Pierre Eau Business Strategy

A uniform distribution of information among all the employees in an organization is one of the most important factors that can increase productivity in the business. Although this isn’t quite a daunting task to achieve, it sure does needs lots of discipline and proper monitoring. The sharing of regular activities and organizational duties among all the employees in a seamless and uniform manner is possible through what we know as the intranet. As a smaller version of the internet network, the intranet network works best within the sanctums of an organization creating a platform for communication and exchange of data between each worker in it. This network uses the same technology that is used by the internet technology and lets business owners build a localized company website for employees to drop their suggestions or discuss on any issues.

The intranet is also a highly cost-effective and quick method of allowing employees access to organizational information through a private network. This means that only employees of that particular organization can access the network through passwords deployed to them. As more and more business owners are waking up to the advantage of having an intranet network to spruce up their business productivity, there has been a great demand for professional intranet design services. Professional intranet designers can offer you the right solutions to your daily business requirements to speed up your operations. After proper analysis of your organizational structure, your business theme and your objectives, the designer will come up with a program that best suits your demands and has the verve to take in lots of pressure.

The strategizing part leads to the building of the intranet software that will set up the communication platform on each computer in your organization. Every little operational detail from the daily responsibilities to the tracking of the daily productivity and even updates on employee forums clears up the mist that usually floats within a company. This creates an air of transparency in the organization, allowing the policy makers to come up with better measures to boost the business in the future days to come.

Disruption in its simplest sense is hindrance to actual progress thus reducing the output of construction resources, those being, primarily, labour and plant. Disruption costs may be distinguished from prolongation costs by virtue of the fact that the latter are a function of time and the former are essentially productivity related. Disruption may not result in delay. 

 

Contractors claim that they could not achieve their planned output because of the Employer’s actions and hence that the damages or extra costs are payable. Disruption results in loss of productivity that delays the work being carried out and not necessarily to completion of the Works.  To justify a disruption claim, a contractor must establish that actual progress of the work has been interrupted and the cause of the disruption was either a breach of contract by the Employer or an action for which the contract provides for the reimbursement of extra cost. To warrant the payment of disruption costs, a contractor must identify the particular work activities that were affected by the disruption and demonstrate that the disruption caused the contractor to incur additional costs. The fact that there are many variations, no matter how many, does not give rise to an entitlement to a claim for loss of productivity.

 

For a disruption claim to be valid, a contractor must demonstrate disruption to actual progress, not planned progress as is often claimed. A ‘work-as-executed’ program should therefore be the basis for any justification of reduced productivity.

 

However, there are many factors that can lead to a loss of productivity but provide no basis whatsoever for claims in instances such as union activity, low morale, working to rule etc that are usually not related to acts or omissions of the Employer. Even if the Employer does cause disruption, this may not result in an entitlement to additional payment, when the contractor failed to comply with certain contractual requirements such as timely notice that is condition precedent.

 

An example is where the Employer ordered a contractor to cease work on a particular activity for frequent short periods (for example to provide for some necessary operating function of a plant or building) and the need for such stoppages was not specified in the tender documents.  Another example would be where the employer ordered urgent variations and groups of workers had to continually move from one activity to another at short notice, being unable to develop optimum productivity on a particular work activity.  One more instance would be when the work progress is hampered due to traffic on the presence of very important person (VIP) at an unexpected time or without prior notice.  Hence, a disruption claim must identify specific events that are breaches of contract by the employer or events for which the contract specifically provides for extra costs.

 

Where a contract does not prescribe a method for evaluating disruption costs, as in many cases, a contractor might make an ambit claim for the difference between the amount allegedly allowed in the tender and the actual cost of the work performed.  Such an approach falsely assumes that the amount allowed for the work at the time of tender was totally correct and there were no inefficiencies in the contractor’s management of the construction operations.

 

A contractor must quantify the disruption costs once it has established that loss of productivity has occurred and caused a delay.  This involves comparing the actual cost with what the cost would have been was it not for the disruption. The contractor must demonstrate that the latter cost is reasonable, although it is hypothetical to some extent. In making such claims, a contractor must also establish that everything reasonable has been done to minimize the cost of the disruption, for example that hired machines were not left idle on site when the hire could have been terminated.  Cost details of the affected resource (as determined from the contemporaneous records of down time, etc) may then be compiled from the site accounting records. On this basis any resulting disruption claim will be in respect of actual loss and expense incurred instead of reference to tender allowances.

