Erachron Academy
Training in Construction Claims, Delay Analysis & Project Controls
Prolongation Costs in Construction Projects: Assessment and Best Practice
In construction projects, prolongation costs arise when the duration of the works is extended due to delay events affecting the project completion date. When a delay occurs on the critical path, the contractor may be required to maintain site management, temporary facilities, supervision staff, equipment and other time-related resources for a longer period than originally planned. These additional expenses are commonly referred to as site running costs, which are typically included in the contract under Preliminaries or time-related project overheads.
Preliminaries generally include costs such as site management staff, supervision personnel, site offices, temporary utilities, site security, logistics, safety management, and other operational support required to maintain construction activities. These costs are usually structured as time-dependent costs, meaning that they increase proportionally when the project duration is extended.
Proper Assessment of Prolongation Costs
In practice, prolongation costs should not be calculated as a simple global claim based on multiplying the total delay duration by a daily preliminary rate. Although some claims attempt to calculate prolongation using a simplified formula such as:
Delay duration × Daily preliminaries cost
this approach is generally considered inadequate unless it can be supported by detailed project records and a clear causal link between the delay event and the actual costs incurred.
International best practice in construction claims requires that prolongation costs be assessed based on the actual period during which the delay affected the project, rather than applying a broad or generalized calculation across the entire delay period. This means that the contractor must demonstrate:
. The occurrence of a delay event.
. That the delay affected the critical path of the project.
. The specific time period during which the delay impacted the project completion date.
. The additional site costs incurred during that specific period.
In other words, prolongation costs should be calculated by identifying the actual delay period and determining the actual costs incurred during that period, rather than relying solely on averaged or theoretical rates.
Importance of Delay Analysis
A key step in the assessment of prolongation costs is the proper identification of the delay period. This is typically achieved through recognized delay analysis methodologies, such as Windows Delay Analysis or Time Impact Analysis. These methods allow analysts to determine the precise time windows during which delay events affected the critical path of the project.
Once the delay period has been established through delay analysis, the contractor can then identify the corresponding cost records for that specific period, including site staff salaries, temporary facilities costs, equipment standby costs, and other time-related expenditures. This approach ensures that the prolongation cost calculation reflects the actual impact of the delay rather than a generalized estimate.
Avoiding Global Claims
Courts and arbitral tribunals frequently scrutinize claims that are presented as global claims, where contractors seek recovery of large cost amounts without clearly linking specific delay events to specific cost consequences. Global claims typically bundle multiple causes of delay and cost impacts together without properly demonstrating causation.
Both courts and arbitral tribunals have repeatedly emphasized that contractors must demonstrate a clear causal link between the delay event and the additional costs claimed. Where this causal relationship cannot be established, claims may be rejected or significantly reduced.
Best Practice in Claims Preparation
Best practice in prolongation cost claims requires a structured and evidence-based approach. Contractors should maintain detailed project records and align their cost assessments with the results of delay analysis. Typical supporting documentation includes:
Updated project schedules and baseline programmes
. Delay analysis reports
. Site cost records and payroll data
. Equipment utilization reports
. Project correspondence and instructions
. Interim payment certificates and cost invoices
By aligning cost records with the delay periods identified through delay analysis, contractors can demonstrate that the additional costs claimed are directly attributable to the delay events affecting the project.
Industry Guidance and Recommended Practice
International industry guidance, particularly the SCL Delay and Disruption Protocol, emphasizes that claims for prolongation costs should be based on actual costs incurred during the delay period, rather than theoretical or aggregated calculations. The protocol encourages a transparent and structured approach to delay analysis and cost assessment, ensuring that claims are supported by clear evidence and consistent methodology.
This approach is widely recognized in both construction dispute resolution and arbitration proceedings, where tribunals generally expect claims to demonstrate clear causation, accurate delay identification, and reliable cost records.
Conclusion
Prolongation costs are a critical component of construction claims arising from project delays. However, successful recovery of these costs requires more than simply applying a daily rate to the total delay period. Instead, contractors must identify the actual delay periods through structured delay analysis and demonstrate the actual costs incurred during those periods using reliable project records.
