 An employer offers to employ a contractor to do

specified works on specified terms for a specified

price, and the contractor without further negotiations
and without consenting to the specified price, does
the work. After a while, the contractor requested a
higher price than the specified one.
 Is the contractor entitled to change the specified
price?

 Answer: No, the contractor will be deemed to have

accepted the employer’s offer by his conduct, and
will not afterwards be able to seek a higher price.

1
  You have received tenders on 1 February for the
construction of a garage. The lowest tender is in
the sum of LE 500,000.00 and the construction
period is 10 months. Draft a letter of acceptance to
be sent to the tenderer with the lowest tender.

 Unless you have agreed to change any conditions

with the contractor, your letter of acceptance need
say no more than this:
Dear Sirs,
Re: Construction of Garage at XX
We hereby accept your tender dated 1 February,
pertaining to the above mentioned subject.
Sincerely yours,
- in accordance with the tender documents sent
to you on 1 January.
- with the following terms:
. Price = LE 500,000.00
. Duration for completion = 10 months

- Acknowledge receipt (authorized signatory)

4

2
Continuing on from the previous case, you want to decrease the
duration of the last activity, so that the construction of the garage
would last a period of 8 months. Accordingly, you send the
following letter to the tenderer:
Dear Sirs,
We accept your tender dated 1 February in accordance with the
tender documents sent to you on 1 January, subject to the
following amendment:
The period for completion of the works shall be 8 months from the
date of commencement.
Sincerely yours,
The contractor did not acknowledge your letter but commenced
work and completed in 10 months. You claim damages for delay.
The contractor claims that his offer to complete in 10 months
entitled him to take that time to complete the works and he was
not liable for damages. Which conditions apply? Is the contractor
liable to pay damages? 5

Answer: The contractor did not send any written notice

that he accepted to complete in 8 months instead of 10
months. However, since the contractor commenced
work, he has accepted the counter offer by conduct and
he is bound to complete in 8 months. Accordingly, the
contractor would be liable to damages for delay.

3
 The lesson learned from the above cases is what
is called `the battle of the forms’, i.e. the battle
is usually won by he who fires the last shot.

 Mutual consent is the best way to avoid conflict

and expensive litigation to resolve the problem.

Company X advertises to sell a product in the

local paper. Company Y comes to see the
product and is prepared to buy it for LE 300,000,
the advertised price, as long as it can take
delivery of the product that day. Company X
advises that it cannot make delivery until one
week later. Company Y wants the product that
day. Company X insists on delivery one week
later.
 Is there a binding contract?

4
 No, there is agreement on the product and the
price, but not on the delivery date. The result
is that there is no contract at all.

 Sometimes the communication does not amount

to an offer, but it furthers the bargaining
process.
 If the communication is an invitation to treat, it
cannot legally be accepted. There can be no
offer and acceptance, and no legally enforceable
contract.

10

5
 The claimants sent a telegram to the defendants, which stated:
“Will you sell us X farm? Send us by telegram lowest cash price.”
 The defendants replied:
“Lowest cash price for X farm is £900”
 The reply to this from the claimants was:
“We agree to buy X farm for £900 asked for by you”
 This last communication was not replied to and the defendants
subsequently refused to sell the property to the claimants. The
claimants sued the defendants, arguing that a contract had been
agreed, and that the defendants were legally bound to sell the
property at the agreed price of £900.
 Is there a binding contract between the claimants and the
defendants?

11

Held:
 No contract existed.
 The initial telegram was simply an inquiry to see if the
owners of the property were willing to sell and to discover
what their bargaining position would be.
 The claimant's reply was simply an indication of what the
lowest price was, not an offer of a definite price. This reply,
then, was not an offer, open for acceptance to form a legally
binding contract, but was an invitation to treat, an invitation
to further the negotiation process.

12

6
 A argued that displays of goods were an "offer" and when
a shopper selected and put the goods into their shopping
basket, that was an "acceptance".
 B argued that the sale was effected only at the cash point.
 When does the contract come into existence?

13

 Although goods are displayed and it is intended that

customers should go and choose what they want, the
contract is not completed until, the customer having
indicated the articles which he needs, the shop-keeper or
someone on his behalf accepts that offer. Then the
contract is completed.
 Thus, the court decided that the display of goods was an
invitation to treat, not an offer.

