Restarting Suspended Construction Projects – A Quick Guide to Preventing Disputes

It is common for employers and contractors to fall into dispute over suspended projects and their recommencement, particularly in regards to time and costs, changes in design and scope of works. With many projects that were stalled during the Covid pandemic, and the period of lower oil prices, now being restarted, Curtis provides an overview of the key issues to consider together with the main causes of disputes and how to successfully navigate restarting suspended projects.

Pre-Suspension Losses

Contractors should consider what losses they may have incurred prior to a project being suspended. It is very common that, prior to receiving an instruction to suspend works, the employer will have slowed the contractor down in their works which will have caused a loss in productivity. A contractor should consider whether a claim for prolongation or disruption exists prior to suspension.

To establish disruption, a contractor would be required to undertake a review of its productivity in carrying out the works over the schedule in order to determine when lower productivity occurred and what work activities were impacted. It is likely expert analysis will be required to determine the loss of productivity arising out of the disruption events, and the resulting financial loss. As always, good records are essential. 

Suspension

• Costs incurred protecting the works against any deterioration, loss or damage. 
• Downtime/standing time of plant/equipment and labour. 
• Depreciation of equipment. 
• Prolongation costs – staff, insurance, bonds, extended warranties, accommodation, storage facilities. 
• Making good unavoidable deterioration of the works. 
• Loss of revenue. 
• Interest. 
• Other general damages suffered.

Extension of Time

A contractor should be careful to document the employer’s suspension of the works, and carefully maintain project documentation/evidence in order to support any claim for extension of time. It is almost certain that any claim for extension of time will need to be supported by a delay analysis, and therefore a contractor should collect and preserve evidence of progress and instructions to suspend work. This evidence will be critical to support a delay analysis. A contractor should ensure that the following are carefully maintained during execution of the works, and carefully stored and controlled during suspension: 

• Minutes of meetings. 
• Site inspection records. 
• Daily, weekly and monthly reports. 
• Schedules/programs. 
• Design documents. 
• Equipment logs. 
• Photographs of progress and key milestones.

Such documentation will be essential to undertake a helpful analysis examining the status of the works and the critical path prior to any slow down or disruption prior to suspension.

Project Restart – Practical Considerations and Costs

Key issues that a contractor should examine and consider prior to restarting suspended project works:

• Is there an agreed and documented procedure for restarting? 
• Is the design still correct and/or viable? 
• Is the existing project execution plan still workable? 
• What project documentation/records are still in place? 
• Is it possible to jointly agree a condition survey with the employer? 
• Can variations be agreed prior to recommencement? 
• How are the project restart works priced? 
• Is timing, sequence and quantity agreed? 
• What is the basis of pricing the restart works? 

Some cost considerations to be considered before restarting the project:

• What is the impact of suspension/restart on the project’s material costs? 
• Has there been any impact by inflation, escalation, commodity prices, availability of material? 
• Have suppliers changed during the suspension period and, if so, does this impact time or cost? 
• Is it necessary to revisit BOQs and rates/prices? 
• Will there be a need to replace already installed material? There have been significant increases in prices during 2020-2022 of concrete, steel, cabling, timber. This should be factored in and agreed before restarting works.

Impact on Personnel and Rate of Progress

A review should be undertaken to consider what, if any, changes in personnel have occurred. Changes in personnel can result in a decrease of rates of progress and efficiency, due to loss of project and site knowledge. Any such losses should be taken into account and provided for. Some issues to consider:

• Have there been any regulatory or procedural changes during the period of suspension that have increased costs during remobilization? 
• Any changes in regulation also may impact pricing if specified materials have changed or are no longer available due to supply chain restrictions, sanctions, or availability of materials produced overseas. 
• Are subcontractors still available? 
• Has the introduction of VAT had any impact on costs? 

Key Takeaways

Prior to restarting a suspended project, both parties should give serious thought to the issues above, and be realistic and aligned: the original project schedule will unlikely still be suitable for the project. At a minimum, the parties need to undertake a review of the schedule, consider prolongation costs, and reconfirm the scope of works. The parties need to work together if restarting a suspended project is going to move successfully towards completion without disputes arising.