Update on Proving and Pricing Inefficiency ClaimsSummer 2003 – Articles The Construction Lawyer
Lost productivity is a primary contributor to cost overruns that affect many construction projects. In simple terms, loss of productivity (also referred to as inefficiency, disruption, or impact) can be defined as the increased cost of performance caused by a change in the contractor’s anticipated or planned resources, working conditions, or method of performance.
Contractors can incur additional costs when they are not able to work as efficiently as planned in the original bid. Achieving less than the contractor’s planned or anticipated productivity can increase labor, equipment, and material costs and potentially cause work on a project to be accelerated or delayed. In turn, accelerated, delayed, and disrupted progress can drive up variable costs such as labor, equipment, and material costs as well as field and home office overhead. The purpose of this article is to put some order to the technical and legal issues associated with proving and pricing inefficiency claims.