Apportioning the blame

24 April 2008

Given the number of variables in a construction project, it is not surprising that few, if any, construction projects go according to plan or schedule. But should this happen the construction contract can be used to manage the risk of delay by identifying key factors and apportion the risk between the owner and the contractor.

Distribution of the risk is sometimes made through a contractual ‘risk register’ or, more commonly, by an ‘extension of time’ provision, which identifies problems that entitle the contractor to extra time, and sometimes also time related costs.

In theory the allocation of risk seems simple, but in the practical world it is far more complicated. In reality there are a large number of factors that may cause delay to the project, not all of which will be the owner’s risk or critical to the completion of the project.

Delay analysis, through use of one or more critical path based methods, is often used to resolve the practical problem of allocating the factors that caused the delay. There are a number of different techniques available and the main ones are summarised below:

As-planned versus as-built

- This is a retrospective in which the contractor will simply take the difference between the end date shown by the planned as-built programmes. The contractor can then claim for relief for that period by way of an extension of time.

As-planned impacted - This method uses the planned programme and adds owner- caused delays into it to recalculate the construction period and establish a new completion date. The approach does not require as-built information, which means this approach can be used for both retrospective and prospective analysis. However, since actual progress is not considered, this technique may not demonstrate what actually caused the delay to the project.

Collapsed as-built - This method removes owner-caused delays from the as-built programme and by doing so determines the earliest date the contractor could, in theory, have completed the project, had delays not occurred. Good as-built records are vital to enable a logic linked as-built programme to be established. This approach takes into consideration what actually happened during the construction phase, as opposed to what might have happened, so is best suited to retrospective delay analysis.

Time impact analysis - This method is a forward looking analysis technique and provides a basis for determining the expected effect of an event on the completion date. It updates the planned programme while work is underway, and charts actual progress up to the start of each delay event and then notes the expected completion date at that point in time. If the completion date is later extended, this is taken to be the critical effect of the delay event.

Windows analysis - The progress data may not be sufficient to determine progress prior to the impact of each event and so derivatives of the time impact technique, such as window analysis, may be adopted. In window analysis, the construction process is seen as multiple windows, or slices of time, during the period of performance and the delaying event acts as the start of the next window.

Accurate Data

However, without accurate data, the results of critical path analysis may not be reliable and this has been highlighted by the case of Skanska Construction UK Ltd v Egger (Barony) Ltd in the UK.

Skanska made claims relating to delays suffered by one of its sub-contractors on the project but Egger disputed the claim and blamed the delays on inefficiencies within Skanska and its subcontractors. Both companies employed expert witnesses to carry out critical path analysis and report on the delays. But while Skanska’s witness had been closely involved with the project, Egger’s had not and relied on information supplied to him by his client.

The court ruled in favour of Skanska because Egger’s witness had “failed to adequately check the facts presented to him” and in summing up, the judge said that planning experts must be wary of falling into the “junk in, junk out” trap.

Critical path analysis has brought about a perception that delays can be analysed scientifically to produce precise and reliable results. However, the complexity of the techniques means there is a tendency for parties to manipulate them to meet their own needs. As a result critical path analysis has often seen as something of a ‘black art’.

The advantages and disadvantages of each method are varied and the method chosen depends largely on the stage of the construction process, the data available, the form of contract and the legal basis of the claim.

In most cases, carrying out a pure as-planned impacted analysis as a stand alone assessment is not usually sufficient. Courts in the UK and arbitrators usually prefer a retrospective approach using as- built information, but the parties involved will usually pick a method which best suits what they have to work with.

One thing is certain, whichever method is used, the reliability of a sophisticated computer generated impact analysis is only as good as the data that is fed into it.

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