Available online at www.sciencedirect.

com

International Journal of Project Management 26 (2008) 174184 www.elsevier.com/locate/ijproman

Understanding time delay disputes in construction contracts

K.C. Iyer
a

a,*

, N.B. Chaphalkar b, G.A. Joshi

Department of Management Studies, Indian Institute of Technology Delhi, New Delhi 110 016, India b Department of Civil Engineering, Indian Institute of Technology Delhi, New Delhi 110 016, India c Punj Lloyd Limited, Punj Lloyd House, 17-18 Nehru Place, New Delhi 110 019, India Received 6 September 2006; received in revised form 18 February 2007; accepted 1 May 2007

Abstract Most of the construction projects are executed through contracts which are generally not easy to comprehend even by professionals. With advancement in technology and mammoth requirement of infrastructure in developing countries like India, there has been increase in size and complexities in the nature of projects. This gives rise to further ambiguities in the prevailing contract forms eventually making contract forms more complex and dicult and causing adversarial impacts such as increase in number and frequency of claims and disputes besides time and cost overruns. To overcome the worsening scenario, it is essential to develop a system that can assist the contract administrators to understand and evaluate worth of their claims prior to taking it to litigation. An attempt has been made to devise a rule-based expert system to achieve this objective with a limited scope of disputes arising out of Time Delay and Extension in Indian Construction Contracts. 2007 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Construction contracts; Construction claims; Dispute resolution; Expert system; Contract administration

1. Introduction The construction industry is the second largest industry in the India, being next to agriculture. As per tenth ve year plan of India roughly 44% of the countrys plan outlay falls within the purview of construction activity during year 20022007. Majority of construction works are carried out through contracts. In India the most public projects used to follow the standard contract conditions formulated by the two government organisations namely Central Public Works Department (CPWD), and Military Engineering Services (MES) till recently. FIDIC conditions were introduced in 1980s for some public works on the insistence of the funding agencies like World Bank and Asian Development Bank as it was felt that the prevailing contract conditions
Corresponding author. E-mail addresses: kciyer@dms.iitd.ac.in (K.C. Iyer), nitin_chaphalkar@ yahoo.co.in (N.B. Chaphalkar), guneshj@gmail.com (G.A. Joshi). 0263-7863/$30.00 2007 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2007.05.002
*

were not equitable and the projects were likely to be delayed. As a developing nation, India is also going through a phase of infrastructure expansion due to globalisation. These infrastructures are of dierent types and magnitude and most of them are multidisciplinary in nature. With the increasing size and complexity in nature of projects the conditions of the contracts also tend to become more complicated, which in turn add to number of disputes to the already existing ones and further delay the settlement of disputes. The delay in dispute settlement has manifold eects as given below.  It hampers the project progress if dispute arises during execution stage.  It is detrimental to the relationship between owner and contractor.  It contributes to the cost and time overruns.  It sends bad signals to foreign investors thereby slowing down the national progress.

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

175

It is generally said that the contract language is considered dicult to comprehend and they are therefore a major source of disputes. With the increase in complexities in the nature of work as stated in the preceding paragraph, the contracts are also likely to be more complex. As such, a recent study indicates that the average time taken by the Indian Courts for deciding disputes is normally between 5 and 15 years after it has passed through the arbitration trial. Parties feel frustrated because of the delay in settlement of disputes. This delay contributes to continuous rise in the number of cases pending in various courts. It is reported that there are over two million cases pending in 18 High Courts (apex courts of various states of India) alone and more than 200,000 cases are pending in the Supreme Court (apex court of the nation) for admission, interim relief or nal hearing [34]. With the increasing complexity in contracts the situation is expected to further worsen. To change this scenario it is essential to develop a scientic methodology to help judiciary to check the number of disputes. Also such scientic tool should give guidelines to owners and contractors to evaluate the strength of their claims before they are pursued. An expert system is considered to be one such tool. In this paper an attempt to develop a rule-based expert system for resolution of disputes has been discussed. However since there are a number of sources for a dispute including dispute-prone contract clauses, the present paper discusses development of rule-based expert system for resolution of disputes arising out of only the time delay and extension clause. 2. Literature survey In Indian context, Iyer [7] has identied the following critical clauses that lead to disputes in construction contracts through case research study. These clauses, in the decreasing order of their criticality with regard to propensities of disputes, are given below.     Final and binding power Time, delay and extension Termination of contract Pricing of deviation and extra items by owner representatives  Deviation limit/scope of work  Price escalation The author observes that the literature and case laws are dicult to reconcile and can easily lead engineers and nonlegal professionals to believe that courts are arbitrary and that the outcome of a court cannot be predicted. Incidentally, a similar observation was made by Thompson and Portis [30] and Rubin [20] when they discussed construction law of United States of America. However, Thomas et al. [28] showed that the consistency of the law could be shown through careful case law research. They also