A disciplined approach combining delay analysis methodologies, detailed cost documentation, and clear causal linkage is essential for preparing robust prolongation cost claims and ensuring that they can withstand scrutiny in both contractual negotiations and formal dispute resolution proceedings.
1- DELAY TYPES
In construction projects, delays are commonly classified into several categories to determine contractual responsibility, entitlement to time extension, and potential cost recovery. According to the Society of Construction Law and its widely referenced SCL Delay and Disruption Protocol, as well as international industry practice under standard forms of contract such as FIDIC Conditions of Contract, delays are generally categorized as Excusable Delays, Compensable Delays, and Non-Excusable Delays. Excusable delays arise from events beyond the contractor’s control (such as force majeure or employer-risk events) and typically entitle the contractor to an Extension of Time (EOT). Compensable delays are employer-caused delays that may entitle the contractor to both time extension and financial compensation. Non-excusable delays are attributable to the contractor and may expose the contractor to liquidated damages. In addition to these primary classifications, delay analysis practice also distinguishes Critical Delays, which affect the project completion date through the critical path, and Non-Critical Delays, which affect activities but do not delay overall completion. Furthermore, concepts such as Concurrent Delay (simultaneous delays caused by different parties affecting the critical path), Pacing Delay (contractor’s deliberate slowing of work in response to employer delay), and Constructive Acceleration (where the contractor accelerates works without a formal instruction to mitigate employer delay) are also recognized in delay analysis literature and practice. These classifications form the conceptual basis for many delay analysis methodologies used in construction claims and dispute resolution.
Excusable Events
Variation / Change Order: If a variation instructed by the Employer affects the Time for Completion, it gives rise to entitlement to an Extension of Time (EOT); cost entitlement is assessed under Clause 13.
Engineer’s Instruction: Instructions affecting the execution of the Works that cause delay may entitle the Contractor to an EOT.
Late Site Possession: Failure to give possession of the Site on time entitles the Contractor to EOT and generally to cost.
Suspension by Engineer / Employer: Suspension of the Works entitles the Contractor to EOT and, subject to conditions, to cost.
Delayed Drawings or Instructions: Late issuance of necessary drawings or instructions affecting the critical path gives rise to EOT.
Employer’s Site Data Risk: Errors or inadequacies in Site Data provided by the Employer may entitle the Contractor to both time and cost.
Delayed Payment: Late payment entitles the Contractor to financing charges; it is not, in itself, an automatic ground for EOT.
Delay in Permits by Employer: Delays in permits for which the Employer is responsible give rise to EOT.
Free-Issue Materials Unavailable: Failure by the Employer to provide free-issue materials entitles the Contractor to EOT.
Error in Setting Out Employer-related setting out errors not reasonably detectable by an experienced contractor give rise to EOT.
Inspection Delay: Delays in inspection or approval processes affecting the critical path entitle the Contractor to EOT.
Delay Due to Other Contractors: Delays caused by other contractors under the Employer’s coordination responsibility may entitle the Contractor to EOT.
Testing Delay: Employer-related delays in testing procedures give rise to EOT.
Taking Over Delay: Delays in Taking Over procedures affecting completion entitle the Contractor to EOT.
Excusable but Non-Compensable Events
Exceptional Adverse Climatic Conditions: Exceptional weather conditions entitle the Contractor to EOT; cost is generally not recoverable.
Force Majeure: In cases of Force Majeure, EOT is granted; cost is recoverable only under the conditions set out in Clause 19.4.
Labour Strikes: General strikes beyond the Contractor’s control may entitle the Contractor to EOT; cost entitlement depends on the circumstances.
Risk Allocation Dependent Events
Unforeseeable Physical Conditions: Unforeseeable physical conditions entitle the Contractor to both EOT and cost.
Fossils / Antiquities: Discovery of fossils or antiquities may entitle the Contractor to EOT and cost.
Delays by Authorities: Delays caused by public authorities entitle the Contractor to EOT; cost entitlement depends on contractual risk allocation.
2- DELAY ANALYSIS METHODS
Common delay analysis methods, classified according to their analytical characteristics, are presented in Table 1 below.
