Aspects of Delay. Delay claims. Mechanism for delay

1. Introduction

This paper discusses the importance of and role of:

the preparation of the programs that will become the Contract programs both in relation to Contract provisions and the administration of the Contract ;
the management of time to ensure as far as is possible Contract success;
concepts of float and contingency;
target and gross programs;
some of the more common Contract requirements in respect of delay;
mechanisms for delay analysis; and
cost of delay.

In my experience no rules or guidelines that enable facts to be inserted into a “claim delay formula” and an unchallengeable answer is spat out. This is because there is no formula that can deal with all of the concepts simply because of the unknown nature of complex building and construction projects as the design and/or construction develops through to commissioning and final completion of defects.

2. THE CONTRACT PROGRAM

2.1. What do the Contracts Say?

The majority of engineering and building Contracts require that a Contractor submit a program of his or her design and/or construction works. These contracts and their accompanying special conditions require varying degrees of sophistication in the preparation of the programme. While a Contractor may be required to submit these programs, the status of them in terms of being a contract document varies.

The Australian Standard General Conditions of Contract AS4000-1997 notes at Clause 32 in relation to programming as follows:

“The Contractor shall give the Superintendent reasonable advanced notice of when the Contractor needs information materials, documents or instructions from the Superintendent or the Principal.

The Principal or the Superintendent shall not be obliged to give any information material, documents or instructions earlier than the Principal or the Superintendent as the case may be should reasonably have anticipated at the date of acceptance of tender.

The Superintendent may direct in what order and at what time the various stages or portions of WUC shall be carried out. If the Contractor can reasonably comply with the direction, the Contractor shall do so. If the Contractor cannot reasonably comply, the Contractor shall give the Superintendent written notice of the reasons.

A construction program is a written statement showing the dates by which, or the time within which, the various stages or portions of WUC are to be carried out or completed. It shall be deemed a Contract document.

The Superintendent may direct the Contractor to give the Superintendent a construction program within the time and in the form directed.

The Contractor shall not, without reasonable cause, depart from a construction program. If compliance with any such directions under this clause, except those pursuant to the Contractor’s default, causes the Contractor to incur more or less cost than otherwise would have been incurred, had the Contractor not been given the direction, the difference shall be assessed by the Superintendent and added to or deducted from the Contract Sum.”

The Property Council of Australia PC 1 dated 1998 General Conditions of Contract deals with programming at Clause 10.2 of that Contract where it notes as follows:

“The Contractor must:

(a) within 14 days of the Award Date prepare a program of the Contractor’s Activities which must contain the details required by the Contract or which the Contract Administrator otherwise reasonably directs;

(b) update the program periodically at least at intervals of no less than that specified in the Contract Particulars to take account of:

(i) changes to the program; or

(ii) delays which may have occurred, including any for which the Contractor is granted an extension of time under Clause 10.8; and

This form of Contract goes on further to note at Clause 10.3 that:

“Any review of, comments upon or approval of, or any failure to review or comment upon, a program by the Contract Administrator will not:

(a) relieve the Contractor from or alter its liabilities or obligations under the Contract, especially (without limitation) the obligation to achieve completion by each Date for Completion;

(b) evidence or constitute the granting of an extension of time or an instruction by the Contract Administrator to accelerate, disrupt, prolong or vary any, or all, of the Contractor’s Activities; or

Finally, the Australian Building Industry Contract ABIC NW-1 2001 Major Works Contract where it notes at Clause G5:

“G5.1 The Contractor must give the Architect a program within 10 working days after being given possession of the site. The program must include each of the following:

Dates of commencement and completion of the major stages and any separable parts of the works;
§The Date for Practical Completion;
The Start and Completion Dates of all trades;
A critical path.

