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5.1. TBB 2017.915: Claim for extended site operations (delay claims) – Approx. 18% of the claim sustained 

The claim

  • The turnkey contractor required payment from the employer for extended site operations of DKK 6,396,836.00.
    • According to the bid schedule of 27 September 2011 which was an appendix to TE’s bid of that same day, the price for the site was a total of DKK 3,270,000 and the unit price for a month was DKK 500,000. The tender price for the site partly covered operations of the site, partly establishment and stripping, including further defined parts of fixed building site materials while the unit price only covered operations. According to the bid schedule, the unit price for a month was to cover “operations of the site in case of an extended construction period all inclusive”.

Statement of the claim and its proof

  • The claim is calculated on the basis of a variation order based on the unit prices for the site and winter measures of DKK 500,000,00 and DKK 50.000,00 per month, respectively, plus a number of actual, further defined expenses for:
    • In general: Tower crane, forklifts, iron plates, project manager and project director etc.
    • Demolition and roofing: – – – additional expenditure, UE ApS additional expenditure, DB 12 %, foreman and construction manager etc.
    • Concrete works: Crew, crew vehicles, rented concrete material, foreman and construction manager etc.
  • All expenses mentioned are added up to DKK 1,801,819.00 per month or DKK 85,801 per day (21 days) calculated in relation to the period from 26 October 2012 to 14 February 2013, 74 days. DKK 47,569 has been added for personal gear during the winter period.

Reason and finding of the arbitration tribunal

  • On the wording, the agreement on a unit price for extended site operations of DKK 500,000 per month all-inclusive must be understood to mean that no claims can be made for additional, extended site operations. The tender price for included site expenses in the contemplated construction period does not provide a basis for any other understanding because that tender price – as opposed to the unit price for an extended period – not only includes operations but also erection and stripping. The current monthly payments included therefore must be significantly lower than DKK 500,000. Based on the legitimate, extended construction period of 48 days, the arbitration tribunal then determines the additional payment for an extended construction period as follows:

Site operations:

Period

Days

Price

In total

October 2012

3/23 working days

500,000

65,217

November 2012

Entire month

500,000

500,000

December 2012

Entire month

500,000

500,000

January 2013

3/23 working days

500,000

65,217

In total

1,130,434

Winter measures:

Period

Days

Price

In total

October 2012

Nothing

50,000

0

November 2012

Entire month

50,000

50,000

December 2012

Entire month

50,000

50,000

January 2012

3/23 working days

50,000

6,522

In total

106,522

  • Thus in total: DKK 1,130,434.00 + DKK 106,522.00 = DKK 1,236,956.00

5.2. TBB 2018.649: Delay claims – Approx. 38% of the claim sustained

The claim

  • Due to the delay of the construction, the principal contractor advanced the following:
    • Claim for the right to extend the time limit by 65 working days or 13 weeks
    • Claim for payment of DKK 2,184,875.00 exclusive of VAT for a number of circumstances linked to the delay of the construction, including construction process management, welfare facilities and scaffolding rent

Calculation of claims and their proofs plus the reason and finding of the arbitration tribunal for each claim

