Contract execution was suspended for 40 days. The contractor is claiming standing time for all labour that stayed on site, all equipment (concrete mixers, welders, compactors, excavators, trucks etc) at full hire rates. Do you have any guidance on how to assess this claim - is full hire rate payable or only a fraction? Would i be fair to disallow full time costs (labour & equipment) standing time on the basis that the contractor should have demobilised and remobilised when suspension was lifted - under duty to mitigate?
This is an often asked but very difficult question to answer, it is also quite driven by the facts on an almost day by day basis. If, for example, 40 days before the start date the delay was communicated, I would not expect the contractor to incur any cost as it should be able to adjust and redeploy its workforce and plant etc. If it was on the start day and no period of delay was identified but the contractor is being held to a completion date (subject to EOT) with LDs then I would expect it to keep everyone on site and ready to go pending instructions. In reality, it is almost always somewhere in between with some information being given a little before the start date and then a little more information through the period of delay. Generally I think, as long as it is reasonable to retain the full site presence (ir the contractor was not told something specific that allowed an alternative plan to be implemented) then there is really not a lot of mitigation that can be done.
One caveat to the above. You say the contract execution date was delayed. That date is, generally, of little significance. What you really need to look at it the commencement date as that is the point at which the contractor should be mobilised.