G5.2 The program is not part of this Contract.”

and further at Clause G6:

“G6.1 The Contractor must give the Architect an updated program when the Date for Practical Completion has been adjusted by 5 working days or more or such period as agreed. The updated program must indicate how the previous program has been affected by any adjustments of time.”

and at Clause G7:

“G7.1 At the Owner’s request, the Architect must instruct the Contractor in writing to amend the program. When the Contractor receives the instruction, it must amend the program and comply with the new program unless it promptly gives the Architect written notice that it cannot reasonably comply with the notice.

G7.2 An instruction issued under this Clause is to be treated as an urgent instruction.”

And finally, G8:

“G8.1 The Contractor is entitled to make a claim to adjust the Contract in relation to any loss, expense or damage that results in an instruction from the Architect to amend the program, except where the instruction results from the failure by the Contractor to diligently progress the works so as to be able to achieve Practical Completion by the Date for Practical Completion as adjusted, or any other act or omission by the Contractor.

G8.2 Where the works are to be completed as separable parts this clause applies to each separable part.

G8.3 The requirements for making a claim to adjust the Contract and the procedures to be followed are stated in Section H ….”

8 As can be seen from the above programming clauses, these three Contracts represent a range of approaches to programs and how they sit within the framework of the Contract. At one end of the continuum we have the PC1 Contract specifying when the program will be submitted, specifying when it will be updated and what it will take account of when updating and that it will be subject to approval by the Contract Administrator. This contract also sets out that the Contractor is not relieved of any of his obligations should the Contract Administrator fail to review or comment upon a program submitted by the Contractor.

Under the PC1 Contract there is no express entitlement to costs in relation to a change or deviation from that program, and it is not identified as a document forming part of the contract.

In relation to the Australian Standard a significant difference appears in that this program is now expressly deemed to be a Contract document and would, one assumes, attract all of the rights and obligations that a Contract document carries with it both in relation to the Owner and the Contractor. It also raises issues of a Contractor not following a program being in breach of the Contract and/or an Owner not complying with the program equally being in breach.

As I will discuss later, a contractor who plans to finish before the Date for Practical Completion in this form of contract will be able to claim costs and time if that early completion date is delayed by the Owner.

The Australian Standard gives an express entitlement to additional costs if they arise from directions of the Superintendent in relation to the Contract program.

Finally, we see in the case of the ABIC Contract that while it is expressed to be not part of the Contract it does, however, give rise to an entitlement to the Contractor to make a claim to adjust the Contract in relation to loss or expense that arises from instruction to the Architect to amend the program.

So we there have three different Contracts dealing with the Contract program in three quite different ways although each requiring that a Contractor does submit a program of his or her works.

The other consideration in relation to the preparation of the Contract program is what is its role in the design and/or construction process likely to be? As can be seen from the clauses set out above, they do not point in express terms to what they will be used for although each requires that the Contractor update them either at specified intervals or as directed.

In order to find out what the program might be used for we need to look at other parts of the Contract, the most obvious one being claims for extensions of time in events where the Contractor is delayed.

2.2. How is the Program to be used?

The Australian Standard at Clause 34.3 notes as follows:

“The Contractor shall be entitled to such extension of time for carrying out WUC (including reaching Practical Completion) as the Superintendent assesses (EOT) if:

(a) the Contractor is or will be delayed in reaching Practical Completion by a qualifying cause of delay; and

(b) the Contractor gives the Superintendent, within 28 days of when the Contractor should reasonably have become aware of that causation occurring a written claim for an EOT evidencing the facts of causation and of the delay to WUC (including extent).”

At Clause 34.4, the Australian Standard notes with respect to assessment that:

“When both non-qualifying and qualifying causes of delay overlap, the Superintendent shall apportion the resulting delay to WUC according to the respective causes’ contribution.

In assessing each EOT the Superintendent shall disregard questions of whether:

a) WUC can nevertheless reach practical completion without an EOT; or

b) the Contractor can accelerate,

but shall have regard to what prevention and mitigation of the delay has not been effected by the Contractor.”

