Depicting Construction Claim Entitlement with Cause-Effect Matrixes

Cause-and-effect relationships that link claim entitlements to resulting damages are most often found in a project’s contemporaneous documentation, i.e., updates to project plans and schedules, periodic reports, correspondence, change orders, requests for information, meeting minutes, emails, superintendents’ logs, etc.

A claimant must demonstrate the nature of its loss and the connection between the loss and the other party’s actions and/or inactions. The success of the party defending against a delay and disruption claim often depends on its ability to obtain and review the same documentation and set forth alternative or concurrent causes of delay and disruption.

To demonstrate cause-and-effect links between claim entitlements and damages, Long International develops cause-effect matrixes. A simple example of such a relationship is provided below:

Cause: A contractor produced defective design specifications.
Effect: The hydrostatic load tests performed in the field failed. The project will be delayed.

Figure 1 below shows this scenario graphically.

Figure 1: Sample Cause-Effect Matrix

As causes and effects become increasingly complex, with primary and secondary causes and intermediate effects, cause-effect matrixes become more complex, as Figure 2 illustrates.

Figure 2: Sample Cause-Effect Matrix

Ultimately, a cause-effect matrix for a contractor’s delay and disruption claim can become very complex, depicting links from primary causes, through intermediate effects, to the amount of damages allocated to each party. See Figure 3 below.

Figure 3: Typical Cause-Effect Matrix for a Delay/Disruption Construction Claim

This matrix tells a detailed story. Because of design changes, a contractor requested scope changes. The owner was late in responding to many change order requests, which resulted in delay and disruption. The owner did not approve the proper time extensions, so the contractor accelerated its work, which caused trade stacking and congestion. This led to direct man-hour growth and increased direct labor costs, a portion of which the contractor claimed against the owner. Each cause has a story that ultimately leads to increased costs.

Depicting these relationships graphically, in addition to presenting a narrative that includes relevant excerpts from contemporaneous documents, can help contractors, owners, attorneys, arbitration panels, and courts to better understand project impacts.

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