14

7
Lord Justice Somervell in Pharmaceutical Society of Great
Britain v. Boots Cash Chemists (Southern) Ltd [1953] 1 QB
401 :
 If the Plaintiffs are right, once an article has been placed in
the box the customer himself is bound and he would have
no right without paying for the first article to substitute an
article which he saw later of the same kind and which he
perhaps preferred.
 Picking up an article is a convenient method of enabling
customers to see what there is and choose and possibly
put back and substitute articles which they wish to have
and then go up to the cashier and offer to buy what they
have so far chosen. 15

8
 Following an exchange of correspondence
(offer and counter offer), the prospective
Buyer stated in a letter ‘we confirm that we
have accepted your offer…we would highly
appreciate if you could take into consideration
the points we have raised’. Is there a binding
contract?
 Held: There was no contract

 The contractor offered to execute the works

for $1,000,000.
 A counter-offer of $950,000 was made by the
client, but rejected.
 The client later tried to accept the original
offer of $1,000,000, but the contractor refused
to execute the works.
 Was the contractor entitled to refuse?

9
 Held:
 Yes,the contractor was entitled to refuse.
Where an offer is rejected by a counter offer
(qualified acceptance), the original offer no
longer exists.
 Qualified acceptance kills the original offer.

 The pursuer sent a communication to the defender in the

following terms:
 “I am offering to construct the building Y and have pleasure
in quoting you $3,000,000. I shall be glad to hear if you
accept, and await your esteemed reply.”
 The defenders accepted, but then argued that the initial
communication was an invitation to treat, not an offer.
 Is there a binding contract?

10
Held:
 Yes, there is a binding contract.
 There is a definite price and product and terms were
mentioned. Thus, there is a definite offer, which once
accepted, formed part of a binding contract.

 Sue wants to buy a Sony microwave set on display

in a shop. She picks up the microwave to the
check box and gives the checkout assistant an
amount equivalent to the displayed price on the
counter. Is there a binding contract? Explain
 In this situation, an invitation to treat has been
made by the shop owner in the form of the shop
display from which Sue selects the Sony
microwave. An offer is made by Sue to the
checkout assistant. However, there is no
acceptance yet. Therefore, there cannot be a
basis for concluding a contract in the legal sense.

11
 Tim and Mark enter into a written contract, where
they agreed that Tim shall buy stolen books from
Mark for $100. Both Tim and Mark know that the
books are stolen. Is there a binding contract?
Explain
 In this situation, the object of the contract is
illegal and thus there is no legally binding
contract.

 Ben advertises to sell his car. Kate comes to see

the car and gives a written offer to Ben to buy it
for EGP 150,000, as long as she can take delivery
of the car immediately. Ben advises that he
cannot hand over the car until two weeks later.
 Two weeks later, Ben advises Kate that she can
come take the car. Kate refuses. Ben threatens
Kate that he has a written offer and will sue her.
Is there a binding contract? Explain
 Held: There is an agreement on the car and the price,
but not on the delivery date. The result is that there is
no agreement on the essential terms and thus, there
is no binding contract.

12
  After some negotiations for the sale of a horse, A
wrote to B, “If I hear no more about him, I consider
the horse is mine at £30 15s.”
 B made no reply, but when selling his farm instructed
the auctioneer to reserve the horse. The auctioneer by
mistake sold the horse.
 B had in his own mind intended to accept A’s offer, is
there a binding contract between A and B? Explain
 Held: A had no right to impose a contract upon B by
providing that B’s silence should be his acceptance.
Although B in his own mind intended to accept A’s
offer, he had done nothing to communicate this
intention to A and there was no binding contract.

 The employer’s architect sent a letter to the defendants

asking them if they “would be willing to give us a tender
in competition for the work”, and wrote later enclosing
information required for tender.
 In response, the contractor wrote a letter headed
‘Estimate’ which stated: ‘Our estimate to carry out the ...
alterations to the above premises according to the
drawings and specifications amounts to £1230.’
 The employer replied ‘accepting’ this figure.
 The contractor thereupon withdrew their ‘estimate’ and
refused to proceed with the works.