There is no express referencing of the construction program to the calculation of a delay; however, there is a requirement to evidence the facts of causation and of the delay including the extent of the delay. I also note that given the provisions of Clause 34.4 there would appear to be a requirement in the establishing of a claim that overlapping of delays is addressed. I suspect that this provision was included to deal with what we now know as “concurrency”. I will discuss that issue later. Suffice to say that the real issue is causation and the timing of that.

In the case of the PC1 Contract there are a number of steps that the Contractor is required to satisfy to be granted an extension of time. Clause 10.5 sets out:

“If the Contractor is, or is likely to be delayed:

(a) prior to the Date for Completion of the works or a stage, by an act of prevention or a cause described in the Contract Particulars in a manner which will prevent it from achieving completion of the works or the stage by the relevant Date for Completion; or

(b) after the Date for Completion of the works or a stage, by an act of prevention in a manner which will delay it in achieving completion of the works or the stage, the Contractor may claim an extension of time.”

From this clause it can be seen that the Contractor would have to be able to demonstrate to the Contract Administrator that he has been or is likely to be delayed in achieving completion of the works by the Date for Completion.

PC1 further notes at Clause 10.6 that the Contractor would be required to give detailed particulars of the delay and the occurrence causing the delay and state the number of days extension of time claimed together with the basis of calculating that period. Again, no specific reference to the program but there has to be a way in which the Contractor can demonstrate the delay and the basis of calculating.

Finally, at Clause 10.7 of PC1 there are certain conditions precedent needed to be satisfied to entitle the Contractor to an extension of time, one being that they actually have been or likely to be delayed such that they will be prevented from achieving completion of the works by the relevant Date for Completion unless that date is extended.

Again, requirements to demonstrate a delay but no clear reference to relate that to a program of the works.

However, Clause 10.9 deals with reductions in extensions of time as follows:

“The Contract Administrator will reduce any extension to the relevant Date for Completion it would otherwise have notified to the Owner and the Contractor under clause 10.8 to the extent that the Contractor:

a) contributed to the delay; or

b) failed to take all steps necessary both to preclude the cause of the delay and to avoid or minimise the consequences of the delay.”

Two issues arise out of this requirement, the first to satisfy the Contract Administrator that he or she has not contributed to the delay, the second to demonstrate that they took steps to preclude the delay and minimise the consequences. Both of these requirements can be satisfied by the appropriate use of the (regularly) updated contract programme.

The ABIC Contract deals with adjustment of time at Section L, however, as we noted above this form of Contract expressly states that the program is not part of the Contract and hence we would not expect to see it referenced in any assessment of adjustment of time.

Section L refers to Section H in relation to the requirements for making a claim and at Section H it sets out the details required for a claim as follows:

“H2.1 A claim to adjust the Contract must contain the following details:

§ Identification of the Architect’s instruction that caused the claim, or where no instruction has been issued, details of the event and the basis for the claim;
§ A breakdown on a trade by trade basis of any extra costs including the cost of Preliminaries and of a reasonable allowance for Contractor’s overheads and profit not greater than the rate shown in Item 13 of Schedule 1. If no rate is shown then the rate is 10%;
§ Reference to the rates and unit prices in the Bills of Quantity if applicable;
§ References to Schedule of Rates if applicable;
§ Any documentation required to be provided under any relevant legislation;
§ Any required adjustment to the Date for Practical Completion; and
Where applicable any adjustment of time costs associated with the claims.”

As can be seen this does not assist us greatly in deciding what document is appropriate to use when making a claim for delay.

I would also note that Clause L of the ABIC Contract includes at L4.2 the following:

“A critical Construction Activity is an activity in the construction of the works that if delayed will have a direct effect on subsequent activities such that the Contractor’s ability to achieve Practical Completion at the Date for Practical Completion will be affected.”

This is the only reference in any of the three Contracts that I have examined here to a critical activity which, as we all would be aware, conjures up images of critical path programs notwithstanding in this form of Contract that the program does not form part of the Contract.

