Delay In Construction Of Public Projects In Pakistan Construction Essay

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The problem of delays in public project construction is a global phenomenon and there is no exception. Public projects are all those projects which are constructed by the government and are very important for the welfare of the public. Public projects helps economic condition of the country. The traits for the public projects are that they are accountable to public, numerous aims and objectives, responsibilities power and rights are constitutional, financial and operating structure is set by the law, budget has high importance and the transactions are non exchangeable and thus these projects are further delayed due to their complexities.

The main purpose of this study is to identify the cardinal causes of delay in public projects. Previous studies have been carried out on delays pertaining to general construction, but none have been addressed towards the public sector in Pakistan. The questionnaire survey was conducted from Contractors, Consultants and Government Authority of Pakistan, in Punjab and Sindh Province. Frequency and extent of delay were identified.

The research deduced that most of the important causes of delays in public utility projects were fundamentally related to financial barriers, changes in orders and project specification, permit approval, slow decision making from the owner and poor co-ordination and communication barriers. If quality, time and cost systems are implemented efficiently, delays can be controlled or even diminished to a great extent which proves the significance of Project Management.

INTRODUCTION

General:

Pakistan government's one of the main agenda is to make available and upgrade services and facilities for their people for whom they commence numerous types of projects. Their policy is to make sure these projects complete in the given time frame and budget with built quality intact (The World Bank, 2012). Success is when all the objectives and aims detailed in the project contract are met in time.

In construction completion time is very important. "Time is Money" and "Time is of the Essence". It is vital as the client can start to enjoy the investments' return and the contractor can move to other projects, saving both of them the cost and time. Thus, cost and time are the foundation of viable and successful construction (Odeh and Battaineh, 2002).

According to The World Bank (2012) Pakistan is in dire need of infrastructure, water, irrigational and transport projects such as rail, road &.air ports. Pakistan has to invest approximately $1 billion dollars if they do not want to face water scarcity and severe power shortage in next two decades. If the precaution is not taken now social and economic disharmony and discontent will rise in all the provinces making the condition worse. All the projects have been delayed two to three times their contractual time. The system is so weak that only 50% of the payment is allocated to the projects and the rest of it is rewarded to delays. Each project is delayed by 8-18 years continuous utilising country's valuable resources which could be used elsewhere to improve conditions.

According to Sadi (2006) the main factor for the owner is to deliver the project on time and within the cost. One of the biggest hindrance that an organization can, may and does face is the delay of a project. Delay is when an event is not completed on the given time and thus is extended from the required time as defined in the contract (Trauner, 2009).

It is something that is literally a universal phenomenon. With delays comes almost always the inevitable overrun of budgets (costs) and time. Public Project delays cause adverse affects on all the parties involved from settling the arbitration issues raised primarily due to trust issues in reference to cash flow and eventually anxiety, fear and distress in between the concerned parties (Sambasian, Soon 2006).

Problem Statement:

Delay of Public Projects causes a loss of millions of dollars which a country like Pakistan cannot afford. With an unstable political and economic condition every single dime is worth the investment. A delay in the public project costs a lot of money to the state, whereas, this money can be used to finance other infrastructures projects which Pakistan desperately needs in order to avoid water and power shortage. Moreover, less debt needs to be raised from International Monetary Agencies such as IMF and World Bank. This will help the country to raise its 0economic and social condition as the financial resources will be managed effectively. In order to avoid delay most important causes should be identified which will help each party to circumvent the delay by tackling it precautiously beforehand.

Delay in the construction projects is a fact which cannot be denied. (Sambasian, Soon 2006). Public projects have a very high probability of delays due to their characteristics and governance. A lot of problems arise and becomes a barrier to the progress of the public projects and thus causes a delay to its completion. The causes for delay are numerous and ought to be recognized so they can be tackled in the preliminary phases of the project. (Haider, Barnes 2011).

A preliminary survey has been done to identify the frequency and extent delays in the construction of public projects in Punjab Province. Moreover, to further make the thesis strong, different delayed projects are discussed and a chapter has been dedicated to a numerous case studies on the delayed public projects in Pakistan.

According to Tirmizi (1999) 76% of all the projects of Ministry of Housing and Public Works in Punjab province got delayed by the local contractors. He stated that 76% of the projects that is 110 out of 146 got delayed due to time. In approximately 67% projects contractors requested for time extensions and 89% of these projects were granted the extra time. This is just a statistics which is a limelight on the overall extent of delays in Pakistan's public projects.

Delay incurs in almost all the public projects and thus the causes of these delays should be indentified so public authorities do not suffer from such delays over and over again. It will help them to take precaution from the causes of the delays in the early phases of the project in design and planning stage to keep the project schedule on track and avoid the causes of delays.

These public projects are different construction environments and a different nature of work that allow more chance for delay. The delay in construction of public projects could address several questions concerning the frequency, extent and the causes of delay in this type of project. These questions are

What is the frequency of delays in public projects?

What is the extent of these delays in the delayed projects

What are the causes of delay in public projects?

How frequent and how severe are these causes?

Which party is responsible for delay?

The study in 1999 by Tirmizi was done which only showed the extent of delay but not the reasons thus, this thesis will attempt to reflect light by answering the above questions in order to recognize the frequency and causes of delay in public projects and how to control and avoid the causes which will help to improve the execution and operation of public projects in the future.

Objectives of the Study:

"Why do Public Projects in Punjab and Sindh province, the largest province of Pakistan gets delayed leading to over expenditure of government funds which could be invested in other projects". This question has deep roots and therefore will only be given justice by addressing the following:

Understanding of Public Projects as to what are Public Projects and what are their characteristics and their links to delay.