13
 The employer, then, entered into a contract with another
contractor to carry out the works and sued the original
contract for the extra cost involved in having the work
done by another contractor.
 The contractor claimed that they had made no offer
capable of acceptance.
 Is the contractor liable for the extra costs? Explain
 Held: There was a binding contract between the
employer and the original contractor. Thus, the
contractor was liable for the extra costs.

14
1. Contract is Interpreted as a Whole
2. Construed Against Drafter
3. Ordinary Meaning of Language
4. Conduct of Parties
5. Construed in the Context of the Trade
6. Order of Precedence of Contract Documents
7. Prior Negotiations Cannot Be Relied upon to Vary
the Terms of the Contract
8. Others
The Rules of Contract Interpretation -- How to Say What You
Mean and Mean What You Say by Allan Goodman, J.D.
1

A phrase could have more than one meaning.

 No one section will be read alone in such a
manner to make it inconsistent and defeat the
uniform purpose of all the sections interpreted as
a whole.
 No single phrase will be interpreted out of context
with the rest of the contract.
 Clause 1.5 of FIDIC 99 “The documents forming
the Contract are to be taken as mutually
explanatory of one another.”

15
 Example: Identify at least 2 meanings for each
of the following phrases:
 Computer furniture design
 Disabled Parking
 To recap

 Computer furniture design

 Design of furniture using computers;
 The design of computer furniture (by whatever means)
 Disabled Parking
 Disabled Parking literally means that the parking has been
disabled – it is not able to be used.
 However, in ‘street language’, this phrase means (and should
read as) “parking for disabled (people)”.
 To recap
 “To recap” is, literally, to put the cap back on.
 In street language, it is almost always used as an abbreviation
for “to recapitulate” – “to go over again; to summarise”

16
 Section 1: “The Contractor shall perform the
finishing works as per drawings A, B and C”
 Section 2: “The Contractor shall perform the
finishing works as per drawings A and C and
Specifications Section 1.13”
 Section 2 has a higher priority than Section 1.
 In accordance to what should the Contractor
perform the finishing works?
 In accordance to drawings A, B, C and
Specifications Section 1.13

 If
the words are ambiguous, the provision will be
construed against the party who drafted it.
 The contract may be subject to more than one
reasonable interpretation, and a court is often
faced with the burden of choosing between the
two.

17
 The reasoning behind this principle is that the
party that drafted the document had ample
opportunity to avoid ambiguity and clearly express
the intended meaning, but failed to do so.
 The non-drafting party did not have such an
opportunity; they reasonably assumed that the
contract language meant a certain thing, and in
court that interpretation must prevail.

 Language is usually given its ordinary meaning.

18
 Example: A supplier contracts to furnish “sand” to
an owner.
 The supplier delivers sand which includes a large
amount of dirt, stone and other materials.
 The owner rejects the delivery, because “sand”
normally means materials consisting of small
grains and, therefore, the supplier’s material did
not conform with the normal meaning of the term.
 The supplier argues that no specific specs for the
sand was included.
 Which interpretation shall prevail?
 The owner’s interpretation would prevail, as he
applied the normal meaning of the word.
10

 When there is an ambiguity in the contract

documents, the court would examine the conduct
of the parties during performance of the contract
to check if the actions of the parties show mutual
understanding or intent. If so, the ambiguity will
be resolved by their actions.

13

19
 If a word or phrase has a commonly accepted
meaning in the construction industry, that
meaning must be applied when reading and
interpreting construction contracts.
 If the provision is clear, then trade custom or
usage is irrelevant. That is true even if the trade
custom or usage is in direct conflict with the
contract provision.
 But if the provision is, in fact, ambiguous, then
trade custom or usage becomes an important
factor in determining the meaning of the
provision.
15

 This rule is not applied when there is an express

term in the contract which conflicts with the trade
custom or usage.
 This situation can arise if the contract provides
stricter standards than those of industry
standards. Thus, trade custom or usage do not
take precedence over an express term in the
contract.

