2016 Delay 63

Concurrent delay:
Time does not always equal money
Andrew Bayne, Partner, Centra Consult

P RIOR to City Inn v Shepherd (2010) CSIH 68, it had been a

fairly well established legal position that where an event
gives rise to an extension of time, the contractor is entitled
to it even if there is concurrent contractor delay. It is worth noting
that the fundamental purpose of the extension of time mechanism
in a contract is to protect the employers right to deduct liquidated
and ascertained damages in the event of the works being
completed late. If the employer has prevented the contractor from
completing its works by the completion date, it would appear
to be iniquitous for liquidated and ascertained damages to be
deducted from the contractor.
City Inn involved a traditional Joint Contracts Tribunal (JCT)
building contract. At paragraph 42 of the decision, Lord Osborne
states that:

In such a situation, which could be described as one of

concurrent causes it will be open to the decision-maker,
whether the architect, or other tribunal, approaching the issue in
a fair and reasonable way, to apportion delay in the completion
of the works occasioned thereby as between the relevant event
and the other event.

In contrast to City Inn, Walter Lilly & Co Ltd v Mackay (2012) EWHC
1773 (TCC) reafrmed what had been the established position. At
paragraph 370 of the judgment, Mr Justice Akenhead states:

In any event, I am clearly of the view that, where there is an

extension of time clause such as that agreed upon in this case
and where delay is caused by two or more effective causes, one
of which entitles the contractor to an extension of time as being
a relevant event, the contractor is entitled to a full extension
of time.

It is noted that the judge made reference to an article by John

Extensions of time, LADs Marrin QC1 and what he described as a useful working denition
and concurrent delay of concurrent delay as:

where are we up to? A period of project overrun which is caused by two or more
effective causes of delay which are of approximately equal
causative potency.