Nature of Delay as to who is to be blamed for a typical delay

Understanding the causes of delay in the Public Projects

Identify the frequency and the extent of delay in construction of public projects through the survey which will help in understanding the delay

Identify the importance of the causes of delay in construction of public projects with respect of each party through the survey which will aid to understand the reasons for delay

Test the hypothesis from each of the stakeholders' perspective as to which party is responsible for the delay.

Scope and Restriction of the Study:

The scope of this research project is generalised towards delay of construction in public projects. Construction Environment of these projects has their own nature of work so to differentiate them from other construction project environment this survey would be restricted to the following:

Public construction projects which have a value more than ten million Pakistani rupees.

Projects built in Punjab and Sindh Provinces of Pakistan

Delay which occurs during the construction phase only, starting from the date of site delivery to the contractor to construction completion date specified in the contract.

Significance of the Study:

"Why do public projects get delayed in the Punjab and Sindh Province of Pakistan with respect to each party's outlook". There are numerous reasons which lead to delay and when it arises the contractor blames it on the government and the consultant on the contractor as no one wants the blame on themselves. This study will not only let us gauge each party's contribution towards delay but will also help us to avoid those delays within the proper time frame. Delay is very costly for any project and when it comes to public projects it becomes even more expensive (Sadi, 2006). The problem of delay is regarded as the major hurdle in the construction cycle. If delays are not handled in the initial stages, it leads to disputes and claims between the contractor and owner and eventually both of the parties end up with losses as wastage of time and money is applicable to both (Abbas, 2006).

Subsequently, in order to play safe and keep out of any disputes it is the duty of both the parties to identify and recognize the causes of delay in the preliminary stages of the project so it can aid them in not getting involved in any type of dispute during the construction (William 2003).

As in short, it will aid in detecting the problem and its most decisive causes. Identification will help to control those causes of delay in the early phases of the construction which will lead to a better performance of the public project. The outcome of the thesis will help all the stakeholders, that is, the government, consultants and the contractors.

Organization of the Report:

The report is rationally methodized in six chapters, plus appendix.

Chapter one details the understanding of public project, their attributes and the reason they get delayed.

Chapter two presents an overview of the delay of public projects. Furthermore, it is comprised of general backdrop information which defines the overview of the research regarding the varying types of delays that can possibly be encountered in the process of construction. The general categories are further subdivided into the nature of the delays and the degree of the involvement of the parties and any other damages.

Chapter three present the causes of delays which is constituted of the detailed review of the literature gathered from a vast majority of media and study that has been done related to the topic.

Chapter four explains how the survey, a quantitative questionnaire is designed and made for the collection of the data for analysis in order to aid the investigation.

Chapter five provides the investigative content and analysis of the data collected courtesy the questionnaire survey which helps to recognize the afflictive causes of delayed in the construction public projects.

Chapter six is a preface which provides the conclusions and further recommendations from the literature review and survey as to what the major findings are.

CHAPTER 1

Public Projects

1.1 Background:

Fundamental physical and organizational structures required for the operation of an enterprise or facilities essential for a functional economy are known as infrastructure (Sullivan, Steven, Sheffrin, 2003).

They are interlinked structural components that form a framework on which the structure of development rests. These projects are funded and governed by the government (Fulmer, Jeffrey 2009).

According to Clement and Lal (2005) A country's economical situation & development is judged by its infrastructure status. The technical structures supporting the society may be the roads, sewers, water supply, electric gridding, airports, highways, railways or telecom services. These components can also be termed as the physical elements of inter connected systems that provide commodities for a more proficient living conditions. All of these services are constructed to the aid the nation towards economic boost. These are huge and mammoth investments by the government. These projects are expensive to build and thus takes a lot of time in planning.

Eberhard (2007) states that public projects can be grouped into two categories:

Soft Infrastructure

Hard Infrastructure

1.2 Soft infrastructure:

All organizations that maintain the health, cultural, social & economical systems of a country are known as the soft infrastructures. They can be classified as bearing the physical assets such as buildings, equipment or machinery .The nature of soft infrastructure is to provide customized service to the public. The soft infrastructure can pertain to different sectors such as the:

1.2.1 Economical infrastructure

The general financial setup inclusive of payment setups, for exchange & money supply, & other finance regulations. Business logistics & shipping managements

Manufacturing management such as economic zones and processing plants, public safety and environmental rules and associated standards. Agricultural management consisting of livestock, fisheries & forestry, health standards of farms and related research centres

1.2.2 Governance infrastructure

A government & legislation including political & judicial services Emergency specialized services of police ambulance etc.

1.2.3 Social infrastructure

Healthcare services inclusive of hospitals & other health institutions. Furthermore, research & education based institutional systems. Social welfare & NGO by private services or government supported also come in social infrastructure.

1.2.4 Cultural /recreational & sports infrastructure

Sports facilities such as clubs & leagues and associations. Recreational activities, natural attractions, services catering to tourists & travellers such as parks and beaches. Cultural services such as museums, libraries & halls etc.

1.3 Hard infrastructure:

These infrastructures are the much larger & physical networks that are essential for a revolutionizing functional of the nation. They are however limited to capital assets which functions to propagate the energy, people, transport and form a network.

The hard infrastructure pertains to the:

1.3.1Transportation infrastructure

All the structures of or relating to types, nature & mode of transportation such as the roads, tunnels, sidewalks rest areas, & related electrical & transportation systems.

Mass transit services such as the railways, seaports, airports, ferries

& bicycle pathways.

1.3.2 Water management infrastructure

Water supply, Sewage & drainage systems

1.3.3 Communication infrastructure

Postal series, telephone networks, television and radio transmission. Plus Internet & communication satellites

1.4 Attributes of a Public Projects:

The public projects are huge projects for the people of the nation. It is designed to make sure the people can have all the services and facilities. But all is not green on the public projects. As they have a huge structure and legalized form when a project is implemented it takes a lot of time to complete.