The conclusions that can be drawn from the above would appear to be that there is a requirement to identify to the Superintendent, or the Architect, or the Contract Administrator that there has been a delay and in calculating that delay period details of how that is arrived at. While, as I will discuss further, the Contract program is not an exact document and on one view is ever only at a point in time a Contractor’s intention as to how he will reach completion of the works, (or in the eyes of some cynical Owners his “hope” as to how he might reach completion), it is none the less the primary document for assessing what the likely effect of a delaying event will be on reaching completion of the works or the date for completion of the works.

What then does this mean in relation to the preparation of programs that while not specifically sanctioned or endorsed by Contracts as the mechanism by which time will be assessed in practical terms fulfil that function albeit amongst the more important function of contractors controlling their resources and subcontractors.

2.3. Float

When we start to discuss the preparation of programs it obviously raises two quite different views as between the Owner and the Contractor as to how those programs might be interpreted and how issues of float and contingency in particular are dealt with.

If I can go to some basics of programs which for those in the room who deal with these every day I apologise, however, I think it is necessary to consider how they are built up and what they show.

A program, in simple terms, is a series of work activities of certain durations with have a logical relationship to each other. When all of those activities are joined together to form a network there will be a series of those interconnecting activities which, based on the durations that the Contractor has decided on, will represent the longest path to completion. This is what we term the critical path of the project.

There may be by design, or by simple honest relationships, a number of paths through the job that are so close to being the same as the longest path in overall duration that they can be termed as being co-critical or near critical to completion of the works. The relevance of these paths is such that a small delay to an activity on one of those near critical paths may well have the effect of changing the critical path to completion. This can happen many times during a project.

What can be seen from the above is that there are two crucial variables that go into the production of a Contract program, they being that the duration that the Contractor estimates to undertake the work activity and the manner in which the Contractor either elects to or the design dictates that the works will be constructed giving the logic, sequence and dependencies. Change either of those variables and you may change the completion of the works. This debate fairly raises the issue of float and contingency and how contracts may deal with those two issues.

Float or, more correctly, total float which is the important issue in relation to critical path to completion is the amount of time by which an activity can be delayed before it delays completion. Consequently, and obviously, activities that form the critical path of the project have no float and therefore a delay to any of those activities will delay completion. However, the near critical paths have activities which by their durations and their relationships to other activities can be delayed before they would delay completion.

The contractor will argue that that float belongs to him and that if an Owner caused delay should use up some of that total float then why should he not be compensated by way of an extension of time. However, while that might be an arguable moral stand to take it does not necessarily reflect what the contracts say.

In the case of the PC1 Contract which requires that a delay has to delay the contractor achieving completion by the Date for Completion then an Owner caused delay can take up or use total float and until that total float is expended. As a consequence until the total float is consumed the Contractor would have difficulty demonstrating that the delay had delayed him or her from achieving completion by the Date for Completion, and accordingly would not be entitled to an extension of time.

This in my view does not address the situation where a contractor finds himself or herself delayed by a non-compensable delay some time after an Owner’s delay has consumed the total float on the same activity. As there is no float now available to the contractor to absorb the non-compensable delay then absent other considerations the works would be delayed. The Contractor under a traditional engineering or building Contract in that situation would face the imposition of liquidated damages which but for the Owner’s previous delay he or she may not have had to have faced. This raises complex legal questions of causation which is not for me to go into in this discussion paper except to raise the issue as one that at some time will occupy our minds in a dispute process. As will be seen by my later comments in relation to possible analysis of the effect of delays the argument may be available to the contractor to claim that the causal connection to the non-compensable delay in fact starts with the Owner’s delay and not his or her own.

Unfortunately, these provisions in contracts which enable compensable delays to consume float where it exists encourage contractors to produce programs where there is in essence no total float and everything is critical or near critical.