demonstrated consistency of the law in several cases e.g. disputes on notice requirements [29], disputes on oral change orders [28], disputes on misrepresentations [26], disputes on diering site conditions clause [27], disputes on interpretation of clauses [25], disputes on specications [22], disputes regarding certifying completion [23] and disputes on enforcement of liquidated damages [24]. In each of these studies authors have shown a systematic way of resolving disputes arising out of several reasons stated above besides establishing the consistency in court decisions in the US construction contracts. In India too, a few researchers, through case research studies, have developed decision support systems for resolution of disputes arising out of decisions under nal and binding power vested with some authority in the contract [9] and time delay and extension clause [8]. These decision support systems can be further synthesized to form an expert system so that all sources of the given dispute can be analysed simultaneously and appropriate decision can be given. Allwood [1] has mentioned some expert systems developed for Civil Engineering in the following areas.  To diagnose the causes of dampness in buildings.  To select the most suitable paint treatment to protect structural steelwork from corrosion.  To select appropriate type of tower crane for use in multi-storey construction.  To oer advice on construction planning.  To examine the cross section of a window frame and consider all possible routes by which the water might penetrate the frame.  To check a room layout.  To design the layout of temporary facilities on a construction site. Mohan [14] has listed 37 expert systems in the eld of Construction Management and Engineering out of which 3 were related to contract management dealing with selection of contract type and diering site condition claims. Kraiem et al. [11] have developed an articial intelligent system called DISCON, which is designed to give legal advice to design and construction engineers as well as contractors and owners concerning Dierent Site Conditions claims. DEViCE (Dynamic Expert system for Valuing Variations in Civil Engineering) was developed by Sutrisna [21]. This system deals with quotations related to excavation. Cheung et al. [6] have developed a fuzzy Construction Dispute Evaluation (CDE) model based on the knowledge extracted from practitioners in Hong Kong. They suggest dispute control mechanism through four stages: dispute identication, dispute analysis, dispute evaluation & dispute control. A number of expert systems have also been developed in various elds by researchers form India, but no expert system is reported in the area of construction disputes. Thus as a modest beginning an expert system is developed for

176

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

resolution of disputes arising out of one of most disputeprone clauses, the time delay and extension clause. 3. Expert system Recent developments in computer technology, especially in the eld of Articial Intelligence, make it possible to simulate human-like reasoning in computer systems. Such systems are popularly known as Expert Systems. The expert system comprises of knowledge base, inference engine, working memory, user interface, explanation facility and a knowledge acquisition facility. The heart of the expert system is the knowledge base where domain specic knowledge acquired from the expert is stored. The user of the expert system interacts with it through the user interface and the experts knowledge is collected and compiled through knowledge acquisition facility. The knowledge acquired from the expert is stored in the knowledge base using various formal knowledge representation techniques. The hypotheses and facts are generated during the reasoning process and they are stored in the working memory. Expert system does inferential computing using inference engine which carries out the search through the knowledge base either to prove hypotheses or to arrive at a conclusion. Explanation facility tells the user why particular information is required and how the system has arrived at a particular conclusion [13]. Thus the expert system acts like a store house of experts knowledge to give solution to users query in a particular manner. There are three major categories of expert systems namely rule-based systems; case-based systems; and hybrid systems. Rule-based system comprises of a set of rules formulated using knowledge of several experts and rule interpreter. When a new problem is posed to the system, the rule interpreter decides which rules to apply and determines the result from the facts given to the system by the user [16]. Some of the pioneering rule-based expert systems are MYCIN, TAXMAN and JUDITH. MYCIN is designed to provide expert advice on the diagnosis and treatment of blood infections to a physician who is not an expert in the eld of antibiotics. The other systems, JUDITH and TAXMAN were designed for use by lawyers and for taxation of corporate restructuring respectively [17,15]. In the case-based system a database is created using past cases. When a new case is fed, for which the user is seeking the solution, the system compares this (instantaneous case) with the cases in the data base. It then identies and displays the information of the most matching case(s) from the data base that facilitates the user to arrive at the decision. FINDER and SHYSTER are the examples of this type of system developed using legal reasoning [31,18]. Hybrid system is one which combines above two methods of reasoning in order to attempt to answer the problem. Some typical examples of hybrid system are CABARET, GREBE, PROLEXS and IKBALS. CABARET is an expert system that deals with US income tax