According to the Canada's Public Sector Accounting Standards Board's (2011) they have identified the following as the key attributes of public projects:

Public accountability

Numerous objectives

Responsibilities & powers

No or lack of ownership of equity

Legislated frameworks of finance & operation

Budget significance

Structures of governance

Resources nature

Transactions that are non-exchangeable

1.4.1 Public accountability

Democratic systems allow a government to be elected who are given certain responsibilities & powers. The primary objective of public sector entity is to provide information to demonstrate accountability to the public. In public accountability, the public projects are required to justify their usage of public resources as it is the right of the public to know.

Public accountability includes:

Conferral of a responsibility

Reverting back with the updates on the responsibility

Assuring accountability by monitoring

Non-performance sanctioning

Public accountability tasks should be clear & vivid because in case of ambiguity, it becomes difficult to hold the responsible person for the particular performance.

The reports should be transparent in documenting critical information regarding policies, decision & financial positions of the public projects entities.

The finances statements assess & determine the justified use of resources, finances & performances delivered. As the government is responsible for letting its public know how it is spending its money and on what facilities it takes a lot of time to process data as the public projects are expensive and huge. The system has to go through so many authorities and agencies that a project gets delayed in just following the procedure. The system of network is so big that if only one of the systems of any project fails the whole project comes to a standstill. As public is accountable, government makes sure the budget and capital of each project is available to the public.

1.4.2 Numerous objectives

Profit is not the goal of a public project. Their objective is such as provide services, re-allotment of services and development of the policies & regulations.

The public projects entities provide the public with goods & services on investment, instead of generating revenues. They provide quality services at competitive prices compared to the private sector. These services can be the legal services, health & safety education & transport systems. Some service provisions of resource allotments such as economical stimuli are in accordance with the policy objectives made by the public sector entity. As project objective differs with regards to each of the government's department it becomes hard for a conclusion to appear as each department works for their own plan rather than looking at the bigger picture.

1.4.3 Responsibilities & Powers

The powers of the government allow them to influence the economy along with the extent of the provision of public accountability

They hold the following rights:

Impose tax

Fines & penalties

License issuance

They may have the above rights at the varying levels, but in return they also have several responsibilities & expectations to meet such as to meet with their tasks and performance. Each public project has to meet with the requirement of the public and to make ease to them. With great responsibilities comes great power and great power tends to corrupt. When a public project starts the influential power leads it to delay as powerful stakeholder has a say and each say is different from other it takes time to make sure each stakeholder is on the same page. If stakeholders' objectives are not fulfilled with the power they are given they easily turn the course of the project, such as by not issuing the construction permit on time, which leads to delay.

1.4.4 No or lack of ownership of equity

Public project entities do not act to improve the owner's economical condition.

They are formulated with little or no equity ownership by the Provincial & federal government, Local & territorial government or a government organization. It is a very simple logic as to when there is no owner the property has no check and balance. So if a property is of public and they are paying for it why would government make a special protocol for it? No owner means no one to exercise for their rights and thus the government takes each step in a usual course of time and as the project slows down or halts the government makes one of the nicest economic or financial excuse

1.4.5 Legislated frameworks of finance & operation

Public project entity must comply with legislation. It is mandatory to engage with the operating & financial framework and reporting of public accountability compliance

Government & its organizations have activities & their financing which are laid down in the legislations. As the frame works and finance systems are so large and complicated when a project is implemented the protocol welcomes the delay involuntary.

1.4.6 Budget significance

The financial budgets of the government are normally publicly documented & referenced The budget not only demonstrates the financial components of the government's future plans but also provides insight to the financial status of the operations. Public accountability provides the comparison of budget with the delivered result. The public projects are thus implemented within nation's budget. It is the right of every countryman to know how much is being spent by their government and how they will be benefitted. Budgets are more like limitations. As budgets are set it means the financial capacity is fixed and thus there is a lot of heavy lending involved in public project. One unstable economic or financial situation in the region and off goes the budget which means more injection of funds and thus a delay is welcomed in before more funds can be allocated.

1.4.7 Structures of Governance

For the different type of governments, the legislature provides their governance (e.g., governors, senators etc) Authority is granted by them to the cabinet that hold them responsible for their administration. In public projects, board of directors or other concerns administrative boards give authority for operational & financial procedures under the rules of the government policies. This complex and huge governance structure makes the planning and decision capacity lower. It takes a lot of time to pass a project and even though a project is announced the starting of public projects needs of ample time as the legal documents need a lot signatures and stamps from different statuaries of the government.

1.4.8 Resources Nature

Public sector entities are accountable for provision of services for generating revenues. The resources may be rights of crown-inherited resources, Cultural & heritage, Crucially complex infrastructure and Renewable & intangible resources. Resources are any country's wealth. As it is a source of income a deep thought and consideration is given while developing any of the projects as the consequence and after affects are studied deeply. As the work is delicate and highly skilful the process takes more time and if new development arises during the process it slows down the work to make sure each step taken towards the completion is rock solid.

1.4.9 Transactions that are non-exchangeable

Being essentially involuntary in nature, the transactions governed by the public projects entity are non-exchangeable. If a government pays for a commodity it is for good as it does not come with a return or exchange offer. As governments are also run by human they tend to make mistakes as well. They work on a project; spend time & money building feasibilities and few blunders and decisions makes the project go scrap. Then there is a new beginning, but it rakes in a lot of money and thinking so the first mistake is not repeated but at the cost of time.