In respect of the Australian Standard conditions they are considerably more generous to a contractor. In this form of contract the contractor only has to demonstrate that he or she will be delayed in reaching Practical Completion. Practical Completion is a physical state defined in other parts of the contract and not a date. Therefore so long as the contractor can demonstrate that he or she will be delayed in reaching that physical state then they would be entitled to an extension of time. As noted above this provision would appear to preserve “early completion float”, and while the delay must affect the critical path to Practical Completion (the state of), the delay need not necessarily be a delay that affects the critical path to the Date for Completion. However, a compensable or Owner delay would need to consume any float on the path to Practical Completion before it would delay Practical Completion.

There are obviously common law provisions that would impact on the rights of the parties under this form of contract due to the programme status being a contract document.

The ABIC contract leaves us somewhere in the middle. It makes the effort to define a “critical construction activity” as one that if delayed would delay achieving completion by the Date for Completion, and in this regard has similarities with PC1, however does not tie the extension of time provisions to this definition of a critical construction activity.

One can only assume that if you were representing an Owner using the ABIC form of contract that you would argue that the requirement of H2.1 dot point 6 that:

“A claim to adjust the Contract must contain … details (of) any required adjustment to the Date for Practical Completion”

requires the contractor provide details that demonstrate that a critical construction activity had been delayed.

2.4. Contingency

A separate issue but one that is often confused with float and talked of as if it is float is that of contingency.

As I noted previously, one of the elements that goes to make up the construction program is the duration of an activity. This is an estimate of the time it takes, based on certain crew sizes, productivity and a known scope of work, to undertake that particular activity. Obviously the productivity of the labour that is chosen will affect the duration, and a prudent Contractor may well say that I can and will build in some extra time or “contingency” in relation to particular activities or all of his or her activities on the basis that he or she might not achieve the productivity that was planned.

Additional time included as a contingency would not be apparent within the program unless a reviewer of that program wanted to undertake the estimate themselves and then question the contractor. However, I think as is reasonably obviously this is an area where the contractor makes his own assessment of the risks involved in construction both in terms of the design, labour conditions, access etc. The other method by which contingency is included in construction programs is by the inclusion of an activity following the last construction activity but before the Date for Completion said to be the Contractor’s contingency. The activity so identified, if properly utilised, would reduce as Contractor caused delays are experienced during the job and if it had been a good estimate at the start of the job there would, in theory, be none left by the end of the construction.

The alternative view with early completion is that the contractor simply plans to complete early and therefore save some of his or her time dependent costs and increase tendered margins.

2.5. Target and Gross Programs

Having prepared a program of the works which shows completion by the Date for Practical Completion the Contractor has arguably satisfied his contractual requirement as between him and the Owner. This could be considered to be the gross program as it includes all allowances that the contractor thinks are necessary for him or her to complete by the date for completion.

However, the Contractor then has to deal with its subcontractors and in general terms they will generally set the subcontractors a target program which has overall durations that are less than the gross program that has been given to the Owner.

When both target and gross programs exist there is a potential issue not dissimilar to that of contingency.

If an Owner is aware of or becomes in possession of those target programmes, possibly as part of a dispute process, is he able to argue that given the shorter durations included in the Target program the contractor is not being delayed until the longer durations included in the Gross programme are exceeded.

The question arises then as to what program should be used for the evaluation of delays when and if, they occur and can an Owner take advantage of the difference to absorb compensable delays.

2.6. Contract Administration

We have now reached the stage where the Contractor has prepared his program keeping in mind issues of float, contingency and target versus gross, submitted it to the Owner or the Owner’s Representative and has it accepted as the Contractor’s planned sequence and timing for designing and/or constructing the works.

