Construction Project Delay: Causes and Effects

Construction Project Delay: Causes and Effects In this chapter, I will discuss types, causes and effects of delay of project in the construction industry. Besides that, I will also discuss the method to minimize the delays happening in construction industry 2.2 Type of Delay In construction industry, there are the categories of delays used in determining delay damage as shown in table 2.1 Figure 2.1 Types of Delay 2.2.1 Excusable delays Excusable delay as define a delay that is due to an unforeseeable event beyond the contractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s or the subcontractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s control. Usually, based on common general provisions in public agency specifications, delay resulting from the following events would be considered excusable such as fires, floods, owner-directed changes, errors and omissions in the contract drawing, unusually severe weather and etc. Excusable delays can be further classified into excusable with compensation and excusable without compensation. 2.2.1.1 Excusable with compensation Compensation delays are caused by the owner or the owners agents. An example of this would be the drawings late release from the owners architect. An excusable, compensable delay normally leads to a schedule extension and exposes the owner to financial damages claimed by the contractor. In this scenario, the contractor incurs additional indirect costs for both extended field office and home office overhead and unabsorbed home office overhead. 2.2.1.2 Excusable delays without compensation Non-compensable delays are caused by third parties or incidents beyond the control of both the owner and the contractor. Examples typically include acts of God, unusual weather, strikes, fires, acts of government in its sovereign capacity, etc. In this case, the contractor is normally entitled to claim extension of time but no compensation for delay damages 2.2.2 Non-excusable delays Non-excusable delays are cause by lack of performance of the contractor on the construction project. This delay can be cause by underestimates of productivity, improper project planning and scheduling, poor site management and supervision, wrong construction methods, equipment breakdowns, unreliable subcontractors or suppliers. Therefore, it is contractor responsibilities to continue their work with no entitlement to claim for extension of time or delay damages until they completed the project. For instance, a contractor failure to provide an adequate material to completed their job. 2.2.3 Concurrent Delay Concurrent delay is a problem that happening on most of the construction industry project. This issue arises when two or more delaying event at the same time in a project cannot complete on time. In this situation, both owner and contractor are responsible for the delay. Commonly concurrent delays which involve any two or more excusable delays result in extension of time. When excusable with compensation and non-excusable delays are concurrent, an extension of time can be issued or the delay can be distribution between the owner and the contractor. Concurrent delay can be categories in three types of delays: If excusable and non-excusable delays occur concurrently, the contractor only to allow claim for extension of time: If excusable with compensation and excusable without compensation delays occur concurrently, the contractor is entitle to claim extension of time but no delay damages: If two excusable with compensation delays occur concurrently, the contractor is entitled to claim extension of time and delay damages. For instance, a concurrent delay would be if the owner failure to give more detail regarding either using ceramic tile or homogeneous tile for toilet floor finishes. But at the same time contractor made with own decision and using ceramic tile for toilet floor finishes but actually owner plan using homogeneous tile. In this situation, the contractor cannot claim for damages. It is because contractor is not follow owner instruction but he can claim for extension of time with owner failure to give more detail of drawing 2.3 Causes of delays Figure 2.2 Causes of delays Based on the researched done through by journal, books, and some other reference. Project delay can be causes by a lot of parties which is shown in the Figure 2.2. They are include client, contractor, consultant, labour, material, equipment, financial and some external causes. 2.3.1 Caused of Client Related Delays Figure 2.3 Factors of client related delays 2.3.1.1 Lack of experience of client in construction According to Koushki, et al. (2005) identified factors of lack of experiences of client in construction project have high influence to the causes of delays. Some of the project delay cause by client due to not enough experience especially fresh developer. Most of the time, client facing a problem and do not know how to solve it immediately because of no experience. During client finding the way to solve the problem, some of the work could not progress. Finally, the whole project delay because of some particular work delay. 