1.4.10 Large networks

Often sparing over generations, this network has service provision to a limited geographical area. It is mostly related to road and rail. Every large thing is complex and hard to reach. When roads, bridges and rail links are considered the mobilization of machinery is huge a task as some sophisticated machineries are so huge that their transportation not only takes days but is also not safe with respect to their weight and size. The networks are so large that their inspection taken months and any hurdle leads to delay.

1.5 Delay of public projects:

Public project is any infrastructure project by the government to aid the public. Governments always try to facilitate the public but having the sole governance, funds and power they still are not able to have the projects completed on time. Sometimes money runs out some times the project is scraped half way and only plans are made. With the help of the attributes discussed above we will try to understand that just because the government have all the power and resources it is not necessary that they have the control over the project because their network systems are so huge and complex that each project has a proper process to follow that eventually it derails. Everything is accountable to the public so it is crystal clear and thus each process is standardized (Objective, 2012). The Federal government objectives are different from provincial government. Their objectives are multiples and when they clash they tend de-course the project as behind every project each government has set some aims and objective. The objective might clash due to budget constraints or due to and new bill passed but once there is an irregularity the project has to face delays (The World Bank, 2012) (Objective, 2012).

As government projects are huge they require lots of capital and planning. They have all the resources but as there is lack of ownership equity and none of the government entity steps in to pace up the project or plan it more wisely with regards to international certification system. One system is followed which takes a lot of time and no one is bothered to make sure the project management strategies are followed or not. According to the study of Mezher and Tawil (1998) most public projects got delayed due to not having the proper project management skills.

Another study by Middelkamp (2011) states that as government takes a lot of time in the process of approval and permits. They have set the same rules and regulation for all and if a particular system of the government lacks proper management the project tends to keep its course towards more delay.

Furthermore, as public projects are connected by the nation's budget they get underestimated as they have to be implemented within the allocated budget. Flyvbjerg (2002) states in his research that most of the public projects are underestimated by the government.

A problem which was always there from the beginning but has recently started to get notice is corruption in public projects as lot of money is involved. Haq (2009) states that according to CBICS World Market as much as $35 trillion in public projects will be spent over the next 20 years.

Through the above research we have come to an understanding that constructions of public projects have more tendency to get delayed because of their characteristics. As government projects have no ownership, huge and are based on very complex levels of structure it tends to leave a lot of loopholes open which further delays the project. If stricter governance or a new regulatory unit is specially created by the government only to supervise the public projects, the delays which occur due to legislated frameworks can be controlled.

CHAPTER 2

Delays

2.1General:

This chapter highlights about the overview of the delay in public projects, nature of delay, causes of delay, rules & regulation and dispute process with regards to delay.

Millions and Billions worth of public projects are implemented in Pakistan each year but because of the delays in the construction phases large amounts of resources are wasted.

Being the most common and universal risky complication, delay is exceptionally significant as it becomes the source of many other serious disputes eventually leading up to court battles (Assaf 2006). Contractors can claim for monetary disputes whereas the owner claims for compensation with regards to performance. In order for such situations going out of control, an agreement is signed between the parties in terms of a contract (Biau 2002). A contract defines the obligations and other duties of the respective parties. Nobody can foresee the problems that may arise during the construction processes; hence a general condition clause is drawn up which addresses the majority of the common issues that maybe encountered (Chan, 1995). This occurs normally when there is a direct 'cause to effect' relationship between the two parties; the contractor and the owner. The owner breaches the contractual agreement and hence comes the delay. The contractor also has to put up with the inflating costs everyday that rise in response to the delay (Biau 2002).

In normal practice, it is observed that everything cannot be picked for its face value nor can it be taken for granted. Also, the situations play a great deal in reference to the particular delay. (Kass, 1996). The contractual laws also make it necessary that both the parties follow the clauses in order to maintain just dealing, reasonable claims and warranties as well as implied responsibilities. Both parties should have a vivid understanding of the contractual agreement so that if a delay occurs, they are in a position to take the proper decision according to the principles mentioned in the contract (Haider , Barnes 2011).

In more complex public projects, settlement is more of the give and take type between the parties. It is important to realise that small obstacles and interferences should not cause deviations in the project or compromise the energy, time and money (Chan ,1995). The general conditions in contracts have clauses that allow the contractor to plan ahead in certain situations and further delays that may occur due to these situations are termed as the non excusable delays (Wilson 2012).

Contractual clauses can be of several types. Some clause may expect that a claim made on a delay must be submitted in written within a conferred number of days from the initial delay day (Biau 2002).

In those number of days, the contractor is expected to specify the precise duration of the delay in a written notice. The extension of time can reasonably be denied, if the contractor fails to reproduce either of the mentioned notices. Simultaneously the contractor sends out a clear warning message to the owner, when he successfully reproduces the notice, informing him that he should either try another alternate option or bring down the inflating costs (Haider, Barnes 2011). It should be realised that delays are not a consequence of a single destructive event. Delays don't occur spontaneously. They can very well be developing chronically over time and don't have to be apparent till they cause a significant change economically. By the time the contractor acknowledges the cumulative damages; other external parties would have contributed heavily to the already aggravating situation. Further if the notice requirement is failed to be met with, a situation maybe created in which claims may or may not be able to be defeated (Haider, Barnes 2011) (Chan ,1995).