  • According to the principal contractor, 5 weeks out of the 13 weeks could be attributed to the parties’ dispute regarding the design of longitudinal steel beams which the employer’s consultants refused to design although according to the contract, that was the responsibility of the employer, thus the employer’s consultants. 
    • Proofs of the claim:
      • Minutes from site meetings
      • Mail containing the principal contractor’s emphasis of the importance of the design
      • Mail containing the principal contractor’s notification of an extension of the time limit
      • Mail from the consultants to the principal contractor stating that the consultants had started making calculations for the steel beams
      • Mail correspondence that showed that the consultants did not agree with the principal contractor that they, not the principal contractor, were to manage the design of the steel beams
      • Mail containing the consultants’ final forwarding of sketches with instructions showing the location of the beam anchoring
    • Arbitration tribunal: The arbitration tribunal found that the employer’s consultant caused the delay of the first 5 weeks due to the lack of calculations for part of the design which made it work at a critical path. However, the arbitration tribunal found that 1 out of the 5 weeks also had delaying circumstances caused by the principal contractor’s circumstances but that this could not change the fact that according to § 24, subsection 1 of AB 92, the principal contractor is entitled to a 5-week extension of the time limit in relation to the start-up phase. 
  • According to the principal contractor, 3 weeks out of the 13 weeks could be attributed to a lack of clarification regarding the selection of materials for kitchens and floors.
    • Proofs of the claim:
      • Statement during the case from the sub-contractor regarding the original intention to complete kitchens and floors at the supplier in Latvia before the room modules were transported to Denmark
    • Arbitration tribunal: Based on an estimate, the arbitration tribunal determined the delay caused by the late delivery and installation of room boxes and by the lack of clear instructions from the employer’s consultant to be 2 weeks. The delayed work was at a critical path. In respect of one of the two weeks and following an assessment based on an estimate, the arbitration tribunal found that the delay was also due to circumstances which could be attributed to the principal contractor’s planning and organisation of the work and for which the principal contractor was therefore responsible. However, the arbitration tribunal found that the delaying circumstances that could be attributed to the principal contractor do not change the fact that according to § 24 subs. 1 of AB 92, the principal contractor was entitled to a 2-week extension of time for the selection of materials for kitchens and floors.
  • According to the principal contractor, 5 weeks out of the 13 weeks could be attributed to a number of conditions. According to the principal contractor, some of them overlapped in terms of time, but according to the principal contractor, they had caused a cumulative delay and a derived claim for a 5-week extension of time.
    • Lack of electricity in the module boxes:
      • Proofs of the claim:
        • Construction project description about the principal contractor’s responsibility for construction electricity
        • Minutes from two site meetings in which the principal contractor asks for clarification regarding the end user addresses so that electricity meters can be installed and electricity be routed to each module box (apartments)
        • Minutes from a site meeting indicating that the municipality had stated the addresses and that the electricity supplier was able to initiate the necessary activities
        • Minutes from a site meeting indicating that the electricity supplier would make new cable boxes as an urgent job and that the electricity contractor would initiate establishment of the service lines
          • Arbitration tribunal: On that background, the arbitration tribunal found that at least part of the delay in the work connected with the lack of electricity in the module boxes installed was caused by the consultants’/employer’s circumstances. As the work was at a critical path, the delay entitled the principal contractor to an extension of the time limit.
    • Steel project in connection with gable rafters
      • Proofs of the claim:
          • No evidence produced
            • Arbitration tribunal: The principal contractor stated that the lack of clarification regarding the steel project in connection with gable rafters had led to a delay in the subsequent works and that the result would be an extension of the time limit. The arbitration tribunal did not find that an extension of the time limit was justified as it had not been established that it was a matter of delay in work at a critical path.
    • Fire parapet substitution
      • Proofs of the claim:
        • Expert opinion
          • Arbitration tribunal: In agreement with an expert opinion of 4 October 2016 (reply to question 1), the arbitration tribunal considered that a fire parapet substitution, staircase and windbreak had largely been constructed as designed and that only minor adjustments had been made. Whether there was a delay in connection with the design or not, the arbitration tribunal found that it had not been established that it was a matter of a delay in work at a critical path.