2.3.1.2 Change order According to Odeh and Battaineh (2002) mentioned the factors of change orders that contribute to causes of delaysà ¢Ã¢â€š ¬?. Client always change the design during the construction period, during the same time that will affect whole project delay. It is because contractor cannot carry out his work until the latest drawing issue by architect. Consequently contractor cannot be done within the contract period. Most of the current project delay because of change order by client. For instance, a project almost complete but client change certain part of design and instruct contractor carry out the additional work. After done the whole project, the contractor found out was exceeding contract period. 2.3.1.3 Client interference According to Long, et al. (2004) studied the factors client interference that contributes to causes of delays in construction project. Some of the client instruct contractor to carry out additional work without ask architect promise. During the contractor carry out additional work, some of the work could not progress and it will be delay immediately. On the other hand, client do not follow the procedure such as did not mention architect issue an architect instruction. Finally it will affect the whole project delay. 2.3.2 Causes of contractor related delay Figure 2.4 Factors of contractor related delay 2.3.2.1 Inadequate contractor experience Abd Majid and McCaffer (1998) studied the factors of inadequate contractor experience as contributor to causes of delays. Long, ET al. (2004) mentioned the factors of inadequate contractor experience that contribute to causes of delays in construction project. Battaineh (2002) identified the factors of inadequate contractor experience as contributors to causes of delays. In construction industry, some of the delay projects are facing a problem during construction period. But at the same time contractor could not solved the problem immediately because of no experience. During the contractor finding method to solve the problem, some of the works totally stop because of that problem. After the problem was solved, those work keeping continue but run out from the schedule. Finally, the whole project will influence delay. 2.3.2.2 Inaccurate time estimate According to Long, et al. (2004) identified the factors of inaccurate time estimating that contribute to causes of delays in construction project.à ¢Ã¢â€š ¬? Time estimates are important as inputs into other technique used to manage and structure for all projects. An inaccurate time estimation technique may cause a project delay. For instance, in some delay project, the contractor do not allowed time for some common problem always happen during the construction stage such as breakdown of equipment, miss deliveries by supplies, accidents and emergencies and so on. Because of this problem the actual time will run out from the estimated. So, the whole project could be facing delay. 2.3.2.3 Inaccurate of cost estimate According to Long, et al. (2004) also mentioned that, the factors of inaccurate cost estimating that contribute to causes of delays in construction project. Construction estimating errors can be very expensive and embarrassing. Inaccurate of cost estimate contribute a lot of cause such as wrong measurements from contract drawing, using incorrect units of measure, material improperly priced and the most common mistakes in arithmetic . Sometime contractor because of inaccurate of cost estimate measurement again for that particular work. Finally, due to re-measurement time some of the work will influence delay and it will also affect whole project to delay. 2.3.2.4 Poor site management and supervision Battaineh (2002) studied that, the factors of poor site management and supervision as contributors to causes of delays. Chan and Kumaraswamy (1996) identified the factors of poor site management and supervision that contribute to causes of delays. In construction industry, some of the project team a lack of management and supervision due team member without any experience and skill such as hire person who are fresh graduate. Once they facing problem but do not know how to solve it. Besides that, some of the supervisor did not cooperation with their team member due to lack of communicated. Finally, because of cannot solve the problem immediately the whole project influence delay. 2.3.3 Causes of Consultant Related Delays Figure 2.5 Factors of consultant related delays 2.3.3.1 Inadequate consultant experience According to Long, et al. (2004) studied the factors of inadequate consultant experience as contributors to causes of delays. In construction industry, they are many consultants carry out their work without experience. Besides that, there are many causes of a consultant without experience which include different site conditions, mismanagement and maladministration, site access restrictions, defective plan and/or specification. For instances, some of the architects only concentrated in certain part of building and do not have any experience in other type. Once architect design on that particular type of building without experiences, he will facing a lot of mistake and no ideas during design and because of this architect will delay issue the drawing. Finally, the works cannot process and it will affect the whole project delay. 2.3.3.2 Poor design and delay in design According to Ogunlana, et al.