The best method to avoid accelerated claims from contractors is to:

Promptly issue schedule extensions or an order of change when required

Refrain from unjustified completion or inappropriate ordering

Respond to any notice or claim from a contractor as early as possible

2.2 Nature of delays:

According to Trauner et al (2009) the way in which contracts operate, delays can be broadly categorized as follows:

Non-excusable delays

Excusable non-compensable delays

Excusable compensable delays

Simultaneous or Concurrent delays

2.2.1 Non-Excusable Delays

Hughes (2008) states that these delays are fundamentally the responsibility of a contractor. They cannot be relieved of this misconduct of delay. A contractor is held responsible for this, as these types of delays can pretty much be predicted much ahead of time and they are definitely in control of the contractor. It can also be stated that the contractor causes these delays either advertently or inadvertently and assumes the risk for as well. Situations may include anything from mismanaged administration, misconducts in and during construction, improper scheduling, broken equipments staff recruitment or underestimated productivity. These delays are either foreseeable or under a contractors control, however, they do not necessarily have to be both together (Trauner et al. 2009).

2.2.2 Non-compensable Excusable Delays

Hughes (2008) states in his article to claim that in this type of delay, the contractor is not held liable for the delay and nor does he receive any kind of compensation for it, but he can't also be attributed to it due to his negligence. It normally includes factors which are un-foreseeable and well beyond the control of the contractor. Due to this, neither party is seen to be at fault and under the clauses of the contract, both parties share equal risks and effects for events that occur without prior notice. The contractor is not compensated monetarily, but is vested with more time in order for him to complete his work. The contractor is also relieved of the liquidated damages that may have risen in the delayed time period (Trauner et al. 2009).

2.2.3 Compensable Excusable Delays

Wilson (2012) in his book of Government Contract states that delays which are excusable and are compensated for in terms of money and/or time are known as compensable excusable delays. These delays can be a result of modifications in the change notice. If the owner breaches an obligation, that was either simply implied or stated prominently in the contract, and it causes the project to be halted, suspended or interrupted in any way, the owner would be held responsible for the misconduct. Thus, the contractor may not only be entitled to a time extension but he can also be compensated financially, or costs over run that may have resulted from the negligence on the owner's part (Mubarak 2005).

Contracts that are issued by the owners have clauses related specifically to the significant compensable delays and they also provide an equally potent adjustment in return. The common adjustment clauses applicable to delay in contracts issued by the owner are:

Modifications and changes

Suspension or temporary termination

Differing or Non-conforming site conditions

The above clauses are explained more profoundly below.

2.2.3.1 Changes

Willson (2012) in his book of Government Contracts: Law, Administration & Procedures states that by submitting a written change notice, an owner is permitted to make any modification solely or at his own will without any prior notice to any sureties. He can make the change at any given time, but the changes must conform to the general scope of the contract. The following changes may be included, but are not definitely limited by the following:

Variations in design and architectural specificities

Technique, sequence or method of the work of the contractor

Sites, equipments and services facilities furnished by the owner

Increasing or decreasing the speed of the rate or performance of the work

Contractual milestones or its schedule

According to Murphy (2007) there are many clauses in the change notice which covers all the situations arising during the construction process with regards to the change notice. However if the contractor feels that omissions are or may have been carried out on the owners part that does not comply with the change notice at all, then the contractor has all rights to submit a change notice request, describing in detail his reason and basis for making a claim against the owner. The contractor must take action within 10 calendar days from the discovery day of the act. The owner in turn is left with two options; either to issue a change notice or decline the request of the contractor in a written notice.

An equitable adjustment is almost always made to compensate for the cost and time, that is if the change under this clause has caused an inflation or deflation in the cost or the time has limited the performance of the project in any way, irrespective of the change in or order or not. Eventually, the contract is modified according to the new situation (Alkass , Mazerolle and Harris 1996).

It is observed that changes in the work method would ultimately cause changes in the performance of the work as well as its schedules. In order to keep up with the scheduled milestones and cost effectiveness, further revision of the entire construction process would have to be taken in account. Changes may be required in the duration of the labour hours and other physical activities, method and sequencing in the work pattern or other tasks within the project. Change rearranges the way in which each task is prioritized. The change can have an immediate effect on the timing of the schedule where as it is only the change in method that has a significantly increasing or decreasing effect in the period of performance (Willson, 2012) (Alkass , Mazerolle and Harris 1996).

Other types of compensations maybe provided for the delay coming from a contractual change, along with the time extension. The other compensation is normally the adjustment for the increased costs of the work performance due to changes (Murphy 2007).

2.2.3.2 Differing Site Conditions

According to Wilson (2012), apart from the change of notice clause in FIDIC, the part referring to differing site conditions adjustment cost and time, states:

An equitable adjustment shall be made to the general condition changes if the conditions differ in the material and in turn cause an inflation of deflation in the cost of the contractor's budget or vary the time extension causing an effect on the work performance. A contractor will not be allowed to claim under this clause, unless and until he has given a prior notice (Kartam 1999). The chief reason for this clause is to make sure that the contractor is not caused any damage not is he given an advantage because of a resulting delay. The clauses in the Site conditions clause in the contract issued by the owner and differing site condition are not similar and must not be taken in to the same account. The site condition clause holds the contractor responsible for the delay that the contractor should have anticipated beforehand. In this way, the contractor is not entitled to draw any claims for delays due to conditions present at the site (Kartam 1999) (Willson 2012).

2.2.4 Concurrent or Simultaneous delays

Mubarak (2005) states that in these types of delays, the owner and contractor both are to be blamed and liable for the delays. If the delays are inescapable and entangled, then the contractor can neither be accountable for the delay or any liquidated damages, nor is he allowed to claim any damages from the owner (Willson 2012).

There was never any reliable technique to measure the impact of owner and contractor caused delays. Now with the development and availability of the CPM, a highly sophisticated computerized technique, it has become very convenient and easy to separate the impacts of delays with regards to owner and contractor individually. A contractor's CPM schedule is compared with the control CPM schedule which analyses the performance of the contractor. The analysis provides an accurate proportion of the responsibility for the delay. The contractor updates the schedule according to the contract, because the path mitigates as the project progresses (Alkass , Mazerolle and Harris 1996).

