Decision Support System for Commencement Delay Claims

Abstract

Delay claims are common in construction projects. Commencement delay claims are different, as the owner is responsible for the delay. This paper presents a methodology to solve the conflict of a commencement delay event in an efficient way through a case study. This paper addresses a successful commencement delay claim that a contractor solved without going through litigation. The owner refused a commencement delay claim of $2 million. There were three alternatives for the contractor: to continue the project without any claims, to go through litigation, or to settle with the owner. The contractor used a decision tree technique to minimize the cost associated with the commencement delay event. The contractor calculated the cost of different alternatives and predicted the probability of each solution. Based on the cost of each solution, the contractor selected going for a settlement with the owner for advanced payments. The present value of the settlement was $1.5 million.