Extensions Of Time, Delay Analysis And Prolongation-Where Are We. Where Are We Going.pdf

Extensions of Time, Delay Analysis and Prolongation Where are we? Where are we going? Extensions of Time, Delay Analysis and Prolongation Where are we? Where are we going? SCOTT ADAMS, SCOTT ADAMS CON[.]

Extensions of Time, Delay Analysis

and Prolongation:

Where are we? Where are we going?

SCOTT ADAMS, SCOTT ADAMS CONSULTANTS LTD., UNIT A5, 17/F MAI LUEN INDUSTRIAL BUILDING, 23-31 KUNG YIP STREET,

KWAI CHUNG, HONG KONG TEL: 2512 1708

• Programmes and Project Management

• SCL Delay and Disruption Protocol Rider 1

(Delay Analysis Techniques)

• Recent Cases on Delay and EOT

• Prolongation Costs - Costain v Charles

Haswell

• Liquidated Damages: A New Test for

Penalties

Programmes & Project Management :

• A programme is a project management tool …

• … and nothing more

• Not devised for political, or tactical purpose

• “The programme … is not contractual in the

same sense as the specification, since neither

the contractor or the employer are bound by it The programme is what it is – a document

indicating the intent of the contractor at the

time he furnishes it …” (Max Abrahamson)

Programmes & Project Management :

• Vivergo Fuels v Redhall Eng’r’g Solutions [2013]

• Contractor’s employment terminated for not

keeping programme up to date

• [374]: “In summary therefore the need for the revised

programme was not some mere unimportant obligation Rather it went to an important aspect of the project, the time of completion and on a Project such as the present that was relevant not only as a matter of management of Redhall's works but the entire Project It was not made less important by the existence of the Rev 3 Programme, the draft Rev 4 Programmes in December 2010 and January

2011 or the look-ahead programmes.”

Programmes & Project Management :

1 Devise a sound, logical programme (and method

statement)

2 Work to the programme until it becomes

impossible for any reason;

3 Record the reason as fully as possible;

4 Update/Revise the programme to account for the

reason (show any delay honestly and fearlessly);

5 Repeat steps 2-4 in respect of each change which

occurs

Programmes & Project Management :

1 Should lead to an incrementally updated / revised

programme, showing all delays as they unfold

2 Backed up with detailed records of what changes

have occurred, and why

3 … reading like the chapters of a book

4 And then no need for any further/new substantive

analysis of the delays.

5 So why does this never happen …?

Programmes & Project Management :

1 Contractors often do not have the time/resources to

devise a logical, sound and resource-loaded

programme and/or keep such a programme up to date with all changes;

2 All parties have an aversion to having their delays

shown on a programme

3 GCC Clause 50(4): (After EOT award) “… the

Contractor shall revise the programme referred to in Clause 16 accordingly.”

4 Programme incorrectly regarded as ‘binding’

5 PROGRAMME OFTEN NOT WORKED TO!

SCL Delay Protocol: Rider 1 (2015)

1 Original SCL Delay Protocol 2002 (Reprint 2004):

2 Widely quoted (although not so widely adhered to)

3 “Delay and disruption issues that ought to be

managed within the contract all too often become

disputes that have to be decided by third parties The number of such cases could be substantially reduced

by the introduction of a transparent and unified

approach to the understanding of programmed

works, their expression in records, and identifying

delay and disruption.”

SCL Delay Protocol: Rider 1 (2015)

1 Original SCL Delay Protocol 2002 (Reprint 2004);

2 “The Protocol recommends that, in deciding

entitlement to EOT, the judge or arbitrator should so far as is practicable put himself in the position of the

CA at the time the Employer Risk Event occurred.”

3 [3.2.11] “The methodology described in this section is

known as ‘time-impact analysis’ The Protocol

recommends that this method be used wherever

circumstances permit, both for prospective and

retrospective delay analysis.”

SCL Delay Protocol: Rider 1 (2015)

1 “ [A] key difference introduced by Rider 1 to the

Protocol is the removal of a preference for a

particular delay analysis where that analysis is carried out at a time distant from the delay event or its

effect.”

2 [Other main difference] “… the contemporaneous

submission and assessment of EOT claims is elevated

to a core principle.”

3 ‘Time-Impact’ analysis still recommended during the

course of the project (Guidance Section 3)

SCL Delay Protocol: Rider 1 (2015)

1 “ 4.1: This part of the Protocol addresses the

consideration of EOT applications after completion of the works, or considerably after the occurrence of

the delay event or its impact In those circumstances, the prospective analysis of delay referred to in

Guidance Section 3 may no longer be relevant or

appropriate.” [My emphasis]

2 But why not? And how long is ‘considerably after’,

and what difference does it make compared to (say)

‘just after’?

