David McCullagh discusses Industry Standard for Delay Analysis | FTI Consulting

Page 1 of 2

CASE LAW
David McCullagh discusses whether there is such a thing as an Industry Standard for Delay Analysis
Subject Rights & Remedies Date 29.Feb.2012 Judgment N/A The Issue N/A Implication N/A Case Number CJA-12.05 Author David McCullagh I was recently asked to review an interim Extension of Time claim submitted by a Contractor on a large building project in the UAE. The Engineer had rejected the previous extension of time claims stating that the claim should be resubmitted and the analysis of the delay should be as per the industry standard. The contractors question was simply what is the industry standard? Of course, the answer to that question is that there is not one. The type of analysis that should be used is dependent on a number of factors. Yet the attitude of the Engineer is typical of many working in the industry in seeking some kind of uniformity on an issue which in turn causes confusion and uncertainty. Of course, there have been several attempts to regiment the subject of delay analysis such as the UK Society of Construction Law Protocol as well as recommended practice produced by the American Association of Advancement for Cost Engineering (AACE), but no industry standard has emerged. This is primarily due to the fact that the situation encountered on any project is probably unique. In an ideal world, delays would be dealt with as and when they arose during the course of the project. Most standard forms of contract require that Extension of Time requests are to be considered during the currency of the works where the projected effect of a delay on the end date has to be calculated in a prospective way. For this to be achieved successfully an agreed baseline programme should be in place and this should be updated with agreed progress figures. Delays could be easily identified should progress to the works drop below the planned rate. The New Engineering Contract (NEC) has attempted to make such an arrangement a contractual obligation but, as is common in the application of other forms of contract, this is rarely ever the case and delays are dealt with months or even years after they have actually occurred. Although there are prospective methods of analysis available, it is invariably the case that delays have to be addressed retrospectively. When confronted with this situation, the method of analysis used is totally dependent on the quality of the information (site records) kept by the contractor or the clients representative. The records in question can vary from a baseline programme and their subsequent updates, to site photographs or site diaries, correspondence or quality assurance records. Many contractors will keep these records as a matter of course but experience tells us that in many cases these records can be contradictory as well as lacking the necessary detail required to substantiate the extent to which a delay has affected the overall project completion date. What is important with any of the records is their accuracy. Accurate records will allow a full and detailed delay analysis to be carried out. Without accurate records, all of the purported methods of delay analysis will be based on a degree of assumption and will be less persuasive as a consequence. Where records of this type have not been kept, then the quality of the investigation will rely upon the construction knowledge of the analyst. Issues such as the construction methodology, sequence of events and the production rates achieved will all have to be reviewed to establish what caused a delay. This type of forensic or practical approach, which looks at all the information available rather than just the results of programme analysis, can be time-consuming but should produce reasonably robust results. Many of the existing methods of delay analysis attempt to use a prospective method for a retrospective situation. This leads to theoretical results being produced which leads to confusion and doubt over the results. What appears to have been forgotten is the need for any retrospective analysis of delays to show what actually happened during the course of the project and not to rely upon theoretical results. This can make the assigning of liability for the delay very difficult as one dominant delay emerges and no account is taken of the actual critical delays or concurrent delays. For instance, some specifications in the Middle East allow the Engineer to insist on the use of Time Impact Analysis. This is wrongly interpreted as the preferred method of delay analysis. Time Impact Analysis is a prospective technique that produces theoretical results and it is not advisable to use this method as a retrospective analysis. The reason for this will be explored in a future article. Generally speaking, Courts, Arbitrators and Tribunals prefer agreement between the disputing parties experts on the method of delay analysis to be used. This would allow

Contact Us

http://www.fticonsulting.co.uk/global2/case-law/david-mccullagh-discusses-industry-... 05/03/2012

David McCullagh discusses Industry Standard for Delay Analysis | FTI Consulting

Page 2 of 2

them to concentrate on liability for the delay and the extent of the delay rather than the pros and cons of the methodology used by each expert. Unfortunately this situation rarely arises and each side in the dispute will invariably use the method which produces the most beneficial results for them or their client. In summary, there is no industry standard for a retrospective delay analysis. Each case will be different. Trying to impose a method which might not be suited to the available information will end in further confusion and possible escalation of the dispute. What is required is relatively straight forward; namely a logical explanation as to why a project has been delayed and the apportionment of liability for that delay. In simple terms, this can be achieved by working logically through the following steps: What was planned? What should have been planned? What happened? What delay was incurred? Which events/issues actually caused the incurred delay?

2012 FTI Consulting, Inc. All rights reserved. Legal Sitemap

CJA-12.05

http://www.fticonsulting.co.uk/global2/case-law/david-mccullagh-discusses-industry-... 05/03/2012