In this regard I would caution against the Owner’s Representative who seeks to disallow or not approve a Contractor’s program on the basis that the sequence in relationships that the Contractor has suggested is not the way the Owner’s Representative may have planned to do the work. It would seem to me that the Owner’s Representative is only entitled to object to Contractor’s programs where they impose requirements on the Owner or his representative that have either never been advised of prior to the preparation of the program or, alternatively, impose deadlines that are impractical to achieve. This, in my view, is the important review to be undertaken by the Owner’s Representative so that at least at the commencement of the project the parties are comfortable with the time allocated for them to fulfil their obligations to each other.

For the program to continue to be a tool by which the Contractor can claim and the Owner can assess the effect of delaying events and therefore grant or deny extensions of time in a reasonable and informed manner, it is essential that the program be regularly statused and updated as to reflect at any point in time the manner and times by which the Contractor is going to achieve either the original completion date or the adjusted completion dates. This statusing of the works and production of a new replacement program is essential in my view to both Contractors and Owners being able to estimate the effect of a delaying event with some degree of confidence.

The other benefit of regular statusing of the works and production of rescheduled programs is that it satisfies requirements of Contracts that oblige the Contractor to identify all delays. That is because the status considers the progress of each activity in the program it will take into account Contractor delays in particular and Owner delays if they are included. This status may reveal that the Date for Completion has moved and it may also indicate that the critical path through the balance of the Works has changed due to delays to activities.

It is this regular statusing that in my view is critical to not only the management of time in respect of the Contract works and the completion of them in a timely fashion, but also enables the effect of delaying events to be estimated. This is important given provisions in Contracts which require the Contractor to either have been delayed or be likely to be delayed in achieving completion.

Having statused the works two options exist in relation to the works to complete. They are to retain the logic that was planned prior to or at the time of the status, or alternatively change that logic from the time of the status to the completion of the Works.

The choice as to whether to change the logic of the remaining works at any point in time will usually be governed by whether there has been a delay such as to delay completion of the Works combined with a secondary test as to who has caused that delay.

By this I mean that if a status shows that the Works are going to complete after the contractual Date for Completion and it is apparent to the Contractor that it is delays of his own making or delays that more correctly put are ‘non compensable’, then under most of the Standard Forms it would be incumbent upon him to reschedule the works to show completion by the then current Date for Completion. Accordingly, you would expect to see some reworking of the logic in the program either by the relationships between activities or the durations of activities such that that Date for Completion can be achieved.

If, however, the status reveals that a compensable delay or possible delay is in fact what is causing completion to be delayed past the Date for Completion then this may constitute grounds for an extension of time and the Contractor would absent specific provisions to the contrary not be required to reprogram to overcome that delay but rather would be entitled to progress the Works as planned with an appropriate extension of time.

This of course does not address issues of directions to accelerate which may be given.

3. DELAY ANALYSIS

On the basis that the obligation lies with the Contractor to prove either to the Superintendent or Contract Administrator, or some other third party, the cause, effect and extent of a delay, what are the options available to the Contractor to do so.

As with any prosecution of a claim the most critical issue is the availability and completeness of the contemporaneous records necessary to establish the Contractor’s entitlements. In the case of a delay analysis that will primarily be both the program at the time of the delay and the ‘as constructed’ or ‘as built’ records of the progress of the Works.

The ideal situation is where the Contractor has regularly updated programs, statusing them and adjusting them for delays as they occur.

If these documents are not available then the production of an ‘as built’ program assists in statusing the Works after the fact based on programs that may have been available at the time of the delay.

In the situation where there have been little or no programs of any quality produced during a project then it may be that the ‘as built’ program is all that the Contractor and/or the third party have available to them to try and find out the effect of a claimed event.