law relating to the deduction for expenses relating to a home oce developed by Rissiland and Skalak [19]. Branting [5] designed GREBE for the domain of Texas workers compensation law. PROLEXS developed by Van Opdrop et al. [32] is a Dutch expert legal system, focused on the domain of landlordtenant law. The IKBALS by Vossos et al. [33] operates in the area of credit law. 4. Expert system for settlement of disputes in indian construction In the Indian context, database in the form of settled cases of construction disputes are available in the Arbitration Law Reporter (Arb LR) and All India Reporter (AIR). Besides, some primary guidelines such as decision support systems developed for resolution of disputes arising out of dierent clauses by some researchers are also available [9,8,3,2]. These researchers have concluded that such decision support systems can be synthesised to convert them in the form of an Expert System which will help in reduction of time required in giving decisions. Since the expert system would contain a huge database, it will serve as a checklist for the contract administrators to predict the strength of their cases before going for litigation. The data available can be matched with the current situation and it could be predicted that, which party may be at fault. Once this is known arbitration procedure can be either avoided or at least can be expedited. In turn it will reduce the ling of disputes as the concerned party already has the idea of likelihood of decision. Also it will be helpful to the arbitrator and to the judges, since they will be having huge database of similar type of cases readily available for reference. Many times it so happens that the claim can neither be completely accepted nor rejected, but there is partial acceptance of the claim. This is assessed based on the extent of defaults of parties in the disputes and it is also known as apportionment of the claim. Details of the apportionment if stored in the knowledge base, it can serve to detect the extent of defaults of parties and arrive at the weightage of the claim admissible in favour of any party. Thus an expert system would prove extremely useful in cases requiring apportionment of claims. The area/domain of construction disputes being very large, an attempt has been made to develop a rule-based system module for time delay and extension clause in construction contract [12]. While designing a system, questions are formulated using available cases from All India Reporter (AIR), Arbitration Law Reporter (Arb LR) and arbitration awards. The arbitration awards are not published and hence collected through personal contacts. 5. Development of rule-based system for time delay and extension clause It has been seen in most of the case studies that the frequency of disputes over Time delay and extension has

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

177

greater implications in terms of the cost and time of the project. Every delay, be it regarding payment, or site handing over, or temporary stoppage of work leads to time loss which eventually prompts invoking of Time delay and extension clause. Therefore it becomes necessary to understand all aspects of disputes arising out of time delay and extension clause; which is explained below in a rule-based expert system form. The development of rule-based system follows a three step approach. The rst step is to understand the cause and eect relationship of the dispute. The second step involves formulation of broad domains in which all the causes t in. The last step is to develop the rule base to predict the plausible eects for these identied domains. 5.1. Cause and eect relationship of disputes The disputes arising out of time delay and extension are of varied nature. These disputes can be studied in two stages for their better comprehension and analysis. They are identication of dierent delays i.e., cause and its eect i.e., claims arising out of these delays. When we consider cause and eect relationship, one must bear in mind that one eect may prove to be cause for the subsequent eect, e.g. when we consider pair of situations causing delay and type and quantum of delay as cause and eect respectively, in the next level type and quantum of delay becomes the cause and the claim on account of delay becomes the eect. Thus it becomes a chain as schematically shown in Fig. 1.

Types of delays as cause and claims as eect are discussed below. 5.1.1. Types of delay The delay occurring in a project can be classied into number of types depending upon the stages at which it occurs as well as on the nature of outcome, i.e., claims. This denes the criticality of the delay in the overall project completion and its impact thereafter. The delays are accordingly classied as critical delays and non-critical delays. Contract denes obligations of parties to meet the project performance including schedule and also the recourse in the event of failing to meet such obligations. The recourse is generally asking for compensation for the delay by the aected party from the other party and thus it is the choice of the aected party. In certain cases the aected party may excuse (i.e., he may not levy compensation for the delay) while in some other cases he may not excuse the delay. The consideration to excuse or not to excuse would depend on several factors such as whether a party can or cannot foresee the situation causing delay at the time of entering the contract; and the impact of delay on project performance. This leads to classify delays as excusable or non-excusable. However on certain situations when both parties are equally or partially responsible for the delay, the delay is called as concurrent and analysis of actual damage due to delay with respect to levels of obligations stated in the contract and that actually performed helps in apportioning the quantum of losses to be shared by parties. Dierent events classifying delays as excusable and non-excusable are given in Table 1 [10,4]. 5.1.2. Types of claims due to delay Dierent types of claims arising out of Time delay and extension clause are as follows [8].  Levy of compensation by owner due to delay attributed to contractor.  Claim for price escalation of resources by the contractor when the work is not completed in time and extensions are to be allowed because of owners default.

Fig. 1. Cause and eect relationship of disputes.