(1996) mentioned the factors of poor design and delay in design that contribute to causes of delays in construction project. Design is every important to any project, without good design the whole project will influence delay. It is because in a project if facing poor design that will facing demolish and rebuilt again. This problem happens because of the designer lack of experience. For instance, an architect designs a column in the middle of classroom. Once the contractor without any experience and construct the work exactly shown in the drawing. Finally 2.3.3.3 Incomplete drawing and detail design Long, et al. (2004) identified the factors of incomplete drawing and detail design as contributors to causes of delays. Ogunlana, et al. (1996) studied the factors of incomplete drawing and detail design that contribute to causes of delays in construction project. During construction, the contractor is carrying out the work but because of drawing is unclear and none very detail shown in the drawing. He could not continue the work with problem, so the works have to stop immediately until get more detail of that particular drawing from consultant responds. Because of without detail drawing the work could not be progress, so it will affect the tat particular work delay and it will also influence the whole project delay. 2.3.4 Causes of labour related delays Figure 2.6 Factors of labour related delays 2.3.4.1 Labour supply Abd Majid and McCaffer (1998) identified the factors of slow labor supply that contribute to causes of delays. Odeh and Bataineh (2002) in their research identified à ¢Ã¢â€š ¬Ã…“the factors of labor supply as contributors to causes of delays. Besides material, the labour also consider as major source in the construction industry. Generally, labour are categories into two groups such as skilled workers and unskilled workers. In construction industry without labour project could not run. For instance, during construction, materials are ready to but no worker carrying out the work. During the same time because of no worker to progress of work, the project will confront project delay. 2.3.4.2 Shortage of skilled worker According to Chan and Kumaraswamy (1996) mentioned the factor of shortage of skill labor is the most important factor that contributed to causes of delays. Skilled worker is a worker who has some special skill, knowledge and ability in his job and also gets highest pay such as plasterer, carpenter, painter, and concreter. Those skilled workers are learning the skills on the job. In construction, some contractors do not hire skilled workers because of higher labour cost and he employs some unskilled workers. At the same time skilled workers do not want get the job from the contractor with lower labour cost. Finally the unskilled workers could not complete the work on time. So, because of shortage of skilled worker affect whole project delay. 2.3.4.3 Labor of productivity According to Ogunlana, et al. (1996) studied the factor of labor productivity having high influence to causes of delays. Labor of productivity; generally define as output per labour hour. There are many factors that influence on the labour productivity. One of the factors is workers experience, labour with high experience and high skills in field leads to high performance at workplace. Besides that, attitude also will affect productivity of labour. For instance, a worker can lay one meter square per hour but because of lazy. Finally he using three hours to finish laid the brick wall. Because of this factor, the progress work delay and it will also influence the whole project delay. 2.3.5 Causes of Material related Delay Figure 2.7 Factors of material related delay 2.3.5.1 Shortage of construction materials Koushki, et al. (2005) mentioned that, factor shortage of construction material that contribute to causes of delays. Ogunlana, et al. (1996) identified the factor of shortage of material as a factor to causes of delay. Chan and Kumaraswamy (1996) studied that factors shortage of material as contributors that contribute to causes of delays. Abd Majid and McCaffer (1998) identified the factor of shortage of material that contribute to causes of delays. Material shortage is a potential source of construction delay. The major causes of material shortage is demand exceed supply. In construction have a lot type of material and the three main courses are cement, formwork and steel bar. Besides that, material is one of the main sources in construction industry. It is because without material project cannot construct. If a project facing the material shortage problem will be delay. For instance, a project having shortage ceramic tiles even though the labours ready for tiling. In this situatio n, the project will facing delay project. 2.3.5.2 Late delivery of materials Ogunlana, et al. (1996) identified the factor of late delivery of material as a factor to causes of delay. Abd Majid and McCaffer (1998) studied the factor of late delivery of material that contribute to causes of delays. Late delivery of material as a supplier fault due to high market demand; however the long procedure of the purchasing order from head office was complained. In construction, it factor is similar to the material shortage such as the labour ready for work but no material to do their work. Once contractor cannot receive the material on time that will be delay work and it will also affect project delay. For example, workers want to install the windows but without frame because of late delivery to site. So, the work will be delay and it will affect project delay. 