Concurrent Delay

Concurrent delay is a highly contentious issue and one which all professionals encounter at some stage in their careers. I wonder though how much more topical this whole area may become as clients and contractors increasingly find themselves in contentious circumstances due to the suicidal bidding taking place across the industry as contractors fight it out to maintain activity levels.

Let us consider the effects of this; increasing claims? Most definitely; high cost of variations? Again, most definitely; a departure from traditional suppliers as contractors also seek lower costs? I think so and I have heard of this from good authority. Doesn’t this also spell phone directory supply chains which Paul Morrell is so critical of?; contractors taking on risks they would ordinarily balk at and cutting establishment to the bare minimum in order to keep costs down?; most definitely!

Anyway you get the picture but this all points towards performance issues increasingly coming to the fore and delaying works on site, so when a Relevant Event such as an Employer change is introduced, which is the most common Relevant Event to occur, then it’s inevitable that concurrent delay issues and associated loss and expense will arise.

So how does the JCT suite and in particularly JCT D&B 2011 deal with this thorny subject? Well, the simple answer is that it doesn’t expressly do so- it only requires the Employer to fix an extension of time ‘as he then estimates to be fair and reasonable ‘ which I do find puzzling considering the emotive subject which it is. One can only assume that this is due to the complexities around navigating a safe route through this subject area and reflecting industry representatives’ consensus view.

Either way if an agreement can’t be reached between the parties, as to the event that caused the actual delay to completion and the entitlement to an extension of time then it falls to dispute resolution procedures, common law and the Courts to determine the position.

Here there are some interesting (and conflicting) precedents. Traditionally the key case has been Henry Boot Construction v Malmaison Hotel (1999) which said that where there are two concurrent causes of delay, one of which is an employer risk event and the other is not, then the contractor is entitled to an extension of time for the full period of delay which is attributable to the employer risk event. This position is supported by the Society of Construction Law’s Delay and Disruption Protocol.

Following on from Henry Boot, the judge in Royal Brompton Hospital NHS Trust v Hammond (2000) provided a further explanation of what is meant by events operating concurrently, namely the events must be shown to be on the critical path of the programme as opposed to one which is merely concurrent with the critical path.

However, a recent decision in the Scottish courts has provoked a great deal of speculation where in the case of City Inn v Shepherd Construction (2010) it was decided that “where two causes, neither of which is dominant, are under consideration, a relevant event and a non-relevant event, it may be appropriate for the architect or decision maker to apportion responsibility for the delay between the two causes”. This seems perfectly sensible to me though this is contrary to the English Law approach laid down previously in Henry Boot and being a Scottish court decision is not formally binding so will remain a controversial analysis of the law in this area until tested further.

However, in addition to the principle of apportionment, the case also established a principal of dominancy, so if there is one dominant cause, all other causes will be disregarded. Again this seems a highly a sensible and reasonable approach to me. For example, let’s say a contractor is 5 weeks behind schedule at a late stage in the programme due to the non performance of one of his key sub-contractors and the client then raises a variation which would otherwise have delayed the works by say 1-2 weeks. In this scenario, English law and the delay and disruption protocol would point towards a two week extension of time (plus associated loss and expense) which to my way of thinking seems unfair when there was a significant, pre-existing delay.

So in the absence of further drafting on this matter from JCT and greater clarity from the courts, what should practitioners do to protect ones interests? Well, here are a number of suggestions.

First, build strong foundations. By that I mean the production of good quality, well detailed design documents clearly setting out what is required in line with the client brief and scope of service. The production of these should not be rushed and they should be thoroughly quality assured to ensure there are no errors, ambiguities or inadequately detailed information;

Second, make sure there is an obligation within the contract documentation for the contractor to provide regular, updated programmes and method statements so that any delay can be managed in a proactive, transparent manner. These should include progress lines, details of the critical path, activity links, no activities >20 days in duration, no open ended activities i.e. all should be linked, details of any mitigation measures to recover any delay etc;

Third, maintain a schedule of employer obligations and milestones so that there are no surprises late in the programme when delay issues bubble to the surface. Some examples include ordering of phone lines, gas and electricity meters, specialist / group 2 equipment;

Fourth, implement a robust change control procedure whereby the full cost and programme implications of any change are first agreed prior to any changes being instructed. One should also re-iterate in the contract that all variations must be via the Employers Agent and that any changes acted upon following direct conversations between the Employer and the Contractor are null and void;

Fifth, maintain open communications and use early warning notices to ensure that issues are flagged early and matters corrected forthwith (ensure paragraph 12 of Schedule 2, Supplemental Provisions of the contract is operative and not deleted in the Contract Particulars); and

Finally, as a very last resort, one could vary the terms of the contract to try and clarify this whole area but making amendments to a standard contract is a dirty word and certainly should not be embarked upon without legal advice. Clearly, this is not something JCT would recommend.

In summary, though there is no substitute for good planning and organisation which set strong foundations in place, good resourcing & communications, and good record keeping so that delay issues can be addressed up front as part of the normal administration and decision making process rather than retrospectively in more contentious circumstances.