Considering the factual circumstances that arise during the execution of projects, Windows Analysis, which retrospectively calculates and apportions delays, is one of the most frequently preferred delay analysis methods in practice [1–4].
Table 2 below illustrates the programme documentation and record-keeping requirements of the aforementioned delay analysis methods.
What is Window Delay Analysis? How is It Performed?
Window Delay Analysis is a retrospective delay analysis method in which delays are examined by dividing the project duration into specific time intervals (windows). It is particularly used in large and complex projects to determine in which period a delay occurred and which party bears the associated risk.
This method is based not on theoretical assumptions but on actual progress data and updated programmes. For this reason, it is regarded in both academic literature and practice as one of the most reliable analytical delay analysis methods (SCL Delay and Disruption Protocol, 2nd Edition).
Fundamental Principle of Window Delay Analysis
The core principle of Window Analysis is as follows:
. The project duration is divided into defined time periods, and the evolution of the critical path is analysed within each period.
. Each window is typically established based on:
. Monthly programme updates,
. A significant project event date, or
. A contractual reporting period.
How is It Performed?
1. Identification of Window Periods: The project timeline is divided chronologically (for example, by monthly updates).
2. Establishment of the Starting Point: Each window begins with the accepted version of the most recent updated programme.
3. Examination of the Critical Path: Delay events occurring within the relevant window are analysed according to their impact on the critical path.
4. Calculation of Net Delay: At the end of each window, the shift in the project completion date is calculated.
5. Apportionment of Delay: Delays occurring within the relevant window are categorised as:
. Employer risk,
. Contractor risk, or
. Neutral risk.
This process is repeated for all windows, and the total net delay is determined.
Advantages
Based on actual progress
Dynamically captures changes in the critical path
Suitable for concurrency analysis
Widely accepted in courts and arbitration proceedings
Limitations
Requires extensive programme documentation
Updated programmes must be available in native format
Requires technical expertise
Academic Evaluation
Within the context of retrospective delay analysis, Window Delay Analysis is one of the most robust methods for demonstrating causation. However, reliable results can only be achieved if regular programme updates and contemporaneous records are available.
1. Purpose of the Protocol
To promote consistency and good practice standards in delay and disruption analysis in construction projects.
To support proactive project management and the analysis of events at the time they occur (contemporaneous analysis), with the aim of preventing disputes.
To provide structured guidance for Extension of Time (EOT) and disruption claims.
Important Note: The Protocol is not a contractual document; it should always be remembered that express contractual provisions and applicable laws prevail over the Protocol.
2. Programme and Record Management Principles
“No records, no claim.”
Records form the foundation of all analyses and should be maintained contemporaneously with the events.
An approved baseline programme should be established at the outset of the project and updated regularly throughout the project duration.
Programmes should be shared not only in PDF format but also in their native software format.
Unless otherwise stated in the contract, float is not owned exclusively by either the Employer or the Contractor; it is considered a shared project resource.
3. Extension of Time (EOT) Management
Avoiding the “Wait and See” Approach:
EOT applications should be assessed at the time the delaying event occurs or as soon as reasonably possible thereafter.
Critical Path Analysis:
Only events that affect the project completion date or contractual milestones (i.e., events impacting the critical path) give rise to entitlement to an EOT.
Note: Entitlement to an EOT does not automatically give rise to entitlement to financial compensation; these are separate considerations.
4. Concurrent Delay
Concurrent delay occurs where an Employer risk event and a Contractor risk event take place during the same period, and both impact the critical path, thereby delaying completion.
SCL Principle:
In cases of true concurrency, the Contractor is generally entitled to an Extension of Time (thus avoiding liquidated damages), but is typically not entitled to additional financial compensation for that period.
5. Disruption
Disruption refers to loss of productivity resulting from interference with the Contractor’s normal working methods, even where the overall completion date is not affected.
The Protocol’s preferred method for measuring disruption is the Measured Mile analysis, which compares an affected period of work with an unaffected (clean) period.
6. Recommended Delay Analysis Methodologies
The Protocol recommends six principal methods depending on the project circumstances and available data:
Impacted As-Planned Analysis: Adding delay events to the baseline programme (prospective method).
Time Impact Analysis (TIA): Incorporating delay events into the updated programme (contemporaneous / preferred method).