16

20
 Example: The term “Engineer”
 “Engineer” is, literally, a graduate of the faculty of
engineering
 In the construction industry and specially contracts,
it stands for the “project manager”

17

 Example: A contract for the remodeling and modification of

several kitchens in differing housing units. The contract contains
the following clause:
 “All work which is manifestly necessary to carry out the intent of
the drawings and specifications or which is customarily performed
for such work shall be performed by the contractor”.
 An existing wall is removed by the contractor in each housing unit
as part of the remodeling. In so doing, it left the ends of the
kitchen cabinets that had previously adjoined to the wall exposed,
opened and unfinished. Neither the drawings nor specifications
specifically referred to any work to be done to the exposed open
ends of the cabinets. The contractor closed the ends and
requested additional costs for this work.
 Is the contractor entitled to such additional costs?

18

21
 Is the contractor entitled to such additional costs?
 There is no provision in the contract which specifically refers to
this work. However, it is the custom of the trade that when a
cabinet is adjoined to a finished wall and that wall is removed,
that the end of the cabinet is closed and finished. In this
situation, this work would be considered to come within the
quoted clause.

19

 Example:
 The Specifications for the plastering in a contract did not provide
for any specs for the dash code
 It is the custom of the trade that the dash code is 450 kg/m3
 The contractor used dash code 350 kg/m3
 Is the engineer entitled to instruct the contractor to repeat the
dash code as 450 kg/m3?
 Yes

20

22
  Many contracts include an order-of-precedence clause.
Such clause establishes an order of priority between
the various documents when an ambiguity occurs
between the documents.

21

“The documents forming the Contract are to be taken as mutually

explanatory of one another. For the purposes of interpretation, the
priority of the documents shall be in accordance with the following
sequence:
(a) the Contract Agreement (if any),
(b) the Letter of Acceptance,
(c) the Letter of Tender,
(d) the Particular Conditions,
(e) these General Conditions,
(f) the Specification,
(g) the Drawings, and
(h) the Schedules and any other documents forming part of the Contract.
If an ambiguity or discrepancy is found in the documents, the Engineer
shall issue any necessary clarification or instruction.”

22

23
 Where the parties have reduced their agreement to a
written contract, all prior negotiations and
understandings are deemed to be merged into the
written document.
 Prior negotiations or agreements cannot be relied
upon to vary the terms of the contract.
 This rule is applied when there is an existing written
contract and its terms are clear and unambiguous.
 Only the terms included in the contract will be
considered in determining its meaning; all prior
negotiations and understandings will not be considered
in interpreting the contract even if these prior
understandings were in writing.
23

 Example: Consider the following contract provision:

“This contract includes all work except toilet rooms on
the first floor, new ceilings and pipe and duct closures
in two wings of the building”.
 The contractor claims that because of prior written
understandings between it and the owner, that new
ceilings were not to be installed in any part of the
building. Is the contractor correct?
 In this situation, the contractor is required to install
new ceilings in certain parts of the building because
the above provision of the contract is clear and
unambiguous in excluding new ceilings in only two
wings
24

24
 Specificterms govern over general terms
 Written words prevail over printed words
 Written words prevail over figures

27

25
 Where the initial delay is caused by the Employer, then
concurrent delay by the Contractor will not relieve the
Employer of liability (though it might reduce the extent of
damages)

C: Delay caused by the Contractor

E: Delay caused by the Employer
N: Delay not the responsibility of either Contractor or Employer
Entitlement to extension of time
Potential entitlement to additional costs

Entitlement to extension of time

Potential entitlement to additional costs

26
 C

Entitlement to extension of time

Potential entitlement to additional costs

Entitlement to extension of time

Potential entitlement to additional costs

27
 C

Entitlement to extension of time

Potential entitlement to additional costs

Entitlement to extension of time

Potential entitlement to additional costs

28
 C

Entitlement to extension of time

Potential entitlement to additional costs

Entitlement to extension of time

Potential entitlement to additional costs

29
 C

Entitlement to extension of time

Potential entitlement to additional costs

Entitlement to extension of time

Potential entitlement to additional costs

30
 C

Entitlement to extension of time

Potential entitlement to additional costs

 Where the initial delay is caused by the Employer,

then concurrent delay by the Contractor will relieve
the Employer of liability of additional costs.