2.3 Causes of delays:

Causes of delay can be of two types. They can either be external causes or the internal causes. External causes, for example, can come from the government or other legal authorities, equipment or material suppliers and even the weather conditions (Long 2004). Other delays which are not connected to the external causes are called the internal causes, which mainly have to do with the involved parties. The concerned parties are the owners, contractors, consultants and the designers or architects. Long (2004) found some of the common findings in the possible cause of delay in public project industry that are being faced by them are dispute over decision power authority and mechanism in an organization of highly ranked officials and bureaucrats, inadequate collection of information and data, variation of geographical and topographical condition after designing, Un coordination at early designing phase, differences between the stakeholders, unskilled staff and time management.

2.3.1 Delay of Public Projects in few countries

Few practitioners have studied several causes of delay in the construction industry.

These causes of delay are around the world in different regions from 1971 to 2006 and are summarized in the table below (Table 2.1).

Researchers

Country

Major causes of delay

Baldwin, 1971

U.S.A

- inclement weather

- shortages of labour supply

- subcontracting system

Arditi, 1985

Turkey

- shortages of resources

- financial difficulties faced by public

agencies and contractors

- organizational deficiencies

- delays in design work

- frequent changes in orders/design

- considerable additional work

Okpala and Aniekwu,

1988

Nigeria

- shortages of materials

- failure to pay for completed work

- poor contract management

Dlakwa and Culpin

1990

Nigeria

- fluctuations in materials, labour and plant costs

- delays in payment by agencies to

Contractors

Mansfield, 1994

Nigeria

- inaccurate cost estimates

- improper financial and payment

arrangements

- fluctuations in cost

- shortages of materials

- poor contract management

Semple, 1994

Canada

- restricted access

- inclement weather

- increases in the scope of the work

Assaf, 1995

Saudi Arabia

- poor workmanship

- shortages of labour supply

- delays in payments to contractors

- changes in design/design error

- slow preparation and approval of shop drawings

Ogunlana, 1996

Thailand

shortages of materials

- changes of design

- liaison problems among the

contracting parties

Chan and Kumaraswamy,

1996

Hong Kong

- unforeseen ground conditions (cont.)

- poor site management and

supervision

- slow decision making by project

teams

Al-Khal and Al-Ghafly,

1999

Saudi

Arabia

-client-initiated variations difficulties

- difficulties in obtaining permits

-"lowest bid wins" system

Al-Momani, 2000

Jordan

- poor design

- changes in orders/design

- inclement weather

- unforeseen site conditions

- late deliveries

Lo, 2006

Hong Kong

- inadequate resources

- unforeseen ground conditions

- exceptionally low bids

- inexperienced contractor

- work in conflict with existing utilities

- poor site management and

supervision

-unrealistic contract duration

Faridi and El-Sayegh,

2006

UAE

- shortage of manpower

- slow preparation and approval of

drawings

- low productivity of manpower

- inadequate early planning of the

project

- slowness of owner's decision making

- poor site management and

Supervision

Assaf and Al-Hejji, 2006

Saudi Arabia

- difficulties in financing on the part of

the contractor

- change in orders by the

- owner during construction

- shortage of labour

- ineffective planning and scheduling

- delay in progress payment

Table 2.1: Previous research for the causes of delay courtesy (Lo et al., 2006)

2.4 Extension of Time:

Many factors contribute to a success of the project. A projects completion is proportional to the schedule, scope and site conditions of the work. Changes to any of the factors can cause an adverse affect on the overall completion of the project. Proper time management forms the basis of a favourable schedule and an accomplished project (Willson, 2012).

2.4.1 Excusable or Non-excusable Delays:-

According to Kelleher (2005) it is wise to know the difference between the types of delays and their resultant affect on the project and the individuals.

In unforeseeable events that are not in control of the company or beyond its powers and not due to their negligence, a conventional clause will award them a time extension (Wilson, 2012). Classic examples of a clause are such as Acts of God, Acts of the public enemy, Fire, Floods, Strikes and Freight embargoes.

Also known as 'force majeure', it lists the excusable delays which occur due to irresistible strength. Besides the excusable delays, any other delay is defined under the non excusable delay. In this type of delay, the company, contractors, or the party the company is responsible for, such as the suppliers and subcontractors have cause the delay by failing to meet the following performances such as Execution of work in time, Material ordering and transportation in time, Drawings and designs submission in time, Coordination with their respective subcontractors and recruitment of staff or labour (Hussin, 2012).

Therefore it is mandatory that the company read the complete contract before submission otherwise they could be subjected to breach of clause. For example, a company might find a strike as an excusable delay, assuming it is beyond their control, whereas the actual clause might not be in agreement and only allow unordinary severe weather conditions or so to be called an excusable condition (Kelleher 2005).

Kartam (1999) and Mubarak (2005) states that a delay for which a company receives monetary compensation as well as time extension is known as a compensable delay. An excusable delay for which a company receives payment in addition to a time extension is called a compensable delay. Conventionally, these delays are on account of the owner, or the representatives of the owners. The representatives of the owner can be its engineers, architect, designer and the manager of the construction company who have delayed the contract in the light of legal work execution. Examples cited for compensable delays can be such as Unsuccessful review of designs and drawings on time, No or inadequate access to the site when required by company, Failed coordination between all the senior members and contractors on site, Demanding modifications in the company's techniques in the work pattern, Alternate acts that may interfere the company's execution due to legal work (Wilson , 2012)

2.5 Receiving Due Compensation:

According to Bramble and Callahan (2011) clause citing excusable delays will never cite if the delay will also be subjected to compensation. The clause can either make the fact of compensation totally oblivious or it can also clearly assure that the delay non compensable.

