TBH Perth Internal Training Session

Society of Construction Law - Delay and Disruption Protocol

Karim Motwashelh| DD/MM/YYYY

1. Introduction2. Programme and records3. Extension of Time4. Float5. Concurrent Delay6. Mitigation7. Delay Analysis Methodology8. Link Between EOT and Compensation9. Valuation of Variations10. Global Claims11. Acceleration12. Disruption

CONTENTS

The Society of Construction Law “SCL” is a body of construction professionals founded in 1983 to promote education, study and research in the field of construction law , in the UK and overseas

The Society is very internationally minded, and works with construction law societies in other parts of the world

1. INTRODUCTION

This Protocol has been prepared by the Society of Construction Law for determining extensions of time and compensation for delay and disruption. Published on October 16th 2002, It exists to provide guidance to all parties to the construction process when dealing with time/delay matters

The object of the Protocol is to provide useful guidance on some of the common issues that arise on construction contracts, where one party wishes to recover from the other an extension of time and/or compensation for the additional time spent and the resources used to complete the project

The purpose of the Protocol is to provide a means by which the parties can resolve these matters and avoid unnecessary disputes. It is not intended that the Protocol should be a contract document

1. INTRODUCTION

Issues:

Do we need to have an updated programme?

2. PROGRAMME AND RECORDS

The Protocol recommends that the parties reach an agreement on the programme, in particular to:

• the interaction with the method statement (which describes how the Contractor intends to construct the works);

• the time within which the contractor should submit a draft programme foracceptance;

• Recommends the parties reach a clear agreement on the records to be kept;

• a mechanism for obtaining the acceptance of the CA of the draft programme; and,• the requirements for updating and saving of the accepted programme.

2. PROGRAMME AND RECORDS

Issues:

When is a contractor entitled to an EOT?What is the procedure for granting EOTs?

3. EXTENSION OF TIME

3.1 Entitlement to EOT

• The benefit to the Contractor of EOT is only to relive the Contractor of liability for damages for delay (usually liquated damages) for any period prior to the extended contract completion date. The benefit of an EOT for the Employer is that it establishes a new contract completion date and prevents time for completion of the works becoming ‘at large’

• Applications for EOT should be made and dealt with as close in time as possible to the delay event that gives rise to the application

• The contractor will be potentially entitled to an EOT only for Employer Delay arising from Employer Risk Events (causes of delay in for which the Employer has assumed risk and responsibility)

• The contractor will potentially only be entitled to an EOT for those events in respect of which employer has assumed risk and responsibility (Employer Risk Events)

3. EXTENSION OF TIME

3.2 Procedure for granting EOT

• The programme should be up to date to the point immediately before the delay event, and should be the primary tool for determining the amount of the EOT

• The EOT should be assessed on the extent that the delay event affected the Completion date

• The entitlement to an EOT should be based on the contract, not on the question of whether or not the contractor needs an EOT in order not to be liable for liquidated damages

3. EXTENSION OF TIME

Issue:

Who owns float?

4. FLOAT

Total Float is described as:

“the amount of time by which an activity may be shifted in time without causing delay to a contract completion date”

• It is recommended that ownership of float be addressed in the contract

• A contractor should not automatically be entitled to an EOT merely because an employer delay event used up the float for a particular activity.

• An employer delay should only result in an EOT if it is predicted to reduce the total float on the activity paths affected by the delay to below zero, i.e. The Project/Principal owns the float.

4. FLOAT

Issue:

Where both the Employer and the Contractor are causing delay, does the Contractor get an extension of time?

5. CONCURRENT DELAY

• Contractor’s concurrent delay should not reduce any EOT due

• Delay events which occur sequentially, but the effects of which are concurrent, should not reduce the amount of an EOT due to the Contractor as a result of Employer Delay

• Any additional costs incurred by the Contractor as a result of concurrent delay must be separately identified to apportion the additional costs caused by the Employer Delay and the Contractor Delay. The Contractor is not entitled to recover additional costs caused by the Contractor himself

• Accurate identification of float and concurrency is only possible with the benefit of a proper programme, properly updated

5. CONCURRENT DELAY

Issue:

To what extent shall the Contractor mitigate the effect of Employer Risk Events on its works?

6. MITIGATION

• The Contractor has a general duty to mitigate the effect on its works of Employer Risk Events.

• Subject to express contract wording or agreement to the contrary, the duty to mitigate does not extend to requiring the Contractor to add extra resources or to work outside its planned working hours.

• The Contractor’s duty to mitigate its loss has two aspects – first, the Contractor must take reasonable steps to minimize its loss; and secondly, the Contracotr must not take unreasonable steps that increase its loss.