Table 1 Dierent events classifying non-excusable and excusable delays

Non Excusable delays 1. 2. 3. 4. 5. 6. 7. Ordinary and foreseeable weather conditions Subcontractor's delays The contractor's failure to adequately manage and coordinate the project site The contractor's financing problems The contractor's failure to mobilize quickly enough Delay by the contractor in obtaining materials Poor workmanship

Excusable delays 1. 2. 3. 4. 5. 6. Labour disputes Force majeure Unusual delay in deliveries Unavoidable delays Unforeseen delays in transportation Other unforeseeable causes

178

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

 Claim for idling of resources/overheads by the contractor due to delay by owner.  Whenever, a contractor does not do the work with due diligence or his pace is slow, the running bill amount may be withheld leading to claim for interest on withheld payment.  Sometimes the clause for reimbursement of price escalation may not exist in the contract and the contractor claims for compensation, when the project gets delayed, as extra-contractual obligation.

5.3. Development of rule base for delay domains The rule base contains logical decision diagram which establishes the relationship between the claim and its origin, particularly the party responsible for the delay. It then states the validity of the probable claims and suggests the likely outcome. Development of rule bases for dierent delay domains is discussed below. 5.3.1. Delay due to Handing over of site As per the conditions of the contract, the site can be handed over fully in one go or in parts/stages during progress of work. Particularly, in case of road projects handing over of site in part is a common feature. So the disputes arising out delay in handing over of site has to be understood at two levels: whether it is due to full site; or it is due to part site. In either case the contractor would try to claim for compensation on account of idling of resources and safeguard himself against liquidated damages. When the dispute arises at very initial stage of the project due to non-handing over of entire site by a given date, the contractor to be eligible for claim under idling of resources, it is mandatory for the contractor to give written notice in time which may be checked by the owner representative. If the contractor fails to give notice in time, he has to at least prove that he had mobilized his resources that actually idled. Failing this he is not entitled for any claim. On the contrary, if owner proves that he had handed over the site on time and contractor being of poor means failed to start the work, the owner is entitled for liquidated damages. Similarly, in handing over of part site, it is utmost important to ascertain that whether part handing over actually hampered the progress of work. It is checked whether handing over of site was an activity on the critical path. If it is proved that it was on a critical path, then the same logic which is used for handing over of full site is applicable and delay will be attributable to owner. On the other hand, if it is not a critical activity, then any claim by the contractor ceases to exist. 5.3.2. Delay due to Release of mobilisation advance Many contracts cater for provision of mobilisation advance by the owner at the commencement stage of project to reduce the burden of mobilising the resources on the contractor. But generally this amount is issued in parts over a period of time. In the event of the delay in release of this amount, it is likely that the expected fund ow of contractor is aected; thereby the project schedule is aected. When the delay in release of the amount occurs, it is the duty of the contractor to bring to the notice of owner that such an act will aect the duration and cost of the project. It is owners right to know the implications of his acts so that he may reconsider his actions. The contractor can also provide a solution in which he would raise the mobilisation amount through some other means and claims for interest on that. If the contractor does not notify the owner, he

5.2. Formulation of domains for expert system Next step in development of expert system is the formulation of broad domains. A domain is a well focussed subject area for which the rule set is developed. In a construction project any delay may lead to chain of claims and as discussed above the admissibility of claims depends upon its source and the partys attitude. Based on the study of arbitration cases and other available literature, a set of delays have been found to be very frequently invoked. These delays are further probed for their origins for classifying them into appropriate domains as given below. 1. 2. 3. 4. 5. 6. 7. Delay Delay Delay Delay Delay Delay Delay due due due due due due due to to to to to to to Handing over of site Release of mobilisation advance Late receipt/checking of drawings Accidents Temporary stoppage Rework Extra work

As the next step, rule bases for each domain are prepared. These rule bases are prepared using over 20 arbitration awards and 70 cases from Arb LR pertaining to delays and extension. The aggrieved party, against whom the award has been pronounced in the arbitration, generally appeals in the next higher court for setting aside/reversal of the award, which is permitted under special circumstances. The arbitration awards thus become open for review in the court of law. While analysing the appeals, the courts look at if award raises question of facts i.e., the material evidences preferred in pronouncing the award or questions of law i.e., legality of award. If it is established that arbitrator has erred in law i.e., the award has been contradictory to the provision of law, the awards are likely to be set aside [9]. On the other hand if the party has been contesting on the ground of improper review of all material evidences produced before the arbitrator, the court does not take any cognizance of it and the award stands upheld. A party can appeal on any point any number of times, but if in the two consecutive appeals the decision is not altered, he would not be allowed to make any further appeal. So to develop the rules, the cases were required to be understood with respect to enforceability of awards in the eyes of law.