A full review would have to be done on the clauses to see if the company deserves to be compensated for any one or more types of excusable delays aforementioned.

Several delays entitle the company to some sort of compensation under the acts of the clauses. The 'Changes' and the 'differing site conditions' clause state that the company will be compensated for the damages or additional costs provided they deservingly fall under the situations mentioned in those clauses (Wilson, 2012).

2.6 Giving Required Notice:

There is not enough way to stress the need to promptly submit a contractual notice to the owner. Literally every contract that manages the clause of excusable and compensable delays precisely mentions the requirement of a notice of delay sent immediately to the owner (Bramble and Callahan 2011) (Wilson , 2012).

Along with that, the updated schedule that is sent successively to the owner should mention and show any previous or current delays the company experienced and the amount of time extension the company expects or is entitled to. It should also mention how much time extension was requiring, when it was requested from the owner, and if the owner had granted the extension or not. The update should accompany the report which explains the delay and its consequences in completion of the project to whatever extent to which the project has progressed (Bramble and Callahan 2011).

There is normally no need to send a notice to the owner, if the delay is non-excusable. Though it is mandatory that the non excusable delay is present in the contractual update so that the company is prepared to take the required actions to make up for the loss of costs or time, in terms of speeding up the performance or increasing the budget. (Bramble and Callahan 2011).

2.6.1 Steps to take when delays occur

It is very important to follow a protocol when a delay has occurred. The companies should be readily prepared when they believe that the project would probably not be completed on time and would cross the expected limit (Haider ,Barnes 2011).

The owner should be rightly and promptly notified when the contractor anticipates a delay due to any lack in performance or prosecution. The contractor must submit the notice in writing in which he mentions the cause and type of delay and mention whether it is avoidable or unavoidable. It is important to notify the representative of the owner of the delay, in case the causative factor may be removed before any damage. Immediate actions can often help in preventing the occurrence of the factor. The earlier the problem is taken care of, the lesser is the cost overrun and time loss. No claims can be made against the owner when it comes to his attention, by the contractor in case the delay at the time of occurrence was unavoidable (Haider ,Barnes 2011) and (Wilson 2012).

2.7 Liquidated Damages:

Wilson (2012) states that liquidate is a word related to legal proceedings which means the amount of money that has to be paid for a delayed completion, only if it is fixed. A company almost always signs a contract with a completion date and time and that is the most important aspect of the contract. Failure to comply on the time given and scheduled for, the company is at fault and will eventually be accountable for all of the owner's damages that have concurred due to the misconduct causing the delay, which is normally in the price of money (Brizzee 1991).

2.8 Acceleration:

A contractor's time to finish his work can be shortened by the presence of events along the way or even an owner may require the contractor to accomplish the project much sooner than initially decided. Either way, the contractor has to accelerate his work performance, in order to prevent any kind of actual or liquidated damages that could be payable to the owner due to completing the project later than what was decided. Acceleration is often helped by overtime work especially put in by the labour and other manpower, increasing the shifts of the staff and providing the project with more equipment (Daniszewski 1990) (Wilson 2012).

2.9 Controlling the project:

Project is made up of two mechanisms which are as follows:

Clear and precise data about the project's action-plan and schedule.

Actions and decisions taken with regards to the results and feedback.

If a project is on schedule the money keeps flowing in. In general contracts have clauses which states penalties if projects are not complete on time and it also is an incentive which keeps the contractors to finish the project as early as possible. (Wilson 2012) (Arıkan and Dikmen 2004).

2.10 Delay Accountability:

According to Haider and Barnes (2011) the question of delay with regards to its accountability is if contractor will be blamed or will be awarded additional time and money to finish the project. The group of responsibilities are as follows:

Owner Accountable: Contractor will be awarded additional time and money to complete the project.

Contractor Accountable: Contractor will have to reimburse all the cost and damages. Plus no extra time and money will be given.

Neither Party Accountable: Contractor will get extra time to finish the project but extra money will not be given.

Both Parties Accountable: Contractor will be given extra time but no money will be given for the damages

2.11 Going to court:

Disputes and disagreements finalizes on the three features of delays:

1) Whose fault was it to cause the delay?

2) By how much time the project got delayed

3) How much money will be granted?

The CPM as discussed above is very practical and helpful in deciding how much money and time should be granted. It becomes easier to decide the future actions which should be taken and as the objective is to have a bias result the models provides precise information (Wickwire 2003) (Jingsheng 2001).

CHAPTER 3

Causes of Delay

3.1 General:

On large level there is no suspicion that the development of country depends upon its achievement of its advance plan with elevated construction contents.

The most common and significant issue in the construction industry is the occurrence of delays. Delays are an inextricable part of almost every project, though the magnitude of the delay varies with each individual project, higher being for public projects (Sullivan, Harris 1986).

According to Afridi (1998) there is a French dictum "when the construction industry prospers everything prospers". Escalation of construction industry is of imperative for all regions of national and international economy, as well as everyone involved in the industry like contractors, workers, financiers, architects, engineers etc (Ogunlana, Promkuntong & Jearkjirm 1996). The project's success depends on meeting objectives within time and budget limits (Akinsola. 1996). Project management plays a very important role in avoiding the delays in public projects. [Burati, Mattews, Kalidindi, 1994).

The major factor of construction problems is project's delay. It means loss of income according to and for the owner or client. (Odeh, Battaineh 2002).

There are a number of definitions for delay. In the construction management context, the simplest definition of a delay is made by Mubarak (2005) as "an event or a condition that results in finishing the project later than stipulated in the contract." Callahan et al. (1992) define delay in construction claims as "the time during which some part of the construction project has been extended or not executed owing to an unexpected event".