Entitlement to extension of time

Potential entitlement to additional costs

31
 C

Entitlement to extension of time

Potential entitlement to additional costs

Entitlement to extension of time

Potential entitlement to additional costs

32
 C

Entitlement to extension of time

Potential entitlement to additional costs

33
 The contractor is on programme to complete the
superstructure (concrete works) to a multi-storey
building at the end of week 50. One week was allowed in
the programme to construct the lift motor room at roof
level. The contractor had notified the architect at the
commencement of the contract that he needed details
for the lift motor rooms at least one week before fixing
formwork at roof level (i.e., by week 48). The architect
fails to issue the details until week 52 and the contractor
is unable to proceed with the structural works at roof
level until week 53.
 Is the contractor entitled to claim extension of time? If
so, assess the delay. Is the contractor entitled to claim
additional payment as a result of the delay? 1

 If the architect’s delay is on the critical path and

assuming there are no concurrent delays by the contract,
the contractor shall be entitled to extension of time of
four weeks.
 The contractor is entitled to additional payment, because
the time related costs during the four week delay are
additional to those which the contractor would otherwise
have incurred had there been no delay. That is the real
test. Would these costs have been incurred if there had
been no delay? If the answer to that question is ‘no’,
then the costs are a direct effect of the cause of delay
and are recoverable as a valid claim.
2

1
34
A contractor sets up to start work on the date for
possession and immediately discovers that there are
errors in drawings. There is a 5 week delay to revise
the drawings. The contractor’s site staff and
equipment cannot be redeployed on another site and
the works done during the period is minimal. There is
8 weeks float in the programme.
 Is the Contractor entitled to extension of time?
 Is the Contractor entitled to additional costs?

 The Contractor is not entitled to extension of time,

as there is 8 weeks float in the programme.
 The contractor is entitled to claim the costs incurred
during the five week delay. The time related costs
during the five week delay are additional to those
which the contractor would otherwise have incurred
had there been no delay. That is the real test. Would
these costs have been incurred if there had been no
delay? If the answer to that question is ‘no’, then the
costs are a direct effect of the cause of delay and are
recoverable as a valid claim.

2
35
 The contractor is on programme to complete by the end
of week 22. The architect issues a variation order which
delays completion to week 26 and an extension of time is
granted of four weeks. Exceptionally adverse seasonal
weather conditions occur in week 25 causing a further
delay of two weeks. The contractor claims loss and
expense for six week (i.e., four weeks caused by the
variation and two weeks caused by the adverse weather
conditions). The architect approves loss and expense for
four weeks but rejects the contractor’s claim for two
weeks (adverse weather). Is the contractor entitled to
loss and expense for the full period of delay (six weeks)?
For how long is he entitled to claim loss and expense?

 Your first response may have been to reject the

contractor’s claim for the period of adverse weather on
the grounds that delays due to adverse weather do not
attract additional payment.
 However, in these circumstances, the variation forced the
contractor into executing work during the period of
adverse weather (which they would not have
encountered if it wasn’t for the delay caused by the
variation).
 If a variation that caused a delay forced the contractor
into a period of adverse weather, then the contractor was
entitled to payment on the grounds that the delay and
extra costs were a result of the variation.

3
36
 You’ll see from the above Case Studies that it does
not necessarily follow that an extension of time must
accompany a claim for additional payment (delay
where there is a float may qualify for payment of
time related costs) nor does it follow that delay due
to adverse weather will not qualify for additional
payment. Each case must be considered in the light
of all of the circumstances at the time.

4
37
 Contract Sum = $ 500,000
 Contract Period = 100 weeks
 Period of Delay = 6 weeks
 The HO percentage used during the tender: 9
 The contractor’s annual turnover and overheads for
the three years prior to the delay were:

Turnover Overheads
Year 1 6,000,000 450,000
Year 2 7,500,000 600,000
Year 3 8,000,000 700,000

Calculate the HO overheads for the period of delay,

using Hudson & Emden formulae.