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

179

forfeits the claim for any compensation due to this delay. At the most, he is eligible for extension of time, if such provision exists in the contract. On the contrary if the owner does not respond at all to such notices, he is held solely responsible for the delay as well as accountable for the payment of compensation to the contractor. In a few other cases the part payment of mobilisation amount was delayed, but it did not aect the project schedule. In these cases, it was concluded the contractor is not put to loss and the claims are not admissible. Understanding the position of contracts, if the contractor proposes some alternative arrangement of raising mobilisation advance including his claim for interests and the owner responds by accepting the oer given by the contractor, then it is construed to bring change in the contract through mutual consents. It then becomes contractors duty to do the needful as the mutually changed contract conditions and failure to perform is treated as a default on contractors part. 5.3.3. Delay due to Late receipt/checking of drawings The drawings form an important constituent in the contract documents. Dierent types of contracts are in practice, where, the drawings are not the responsibility of only the owner. The contractor may be required to prepare the drawings which are then checked by the owner. Generally they lead to three situations: delay from contractors side in preparation; delay from the owners side in checking; and delay from both the parties. For the rst two situations, the responsibility of delay is easily ascertained while in the third situation which constitutes a case of concurrent delay, the claim has to be resolved using apportionment. In case, the supply of drawings is the owners responsibility and there is a delay in supply, the notice requirement comes into picture. On failure to notify about the delay in receipt of drawings and its consequences to the owner, the contractor forfeits his rights of getting compensation. On the other hand, if the owner does not respond to such notice, it is assumed that owner is aware of the consequences. In yet another type of contract, where supply of drawings is the responsibility of the owner and there are some discrepancies observed between the sets of drawings and the specication, or some details missing in the drawings, or a number of corrections to be incorporated in the drawings, which may account for the delay. Even if there are no corrections/additions, the contractors may have to wait for the decision on the discrepancy leading to loss of time in execution of actual work. Generally these discrepancies lead to varied interpretations by parties with nancial implications besides seeking for extension of time and thus become sources of disputes. Due to the intrinsic nature of the construction industry where standardisation has not yet been adopted throughout, there occur dierences in interpretations of discrepancies in the drawings. The question then arise is whether the delay is substantial to aect the overall project schedule or not.

The types of claims arising out of such delays are generally on the grounds of idling of labour and equipment and overhead charges. Even though the responsibility of the delay solves the question of permission of extension of time, the compensations are awarded on the basis of facts. 5.3.4. Delay due to Accidents Accident is another source of delay when the complete project site has been shut for sometime, or work is suspended, or on some emotional ground there is labour unrest leading to stoppage of work. The responsibility of the accident automatically assigns the responsibility of the corresponding delay. However, there are various reasons that can lead to accidents, and the main problem is to ascertain its responsibility. Although there are many unforeseeable events that could lead to the accidents, based on the cases studied the reasons have been divided into six broad heads as given below.       Force majeure Actions not following safety norms Substandard work Error in the design/drawing Actions of subcontractor Use of facility before its handing over

The main after-eect of the accident is the loss of time as well as damage to work or workforce. These huge losses in circumstances like force majeure are to be shared by both the parties. On the other hand, if the safety considerations are given a little attention leading to accidents, the contractor is held responsible for the accident. As in case of substandard work leading to accident, it is contractors responsibility to absorb the losses only if the work was not approved by the owner. But if the owner had approved the work, then the loss has to be borne by the owner. It is quite likely that faulty design/drawing may also cause accidents. In one of the arbitration cases the formwork design of the slab had been approved by the engineer and also checked before casting of the slab. The slab fell down the next day within 24 h. The accident analysis report stated that the design was not proper to withstand the load. The arbitrator made the award in favour of the contractor. It is a common feature to sublet part or whole of the construction work to subcontractor. If the accident is on account of action/work of subcontractor, then it is essential to ascertain whether his appointment was eected by owner or contractor. Accordingly the responsibility can be xed. The accident may also occur due to premature use of a facility before its testing or before it is formally handed over. If such facility is used without formal approval of contractor and accident occurs, then it is construed that the facility is used without the knowledge of the contractor and hence the contractor cannot be held responsible for the accident and the owner will be liable to pay compensation.

