Approximating Damages: The Measured Mile Analysis

Approximating Damages: The Measured Mile Analysis

If a contractor encounters a suspension of work or owner-caused delays, it may incur damages due to labor inefficiency or loss of productivity. These damages are caused by a disruption in the learning curve that prevents a crew or spread of crews from reaching maximum efficiency on a project. In presenting a loss of productivity claim to an owner, it is best to use actual costs if at all possible, but if the contractor is unable to use actual costs to quantify its damages, it has the option of using other methods of approximating its damages on a project. This month's article will discuss one of those methods -- the measured mile analysis.

A contractor seeking an equitable adjustment to the contract price has the burden of proving causation. In other words, the contractor must show the connection between the additional costs incurred and the claim causing event(s) which the contractor believes entitles the contractor to recover additional money. Assuming that the contractor is able to prove causation, it must then show "the amount of increased costs incurred with reasonable certainty." See R.W. Contracting Inc., ASBCA No. 24,627 (1984). The increased costs do not need to be identified with exactitude; rather, "there must be sufficient evidence to make a fair and reasonable approximation." Project documentation such as daily reports, actual cost records and pay applications must be available to independently verify a contractor's damages calculations.

One method of calculating the loss of productivity is the measured mile approach. The measured mile analysis may only be used if it is impossible to determine the actual costs of impacted work. For example, if the claimant has records that identify the claimant's actual costs for the impacted work, then the measured mile approach would not be appropriate. The measured mile analysis compares the cost of the portion of work that was impacted or disturbed by the claim causing events for which the contractor is not responsible, with the cost of an unimpacted portion of the same work to determine the difference in productivity costs between the two portions. Clark Concrete Contractors, Inc. v. General Services Administration, GSBCA No. 14,340 (1999); Lamb, EBCA No. C-9304172. The two portions of work being compared must be identical or substantially similar, and the contractor must take into account other factors that may have impacted the contractor's productivity in both sets of work being compared.

The percentage difference between the impacted and unimpacted portions represents a rough estimate of the loss in productivity or efficiency due to the claim causing event. Productivity can be measured in rate per hour, per day, or per week. The difference in productivity between the two compared portions is multiplied by the quantities actually installed to arrive