 HO Overheads claimed = HO % / 100 X Contract

Sum / Contract Period X Period of Delay
 HO% = 9
 Contract Sum = $ 500,000.00
 Contract Period = weeks 100
 Period of Delay = weeks 6
 HO Overheads claimed =

9/100X500,000/100X6 = $ 2,700.00

1
38
 HO Overheads claimed = h / 100 X c / cp X pd
 Total Turnover (3 years) = $ 21,500,000
 Total overheads (3 years) = $ 1,750,000
 h = total HO overhead percentage of the contractor's
organisation as a whole divided by the total turnover
as extracted from the contractor's year end accounts
{multiply by 100} = 1,750,000 / 21,500,000 X 100
=$ 8.14
 c = Contract Sum = $ 500,000.00
 cp = Contract Period = weeks 100
 pd = Period of Delay = weeks 6
 HO Overheads claimed =
8.14/100X500,000/100X6 = $ 2,441.86

2
39
 Contract Sum = $500,000
 Contract Period = 395 days
 Period of Delay = 30 days
 Revenues during contract period = $5,000,000
 Overheads during contract period = $1,000,000

Calculate the HO overheads for the period of delay,

using Eichleay formulae.

 HO overheads allocated to the Contract = Value of

Contract Work during Contract Period / Total value of
work for the company as a whole during contract
period X Total HO overheads expended during
contract period
 HO Overheads claimed = HO overheads allocated to
the Contract / Contract Period X Period of Delay
 HO overheads allocated to the Contract = $500,000 /
$5,000,000 X $1,000,000 = $100,000

 HO Overheads claimed = $7,595

1
40
  Contract Sum: EGP 200,000,000
 Project Start Date: 1/1/2012
 Contractual Date of Completion: 31/12/2012
 Actual Date of Completion: 31/3/2013
 The HO percentage used during the tender in the
calculation of the contract price: 4.5
 Total turnover as extracted from the contractor's year end
accounts (extracted for Actual Contract Period): EGP
1,000,000,000
 Total HO costs expended for the contractor's organisation
during Actual Contract Period: EGP 37,500,000
The delay was merely due to a suspension. Calculate the
HO overheads for the period of delay, using the three
formulae.

 HO Overheads claimed = HO % / 100 X Contract

Sum / Contract Period X Period of Delay
 HO% = 4.5
 Contract Sum = EGP 200,000,000.00
 Contract Period = days 365
 Period of Delay = days 90
 HO Overheads claimed =

4.5/100X200,000,000/365X90 = EGP 2,219,178.08

1
41
 HO Overheads claimed = h / 100 X c / cp X pd
 h = total HO overhead percentage of the contractor's
organisation as a whole divided by the total turnover
as extracted from the contractor's year end accounts
{multiply by 100} =
37,500,000.00 / 1,000,000,000.00 * 100 = 3.75
 c = Contract Sum = EGP 200,000,000.00
 cp = Contract Period = days 365
 pd = Period of Delay = days 90
 HO Overheads claimed =

3.75/100X200,000,000/365X90 = EGP 1,849,315.07

 HO overheads allocated to the Contract = Value of

Contract Work during Contract Period / Total value of
work for the company as a whole during contract period
X Total HO overheads expended during contract period
 HO Overheads claimed = HO overheads allocated to the
Contract / Contract Period X Period of Delay
 Value of Contract Work during Contract Period = EGP
200,000,000.00
 Total value of work for the company as a whole during
contract period = EGP 1,000,000,000.00
 Total HO overheads expended during contract period =
EGP 37,500,000.00
 HO overheads allocated to the Contract = EGP
200,000,000/1,000,000,000X37,500,000 =7,500,000.00
 HO Overheads claimed =
750,000,000 / 455 X 90 = EGP 1,483,516.48

2
42
 Tender price = $950,000
 Tender profit rate = 10%
 Total actual cost = $1,245,000
 Calculate the total cost claim

 Tender price = $950,000

 Tender profit rate = 10%
 Total actual cost = $1,245,000
 Calculate the total cost claim
 Total actual cost + profit = $1,245,000 + $124,500
= $1,369,500
 Total cost claim = $1,369,500 – $950,000 =
$419,500

1
43
 Tender price = $950,000
 Tender profit rate = 10%
 Total actual cost = $1,245,000
 The contractor incorrectly placed piles, which resulted in
additional costs = $47,500
 There was an error in the tender which was underpriced
by $27,500