While various learned texts describe a number of what are termed critical path methods of delay analysis, in my view the most appropriate method and the one that will give the best estimate of the effect or likely effect of a delay event on completion is one that includes the following steps:

a) The program that is in use at the time of or as close as possible to the time of the delay is selected;

b) The logic of that program is reviewed and adjusted where appropriate and where it does not compromise the later analysis;

c) The program is statused if not statused already for the state of the work at the time of the delay;

d) From the above statusing the logic to completion as planned at the time of that status is retained and therefore the critical path to completion is able to be established from the statusing. It is noted that the statusing has the effect of taking into account the Contractor’s own delay.

e) The delay event that is being considered is then introduced into the program so that it can be estimated as to whether the delay would be likely to delay completion. In this regard and depending on the Contract governing the works, the delay may or may not expend float before delaying completion.

If there are further delay events to be considered then they are sequentially considered using the above steps. This sequential consideration of the delaying events also deals with the issue of concurrency.

3.1. Prospective or Retrospective Analysis

In undertaking an analysis of the effect of a delaying event should this be undertaken by the person evaluating the event at the time of the delaying event and look ahead based on how the Contractor was planning to complete the Works (a prospective analysis), or should the person evaluating the event put him or herself after the delaying event and look back in time and decide whether the Contractor was in fact delayed by that event (a retrospective analysis).

To complicate the issue there are in my experience two possible alternatives with a prospective analysis they being an analysis where the person evaluating the claim does so at the time looking forward with the facts as they were known at that time of the delaying event or with the facts as they were known later. Depending on the delay event and what was known or not known at the time the result of the analysis can be quite different.

In my view the Standard Form Contracts commonly used in Australia contemplate a prospective analysis in that they talk of a Contractor either being delayed or likely to be delayed. This theory is also strengthened by a consideration of as built ‘critical path’ type analyses which in looking backwards can quite simply miss the true effect of a delay event.

A further consideration in relation to a prospective analysis of a compensable delay is where the person analysing the event does so by reprogramming the remaining works to complete in such a way that the delay does not delay completion. Is this appropriate and does this fall into the realms of mitigation or is a contractor in the case of a compensable delay entitled to finish in the manner and with the resources that he planned? What would also be the situation if at a later time having reprogrammed the works and possibly removed float and/or contingency the contractor is delayed by a non-compensable delay?

A final issue to consider in relation to the prospective of analysis is that of compensable and non-compensable delays occurring early in a project where a Contractor has the ability to (and in fact does) accelerate its program of works having been delayed initially. This prospect considers that a Contractor has the ability to overcome its own delays; however, a Principal may never overcome its delay.

By way of example, consider a high rise building with 8 levels of underground car park requiring extensive excavation and 38 levels of office accommodation above ground. The Contract includes an integrated fit-out component whereby the building Contractor will be putting in certain parts of the fit-out to the Owner’s design to be provided during the project.

The Contractor is delayed in the excavation of and the construction of the 8 levels of car park below ground. The Owner misses the date by which design information has to be available in respect of their fit-out so it can be incorporated into the design and construction of the base building works. The provision of the information from the Owner is shown on programs to be on the critical path.

At the time of the delay event a status of the program reveals that the Contractor is behind time and that the Owner’s delay does not delay completion or is not likely to delay completion and therefore the Contractor is not granted an extension of time. At the time of the delay the Contractor has implemented acceleration which has the effect of reducing the cycle time on the above ground floors and he recovers the time that he was behind by the time he reaches Level 10. The Owner’s delay is now a true delaying event.

What is the appropriate method and time of analysis and what is the appropriate timing of the cause and of the effect?

3.2. Concurrency

Concurrency of delays or causes of delay or delaying events as it is variously referred to is a concept that in my view is not well understood and if it exists at all it exists very infrequently.

In order to consider concurrency or what people call concurrency in its proper light we need to go back to the basic proposition of cause and effect.

A delay is caused by some event. That event happens at a point in time and causes a delay the effect of which may follow immediately on from the cause, as in the case of rainfall, or it may follow some time later as, for example, in the case of a variation where the physical work is done at some later time.