Time Slice Windows Analysis: Examining the project in periodic windows (retrospective method).
As-Planned vs As-Built Windows Analysis: One of the most commonly used retrospective methods.
Retrospective Longest Path Analysis: Tracing the critical path backwards from the completion date.
Collapsed As-Built Analysis: Removing delay events from the as-built programme to assess their impact.
7. Critical Success Factors
Avoidance of Global Claims: The cause-and-effect relationship (causation) between each event and its impact must be demonstrated separately for each delay event.
Mitigation: The Contractor is obliged to take reasonable steps to mitigate the effects of delay when such events occur.
Prolongation Claims
Evaluation of extended site costs arising from excusable delays, including labour, plant, equipment, and site overheads.
Disruption Claims
Quantification of reduced productivity impacts through the Measured Mile method or other widely accepted methodologies.
Recovery of Head Office Overhead – HOOH
Application of industry-standard formulae such as Hudson, Emden, or Eichleay for the recovery of unabsorbed head office overhead.
Acceleration Claims
Calculation of additional resources, overtime, and related costs incurred as part of mitigation or acceleration measures.
Interest Claims
Assessment of financial losses resulting from late payments or under-certified interim payments.
Finance Charges
Quantification of increased borrowing or financing costs arising from withheld or delayed entitlements.
Price Escalation Claims
Analysis of cost increases in materials, fuel, and labour due to inflation or market volatility.
Loss of Profit Claims
Estimation of foregone profit resulting from wrongful termination, reduction of scope, or unjustified delay.
Why Arbitration is Necessary Compared to Litigation in Construction Disputes: A Perspective from Extension of Time (EOT) and Quantum Claims
Construction projects are inherently complex undertakings involving multiple stakeholders, technical uncertainties, and contractual risks. Delays, disruption, and cost overruns are therefore common occurrences, often leading to disputes between contractors, employers, and subcontractors.
In such cases, disputes frequently revolve around Extension of Time (EOT) claims, prolongation costs, disruption claims, and quantum assessments. Resolving these disputes effectively requires not only legal interpretation but also technical understanding of scheduling methodologies, delay analysis techniques, and cost evaluation methods.
While litigation in state courts remains a traditional dispute-resolution mechanism, arbitration has increasingly become the preferred method for resolving construction disputes worldwide. This article discusses why arbitration is often more suitable than litigation for construction disputes, particularly from the perspective of EOT and quantum claims.
What is Arbitration?
Arbitration is a private dispute resolution mechanism in which parties agree to submit their dispute to one or more neutral arbitrators instead of bringing the matter before state courts.
The arbitrator (or tribunal) renders a binding decision called an arbitral award, which is enforceable in many jurisdictions similarly to a court judgment.
Unlike court litigation, arbitration allows parties to:
• choose arbitrators with specific expertise
• determine procedural rules
• maintain confidentiality
• conduct proceedings more flexibly.
These characteristics make arbitration particularly suitable for technically complex disputes, such as those commonly arising in construction projects.
Historical Development of Arbitration
Although arbitration has existed for centuries as a method of resolving commercial disputes, its modern legal framework was shaped by several international conventions.
Geneva Protocol (1923) and Geneva Convention (1927)
The Geneva Protocol on Arbitration Clauses (1923) and the Geneva Convention on the Execution of Foreign Arbitral Awards (1927) were among the earliest attempts to facilitate international arbitration.
However, these instruments had limitations regarding enforcement procedures.
New York Convention (1958)
The major breakthrough occurred with the adoption of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) in 1958.
The New York Convention is one of the most successful international treaties in commercial law and currently has over 170 contracting states. It provides a standardized framework for recognizing and enforcing arbitral awards across jurisdictions.
This convention significantly strengthened the credibility and enforceability of arbitration in international commerce and construction projects.
Arbitration Institutions in Turkey
Turkey has increasingly developed its arbitration infrastructure in recent years. The most prominent arbitration institution in Turkey is:
Istanbul Arbitration Centre (ISTAC)
The Istanbul Arbitration Centre (ISTAC) was established in 2015 and provides arbitration and mediation services for both domestic and international disputes.