    • Drain systems, residential ventilation – installations in crawl space and loft
      • Proofs of the claim:
        • Time schedules
        • Minutes from a site meeting in which the principal contractor stated that a “collision” had been found between the smoke and heat ventilation and discharge pipes below the module boxes and that an assessment meeting had been arranged with a person from the sub-consultant.
        • Minutes from three site meetings stating that the issues with finding room for discharge pipes crossing longitudinal steel beams had not been solved.
        • Minutes from a site meeting stating that a solution to the problem had not been found and that a trial mounting was in progress.
          • Arbitration tribunal: The late solution to the drain system issues which – in the arbitration tribunal’s opinion – was the employer’s/his consultants’ responsibility involved among other things that it was necessary to do the installations in the room between the original roof deck and the bottom of the new room boxes (“the crawl space”) which had caused a delay in the construction and had rendered the construction difficult. The work was at a critical path. In the arbitration tribunal’s opinion, the actual change of making the drain system a UV system, meaning a system with a closed flow, did not in itself cause a delay. With regards to the residential ventilation, the principal contractor’s work according to the time schedule of 18 June 2012 also had to be completed from week 37. As previously mentioned, delay had already occurred at that time due to the late design of the longitudinal steel beams. The parties’ disagreement regarding residential ventilation includes the responsibility and significance of any missing project clarification regarding ventilation at roof level (loft), including changes in the location of roof vents/ventilator cowls. Based on the considerations stated by the arbitration tribunal, designing residential ventilation is the employer’s/his consultants’ responsibility. The principal contractor did not receive the final plan regarding i.a. duct routing for residential ventilation until 3 May 2013. Although the arbitration tribunal finds that it is a matter of design delay for which the employer is responsible, it is not a matter of work at a critical path. Therefore, the principal contractor is not entitled to an extension of time in those regards. Regarding the delay caused by the fact that part of the ventilation work had to be completed in the crawl space, the arbitration tribunal refers to the above notes regarding the drain system work in the crawl space which also applies to this delay.
    • Lift
      • Proofs of the claim:
        • No evidence produced
          • Arbitration tribunal: The principal contractor stated that the lack of project clarification regarding the lift caused a delay in the subsequent works and that this led to an extension of time. The arbitration tribunal did not find that an extension of the time limit was justified as it had not been established that it was a matter of delay in work at a critical path.
    • The arbitration tribunal’s overall reason and finding as regards the principal contractor’s extension of time claim for “other circumstances”:
      • The arbitration tribunal found that the principal contractor was entitled to an extension of time for delays in connection with the lack of electricity and regarding drain systems and residential ventilation (crawl space and loft). As the delay in connection with the relevant works overlapped to a certain extent and as there also was some degree of uncertainty related to the exact duration of the delay, the arbitration tribunal determined the principal contractor’s claim for an extension of time to be 4 weeks based on an estimate.
  • Thus, the arbitration tribunal determined the principal contractor’s total claim for an extension of time to be 11 weeks.
  • The principal contractor’s financial claim due to the 11-week extension of time
    • The principal contractor claimed DKK 2,184,875.00 exclusive of VAT for extended construction time.
      • Proofs of the claim:
        • No further documentation was presented for all of the expenses at issue.
          • Arbitration tribunal: The arbitration tribunal found that the delay was caused by the employer’s circumstances considering the 11 weeks, and the principal contractor therefore was entitled to compensation, cf. § 27 subs. 1 paragraph 1 of AB 92, cf. § 24 subs. 1 paragraph 2. Two weeks of the total extension of time also involved delaying conditions caused by the principal contractor’s circumstances. The arbitration tribunal found that the principal contractor was only entitled to compensation regarding delay which was not (also) caused by the principal contractor’s own circumstances. Thus, the principal contractor was only entitled to payment due to a 9-week extension of time. As no further documentation was presented for all of the expenses at issue in the principal contractor’s claim of DKK 2,184,875.00 exclusive of VAT, the arbitration tribunal determined the principal contractor’s claim regarding an extended construction time to be a total of DKK 900,000.00 exclusive of VAT based on an estimate.