As I have set out above, I consider that the Standard Forms of Contract that are most commonly used in Australia contemplate a prospective analysis of an effect of delay. Therefore to give meaning to the expression that a Contractor either has been delayed or is likely to be delayed requires that the effect of a delay event has to be examined at the time that the delay event occurs and you either assess, has the Contractor been delayed, for example in the case of rain falling on that day, or are they likely to be delayed, in the case of the variation.

Concurrency however it is described disappears if the analysis is undertaken when the delay occurs except for the one situation which, in my experience, I have rarely if ever seen, of two causes of delay occurring at exactly the same instance of time.

When you think about the logic of a delay event and its effect if a delay event occurs today and the effect of that delay event is to cause a delay of 10 days, and another delay event occurs tomorrow then unless that second delay event is greater than 9 days it does not delay completion of the Works because the first delay that occurred today is still continuing. If the delay event No. 2 is tomorrow and has an effect of 5 days then it will never delay and therefore doesn’t have to be considered any further because it is not a delaying event. i.e. it does not cause a delay. If delay event no. 2 causes a delay of 20 days then until 9 days of that have passed it is not an event that is delaying completion and only at that point in time does it start to delay completion and hence would, on that example, delay completion by 11 days.

A further consideration is that even if two different causes of delay occur at the same instance of time and one affects the critical path and the other affects a non critical path then if the effect of those delays is the same, delay no. 2 would not delay completion or if delay no. 2 is greater than delay no. 1 it would not delay completion until delay no. 1 has finished and it has expended the float.

It is for the above reasons that we generally talk of a ‘dominant’ or ‘first occurring’ cause of delay or delays.

On the proper analysis of the delaying events and the status of the works it will be seen that Contracts which seek to disentitle Contractors from an extension of time where they talk of concurrent delays or causes of delay will rarely have the outcome that the drafter may have sought. This is very clearly an issue of cause and effect and if the proper analysis is undertaken then the answer will be apparent notwithstanding the provisions of the Contract.

3.3. Costs of Delay

There are generally two options as to how the cost of delay if payable under the contract can be dealt with.

The first is in the same way as a liquidated damage or late completion by the Contractor where a pre-ascertained and liquidated delay cost is included in situations where the Owner causes a delay. This needs to be treated with some circumspection as if it is simply expressed that the Contractor shall be paid an amount of money for everyday that the Contractor is delayed then the Contractor would be entitled to recover those costs even if they have, for example, left the site and are not even incurring those costs. They also do not address the actual cause of the extra cost. Hence consideration should be given to some caveat whereby while the Contractor does not have to prove the exact amount of the cost because it is liquidated however there has to be some evidence that he has in fact incurred costs due to the delay.

The second method by which costs of delay can be dealt with is, by what I would term, an extra costs Contract wherein the Contractor is entitled to recover the extra costs that occur as a result or a consequence of the delay that is compensable.

This can return a quite different result to the actual extension of time entitlement because of the requirement to establish what was the extra cost actually incurred due to the delay. Again, by way of example, a Contractor might have an entitlement to a 50 day extension of time due to a cost compensable delay. However if the Owner can establish that the Contractor would have, due to his or her own delays, been there for 30 days in any event and in the absence of the compensable delay then the extra costs that have been incurred would, on one view, only relate to 20 extra days not 50 extra days.

As a consequence while the level of proof for both Contractor and the Owner is greater in an extra costs Contract it does return what are quite different results depending on the factual matrix surrounding the delays on or off site.

4. CONCLUSIONS

I have canvassed a number of issues in this paper to do with programming, the role those programs may take in a Contract and in Contract administration and some thoughts on delay analysis and costs of delay.

I think that the conclusions that can be drawn from this sort of discussion is that there are unique project specific issues for every engineering or building project and therefore the need to consider in great detail the factual matrix that surrounds the delay and the management of time generally.

Is time of essence to Contract success? I think the answer can only be an emphatic, yes, but unfortunately an aspect that is still even on major works projects given limited attention and understanding by both contracting parties and contract administrators.

Aspects of Delay - Delay Claims