2.3.5.3 Poor quality of construction materials Koushki, et al. (2005) mentioned that factor poor quality of material that contribute to causes of delays. Ogunlana, et al. (1996) identified the factor of poor quality of material as a factor to causes of delay. Abd Majid and McCaffer (1998) studied the factor of poor quality of material that contribute to causes of delays. Poor quality of material is construct building with using poor quality of material. The contractor has intention to cheat owner to earn more profit by change the quality of material such as concrete. For instance, a contractor cast a column with using Y 20 steel bar but actual in contract drawing is Y 25. After site staff done the inspection for this column and found that the steel bar inside column is Y 20 and ask contractor demolish the column to rebuild. In this case, time taken to rebuild the column will also affect project delay. 2.3.5.4 Escalation of material prices Ogunlana, et al. (1996) identified the factor of escalation of material prices as a factor to causes of delay. Wiguna and Scoot (2005) studied the factor of escalation of material prices was one factor that contribute to causes of delays. Escalation of material prices will cause shortage material in construction. It is because the market rate is keeping increasing. Some of the contractor does not buy the expensive material. During same time, the construction without material cannot run so the project will influence the project delay. For instance, a contractor because of material cost of market demands higher and does not make any order for material until material shortage. Finally, the construction cannot run without material and it will affect delay project also. 2.3.6 Causes of Equipment Related Delays Figure 2.8 Factors of Equipment related delays 2.3.6.1 Insufficient number of equipment According to Ogunlana, et al. (1998) identified the factors of insufficient numbers of equipment is the most significant factors that contribute to causes of delays. In construction stage, contractors are facing not enough machinery to produce work. It is because some of the contractors do not have a large capital to purchase that machinery due to higher cost. Once the projects carry out with not enough machinery, it will influence whole project delay. For instance, there are two works to be done by using towel crane but in site only one towel crane available. Finally, two of work could not be done at the same time due to not enough towel cranes. 2.3.6.2 Frequent equipment breakdown McCaffer (1998) studied the factors of equipment breakdown as contributors to causes of delays. Ogunlana, et al. (1998) mentioned the factor of frequent equipment breakdown is the most significant factors that contribute to causes of delays. In construction industry, some of the machinery always breakdown due to improper using by worker such as do not follow the instruction. For instance, machinery only can support for five hundred kilograms of material but during worker using that machinery and his carry out six hundred kilograms of material. Finally, the machinery will breakdown. Once machinery breakdown, the work will be stop immediately and affect some work delay. Finally, because of machinery breakdown the whole project will also influence delay. 2.3.6.3 Shortage of Equipment Parts According to Chan and Kumaraswamy (1996) identified the factor of shortage of equipment parts that contribute to causes of delays. After machinery breakdown, the technical carry out the repair work for the breakdown of equipment. During the same time, some part of machinery none have stock in market. Because of no spare part to repair the machinery, some of the works facing stop progress immediately. Consequently, it will influence whole project to be delay. 2.3.7 Causes of Financial Related Delays Figure 2.9 Factors of Financial related delays 2.3.7.1 Clientà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial difficulties According to Chan and Kumaraswamy (1996) identified the factors of clientà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial difficulties as contributor to causes of delays. During the construction, client will face some financial problem arise from unanticipated emergencies or financial mismanagement such as global financial crisis. Besides that, a client proposes a new development without borrow term loan or bridging loan from the bank. On the other hand, improper cost planning is a most serious problem for those clients facing in current delay project. For instance, during pre-construction stage a client do not planning cost properly and he will facing a lot of problem in construction stage such as no enough capital to pay contractor payment. Finally, because of contractor did not receive payment to influence whole project delay. 