180

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

On the contrary, if due permission of the contractor was obtained before using the facility and accident takes place, the contractor is held responsible for the accident. 5.3.5. Delay due to Temporary stoppage When the ongoing works get interrupted due to some reasons, there comes temporary stoppage of work leading to disputes. The following reasons were found for the temporary stoppages in this study. These causes are enlisted as per their frequency of occurrence.  Payment of running account bills not made on time  Non-availability of specialised equipment, material, or other resources  Sub-contractor abandoning the work without prior notice  Accidents at site Reason for the running payment being withheld is generally due to substandard work by the contractor. When a substandard work is observed, contractor is generally issued a formal notice to improve the quality of work failing which his work will be suspended till the contractor showed due diligence to improve upon the quality of work. As a consequence contractors payments too are withheld pending corrective action from the contractor. However, if the contractor is not served appropriate notice on time either in the certied copy of the running bill or through a separate letter, owner is not in a position to levy liquidated damages in spite of an express provision in the contract. The other reason for withholding payment is that the owner being of poor means for the time being and defaults in making payment. Contractor in this case becomes eligible for the claims of interest charges on the delayed payment. Responsibilities for the procurement of resources are well dened in the contract and delay due to non-availability of resources leading to temporary stoppage is attributable to the party responsible for such procurement. Similarly when sub-contractor abandons the work the default is attributable to the party appointing the sub-contractor. The accident may also prompt the temporary stoppage. Onus of temporary stoppage due to accidents will lie with the party as discussed in the preceding paragraph describing delay due to accidents. 5.3.6. Delay due to Rework Mostly rework is prompted by the bad workmanship or work not conforming to specications, while the other reasons for rework are identied as owners changed requirements or accidents at site. In case of bad workmanship it is generally assumed that the default totally lies with the contractor. Rework due to bad workmanship is attributable to the contractor provided it is brought to his notice (as nonserving of notice may let the contractor escape from his responsibility). On the other hand, the rework due to work not conforming to specications may result due to

improper communication or interpretation by contract administrators. In the methods specication of certain specialised jobs, the owner species a specic equipment to be used during execution. Not using the specied equipment is construed as non-adherence of stated specication and this invites notice of rework from the owners engineer. However, in case of unavailability of the equipment, contractor may inform the owner and get prior approval for using the alternative equipment and save his position. On the other hand if the equipment is to be provided by the owner and if delay occurs, notice from the contractor becomes a key issue in deciding the validity of the claims. Rework may also be ordered due to accidents at the site, in which case the compensation will be decide on the merit of the case as discussed above. Rework due to owners changed requirement is claimed as extra work by the contractor and entire domain of extra work is discussed in the subsequent paragraph. 5.3.7. Delay due to Extra work The nature of construction industry is such that full scope of work cannot be decided at the time of tendering and change orders are inevitable for successful completion of the project. Subsurface conditions and owners changing requirement are often unpredictable leading to extra work. Extra work is identied as a major source of disputes in case of residential building projects, particularly when users and the owner/engineers are two dierent entities. While the owner and his engineer are party to contracts and they are only authorised to communicate with the contractor, the prospective users sometimes directly give suggestions to the contractor that lead to disputes. To avoid the disputes related to extra work, experience plays a key role in forecasting the probable areas of extra work and incorporating the relevant clauses in conditions of contract. As this paper pertains to disputes related to delays, the domain of extra work covers only the eect of extra work on the delay. In case of the extra work, it should be expressly made clear by the contractor that he is not doing the work as a complimentary service, but expects the compensation for that before accepting the extra work. Although there is an express provision in the Indian Contract Act (Section 70 of the Act) that a person (the owner) enjoying benet of non-gratuitous act of the other person (the contractor) is bound to make compensation to the latter, yet the absence of notice from the contractor asking for proper rates before commencement of such extra work becomes a contentious issue. Case studies reveal that the notice should also have a clear indication of the implications of extra work on time of the project and subsequent impacts for the claim to be eective. Later in the paper where software development is discussed, the above domains are termed as sub domains (in stead of domains) to the main domain of Time delay and extension as in any project there are several other domains (clauses) like Final and binding power, Termination of

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

181

contract, Deviation and extra items, etc. and each of these domains will have its own sub-domains. As the scope of work in the paper is limited to the domain of Time delay and extension, the other domains or their sub domains are not discussed. 5.4. Software development It has been observed that the delay and extension related disputes arise due to varied interpretation of the contract, unclear domain of the clause and one sided contract conditions which are in favour of the owner. Based on the arbitration awards available, the primary guidelines are formulated to evaluate the applicability and acceptability of decisions under time delay and extension clause. A sample programming logic developed on the basis of case study for arriving at the decisions on claim domain for delay due to handing over site is shown in Fig. 2. As can be seen the gure is in a tree form where each node depicts a question based on situations leading to delay and links between the predecessor and the successor nodes depict the replies to the predecessor node that had enabled the user to move to the next successor node appropriately. The user goes on answering the questions in each node and depending on the answers by the user the suggested

output is displayed at the end as shown in Fig. 2. Even though Fig. 2 shows the decision tree for the claim domain, delay due to handing over site, the system developed by the authors also handles other claim domains discussed above. Since the rule-based systems are production systems, they incorporate a simple if . . .then. . . statements. It is however important to nalise the method in which the system uses the input to arrive at the decision. Further it is also important to obtain the input from the user without any complexity. For this, the system has been designed as user friendly as possible. The system has been developed using Visual Basic 6.0. It needs windows environment to function properly. The user is rst presented with the introductory form which requires the input regarding the general information of the project like name of the project, owner, contractor, total duration of the project, type of contract document, nature of contract, etc. as shown in Fig. 3. This information is generally useful in keeping the record of the analysed case. After completing the input, the user is asked to proceed further. In the next window, the user is presented with selection of the dispute clauses under which the case may lie (Fig. 4). The user can select more than one applicable clause. This will initialise those domains in the memory. At present only Time delay and extension has been made available. When the user pro-

Fig. 2. Logic development tree diagram for delay in handing over site.

