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Loss of Productivity

3 replies [Last post]
Larry Rino
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Dear All, We're EPC, and our Subcontractor issued claim for loss of productivity. What substantiation to prove and what particular account items are they entitled, if its our default. Thanks

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Patrick Weaver
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There is a big difference between claiming loss of productivity and showing any loss was caused by the client's actions.  I've just finished 18 months working on this for a subcontractor.  The approach used by Zoltan Palffy Send message to Zoltan  Palffy is sound, but the starting point is if the contractor is not achieving the planned rate of production to assume it is because the subcontractor is being innefficient. Then...... 

1. Identify the disruptions caused by the actions or ommissions of the client (head EPC contractor)

2. See if the disruptions coincide with identified delays (eg, the time needed to relocate or re-work a changed design) - treat these issues as normal EOTs for assessing the cost fo the delay even if the delay is not 'critical' 

3. For the remaiing time periods see if there is a reasonable correlation between the claimed disruption to the work and the alledged loss of productivity. 

Some key questions are:

Did the subcontractor have the planned resources in the correct work area?

Were the resources adequately skilled / correct type? 

Did the subcontractor cause any issues or problems requireing time to correct?

Establishing the above needs good contemporaneous records and even then it is difficult to separate the causes of delay so in a sensible contractual relationship some compromise is needed - it is much cheaper than a full blown dispute for everyone. 

For more on this see: https://mosaicprojects.com.au/PMKI-TPI-080.php

Mike Testro
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I have developed a completely new method of measuring disruption.

I hope your contractor doesn't buy a copy of it.

Best regards Mike testro

Zoltan Palffy
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one way to measure loss of productivity is to create a Measured Mile. So in other words look at the productivity rate of installation prior to the time period that is being claimed as having a loss of productivity. For example lets say that prior to the period being claimed that the average rate of installation for conduit using 1 man is 100 ft per day (this is 100% efficeint). Then look at the allged period where inefficencies are being claimed and see what that average rate of installation is lets say that it is 80 feet per day . The difference is you loss of productivity in this case is 20 feet per day.

Math (installarion rate Prior to delay or crowding) 100 - (installation rate Delay or crowding period) 80 = loss of productivity 20

20/100= 20% inefficient 

 established rate no inefficeinecies - rate during inefficencies=loss rate

loss rate/established rate no inefficenecies = % inefficeinet

make sure that when you measure the period of inefficenences that the work is the same. Meaning same type of work and same conditions ie. installtion is at 10 ft heigh in both cases.

ALSO

The subcontractors should all have performance records that indicated their installation performance as it relates to time.