metres of concrete, (another 10% of the original quantity) then once more the regular flow of efficiency in carrying out the original work will have been disrupted.
The Contractor now has had to pour a total of 60 cub metres of concrete, and pro-rata you would expect this to add an extra 20 man-hours (20%) to his original manpower resourcing, bringing it up to 240 man-hours. Unfortunately however, this does not take account of the constant interruption to the originally planned work, which has resulted in lower productivity of the original workscope due to the stop-start nature of the work impacted by the instructions. Consequently, the Contractor needs more time (and will incur additional costs!) to overcome the disruption caused by the additional work and its timing, because the chances are that the Contractor will now have to accelerate to make up for the reduced productivity. Unfortunately, most Contractors don’t realise that they are in fact paying for this themselves!
In most cases though, additional work is often introduced at a time where this reduction in productivity simply munches away at the Contractor’s float, but then suddenly the Contractor wonders why he inexplicably has ran out of time….....
If, as is shown in the Leonard Study, the amount of man-hours spent on additional work is disproportionately high compared to the originally planned man-hours, then overall productivity is reduced.
I can’t find anything on the www re Charles Leonard’s Study (maybe someone more technically minded than me can do so!) but my source for this is “Calculating Lost Labor Productivity in Construction Claims” by William Schwartzkopf. (1995).

Hope this helps,
Cheers,
Stuart

www.rosmartin.com

Hi Daya,

Thanx for asking my opinion (blush! blush!), in which I support your own.

As you correctly point out, there are two ways of looking at your situation:
First, the Contractor keeps his existing resources, but the extra VO work means that he has a critical delay of 1 month beyond the due completion date (June instead of May 2005). If it is a Lump Sum Contract (where the amount of work is defined and is to be executed and completed for a defined and fixed bag of money and during an agreed fixed period of time) then if the amount of work is increased, so the Contractor must be allowed extra costs and time for doing so. Therefore, the Contractor should receive an EOT in recognition of the additional quantity of work to be undertaken (assuming that it impacts the CP). It also flows from this that he would also be entitled to all time-related overheads for the extra month. Those overheads, of course, would have to be omitted from the rates agreed for carrying out the extra work.
In the alternative, (and which is probably the more common approach to this matter) the price for the extra work should be such that it properly compensates the Contractor for all of his extra costs of executing the additional work within the Contract Period. In essence, this could be done by taking the time-related overhead costs for the extra month and folding them into the basic rates charged for the extra work. Furthermore, if additional specific unplanned resources are to be used as a direct result of an Employer/Owner instruction, then all of the additional costs of such resources should be folded into the costs of the extra works.
Timing is also important. It is easier for a Contractor to absorb extra work into his schedule at the front-end of a project (where is may just eat up some of his extra float) than it is for him to carry out such additional work towards the completion, even if the extra work is similar in nature. If the extra work is such that it impacts the CP, then the Employer/Owner has two options: he can either get his project later, or he can pay more to have it on time! (I’ve never known the first option to be selected!)
As always, it all depends on the precise wording of the Contract, but if is states that the Contract Price and/or Time Schedule is in respect of the contract’s defined workscope (or words similar thereto) then the Contractor is probably fully entitled to all of his additional costs (including overheads) when that workscope is adjusted.
Also keep in mind, Daya, that if the amount of extra work orders becomes excessive, you may also have reduced productivity since it is less productive to execute and complete unplanned work than it is to carry out scheduled work. This will therefore cause an increase in your unit rates.
I hope that this helps you out, but let me know if you need further clarification.

Cheers,
Stuart

www.rosmartin.com

Steven,
I would suggest that what is more likely to happen is that additional (planning or any other)resouces would have to be employed in order to execute additional work due to Change or Variation Orders, in order to maintain the project schedule. The cost of such additional resources would be calculated as part of the normal costs of the Change or Variation Order, and this becomes a matter of cost, not one of time.
If the Contract gives the Employer/Client the right to issue instructions, it must also (at the very least by inference!) give the Contractor the right to recover any direct additional costs arising out of such instructions.
Stu.

Martin,
The cumulative effect of Change Orders is the subject of the Leonard Study, which confirms that there is a clear correlation between productivity and the nature and extent of unplanned Change/Variation Orders. There are three relationships between productivity and changes:
1)frequency (number of Variations over the life of the project)
2)amount of additional work (as additional manhours compared to original manhours)
3) percentage of additional hours to actual contract hours.

Try a search for "Effects of Change Orders on Productivity" by Charles A. Leonard. Although this study was carried out in the late 70s/early 80s, it is still valid.
Good luck
Stuart

You have to read also Your contract.
In some contract I worked with, all the extra work the Client asked for, where paid at and agreed rate for extra works. But was well defined that You should use equipment and manpower not planned to work in Your main work!?!?
In this case You can not claim any disruption.
Except the case in as per Client instruction this extra work was urgent the Client asked You to perform it in a particular time period well knowing that this was reducing Your capability to work on critical tasks (reduced access, etc …)
If You have not this condition in Your contract I am agree with Alex.
In any case I think You should advice the Client before to carry out the work of the possible disruption to the main work and let You the opportunity to claim any delay (EOT) or extra cost to recover the lost time.