For an event to give rise to an extension of time, it is established

ground that it would need to affect the works critical path an
effective cause of delay. However, with many extension of time
matters being the subject of retrospective analysis, it is possible
that a number of matters may have caused, or had the potential
to cause, critical path delay. It could be viewed that the matter
of equal causative potency introduces a level of subjective
assessment.
A relevant event (to use the JCT term) may appear on the face
of it to be de minimis in nature perhaps to undertake some
1
(2002) 18 Const LJ No.6 436
64
additional works but it may still result
in critical path delay. The contractor may
be experiencing delay which is its own
responsibility (shortage of labour is an
example used in the above judgments) but
where does this result with regards to an
extension of time being due? Perhaps to
an employer or contract administrator, the
shortage of labour may be the effective
cause of critical delay. However, if the
impact of the relevant event results in
a chain of causation upon the critical
path which delays completion, then a
contractor would feel somewhat aggrieved
if the employer is still entitled to deduct
liquidated and ascertained damages.
Time v money
It is important to emphasise the distinction
between time and money. It is entirely
possible that an extension of time may
be due, but that no loss and expense
is payable and vice-versa. The chain
of causation should apply to loss and
expense as well. However, perhaps the
apportionment approach described in the
City Inn case is more appropriate with
regards to loss and expense?
In general, time related costs such as
preliminaries would not be payable to the
contractor during a period of concurrent
delay. The contractor would still need
to be on site for the period where its
Delay Construction Law Review
concurrent delay was operative and where
costs were being incurred pursuant to the
failings of the contractor. However, where
two concurrent issues exist, it should be
possible for the chain of causation to be
established whereby costs arising from the
effect of relevant events can be recovered
by the contractor. An example would be
where the relevant event has prolonged
the period that a tower crane was needed
on site. Site staff costs are perhaps less
easily disentangled for the purpose of
attributing to a relevant event so a
degree of apportionment would perhaps
be understandable. If an extension of time
is granted, it does not necessarily result
in a situation whereby the contractor can
recover all of its time-related costs. But
in relation to time, if a chain of causation
can be established where a relevant event
has delayed completion, albeit during a
period of concurrent delay, should the
employer be entitled to deduct damages
for contractor delay during this period?
Under a traditional standard form
contract, where assessment of extension of
time is undertaken retrospectively, the full
effect of a relevant event may already be
known at the point in time an extension
of time is granted. It may be that, in
retrospect, the contract administrator takes
the view that the effective cause of critical
delay during the period the relevant event
2016 Delay
Whilst the traditional forms of contract apply
an ostensibly retrospective approach, the NEC
contracts envisage a prospective means of
calculating critical delay.
was ongoing is the lack of progress on the part of the contractor.
But this is a subjective assessment and, if the above chain of
causation can be established arising from the relevant event, the
English position reafrmed in Walter Lilly would suggest that the
contractor should be granted an extension of time.
NEC mechanism
Obviously, parties are at liberty to agree to contractual provisions
as they wish. However, it is perhaps worthwhile to reect on the
mechanism in the New Engineering Contract (NEC) with regards
to extension of time. Whilst the traditional forms of contract apply
an ostensibly retrospective approach, the NEC contracts envisage a
prospective means of calculating critical delay.
NEC envisages that the contractor will submit an electronic
programme to the project manager for acceptance and that,
pursuant to this process, the parties have an agreed baseline
programme for measuring progress and the effect that any
compensation event may have upon the planned programme. Key
to this mechanism operating correctly is that the programme is
regularly updated with progress and rescheduled to ascertain the
projected completion date as the works progress.
An example
For example, after week six of the works, the progress reschedule
indicates that the completion date has slipped by one week
due to lack of contractor progress say in relation to drainage
installation. On week seven, a compensation event arises. The
contractor undertakes an assessment of the compensation event
and submits a quotation describing the time and cost implications.
The assessed effect of the delay is inserted into the programme,
which has been rescheduled up to and including week six. This
involves the creation of new activity bar(s) within the programme
and logically linking the new bar(s) to the existing activities
as appropriate and then rescheduling the programme. If the
critical path is affected, and the completion date is delayed, NEC
envisages that an extension of time should be granted. However,
when progress is rescheduled at the end of week ten, the drainage
emerges once again as a critical driving activity. Throughout the
period of the compensation event, the drainage delay has been
ongoing and was an effective cause of concurrent critical delay.
Here, a situation exists where there is concurrent delay but the
contract provides that an extension of time should be granted
with costs.
Measuring time
Clearly one of the key objectives of delay analysis is to identify
criticality and concurrency of delay events. The process envisaged
by NEC is ostensibly a time impact analysis approach as the works
proceed. This was also the methodology that was recommended
in the rst publication of the Society of Construction Laws Delay
and Disruption Protocol. One signicant drawback of this is that
it can be a very expensive way of managing time and delay on a
65
construction project. Under the JCT and
the old Institution of Civil Engineers (ICE)
forms of contract there was no obligation
upon the contract administrator or
engineer to undertake any specic form
of delay analysis.
In City Inn, Lord Drummond Young
concluded that a complex retrospective
critical path delay analysis, in this case
where an electronic baseline programme
was unavailable, is not essential for a
partys extension of time claim to succeed.
An approach which applies the principles
of experience and common sense is to be
preferred over one that relies on a more
theoretical critical path approach. In City
Inn the parties had agreed an as-built
programme, so there was a factual basis
available for undertaking an assessment of
the effect of relevant events and contractor
progress delays. It is noted that the City
Inn judgment does not reject complex
electronic delay analysis, but it has to be
reliable with logic links being correct.
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It is understandable that in a situation
where concurrent delay exists that one
cause of delay may prima facie appear
to be more signicant than another.
However, if a concurrent employer liability
event has caused critical delay, an effective
cause of critical delay, then should the
principle that the employer has prevented
the contractor from completing its works in
the period of concurrent delay apply?
City Inn considers the JCT terminology
in relation to the architect undertaking a
fair and reasonable assessment. Perhaps
such an approach may have some merit in
resolving quantum where concurrent delay
exists, but should the employer retain the
right to deduct liquidated and ascertained
damages in a period it has caused critical,
albeit concurrent, delay to the works? In
such circumstances is the employer not
in fact beneting from its own failing in
being able to deduct damages and delay
the works?
Andrew Bayne, Partner, Centra Consult
andrewbayne@centra-consult.com
www.centra-consult.com
Should the employer retain the right to deduct
LADs in a period it has caused critical, albeit
concurrent, delay to the works?