In another study, Trauner et al. (2009) describe delay as "to make something happen later than expected or to not act timely". It is usual for delays to occur on construction projects. Callahan et al. (1992) claim that schedules have an important role in construction delays; since the effects of delays on the project completion date can be displayed and future delays can be anticipated by rescheduling the project through the computer.

As Abd El-Razek, Bassioni and Mobarak (2008) studied several articles on examining the causes of construction delays in public projects he was able to determine that since public projects are government funded, they are subjected to profound procedures of legislations and provisions which subsequently lays down a concrete foundation for delays to flourish over long extended periods, withstanding even multiple years.

Another study by Kaliba, Muya, and Mumba (2009) states that if the causes of delay in the construction of public projects are identified in the early stages of the project the delays can be controlled and this can save government a lot of resources.

Construction of Public projects are often subjected to inflated expenses during delays, which occur specifically due to loans accompanied by supplementary interest rates; staff who are paid on the basis of the served time period, and the amplifying wages and prices of materials and other equipment being used in the project (A.A. Aibinu et al 2002).

This makes it mandatory that the types and causes of delays are properly described so each party knows where they stand and know the consequences. Some projects are only a few days behind the schedule; some are delayed over a year. Causes of delays spans over a wide range of engineering and construction factors. Some are due to the involvement of a single party and others can be attributed to multiple parties and groups causing systemic faults or lack of coordination and poor management skills. Project does derail but if proper strategies and policies are placed it helps to keep the project under control

A methodology with a fine engineering judgment, a well estimated cost within a budget, and the completion of the project on time results in a successfully executed project (Hancher and Rowings, 1986).

3.2 Previous Work:-

Legal consequences due to delays were presented by Leishman (1991). Effects of delays on the quality and cost were studied by Herbsman (1995).

A decision support system (DAS) for analysis on construction delays was developed by Yates (1993). Delays in DAS can broadly be categorized under engineering, equipment, external delays, labour and staff, management and administration, owner, consultant, subcontractors and weather.

Ogunlana (1996) studied the delays in public building projects in developing countries such as in Thailand. The delay in construction industries in such countries was attributed to some factors. They could be collectively nested and defined under three sets:

Deficiencies in the construction industry's infrastructure, mainly to do with the supplying of materials and resources

Issues and differences caused and created by consultants and the clients

Obstacles created due to inexperienced contractors.

Public construction delays in Hong Kong were surveyed by Kumaraswamy and Chan (1998) as perceived by the parties in terms of clients, consultants and contractors and he observed the productivity affecting factors.

The survey identified the main cause of delays to be the miscommunications between the three parties and the difference in their viewpoints with regards to expertise and experience of each individual. Mansfield, Ugwu and Doran (1994) studied the causes of delay and the effects of it along with the cost over runs in Nigeria. The deduced results showed that the most critical factors stood to be the financial factors in terms of payment for the labour and completed work, lack of expertise in contract management, differing site conditions, deficient material and equipment and very amateur planning.

Assaf (1995) studied public construction projects delay in Saudi Arabia. Here, the delays turned out to be due to be the time taken for approval of designs and drawings, late payments to contractors which eventually affected the cash flows during the construction, modification of designs, differences in the subcontractors timing schedules, poor decision making, deficient labour and labour skills and presence of high profiled bureaucratic organization.

Mezher and Tawil (1998) survey identified delays in public projects in Lebanon from the perception of owners, contractors and engineering firms. He concluded that financial issues were the major concern for the owners. It was found that owners had more concerns with regard to financial issues, whereas the contractors prioritized the contractual relations and the consultants had felt that project management issues were the most significant cause of delays.

Adhikarib and Manavizha (2002) linked the delays of public projects in Nepal due to the shortage of building material.

Battaineh (1999) evaluated a number of government buildings and highway projects. He took into consideration of 164 buildings and 28 highway projects, evaluated the progress reports of 164 building and 28 highway projects that were under construction from the period 1996-1999. He found the results to point out the delays to be an extensive complication, in which the average ratio of the prescribed completion time against the planned duration of the contract was 160.5% for the road projects and 120.3% for the projects related to government buildings.

Similarly, Momani (2000) also conducted a survey on construction delays by investigating 130 public building projects constructed in Jordan from 1990-1997. The researcher concluded that the major causes of delays happened to relate to designers, changes in designs weather and site conditions, late transport and delivery, economic recession and increase in demand of supplies. He presented it in the form of regression models showing the relation between the planned and actual project duration for the different types of buildings considered.

A precise summary of the methods used by transport agencies for road and highway projects to produce the contract duration and the schedule guide for engineers during the construction process was made by Hancher and Rowings (1986).

Similarly, Chalabi and Camp (1984) carried out a detailed review on delayed public projects in developing countries during every stage. According to their study, they found out that the delay and overrun costs in a construction project were entirely due to the steps and decisions taken in the early stages of the project. Fereig and Qaddumi (1984) conducted their research on the construction experience in the Arabian Gulf and stated the factors of public projects' construction delays are affected by planning, controlling and productivity. Their main aim was to deviate the reader's attention towards the project planning.

Wilson (1982) investigated the role of the owner and the architects in the construction management and resolution of claims. He concluded that the major reasons doe filing a claim was normally excessive work, delayed or accelerated project, deficient skills of management, devoid of access to site and the frequent change in work and timing schedule.

Jingsheng (2001) represented a methodology which electronically computed the activity delays and monitored the project delays. The method had a set of equations which were coded in the computer and the computer program would allow quick and convenient access to the information of the delayed project activity. Alkass, Mazerolle and Harris (1996

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