 Calculate the modified total cost claim

 Tender price = $950,000

 Tender profit rate = 10%
 Total actual cost = $1,245,000
 The contractor incorrectly placed piles, which resulted in
additional costs = $47,500
 There was an error in the tender which was underpriced
by $27,500
 Tender as revised for tender errors = $950,000 + $27,500
= $977,500
 Total actual cost less costs of incorrectly placed piles =
$1,245,000 – $47,500 = $1,197,500
 Total actual cost + profit = $1,197,500 + $119,750 =
$1,317,250
 Claim = $ 1,317,250 – $1,197,500 = $339,750

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 In a contract for pile driving, the contractor proceeded
diligently for a certain period. Afterwards, he suffered
disruption due to impacts by the employer. Use the
following data to calculate the claimed disruption costs
using Measured Mile method:

 Measured Mile or Productivity during an undisrupted period

 Quantity of work performed = m 250
 Total man-days for pile driving = man-day 240
 Productivity during the disrupted period
 Quantity of work performed = m 450
 Total man-days for pile driving = man-day 688
 Labour Cost / day = $176.00

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 Measured Mile or Productivity during an undisrupted period
 Quantity of work performed = m 250
 Total man-days for pile driving = man-day 240
 Productivity during the disrupted period
 Quantity of work performed = m 450
 Total man-days for pile driving = man-day 688
 Labour Cost / day = $176.00
 Productivity during the undisrupted period = Total man-day / Quantity =
240 / 250 = man-day/m 0.96
 Productivity during the disrupted period = 688/450 = man-day/m 1.53
 Cost during disrupted period = Disrupted Productivity X Quantity X
Labour Cost / day = 1.53 X 450 X 176 = $121,088.00
 Cost should have been = Undisrupted Productivity X Quantity X Labour
Cost / day = 0.96 X 450 X 176 = $76,032.00
Claimed amount = $ 45,056.00

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  In a contract for installation of cables, the contractor
proceeded diligently for 50 days. However, it took the
contractor 14 days out of the 50 days to catch up
with the learning curve. The quantity of work
performed after the learning curve period was 350m.
The contractor employed 6 labour/day.
 Afterwards, due to design changes, the contractor
suffered several stoppages and resumption of work.
The disrupted period was 30 days. The quantity of
work performed was 200m. The contractor employed
6 labour/day.
 The labour cost / day is EGP 150.
 Calculate the claimed disruption costs using
Measured Mile method.

 Measured Mile or Productivity during an undisrupted period

 Undisrupted period = days 50
 Learning curve period = days 14
 Number of labour/day = man/day 6
 Quantity of work performed after learning curve period =m 350

 Undisrupted period excluding Learning curve period =

50 – 14 = days 36
 Total man-day after learning curve period =
Number of labour/day X undisrupted period =
6 man/day X days 36 = man-day 216
 Productivity during the undisrupted period =
Total man-day/ quantity = 216/350 = man-day/m 0.62

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 Measured Mile or Productivity during the disrupted period
 Disrupted period = days 30
 Number of labour/day = man/day 6
 Quantity of work performed during disrupted period =m 200

 Total man-day =
Number of labour/day X disrupted period =
6 man/day X days 30 = man-day 180
 Productivity during the disrupted period =
Total man-day/ quantity = 180/200 = man-day/m 0.9

 Productivity during the undisrupted period = man-day/m 0.62

 Productivity during the disrupted period = man-day/m 0.9
 Quantity of work performed during disrupted period =m 200
 labour cost / day = EGP 150

 Cost during disrupted period =

Disrupted Productivity X Quantity X Labour Cost / day =
0.9 X 200 X 150 = EGP 27,000.00
 Cost should have been =
Undisrupted Productivity X Quantity X Labour Cost / day =
0.62 X 200 X 150 = EGP 18,514.29
 Claimed amount = 27,000.00 – 18,514.29 = EGP 8,485.71

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 The engineer instructed the contractor to suspend
some activities. In order to mitigate such delay
event, the contractor relocated the two crews
working on these activities. One crew was relocated
to a similar trade in an ongoing activity, whereas the
other crew was relocated to a new trade. Afterwards,
the engineer instructed the contractor to resume
with the suspended activities. The two crews
returned to perform their original activities.
 Divide the situation into stages and determine what
factors of loss of productivity did the contractor
suffer at each stage.

