WWW.ACPA.ORG 25 Winter // 2022–23 Thomas Olson is the founding partner of Olson Construction Law. Tom’s commitment is to provide guidance on how to resolve issues on the jobsite, not in the courtroom. Tom has worked on highway heavy projects throughout much of the United States for more than thirty years. A prolific speaker and writer as well as attorney, his expertise is in concrete and asphalt paving, utility, earthwork and bridge construction, schedule analysis, material testing, and the technical and legal obligations of both engineers and contractors. ABOUT THE AUTHOR VI. How to Calculate the Amount of Compensation Due. When a contractor has a right to compensation for utility-related problems, it is important to understand how to calculate the amount of compensation due: • When a contractor is unable to work (i.e. delay), many contracts provide for payment of idle resources. This is one of the most often overlooked yet significant extra costs. Generally speaking, idle iron is compensated at the rate of half the operated rate. • When a contractor can work but at reduced production rates (i.e. disruption), if possible, the contractor should calculate this by comparing the reduced production rate in the area of utility disruption with the actual production in the area where there is no disruption. This approach is the best one for two reasons. First, this will likely result in a greater amount of lost production (and hence more compensation) than if the contractor compares the lost production with the production as-bid. Secondly, this approach (referred to as the “Measured Mile”) is more accepted throughout the country because it is based on a comparison of production actually achieved versus the theoretical production of what a contractor hopes to achieve. • A contractor may also be entitled to payment of extended field overhead (i.e. General Conditions) as well as unabsorbed home office overhead. • NOTE: In some contracts, such as those with the DOT, the right to compensation is buried in the section entitled “SUSPENSION OF WORK.” So, although a utility delay or disruption is typically not accompanied by the engineer formally suspending the project work, this referenced contract clause still should apply because it typically provides that a contractor is entitled to compensation for suspension “or a delay of an unusual or anticipated type.” VII. Conclusion Unmarked, mismarked, and late utility relocation is one of the biggest causes of delay, extra costs, and safety problems throughout the country. And, notwithstanding what many contractors as well as owners believe, there are both effective means to minimize the causes of the problems as well as to be paid when these causes occur. The key is contractors educating themselves as well as project owners and engineers. References 1. See U.S. Department of Transportation, Federal Highway Administration Office of Infrastructure, “National Utility Review: Utility Coordination Process” Final Report FHWA0HIF-18-039 (October 2018) (“FHWA Report”) at 6. 2. Id. at 28, citing Sterling, R.L., et al, SHRP2 Report S2-R01-RW, “Encouraging Innovation in Locating and Characterizing Underground Utilities,” Transportation Research Board (2009) at 52. 3. See Allied Manatts Group, LLC. and Delong Construction, Inc. v. Qwest dba CenturyLink QC, Case No. 3:18-cv-00020 JAJ (Fed. So. Dist. Ct. Iowa 2019). 4. My position, as a matter of law, is that owners are required to conduct such a subgrade investigation projects (as well as actually schedule any required utility relocation) on federally-assisted projects. For a fuller discussion of why this is a requirement, see Thomas R. Olson, Olson Construction Law, “Inaccurate Utility Information: How to Protect Against the Largest Problem on Highway Construction Projects with Subgrade Utility Engineering (SUE),” (NASTT No-Dig Show, April 10-14, 2022).
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