5.3. TBB 2009.379: Claim for cover of additional costs in case of delay and disruption – Approx. 88% of the claim sustained

The claim

  • The sub-contractor claimed that the principal contractor be ordered to pay DKK 1,227,515.00 exclusive of VAT due to start-up problems/dead time, disturbances, extra work and the rebuilding of the scaffolding due to delay and disruption. 

Calculation of claims and their proofs plus the reason and finding of the arbitration tribunal for each claim

  • Start-up problems/dead time – DKK 26,070.00
    • Proofs of the claim:
      • Complaint by mail regarding start-up problems/dead time comprising of:
        • Claim for a 20-day extension of time
        • Claim for remuneration for a waiting period for 3 men of 22 hours of DKK 295.00 or DKK 26,070.00
      • Statements during the case
    • Arbitration tribunal: The principal contractor was responsible for the delay. The arbitration tribunal allowed the sub-contractor’s calculated claim.
  • Disturbances – DKK 61,225.00
    • The calculation of the claim was calculated in the final settlement:
      • 10 men who had to move 6 times = 120 lost hours of DKK 395.00 = DKK 47,400.00
      • 1 day of idleness for ½ crew, a total of 35 hours of DKK 395.00 = DKK 13,825.00
      • In total: DKK 61,225.00
    • Proofs of the claim:
      • Complaint by mail regarding limited options to perform work with the presentation of an email receipt for the submission of the email. The mail contained a description of the fact that a crane had been in the way, excavation had been prevented and brickwork had been stopped 3 times due to installation of elements. The sub-contractor believes that he only had access to do approx. 5 % of brickwork due to these circumstances. 
        • Claim for extension of time
        • Claim for payment of costs in consequence – calculation would be submitted later. 
      • Statements during the case
    • Arbitration tribunal: Considered that dead time had occurred for the sub-contractor’s crew. The sub-contractor’s calculation was accepted and it was found to be of no importance that the sub-contractor had not calculated his claim until the submission of the final settlement. 
  • Extra work regarding drilling in wall ties – DKK 61,471.00
    • Proofs of the claim:
      • The contract sum included the work of drilling in the first 1,000 wall ties.
      • In the final settlement of 27 December 2005, the sub-contractor calculated the total number of wall ties to be 3,627 units and invoiced 2,627 units of DKK 23.40 or a total of DKK 61,471.
      • Statements during the case
    • Arbitration tribunal: According to the information about the scope of the contract and the nature of the concrete elements compared to the statements given, the arbitration tribunal found that it had been established that a number of extra wall ties had been drilled in than invoiced by the sub-contractor. Thus, the arbitration tribunal allowed the sub-contractor’s claim. 
  • Extra work regarding rebuilding of the scaffolding – DKK 30,810.00
    • The sub-contractor calculated the claim to be 72 hours of DKK 395.00 or DKK 30,810.00. The claim concerns building and subsequently removing scaffolding with lattice decks for the window installer which was late.
    • Proofs of the claim:
      • Interpretation of contract
      • Statements during the case
    • Arbitration tribunal: According to the statement given by A and other statements in the case, the arbitration tribunal found that it had been established that the window installation was late and that the scaffolding therefore had to be rebuilt. According to the provisions of the contraction contract, the sub-contractor was not obliged to rebuild the scaffolding free of charge for the late window installation. Accordingly, the arbitration tribunal allowed the sub-contractor’s claim.
  • Extra work regarding walling up holes from the platform DKK 6,320.00
    • The sub-contractor calculated his claim to be 16 hours of DKK 395.00, in total DKK 6,320.00 to wall up 16 putlog holes in the west façade from the carpenter’s working platform.
    • Proofs of the claim:
      • Interpretation of contract
      • Statements during the case
      • Photos
    • Arbitration tribunal: Based on the photos presented and the statement given by A, the arbitration tribunal considered that the work invoiced concerned the walling up of putlog holes. The holes had been made in the face wall for a different contractor’s working platforms. That word was not included in the provision of the contract documents regarding follow-up repairs, and the arbitration tribunal therefore allowed the sub-contractor’s claim.
  • Extra works concerning the straightening of pre-shaped wall ties – DKK 528,000.00
    • Proofs of the claim:
      • Interpretation of contract
      • Minutes from a project review meeting regarding brick facing
      • Amendment sheet to the tender documents
      • Minutes from a sub-contractor site meeting
      • Statements during the case
    • Arbitration tribunal: At the project review meeting on 28 February 2005, it was mentioned that there were specific requirements for the straightening of the embedded wall ties, but the minutes or any other written material do not state that the requirements were specified at the meeting. The statements given in those regards are conflicting, and for practical purposes of proof, it can only be considered that the requirements were specified in the amendment sheet of 23 May 2005. Consequently, the special requirements for the straightening using special special-purpose tools involved a project change which required extra work performance and for which the sub-contractor could therefore require additional payment. The sub-contractor’s calculation of the time-consuming extent of the work, thus the costs of straightening each binder, can be substantially accepted, however, the decision is based on an estimate. For the estimate, the arbitration tribunal considered that according to the statements given, it could be considered that the straightening work using special-purpose tools was not completed until the face wall work had been in progress for some time. Accordingly, the arbitration tribunal allowed the sub-contractor’s claim with respect to DKK 400,000.
  • Extra works regarding increased amount of brickwork – DKK 18,670.00 
    • The parties settled the claim in oral negotiations so that the principal contractor pays DKK 7,000.00 plus VAT.

The entire findings of the arbitration tribunal

  • Thus, the arbitration tribunal allowed the sub-contractor’s claim of DKK 1,087,845.00 exclusive of VAT and including interest as claimed out of the DKK 1,227,515.00 exclusive of VAT due to start-up problems/dead time, disturbances, extra works and rebuilding of scaffolding due to delay and disruption.