ISTAC has become an important platform for resolving disputes arising from construction, infrastructure, and commercial contracts.
Comparison Between Arbitration and Litigation
As construction projects grow in complexity and scale, disputes increasingly involve sophisticated technical analyses related to delay, disruption, and cost impacts.
Traditional litigation may struggle to efficiently address disputes requiring deep understanding of construction scheduling, delay analysis methodologies, and quantum evaluation.
Arbitration offers several advantages, including technical expertise, procedural flexibility, confidentiality, and international enforceability.
For disputes involving Extension of Time (EOT) claims and quantum assessments, arbitration therefore provides a more effective and specialised dispute resolution mechanism compared to traditional court litigation.
Disruption Analysis in Construction Projects: Concept, Methods and Practical Implications
Construction projects are complex undertakings involving multiple stakeholders, interdependent activities and uncertain environments. While delay claims primarily focus on the extension of project duration, many disputes arise from loss of productivity and inefficient work conditions, which are commonly referred to as disruption. In such cases, the contractor may complete the project within the contractual time or after an extension of time (EOT), yet suffer significant additional costs due to reduced productivity.
Disruption analysis therefore plays a crucial role in construction claims, particularly in disputes related to loss of productivity, inefficient sequencing of works, excessive rework, and site congestion. Understanding disruption and accurately quantifying its impact requires a structured analytical approach supported by reliable project data.
What is Disruption?
Disruption refers to a disturbance to the contractor’s planned method of working that results in a loss of productivity. Unlike delay, disruption does not necessarily extend the overall project duration but increases costs due to inefficient use of labour, equipment, and resources.
Typical causes of disruption in construction projects include:
. Frequent design changes and late instructions
. Out-of-sequence work
. Site congestion and restricted access
. Excessive variations
. Inefficient coordination between contractors and subcontractors
. Delayed approvals and information flow
. Unforeseen site conditions
Such events may force contractors to perform work in less efficient conditions than originally planned, thereby reducing productivity.
Difference Between Delay and Disruption
Although delay and disruption are often related, they represent different concepts in construction claims.
Delay refers to an event that affects the completion date of the project or specific milestones. Delay claims typically involve extension of time (EOT) and may lead to prolongation costs.
Disruption, on the other hand, refers to loss of productivity caused by inefficient working conditions, regardless of whether the project completion date is affected.
In practice, disruption may occur simultaneously with delays, but the assessment of disruption requires a separate analysis focusing on productivity loss rather than schedule impact.
Methods of Disruption Analysis
Several analytical approaches are used to quantify productivity losses resulting from disruption. The most commonly applied methods include:
Measured Mile Analysis
The Measured Mile method is widely accepted as the most reliable technique for disruption analysis. It compares productivity achieved during an unaffected period (baseline productivity) with productivity observed during the disrupted period.
The difference between these two productivity levels is used to determine the extent of productivity loss.
Earned Value-Based Productivity Analysis
This method evaluates labour productivity using project performance data such as earned value, planned value and actual cost. Variations between planned productivity and actual productivity can indicate disruption effects.
Industry Productivity Factors
In cases where project-specific data is limited, disruption may be evaluated using industry studies or recognised productivity factors, such as those documented in industry reports and academic research.
However, such approaches are generally considered less reliable compared to project-specific analyses.
Evidential Requirements for Disruption Claims
For disruption claims to be defensible, contractors must provide adequate supporting evidence. The following records are typically essential:
. Daily site reports
. Labour allocation records
. Work progress reports
. Method statements and work sequences
. Correspondence and instructions from the employer
. Programme updates and site coordination records
Maintaining detailed project documentation is therefore critical for demonstrating the causal link between disruptive events and productivity losses.
Practical Challenges in Disruption Analysis
Despite its importance, disruption analysis presents several practical challenges:
First, disruption often results from multiple overlapping events, making it difficult to isolate specific causes.
Second, productivity losses may develop gradually over time, rather than as a direct consequence of a single event.
Third, many construction projects lack sufficiently detailed productivity records, which complicates the analytical process.
For these reasons, disruption analysis requires not only technical expertise but also a comprehensive understanding of project operations and contractual frameworks.