 Stage 1:
One crew was relocated to a similar trade in an
ongoing activity. Whereas the other crew was
relocated to a new trade.
 Stage 2:
After 14 working days, the relocated labor would
catch up with the learning curve.
 Stage 3:
After the engineer instructed the contractor to
resume with the suspended activities, the labour
already relocated to other ongoing activities would
be relocated back to their original activities.

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Stage 1:
 One crew was relocated to a similar trade in an ongoing
activity. The productivity loss factors could include:
 Learning curve
 Out of sequence
 Stacking of Trades
 Crew size inefficiency
 Whereas the other crew was relocated to a new trade.
The productivity loss factors could include:
 Learning curve
 Out of sequence
 Reassignment of Manpower

Stage 2:
 After 14 working days, the relocated labor would catch up
with the learning curve. Hence after this period, the
effect of such factor was deleted.
 The productivity loss factors in the first crew could
include:
 Out of sequence
 Stacking of Trades
 Crew size inefficiency
 The productivity loss factors in the crew, relocated to a
new trade, could include:
 Out of sequence
 Reassignment of Manpower

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Stage 3:
 After the engineer instructed the contractor to
resume with the suspended activities, the labour
already relocated to other ongoing activities would
be relocated back to their original activities. The
productivity loss factors could include:
 Learning curve
 Stop and start effects

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If, at any time:
(a) actual progress is too slow to complete within the Time for
Completion, and/or
(b) progress has fallen (or will fall) behind the current Programme,
other than as a result of a cause entitling the Contractor to
extension of time, then the Engineer may instruct the Contractor
to submit a revised Programme and supporting report describing
the revised methods which the Contractor proposes to adopt in
order to expedite progress and complete within the Time for
Completion.
Unless the Engineer notifies otherwise, the Contractor shall adopt
these revised methods at the risk and cost of the Contractor. If
these revised methods cause the Employer to incur additional
costs, the Contractor shall pay these costs to the Employer, in
addition to delay damages.

The Employer shall have the right to direct that the Work be
accelerated by means of overtime, additional crews or additional
shifts, or re-sequencing of the Work, notwithstanding that the work
is progressing without delay in accordance with the established
schedule.
The Contractor agrees to perform same on the basis of
reimbursement of direct cost (i.e., overtime pay, additional crew,
shift, or equipment cost, and such other items of cost requested in
advance by the Contractor and approved by the Employer, which
approval will not be unreasonably withheld) plus a fee of _ percent (
_%) of such cost, but the Contractor expressly waives any other
compensation thereof unless otherwise agreed in writing in advance
of performing the accelerated work. The Contractor shall again
provide promptly a plan, including its recommendations for the most
effective and economical acceleration.

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 Dispute
Frequency Aggressive/ 3rd party Role of the 3rd Decision
Resolution Speediness Cost
in use amicable involvement party (binding or not)
Method
Negotiation

Mediation

Conciliation

Dispute Boards

Arbitration

Litigation

Dispute
Frequency Aggressive/ 3rd party Role of the 3rd Decision
Resolution Speediness Cost
in use amicable involvement party (binding or not)
Method
Negotiation Very high Amicable varies Low N/A N/A Not binding
Not binding.
Promote & facilitate However, binding if
Mediation Medium Amicable High Low Mediator communication of two the agreement is
parties recorded and
signed

Promotes & facilitates Not binding.

communication of two However, binding if
Conciliation Low Amicable High Low Conciliator parties as well as the agreement is
suggests specific recorded and
solution signed

Visiting Site,
Dispute monitoring progress, Depending on
Dispute Boards Medium Medium Medium Medium Board makes
recommendations or the Contract
members
decisions

Arbitrator assumes
Arbitration High Aggressive Quite low High Arbitrators to resolve the Binding
dispute

Lawyers assume
Court - each defense of each party There is another
Low - and the court reviews
Litigation High Aggressive Low party's instance of
High the case in order to
lawyers determine and enforce jurisdiction
solution.

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