SCL Delay Protocol: Rider 1 (2015)

1 “ 4.3: The choice of delay analysis to be deployed

should be determined by reference to the following criteria:

• The relevant conditions of contract;

• The value of the project or dispute [proportionality]

• The nature, extent and quality of available records

• The forum in which the assessment is made”

SCL Delay Protocol: Rider 1 (2015)

1 “ 4.3: The choice of delay analysis to be deployed

should be determined by reference to the following criteria:

• The relevant conditions of contract;

2 My view: only this criteria matters; if requisite records,

programming etc have not been kept, then it should only go to make execution of the delay analysis (or

prosecution of the claim) more difficult

SCL Delay Protocol: Rider 1 (2015)

1 But – beyond the seven bullet points - the Rider does

not clarify what types of factors would lead to

narrowing the choice down to any particular method

2 The disadvantages of each method are mentioned,

but only in a few words

3 Arguably, in cases where records have not been

kept, the Rider could permit lazy or inferior delay

analyses to succeed under the guise of “common

sense”

“As-Planned Impacted”

1 Take the initial programme (‘as-planned’)

2 Impact (add) claimed delays to it (as extra activities)

3 The overall delay = the claimed EOT

“As-Planned Impacted”

1 Very simple and easy to present and understand

(and cheap!!)

2 But criticised because it does not take account of

progress made at the time of delay events, or

acceleration, or resequencing

3 Results tend to ‘favour’ delays to activities which are

on the initial critical path

4 Rarely accepted by judicial tribunals because of the

problems in (2)

“As-Built Collapsed”

1 Take the as-built programme

2 Subtract claimed delays from it, and collapse it

3 The overall delay ‘but for’ = the claimed EOT

“As-Built Collapsed”

1 Very simple and easy to present and understand

(maybe not so cheap if ABP takes time to construct)

2 Has the aura of ‘reality’, because it is based on

as-built programmes (but, note, result is theoretical)

3 But criticised because it does not take account of

acceleration, or resequencing Also introducing logic links into an as-built programme can be a very

subjective task

4 Results tend to ‘favour’ delays to activities which are

on the last critical path (longest path)

Dynamic Methods: (TIA; Windows)

1 See the “Gold Star Slide” – these methods are based

on contemporaneous or re-constructed updates

2 Because progress and changes in sequence are

accounted for, they are generally considered the

best (most accurate) methods

3 But HUGE volumes of data, and (often) indigestible

massive critical path networks involved Also takes a long time and much $$$$$ … I speculate this is why the Rider is allowing choice of easier methods

4 Lots of opportunity to manipulate the analysis

SCL Delay Protocol: Rider 1 (2015)

Recent Cases

1 Walter Lilly v MacKay [2012]

2 Cleveland Bridge v Severfield-Rowan [2012]

3 Discussion of actual v prospective delay

4 Adyard Abu Dhabi v SD Marine Services [2011]

5 Discussion on status of EOT Protocol Fig 9 (“Fairness

vs Criticality”)

Recent Cases

1 Walter Lilly v MacKay [2012]

2 [362] “Whilst the Architect prior to the actual

Practical Completion can grant a prospective extension of time, which is effectively a best

assessment of what the likely future delay will be

as a result of the Relevant Events in question, a court or arbitrator has the advantage when

reviewing what extensions were due of knowing what actually happened.” [my emphasis]

Actual vs Prospective Delay

Recent Cases

1 Cleveland Bridge v Severfield [2012]

2 [98]: “In all these delay cases, it is necessary to

show that the claiming party was actually delayed

by the factors of which it complains; it simply does not follow as a matter of logic, let alone practice,

on a construction or fabrication project, that,

simply because a variation is issued or that

information is provided later than programmed or that free issue materials are issued later in the

programme than envisaged originally, the

claimant is delayed.”

Recent Cases

1 Cleveland Bridge v Severfield [2012]

2 [98]: “If the real cause of the delay is, say,

overwork or disorganisation within the claimant,

the fact that there have been variations, late

instructions or information or late issue of materials

is simply coincidental.”

Recent Cases

1 Adyard Abu Dhabi v SD Marine Services [2011]

2 Delays after prevailing Date for Completion

3 [262]: [SD Marine’s delay expert] gave a helpful example of the

extreme consequences in practical terms of this approach:

"Assuming (as is in fact appropriate in the present case) that the

Contractor is many months in delay by reason of its own default The Employer decides a week before the (original unextended) contract completion date that he wishes a wall to be painted blue instead of the contractually specified red At the time of the instruction,

because of the Contractor's delays, the wall is not even built yet The paint will take 5 weeks to procure, but will still arrive before the

completion of the wall and the date upon which the Contractor

would require the paint in line with his delayed progress

Recent Cases

1 Adyard Abu Dhabi v SD Marine Services [2011]

Mr Swan's analysis would appear to entitle the Contractor to 4 weeks' extension of time (by adding 5 weeks to the date of impact, and

comparing with the original contract completion date) However, I

would suggest that common sense tells the observer that such an

extension was neither fair nor reasonable, where the employer's

actions have not actually delayed the progress of the Contractor by

a single day."