6. MITIGATION

Issue:

When should retrospective analysis be used?When should prospective analysis be used?

7. DELAY ANALYSIS METHODOLOGY

Prospective Analysis

• Project is in progress

• Known events are assessed on how they impact on the completion date

• Estimate of the prospective situation is made and an EOT is considered

7. DELAY ANALYSIS METHODOLOGY

Retrospective Analysis

• Project is complete

• Events and their consequences have run their course

• The impact of events that occurred are considered in hindsight (retrospect) in order to determine if an EOT should be rewarded

7. DELAY ANALYSIS METHODOLOGY

7. DELAY ANALYSIS METHODOLOGY

Issue:

The Contractor has been granted an EOT, is he entitled automatically to compensation?

8. LINK BETWEEN EOT AND COMPENSATION

• Entitlement to an EOT does not automatically lead to entitlement to compensation

• Under the common standard form of contract, the Contractor is nearly always required to claim its entitlement to an EOT under one provision of the contract and its claim to compensation for the prolongation under another provision

• If the method used to asses the amount of EOT is prospective, and the method used for prolongation compensation is retrospective, then the two assessments of time may produce different results but this does not necessarily indicate errors in either methods

8. LINK BETWEEN EOT AND COMPENSATION

9. VALUATION OF VARIATIONSIssue:

The Contractor has been issued a Variation, shall he proceed immediately with the works?

9. VALUATION OF VARIATIONS• Where practicable, the total likely effect of variations should be pre-agreed between the Employer and the Contractor , to arrive if possible at a fixed price of a variation, to include not only the direct costs but also the time-related costs, an agreed EOT and the necessary revision to the programme

• It is not good practice to leave to be compensated separately at the end of the contract the prolongation and disruption element of a number of different variations as this is likely to result in the Contractor presenting a global claim

10. GLOBAL CLAIMSIssue:

Should global claims be allowed?

10. GLOBAL CLAIMSGlobal claim (in regards to delays):

• Where a delay is said to have been caused by multiple causes for which the employer is responsible, but where the extent of the delay attributable to each of those causes is not isolated

• Global claims are conventionally not allowed

• Its flaw is that it is not possible to say what amount of time (or money) flows from each of the causes

• Therefore, the practice of contractors making composite or global claims without substantiating cause and effect is strongly discouraged

11. ACCELERATIONIssue:

Shall the Employer instruct the Contractor to accelerate the works to reduce Employer delay?

11. ACCELERATION• The Contractor cannot be instructed to accelerate to reduce Employer Delay, unless the contract allows for this

• Where the contract provides for acceleration, payment for the acceleration should be based on the terms of the contract

• Where the contract does not provide for acceleration but the Contractor and the Employer agree that accelerative measures should be undertaken, the basis of payment should be agreed before the acceleration is commenced

• Where acceleration is instructed and/or agreed, the Contractor is not entitled to claim prolongation compensation for the period of Employer Delay avoided by the acceleration measures

11. ACCELERATION• Where a Contractor accelerates of its own accord, it is not entitled to compensation

• If it accelerates as a result of not receiving an EOT that it considers is due to it, it is not recommended that a claim for so-called constructive acceleration be made

• Instead, prior to any acceleration measures, steps should be taken by either party to have the dispute or difference about entitlement to EOT resolved in accordance with the dispute resolution procedures applicable to the contract

12. DISRUPTIONIssue:

What is disruption?

12. DISRUPTION• Disruption is disturbance, hindrance or interruption to a Contractor’s normal working methods, resulting in lower efficiency

• Disruption to construction work may lead to late completion of the work, but not necessarily so. It is possible for work to be disrupted and for the contract still to finish by the contract completion date

• In the above situation, the Contractor will not have a claim for an EOT, but it may have a claim for the cost of the reduced efficiency of its workforce

• The most common causes of disruption are loss of job rhythm (as, premature moves between activities, out of sequence working and repeat learning cycles), work area congestion caused by stacking of trades, increase in size of gangs and increase in length or number of shifts

12. DISRUPTION• The starting point for any disruption analysis is to understand what work was carried out, when it was carried out and what resources were used. For this reason, record keeping is just as important for disruption analysis as it is for delay analysis

• The most appropriate way to establish disruption is to apply a technique called “the Measured Mile”. This compares the productivity achieved on an un-impacted part of the contract with that achieved on the impacted part

• However, care must be taken to compare like with like, i.e. It would not be correct to compare work carried out in the learning curve part of an operation with work executed after that period

THANK YOU!!