2.3.7.2 Delay payment to suppliers/subcontractor According to Abd Majid and McCaffer (1998) mentioned the factors of inadequate fund allocation and delay payment to subcontractor/suppliers as contributor to causes of delays in construction project. Due to sub- contractor do not take their responsibility to done the work on time. The contractor will delay the payment until they complete the job. But at the same time, the sub-contractor refuse to work because of not yet receive payment. As a consequently, the whole project will be influence delay due to sub-contractor refuse to work. 2.3.7.3 Contractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial difficulties According to Ogunlana, et al. (1996) studied the factors of contractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial difficulties having high influence to causes of delays. Poor financial management has been known as one of the factors why certain project cannot complete within contract period. Because of contractor lack of experience and could not manage their capital properly. On the other hand, because of delay payment by client contractor not enough money to cover up all sub-contractors and suppliers payment. Finally, the sub-contractor and suppliers refuse to work and supply material to the site and because of this factor the whole will influence delay. 2.3.8 Causes of External Related Delays Figure 2.10 Factors of external related delays 2.3.8.1 Weather condition Odeh and Battaineh (2002) identified the factors of weather condition as contributors to causes of delays. Long, et al. (2004) mentioned factors weather condition as factors ofexternal related delays. AL-Momani (2000) studied the factor of weather condition as contributors to causes of delays in construction project. During the construction period, weather is a factor to influence the whole project delay. It because weather condition that interfere with planned activities. Some activities can process but other cannot. For instances, during the worker cast the ground floor slab, but because of raining that particular work to be delay. 2.3.8.2 Slow site clearance According to Long, et al. (2004) identified factors of slow site clearance as factors of external related delays. During begin of construction stage, the responsibility party should have to carry out their work for site clearance immediately. Without clearance the site construction work cannot process. In some delay project found that, the third party did not take their responsibility to finish the site clearance within the period. Consequently, the whole project delay because of site clearance works delay. 2.4 Effect of Delays According to Aibinu and Jagboro (2002) identified the effects of construction delays on project delivery in Nigerian construction industry. They also said that the six major effects of delays follow by rank which include time overrun, cost overrun, dispute, arbitration, litigation, and total abandonment as shown in the Table 2.11 Effects of Delay Rank Time overrun 1 Cost overrun 2 Dispute 3 Arbitration 4 Litigation 5 Total Abandonment 6 Source : Aibinu and Jagboro (2002) Table 2.11 The effect of delays 2.4.1 Time overrun Time overrun it mean contractor could not carry out their work within contract period. In generally, time overrun can be categories into two group which include excusable delays and non-excusable. Once the project facing time overrun, it will affect the progress of work cannot finish on time. Besides that, the fault party will take the responsibility to pay the relevant parties for damages because of delay. For instance, during the project almost completed, but at the same time contractor because of exceptionally implement weather cannot completed the project within contract period. In this situation the contractor entitle to claim extension of time. On the other hand, if that contractor cannot complete the work within contract period due to his own fault. So the contractor no entitle to claim extension of time and he need to pay liquated damages. As stated in Persatuan Arkitek Malaysia form 2006 (PAM form 2006), which certain clauses stating about the damages by employer due to this event. It stated that in clauses below. 2.3.1.1 Clause 22.1 Liquidated Damage and Certificate of Non-Completion If the contractor fails to complete the works by the Completion Date, and the architect is of the opinion that the same ought reasonably so to have been completed, the architect shall issue a certificate of Non-completion. Upon the issuance of the certificate of Non-Completion the contractor shall pay or allow to the Employer a sum calculated at the rate stated in the Appendix as Liquidated Damages for the period from the Completion Date to the Date of Practical Completion. The Employer may recover such sum from the Performance Bond. The Employer shall inform the contractor in writing of such deduction or such debt due to from the contractor. The imposition of Liquated Damages by the Employer shall not be taken into account by the Architect in the issuance of payment certificates and Final Certificate, and is not subject to the set-off procedures under clause 30.4 and adjudication. 