Tag: Entitlement

Delay analysis

In the previous post we examined the key elements of a successful claim and established 4 main requirements, these being:

• Cause
• Effect
• Entitlement
• Substantiation

Additionally we examined the role of the Programme, its function and how it is used in assessing delays.

In effect we can say the following about the Contract (Baseline) Programme, it is:

• The intentions of the Parties at the time of contract
• Shows the intended time and sequence of how the works are intended to progress
• Shows a clear critical path to completion
• Shows dates when the Employer’s input is required, linked to the critical path

As the Programme should be updated periodically in a claim situation the Programme will be:

• The Yardstick against which to measure the effect of delays
• Should be based on the works included in the contract at the time the contract was entered into.
• Should be revised to take into account Extensions of Time (EoT) or re-sequencing of the works.

The Principles of Delay Analysis

It must be borne in mind that a delay does not automatically lead to an EoT and generally “float” which is shown in the programme will be critical, particularly around who “owns” the float.

On most projects the project owns the float and this float will be used up first, in the event of any delays. Only after the float has been used up can the completion date be affected by any subsequent delays. It must also be remembered that a delay may occur that is not on the critical path of the project works.

When a delay takes place the first activity that should be undertaken is a delay analysis, this is to establish the effect of the delay event. For the Contractor or Sub-Contractor to establish an entitlement to an EoT, it is necessary to link the cause with the effect, in other words to establish that an Employer caused delay has actually affected the completion date.

There are two commonly used delay analysis, these being:

• Impacted As-Planned Delay Analysis
• Time Impact Analysis

We will now investigate both.

Impacted As-Planned Delay Analysis

This is the most commonly used delay analysis and is particularly useful where no contemporaneous records are available or are inconclusive and incomplete to demonstrate a delay. Generally employer cause delays are added to the Baseline Programme (See Typical Baseline Programme with float below) and the effect of this delay on the project Completion Date is assessed. A short coming of this delay analysis is that it is unable to identify concurrency, sequencing, mitigation or acceleration.

13.1 Baseline Programme

Under Impacted As-Planned Delay Analysis the delays should be impacted in a chronological order and the delays effect on the Completion Date. It is possible that a delay could crystallise that is not on the critical path of the programme, but it should be included as subsequent actions could result in this delay having an impact at a later stage.

In very general terms if the delay, once its impact has been assessed and included on the updated Baseline Programme does not extend the time required for completion, then the analysis demonstrates that an EoT is not warranted. However if the analysis demonstrates that the Completion Date has moved out into the future, than an EoT is warranted. (See Typical Impact As Planned Programme which has 4 delay events included)

13.2 Impact As Planned x

Again in general terms if the Contractor completes his works earlier than the updated Baseline Programme (assuming there are no further delays) then this demonstrates that the Contractor has mitigated some of the delays. However if the delay has been properly analysed and its impact included in the updated Baseline Programme and the Contractor completes later than this updated programme, this demonstrates contractor caused delays which could leave the Contractor facing Liquidated and Ascertained Damages (LAD’s).

Time Impact Analysis

Time Impact Analysis is a recommended and accepted practice to be utilised for delay analysis. For Time Impact Analysis to be undertaken it is key that the Baseline Programme is updated on a regular and consistent basis to that when a delay event crystallises this can be analysed promptly and consecutively so that its impact can be analysed.

The Baseline Programme (as updated from time to time) should be brought fully up to date to the point immediately prior to the delay event taking place. This delay should then be evaluated and its impact inserted into the programme. (See Time Impact Analysis Programme which at the period update showed a 3 day delay and its impact analysed)

13.3 Time Impact Analysis Continue reading “Delay analysis”

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Elements of a successful claim

In the previous post we examined the key components required to demonstrate an effective Extension of Time (EoT) claim from the perspective of the main headings that need to be addressed. It could be argued these headings form the basis of any claim event.

