CUMULATIVE IMPACT CLAIMS (LOSS OF PRODUCTIVITY)-PART 2

C. Measured mile approach

In comparison, the measured mile approach is an accepted form of impact cost analysis, that examines retrospectively what the project should have cost. This method involves a comparison of the productivity achieved by the contractor in an undisrupted  area of work with the contractor's productivity on a similar task during a disrupted work period. In most cases, the contractor will select an unimpacted area on the same project, but also may select an unimpacted area of work from a different project involving the same or similar type of work. This approach can provide an excellent basis for calculating the extent of damages if a suitable benchmark can be selected. The greatest obstacle lies in identifying an unimpacted period in which the work being performed was sufficiently similar to that work performed in the impacted period. 

D.Jury verdict method

Boards and courts primarily apply the jury verdict method after they have determined that causation has been established but the amount of damages cannot be ascertained with certainty. This approach amounts to nothing more than an educated guess based on information available to the trier-of-fact. Given the uncertainty of the state of cumulative impact claims, it would be unwise for a contractor to base its case on the jury verdict approach until it was confident that causation had been established. Further, in light of the fact of that proof of quantum often implicates causation, both a measure mile analysis and the modified total cost method provide better measure for calculating inefficiency than the jury verdict method.

Causation is the most difficult element to prove. Without proof of a casual link between the owner directed changes and the ensuing loss of efficiency, there is no entitlement to recovery . The contractor seeking recovery must submit  evidence that the number, timing and effect of the changes that were issued impacted its ability to plan and perform its work. Making this connection is not easy. One point is clear from the case law: the existence of substantial number of changes in itself is insufficient evidence of causation.

Much like the difficulties of demonstrating resultant injury, the biggest problem with proving causation, involves separating internally (contractor) caused inefficiencies from externally (owner) caused inefficiency. So, a contractor seeking to recover for cumulative impacts, must carefully develop it claim by combining expert testimony with lay witnesses who experienced first-hand the effects of numerous owner-directed changes. The credibility of the contractor's lay and expert witnesses appears in many cases to be the most essential element of a successful claim. The foundation for any credible expert is reliance on, and an understanding of the contract and contemporaneous project documents. Further, if an expert uses exhibits that summarize or use representative examples of the effects of numerous changes, the contractor should be sure to present into evidence the documentation that backs up the exhibit and be able to demonstrate that the evidence is in fact representative. 

Boards also have included "foreseeability" of the changed working conditions as an additional factor in determining whether a claim is compensable. If the contractor could foresee that unchanged work would or even could be impacted by a change request, then the contractor is expected to negotiate the cost of that impact in a change order that should follow the impact immediately. The corollary to this rule is that the contractor must prove that the impact was either unforseeable or simply not known when parties agreed to the price of the change order closest in time to the impact. An impact is foreseeable, and therefore direct and compensable, if it can be related in time to a specific change.

The initial obstacle to recovering for a  cumulative impact claim is avoiding release or waiver of the claim before the contractor is even aware that such disruption has occurred. The trend in the law appears to require contractors to expressly reserve the right to request an equitable adjustment for the cumulative disruption even before any impact becomes known. Where a contractor has included express reservations of right in the change orders the cases consistently hold that express reservations of right preserve the contractor's right to make a claim in the future. In contrast, where a change order or particular contract provision contains language releasing the owner for liability for delays and disruption stemming from the change, the owner may raise waiver as defense. In the most recent federal case to touch on this issue, the US Court of appeals affirmed the finding of fact that the contractor reserved its right to seek additional time and compensation in the future for impact

The Courts and various boards of contract appeals have recognized a general entitlement to an equitable adjustment for the cumulative disruptive impact of multiple owner directed changes, whose effect on productivity and cost exceed the direct costs of the changed work associated with each underlying change order. No matter how claim is characterized, the contractor still must prove the essential elements of liability, causation and resultant injury. A contractor seeking to recover must demonstrate that the impact was not foreseeable, and that when the disruptive effect became known, the contractor documented its occurrence ant requested reimbursement. In order to establish the elements, the contractor must rely on mutually supportive combination of expert and lay testimony, based on first-hand proper experience and on a detailed  review of contemporaneous project documentation.