182

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

Fig. 3. Input sheet for case details.

Fig. 4. Selection of dispute claims.

Fig. 5. Selection of time delay domain.

ceeds further, he is presented with sub domains in the Time delay and extension clause (Fig. 5). There are at present seven sub-domains in the area of Time delay and extension domain. In case of the analysis, all of these domains can be selected if disputes exist in all of these sub-domains in a case study. When the selection of the domains is done, the user proceeds to the next window. Whichever sub-domain has been selected in the previous window gets initialised and appears in the next window. Now the user is presented with a series of queries which ask about the facts related with that subdomain. Selection of answer to query will automatically lead to next appropriate query. A set of series of queries leading from one to the other is shown as an example in Figs. 69.

On answering these questions the hierarchy terminates into a decision for that sub-domain (Fig. 10). On clicking next, the second sub-domain is initialised. After analysing all the selected sub-domains, it shifts to the next domain selected in Fig. 4 (currently only one domain has been created). As discussed above due to limitation in the scope of the paper other domains are not activated although they are shown in Fig. 4. On analysing the whole case, a summary sheet containing the details of the project as well as all the decisions is displayed. The user interaction is very simple and it just needs a mouse click to function. Nevertheless, this system has been designed to serve as a tool for the professional in the eld of contract management and thus needs some prerequisite professional knowledge to answer the questions. The

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184

183

Fig. 6. Handing over of site query 01.

Fig. 10. Final decision.

system is a pioneering work for Indian conditions of contracts.

Fig. 7. Handing over of site query 02.

6. Conclusions The issues which prompted to develop the current system are mainly the gaps in contract documents leading to disputes. While a foolproof contract document might reduce the issues drastically, it is practically near to impossible to have such a foolproof contract. There are reasons for inconsistencies and discrepancies in large contracts which are beyond the control of the drafter of the contract. Hence better training in the area of contract management to the professionals can be said to be of a great help in better understanding of the contract. This may help proper drafting of contract with due care that would reduce the occurrence of disputes. However, the human attitude of the parties to get the maximum mileage from the gaps in the contract cannot be overlooked and in such situations the training to professionals may sometimes not prove to be very eective, rather become counterproductive by way of assertion of rights through disputes. When judgments are not given forthwith for the disputes and with time when further disputes are added on continuous basis over the existing, it becomes a challenge to the judiciary system. Incidentally, this is the scenario with the Indian system now. A knowledge based expert system was therefore considered as a handy tool for a judiciary and contract administrators to come to a conclusion faster and this being the motivation an attempt is made to develop the system. Even though the major issue in the domain of dispute resolution is deciding the value of the claim, the system discussed above currently identies the possible guilty party as the rst step towards broader objective. As the next step

Fig. 8. Handing over of site query 03.

