A New Roadmap to a Familiar Journey: The ASCE Standard on Loss of Productivity

Below is an excerpt of an article published in the Spring 2021 edition of Under Construction, a newsletter publication of the American Bar Association Forum on Construction Law.

As the construction industry recovers from and adjusts to the effects of the COVID-19 pandemic and prepares for a new normal, post-COVID world, claims for losses of productivity on projects that were in progress when COVID-19 struck will likely increase due to contractors performing work under conditions far different than originally contemplated when they bid the project and signed the contract. Consequently, as contractors pursue claims seeking compensation for adverse impacts to the productivity on projects shut down or slowed because of the COVID-19 pandemic, and owners defend such claims, documenting causation and accurately assessing loss of productivity will be vital to both parties. While COVID-19 has changed our lives and the construction industry in many ways, it has not changed the fact that claims for loss of productivity remain some of the most contentious, and most difficult to quantify and prove.

Today, contractors must balance common, but often competing, goals of progressing the work to complete projects while at the same time taking unprecedented steps to protect the safety and health of their workers and the public. In addition to impacts due to design errors and omissions, performing work out of sequence or in adverse weather conditions because of delays, or excessive overtime due to acceleration, contractors must recognize that a host of causes—impacts due to social distancing, labor unavailability due to illness, quarantine, owner restrictions and government restrictions, compliance with OSHA and other safety guidelines, medical testing, work stoppages and suspensions, and supply-chain challenges—may result in losses of productivity on projects. To maintain this balancing act, contractors often expend more actual labor hours on the project than planned, resulting in losses of productivity. Successfully identifying, quantifying and proving such losses is critical to a contractor’s financial success, especially in today’s economy.

While the right to recover for losses of productivity is well-settled, there is no universally accepted standard for calculating damages for these claims. Contractors and their experts rely upon various treatises and studies on loss of productivity to present such claims in mediation, litigation and arbitration proceedings. Over the years, courts have decided claims and awarded damages based on different methodologies for quantifying and proving such claims, often leading to inconsistent results. The American Society of Civil Engineers (ASCE), in conjunction with its Construction Institute, seeks to develop consistency and provide guidance through its soon-to-be-published standard “Identifying, Quantifying and Proving Loss of Productivity”. Read the full article.