2.3.1.2 Clause 23.1 Submission of notice and particulars for extension of time If the Contractor is of the opinion that the completion of the Work is or will be delayed beyond the completion Date by any of the Relevant Event stated in Clause 23.8, he may apply for an extension of time provided always that 2.3.1.3 Clause 23.8 Relevant Events Exceptionally implement weather 2.4.2 Cost overrun During construction stages, the client and contractor always facing of cost overrun. Cost overrun  is an unexpected  cost  incurred in excess of a budgeted amount, due to  cost underestimation. Cost overrun is related to time overrun, once a project cannot be done in time, it will also affect the cost of project over budget. Commonly, cost overrun always happen due to contractor own fault such as inaccurate of cost estimate and he need to take responsibility to pay owner loss and expense. For instance, a contractor because of improper cost planning due to cost overrun. Finally, the owner set of his loss and expense from the contractor interim payment. 2.4.3 Dispute In construction industry, some of project delay because of dispute between contractual parties such as client, consultants, contractor and some relevant parties. Those disputes because of client failure make payment to the contractor. Once dispute happen, the relevant parties will go through with mediation. The mediator will make a decision to solve the problem. But if one of the parties does not accept the decision made by mediator, the parties will appeal the decision with arbitrator. If both parties accept the decision and the fault parties will take responsibility to pay damages for project delay. 2.4.4 Arbitration In current delay project, some of the contractual parties do not accept the mediator decision and they appeal in arbitration. Arbitrator will also make the decision to solve the problem. But if one of the parties does not accept the decision again made by Arbitrator, they still can appeal the decision in litigation. 2.4.5 Litigation In some delay project, the relevant parties because of still do not accept with the arbitrator decision. They are appeal the result in litigation which is dispute resolution in the courts. In litigation, the parties have a trial either by a court alone or by jury. If those parties are not satisfied judgment again, then they can appeal again if they have any new evidence to proof their right. But one the parties accept with the judgment, the faulty of parties need take responsibility to pay the penalty 2.4.6 Total abandonment Total abandonment it means the whole project stop immediately because of client facing financial difficulties. Some of the current delay project totally abandoned because of clientà ¢Ã¢â€š ¬Ã¢â€ž ¢s or contractor problem which include clients bankruptcy, contractor run away, poor marketing and sales strategies and so on. The effect of project totally abandoned will affect many parties such as contractual parties which include contractor, consultant, sub-contractor, supplier and some other relevant parties. Besides those parties, the purchasers will also suffer in cost damages due to project abandoned. 2.5 Methods of minimizing construction delays According to Nguyen, et al. (2004), à ¢Ã¢â€š ¬Ã…“studied the factors that can be applied as a method of minimizing of construction delays as follows: competent project manager; frequent progress meeting; accurate initial cost estimates; accurate initial time estimates; awarding bids to the right/experience consultant and contractor.à ¢Ã¢â€š ¬? During pre-construction stage, a client should employ a depth knowledge project manager to organize a good project team member to progress the work. Besides that, the project team member should be always discussing with the problem having during the site progress. On the other hand, contractor should be employs some employee with experience such as quantity surveyor. So that, during the time or cost estimate they can add on some unforeseen event to avoid the cost and time overrun. Furthermore, the developer should be hire some experience consultant and contractor.iot is because once they facing problem, they can refer previous project to so lve the problem immediately. So, the project can process with smoothly. According to Aibinu and Jagboro (2002), à ¢Ã¢â€š ¬Ã…“identified two methods to minimize or if possible eliminate time overrun were: acceleration of site activities, and contingency allowance.à ¢Ã¢â€š ¬? During construction stages, the contractor should carry out his responsibility to make sure the work progress can complete in time. If found that work progress are not equal to the estimate schedule. The contractor may carry out with acceleration such as hire additional worker. Besides that, the client may allow contractor standby some extra cost for unforeseen event such as accidents. According to Koushki, et al. (2005), à ¢Ã¢â€š ¬Ã…“revealed that the minimization of time delays and cost overruns would require: ensure adequate and available source of finance until project completion; ensure timely delivery of materials.à ¢Ã¢â€š ¬? During pre-construction, a client may prepare a good cash flow within the contract period. Once the client does not enough money to cover up construction cost, he can borrow a term loan or bridging loan from the bank to cover the cost until the whole project completed. It will avoid project delay due to client not enough capital. Besides that, the contractors make sure that material are order with a reliable suppliers and can receive it on time. Acco