 

 

In the case of Whittal Builders Company Ltd v Chester-Le-Street District Council (1985) 11 CLR 40, the evaluation of disruption was carried out on the basis of a comparison of productivity prior to the disruptive events taking place, compared with that achieved during the period of disruption (a comparison of outputs was made by assessment of sums certified within interim payment certificates).  However, the basis of calculation depends very much on the records in tact.

There are various methods to quantify loss of productivity and show causation in labor inefficiency claims. These methods include the “measured mile” analysis, the “industry standard” approach, the “total cost” method, the “modified total cost” approach, and the “jury verdict” method, each having its own merits and limits.

The measured mile approach analyzes the contractor’s productivity during a portion of the project in which the contractor’s work was not impeded by the Employer. This measure of productivity is then compared to the productivity experienced during the disruption. It is actually the “good period versus bad period analysis.” The productivity rate for a period of disruption is quantified in lost worker hours, which are multiplied by an hourly rate to find the loss of labor productivity, or the disruption claim amount.

Employers may disagree with a measured mile calculation by claiming that the baseline productivity measure-that is, the measure of the period unaffected by disruption-is faulty. A baseline productivity measure can be inaccurate if the “good period versus bad period” comparison is not an “apple to apple” comparison. The measured mile in its purest application measures two different periods of productivity for the same type of work performed under the same type of physical conditions on the same project.

A less favored approach is the industry standard method of quantifying labor productivity. Trade groups for various contractors have published productivity tables that show how various job site conditions can affect labor productivity. Particular conditions are scored in terms of their effect on productivity. A contractor can use for instance the MCAA factors (Mechanical Contractors’ Association of America’s Productivity Factor Analysis) and ascertain how much the contractor’s productivity was affected by the employer’s disruption. These measurements are then quantified to show the loss of labor efficiency and the disruption claim amount. Employers contend that industry standards are factually distinguishable from the conditions actually experienced on their job sites. Nonetheless, industry standards have been used successfully as a way to measure productivity.

The total cost method is based on the premise that the resulting project is a “cardinal change” from what was originally contracted-that is, the current project is fundamentally different from the project envisioned by the contract. Once a cardinal change, or abandonment, has been established, the contractor is freed from the terms of the contract and is allowed to recover the reasonable value of labor and materials, plus reasonable markups for overhead and profit, less what was previously paid. In effect, the total cost method turns a fixed-price contract into a time-and-materials contract.

A contractor using the total cost method must satisfy a four-part test. The contractor must 1) demonstrate the impracticability of proving its actual losses directly, 2) prove that its bid was reasonable, 3) prove that its actual costs were reasonable, and 4) prove that it was not responsible for its added costs. On a public works project, the judge first determines if the contrac

tor has submitted prima facie evidence that the four-part test has been established before the jury can be instructed on a total cost theory or a modified total cost theory of recovery.

The modified total cost method alters the total cost method by subtracting from the total costs any costs incurred by the contractor due to its own inefficiencies. The main criticism of the total cost and modified total cost methods is that they can be used by contractors to hide losses not caused by the Employer, such as those losses due to the contractors’ bidding errors or defective project management. Employers frequently seek to bar the total cost and modified total cost methods on these grounds.

Employers also contend that the contractor’s cost records are sufficiently detailed so that, during the course of a project, the contractor could have tracked its costs to show an actual causal relationship between the Employer’s actions and the contractor’s loss of production. Employers argue that to the extent the contractor failed to adjust its accounting system to track job costs, the contractor should be barred from using the total cost method.

The jury verdict method allows the trier of fact to determine recoverable disruption damages. To apply this method, a party must present 1) a clear proof of injury, 2) an indication that there is no more reliable method of computing damages than leaving the matter to the trier of fact, and 3) evidence of sufficient weight for the trier of fact to make a fair and reasonable approximation of damages. Frequently, courts as the trier of fact use evidence submitted in support of other quantification methods, such as the total cost method, to derive a jury verdict calculation.

 

Employers contend that the jury verdict method should not be used because the plaintiff contractor failed to meet its burden of demonstrating damages with reasonable certainty. Employers also contend that the jury verdict method, in essence, amounts to nothing more than allowing the trier of fact to make a guess regarding what the contractor’s damages are, and this process frees the contractor from its normal and customary burden of showing breach, causation, and damage.