1 [263]: In my judgment Adyard's approach is wrong as a matter of

both principle and authority It is also contrary to common sense,

as the above example illustrates.

Recent Cases

1 Adyard Abu Dhabi v SD Marine Services [2011]

2 [291(4)]: “In so far as reliance was also sought to

be placed on Figure 9 of Appendix D of the SCL Protocol, I find that, as put to [Adyard’s delay

expert] in cross examination, it can be read as showing that the introduction of the employer's event on path 2 makes that path critical and

causative of concurrent delay in which case

again it puts forward the orthodox position.”

Recent Cases

Delay and Disruption in Construction Contracts, 5 th Ed (Pickavance, Burr)

Recent Cases

Delay and Disruption in Construction Contracts, 5 th Ed (Pickavance, Burr)

Prolongation Costs: Costain v Haswell

1 Costain, main contractor constructing a water

treatment plant (design & build); Haswell its engineer

2 Plant consisted of 10 separate buildings/structures

3 Works were delayed due to design problems with

piling of two of the ten structures; Costain claimed

against Haswell

4 At trial, both delay experts agreed that the piling

delay was on the critical path; but nevertheless, the claim for prolongation costs failed

5 Court held that delays to all 10 buildings needed to

be proved, not just the 2 with critical delays

Prolongation Costs: Costain v Haswell

1 Court also held that the piling delays were not

proved in any case, despite the experts’ agreement

as to criticality

2 The Court held that the early piling delays may have

been mitigated or neutralised by later events

3 This appears to be at odds with the results which

would be obtained from a time-impact delay analysis

Prolongation Costs: Costain v Haswell

1 Court held that delays to all 10 buildings needed to

be proved, not just the 2 with critical delays

2 [184]: “… the contractor will not recover the general site

overheads of carrying out all the activities on site as a

matter of course unless he can establish that the

delaying event to one activity in fact impacted on all

the other site activities Simply because the delaying

event itself is on the critical path does not mean that in point of fact it impacted on any other site activity save for those immediately following and dependent upon

the activities in question.”

Prolongation Costs: Costain v Haswell

2 But prolongation costs

only recoverable for

Prolongation Costs: Costain v Haswell

Prolongation Costs: Costain v Haswell

1 Contractor might

receive no EOT and thus

be liable for full amount

of LD (Adyard v SD Marine); SCL Protocol Figure 9 apparently does not apply

2 Does this seem

Liquidated Damages:

1 Several types of defences may be advance to LDs

2 But LDs provisions are seen as a source of certainty,

simplicity of proof and party agreement and so are not lightly set aside by courts / arbitrators

3 In increasing order of desperation (my opinion), the

main defences to LDs are:

• EOT award Insufficient and/or Practical Completion

achieved earlier than certified

• Time at Large (Peak v McKinney)

• LDs are a penalty (Dunlop v New Garage)

• Void for Uncertainty (Bramall & Ogden)

Liquidated Damages:

1 Dunlop Pneumatic Tyre v New Garage (1915)

2 Lord Dunedin: “… the essence of liquidated

damages is a genuine covenanted pre-estimate of damage.”

3 “If the sum is extravagant and unconscionable in

amount in comparison with the greatest loss that

could conceivably be proved to have followed the breach, it will be regarded as a penalty and

unenforceable.”

Liquidated Damages:

1 ParkingEye Ltd v Beavis [2015]

2 Parking charge for overstay (lump sum, £85) in a

shopping mall car-park

3 [28]: “A damages clause may properly be justified

by some other consideration than the desire to

recover compensation for a breach.”

4 Thus socio-economic factors may be brought into

consideration

5 ParkingEye argued (successfully) that they had a

legitiate interest in managing the car-park and

influencing the conduct of drivers

Liquidated Damages:

1 Therefore, we now seem to have a ‘two-stage’

test:

Is Sum a genuine pre-estimate of

loss?

NOT A PENALTY

Yes

Any Economic factors

Socio-giving rise to legitim’t interest

to charge more?

NOT A PENALTY

Yes

Liquidated Damages:

1 Not law in HK (yet) … but persuasive

2 Many construction projects have a socio-economic

justification Will this new test give employers carte

blanche to levy higher LDs?

3 Note that the judgment offered no guidance on

what the level of parking charge would have been in order to ‘outweigh’ the legitimate interest

4 Thus the ‘penalty’ defence to LDs has become

harder and (arguably) even more hazy