Reasons for contractors' delay claims failures in Sri Lanka

Abstract

Project delays often occur due to the dynamic and complex nature of the construction industry and would lead to claims and disputes between contracting parties. Once a project exceeds the period contractually required to complete a project, there is bound to be an effect on expenditure or income of the contractor as well as the project owner. This study therefore determines the reasons for unsuccessful contractors’ delay claims in Sri Lanka. The study administered a questionnaire survey to construction practitioners, contractors and consultants. A total of 55 respondents from both contracting companies (n = 40, with C1-C3 grading) and consultants (n = 15) were selected using stratified random and snowballing sampling methods respectively. The data obtained were analysed using descriptive statistics and Relative Importance Index (RII). The study found that time overrun occurs in 90% of projects in Sri Lanka and was indicative of the delays to settlement of contractors’ claims. On average 60% of contractors submitted delay claims with only 40% success rate. The top most frequent reasons for unsuccessful claims include: inadequate documentation to substantiate claims, delayed submission of claim details, failure to establish link between cause and effect of claims and failure to use appropriate delay analysis method. Sri Lankan contractors explained that failure to use appropriate delay analysis method and contractors failing to mitigate the effects of the delays are also contributory factors to failures. In order to mitigate these issues, the study recommends that contractors adopt innovative strategies such as providing a contingency for the amount of claim failures under preliminaries or mark up at bidding stage and includes a measure of over valuation as a negotiating margin when preparing the claim first time. Also contractors would need to maintain up to date records of site transactions, while training of their staff to increase their knowledge of contract procedures are a necessity in Sri Lanka.