Fig. 9. Handing over of site query 04

184

K.C. Iyer et al. / International Journal of Project Management 26 (2008) 174184 [15] McCarty LT. Intelligent legal information systems: problems and prospects. Rutegers Comput Technol Law J 1983;9(2):26594. [16] OCallaghan TA. A Hybrid Legal Expert System, B.Sc. subthesis, The Department of Computer Science, The Australian National University; 2003. [17] Popp WG, Schlink B. Judith, a computer program to advice lawyers in reasoning the case. Jurimetr J 1975;15(4):30314. Summer. [18] Popple J. A pragmatic legal expert system. Dartmouth Publishing Company; 1996. [19] Rissiland EL, Skalak DB. Combining case-based and rule-based reasoning: a heuristic approach. In: Proceedings of the eleventh international joint conference on articial intelligence (IJCAI-89); 1989. p. 52430. [20] Rubin RA. Fifty years of construction law. Journal of the Construction Division, ASCE 1975;101(4):70317. [21] Sutrisna M. Developing a knowledge based system for the valuations of variations on civil engineering works. Unpublished PhD thesis, Research Institute in Advanced Technologies, University of Wolverhampton, Wolverhampton; 2004. [22] Thomas HR, Smith GR, Wirsching SM. Understanding defective specications. J Construct Eng Manage (ASCE) 1995;121(1):5564. [23] Thomas HR, Smith GR, Cummings DJ. Have I reached substantial completion? J Construct Eng Manage (ASCE) 1995;121(1):1219. [24] Thomas HR, Smith GR, Cummings DJ. Enforcement of liquidated damages. J Construct Eng Manage (ASCE) 1995;121(4):45963. [25] Thomas HR, Smith GR, Mellott RE. Interpretation of construction contracts. J Construct Eng Manage (ASCE) 1994;120(2):32136. [26] Thomas HR, Smith GR, Ponderlick RM. Resolving disputes based on misrepresentations. J Construct Eng Manage (ASCE) 1992;118(3): 47287. [27] Thomas HR, Smith GR, Ponderlick RM. Resolving contract disputes based on diering site condition clause. J Construct Eng Manage (ASCE) 1992;118(4):76779. [28] Thomas HR, Smith GR, Wright DE. Legal aspects of oral change orders. J Construct Eng Manage (ASCE) 1991;117(1):14862. [29] Thomas HR, Smith GR, Wright DE. Resolving disputes over contract notice requirements. J Construct Eng Manage (ASCE) 1990;116(4):73855. [30] Thompson LJ, Portis CT. History of evasive contract phrases. J Construct Div (ASCE) 1978;104(4):52537. [31] Tyree AL, Greenleaf G, Mowbray A. Articial intelligence developments and applications. Elsevier Science; 1988. p. 23147 (Chapter 16). [32] Van Opdrop GJ, Walker RF, Schrickx J, Groendijk C, Van Den Berg PH. Networks at work: a connectionist approach to non deductive legal reasoning. In: Proceedings of the third international conference on articial intelligence and law (ICAIL-91); 1991. p. 27887. [33] Vossos G, Zeleznikow J, Dillon T, Vossos V. An example of integrating legal case based reasoning with object-oriented rulebased systems: IKEBALS II. In: Proceedings of the third international conference on articial intelligence and law (ICAIL-91); 1991. p. 3141. [34] http://www.sudhirlaw.com/Legal.html; February 2006.

hybrid expert system combining both rule-based and casebased is being developed. Here past settled cases are stored in a logical form in a data base and also appropriate rules are formulated that can help the user to identify the best matching cases for the problem case in hand to arrive at conclusion faster. Since the research is underway and yet to be validated details of its development is not given in the paper. References
[1] Allwood RJ. Techniques and Applications of Expert Systems in Construction industry. England: Ellis Hortwood Limited; 1989. [2] Aserkar A. Renement and validation of decision support system for resolution of disputes under the time delay and extension clause in indian construction contracts. An M.Tech. Thesis submitted at Indian Institute of Technology, Delhi, India; 2002. [3] Bajaj PK. Understanding Risk and Cost clause in construction contracts and development of decision support system for resolution of disputes. An M.Tech. Thesis submitted at Indian Institute of Technology, Delhi, India; 2001. [4] Bhatt V. Avoidance of delay in resolution of disputes in construction contracts. National Conference on Commercial Contracts and Construction Industry Arbitrations, March 34, Organised by The Indian Council of Arbitration, New Delhi, India; 2001. p. 347. [5] Branting LK. Representing and reusing explanations of legal precedents. In: Proceedings of the Second International Conference on Articial Intelligence and Law (ICAIL-89); 1989. p. 10310. [6] Cheung SO, Thomas Ng S, Sin Wing-Sang. A fuzzy sets model for construction dispute evaluation. Construct Innovat 2001;1:11727. [7] Iyer KC. Identication and evaluation of dispute-prone clauses in indian construction contracts. A Doctoral Thesis submitted at Indian Institute of Technology Madras, Chennai, India; 1996. [8] Iyer KC, Banerjee K. Development of decision support system for resolution of contract disputes a systemic approach. In: Portland international conference on management of engineering and technology (PICMET 2001); 2001. [9] Iyer KC, Kalidindi NS. Final and binding power clauses in indian construction contracts. Int J Project Manage (UK) 2002;20:1322. [10] Kraiem ZM, Diekmann JE. Concurrent delays in construction projects. J Construct Eng Manage (ASCE) 1987;113(4):591602. [11] Kraiem ZM, Dagli Dhaval P, Diekmann JE. DISCON: an expert system for the analysis of diering site conditions claims. Knowledge Based Syst 1989;2(3):15864. [12] Joshi GA. Rule based expert system for contractual disputes pertaining to delays. An M.Tech. Thesis submitted at Indian Institute of Technology, Delhi, India; 2005. [13] Krishnamoorthy CS, Rajeev S. Computer aided design software & analytical tools. New Delhi, India: Narosa Publishing House; 1993. [14] Mohan S. Expert systems applications in construction management and engineering. J Construct Eng Manag (ASCE) 1990;116(1):8799.