An integral element of this is the Delay Analysis employed.

There are effectively two major forms of Delay Analysis, these being:

• Impacted As Planned Delays Analysis

• Time Impact Analysis

We will investigate these in greater depth in the next posts.

However prior to this we need to evaluate the essential elements of a successful claim. This can be summed up as the 4 main requirements, these being:

Cause

Effect

Entitlement

Substantiation

We could ask the question, What is a claim? It can be defined as follows:

A claim is an assertion of a party’s rights under the terms of a contract or at law.

In the construction industry, a claim is usually in relation to additional time, additional payment or both additional time and payment. A significant driver of a claim will be variations to the contracted works which increase the scope and / or complexity of the works that have been contracted for. By way of example the following could lead to a claim for variation:

• Change to the quantity of works

• Change to the quality or characteristics of work

• Change to the sequence or timing of works

• Change to the levels, positions and / or dimensions

• Omission or addition of works

Some of these examples of variations to the contracted works may also lead to a claim for an EoT which may lead to additional payments being due as a consequence. However this can also prevent the deduction of “Liquidated and Ascertained Damages” (LAD’s) as the EoT (even if granted without costs) moves the date for the completion of the contract works.

Almost any claim, irrespective of form of contract will require the Contractor or Sub-Contractor to demonstrate that they have suffered a delay in some shape or form and here the programme is critical in demonstrating the delay. In effect the programme is both the Contractor or Sub-Contractors plan to complete the project works but also the yardstick to measure delays based on actual progress against the programme.

Most forms of contract require the Contractor or Sub-Contractor to submit a programme within a stipulated time frame, which then becomes the Contract (Baseline) or Approved Programme and updated accordingly periodically. A Joint Contract Tribunal (JCT) form of contract requires the programme to be submitted as soon as possible after the execution of the contract. However this will be to the start and completion dates that will be included within the contract data.

The programme update requirement should be stipulated in the contract, but for the protection of both parties should be at least within each Application for Payment (AfP) period. These updated programmes will be a record of progress made thus far and also be able to predict events that are yet to take place, based on the update. This is particularly relevant where an activity moves onto the critical path of the programme. In the event an EoT has been claimed and granted, this should be reflected on the next period updated programme and in particular showing where the contract-end date has moved to. This is particularly important where LAD’s could be levied.

In the event of a claim, it is good practice to produce an “As Build” programme at the start of any delay as this will provide a detailed record of actual progress that can be demonstrated at the time that the delay has crystallised.

It also needs to be borne in mind that not every delay will lead to a change in the completion date as the possibility exists that if the event is not on the critical path that the delay can be mitigated by moving the sequence of the programme around, however this could lead to disruption, which in itself could be subject to a financial claim. This could be on a number of grounds, although this list is not exhaustive, such as:

• Acceleration costs to catch up on the programme

• Non Productive costs • Additional staff costs

• Abortive costs

This leads to the question. What should the Contract or Approved Programme demonstrate?

• The intentions of the party at the time of contract

• The time and sequence of how the works are planned to be implemented

• A clear critical path

• Dates that require input from the Employer, particularly where it links to the critical path

• Dates that require input from key Stakeholders, particularly where it links to the critical path

• Identify “float” within the programme and who “owns” the float whether it is the Employer, Contractor or the project.

Who owns the float is particularly important as this will be utilised for any delays before the completion date can be affected by any delays. Where the project owns the float any initial delays by either Employer or the Contractor will utilise the float, whereas if the Contractor owns the float, then any Employer delays can immediately have an impact on the project end date.

You have had a delay event, its impacted on the end date of the contract and will attract a cost, what three things are critical to being able to demonstrate this delay successfully?

• Good records

• Good records

• Good records

And perhaps most important of all, a claims specialist to ensure that not only is the claim prepared in accordance with the contract requirements but in a way that is easy to follow and able to allow a third party to assess and determine liability in favour of the company bringing the claim.