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Retrospective delay analysis

Assessment and float


The assessment for an extension of time must be supported by some form of analysis. The extent of the
analysis may depend on the nature of the delaying event, the complexity of the project, and whether the
submission relates to a simple notification of a likely delay to the architect or demonstration of delay in a
more formal arena.
Delay analysis is increasing in importance in the UK, with many surveyors identifying the need for a
more detailed analysis than has been the norm. Surveyors, architects and engineers should take note of
a number of important recent judgments when conducting such analyses. The judgements are
considered in some detail in the cases resource.

Importance of logical assessment


Those responsible for analysing delay need to conduct a proper retrospective delay analysis. It is no
longer acceptable (if it ever was) to award an extension of time or assess prolongation costs based on
an impressionistic view formed from a comparison of simple bar charts.
This principle was highlighted by the case of John Barker Construction Ltd v London Portman Hotels Ltd
[1996] 83 B.L.R 31, where the judge held that the effect of the architect making an impressionistic,
rather than a calculated and logical, assessment of the contractor's entitlement to an extension of time,
was to introduce a fundamental flaw into his assessment. The architect's award was therefore
disregarded by the court, which used the contractor's own delay analysis to determine the contractor's
entitlement to an extension of time.
It is also important not to get too carried away with the delay analysis process. In Skanska Construction
UK Ltd (Formerly Kvaerner Construction Ltd) v Egger (Barony) Ltd [2004] EWHC 1748 (TCC) a delay
analyst who had been called as an expert witness was criticised by the judge for having prepared a
report of some hundreds of page, supported by 240 charts, but having undertaken inadequate research
and checking of the facts. Also, in City Inn Ltd v Shepherd Construction the court held that a formal
critical path analysis may assist, but is not a necessity.

Ownership of float
The ownership of any float contained within a contractor's programme is a much debated issue and has
been argued about for many years.
The case of Ascon Contracting Ltd v Alfred McAlpine Construction Isle of Man Ltd [1999] touched on the
issue of float and provided some useful guidance on delay analysis, as well as illustrating the difficulties
faced by a main contractor when trying to pin the blame for project delay onto its subcontractors.

Concurrent delays
Where a claim or certain claims for money are made under the contract, the starting point must be to
consider the terms of the clauses relied upon under the contract. The meaning of the clauses may be
determinative of the approach to apply to causation, without any sophisticated analysis of the principles
of causation, even if there is more than one competing cause of delay. However (more usually), the
meaning of the relevant clauses may not answer the question as to which approach should be applied.
In law, a number of approaches to causation have been suggested. In the context of apportioning loss
arising out of competing causes, Keating on Building Contracts (see Further information for full details of
this publication) suggests four possible approaches:

Devlin approach If a breach of contract is one of two causes of a loss, with both causes
cooperating and both of approximately equal efficacy, then the breach is sufficient to carry
judgment for the loss (Heskell v Continental Express Ltd [1950], 1 All ER 1033 per Devlin J).
dominant cause If there are two causes, one the contractual responsibility of the defendant
and the other the contractual responsibility of the claimant, then the claimant succeeds if they
establish that the cause for which the defendant is responsible is the effective, dominant cause.
The question as to which cause is dominant is a question of fact, to be decided by applying
commonsense standards.
burden of proof The claimant must effectively prove that 'but for' the defendant's breach of
contract, they would have suffered no loss.

tortious approach The claimant recovers if the cause upon which they relied caused or
materially contributed to the delay.

The 'burden of proof', or the 'but for' approach to causation has been generally rejected as the correct
approach (see Galoo Ltd v Bright Grahame Murray).
The editors of Keating submit that the correct approach to apply in instances of concurrency in
construction contracts is the dominant cause approach. The other approaches are rejected primarily
because they fail to answer what is referred to as the 'obverse problem'.
The obverse problem arises because of reciprocal claims made for the same delay. It is considered a
nonsense for both the contractor and employer (or, for that matter, the main contractor and
subcontractor) to have valid cross-claims against each other for the same period of delay, each relying
on a competing cause for delay. It is considered that the dominant cause approach avoids such a result.
An analogy is drawn with insurance cases, which require the identification of the dominant cause by
applying commonsense standards. The leading insurance case of this type is the decision of the House
of Lords in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] A.C. 350.
The dominant cause approach has also found favour in the opinions of Lords MacLean, Johnston and
Drummond Young in the Scottish case of John Doyle Construction Ltd v Laing Management (Scotland)
Ltd. In this case the court's opinion was that the question of causation must be treated by 'the
application of common sense to the logical principles of causation': John Holland Construction &
Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd, BLR 84I per Byrne J.; Alexander v Cambridge Credit
Corporation Ltd, (1987) 9 NSWLR 310; Leyland Shipping Company Ltd v Norwich Union Fire Insurance
Society Ltd, [1918] AC 350, at 362 per Lord Dunedin.
In this connection, it is frequently possible to say that an item of loss has been caused by a particular
event notwithstanding that other events played a part in its occurrence. In such cases, if an event or
events for which the employer is responsible can be described as the dominant cause of an item of loss
that will be sufficient to establish liability, notwithstanding the existence of other causes that are to some
degree at least concurrent. That test is similar to that adopted by the House of Lords in Leyland
Shipping Company Ltd v Norwich Union Fire Insurance Society Ltd [1918] A.C. 350.
The dominant cause approach also found favour in the Court of Appeal in Midland Mainline Ltd and
Others v Eagle Star Insurance Company Ltd [2004] EWCA Civ 1042 which involved compensation for
losses following the Hatfield train crash and also most recently in City Inn Ltd v Shepherd Construction
Ltd.
It is recognised that the dominant cause approach is very much an 'all or nothing approach' to
causation. In other words, if Party A proves that Party B was the dominant cause of delay, its claim will
succeed even though Party B might have proven that Party A was also culpable to an extent.
Conversely, if Party A proves that Party B acted in breach of contract and was a cause of delay, or even
that Party B was an equally effective but not dominant cause of delay, Party A may be left without a
remedy and Party B will escape liability for its breach.
It is possible to derive from the authorities two approaches alleviating the potential harshness of the
dominant cause approach. The first is really a restatement of the Devlin approach set out above. The
second is based on a willingness to apportion damages between the claimant and defendant in cases of
concurrent causation where the claimant and defendant are both culpable.

Restatement of the Devlin approach


If a breach of contract is one of two causes, both cooperating and both of equal efficacy in causing loss
to the claimant or referring party, then the party responsible for the breach is liable to the claimant or
referring party for that loss. The contract-breaker is liable so long as their breach was 'an' effective
cause of the loss: the court need not choose which cause was the most effective. This proposition
restates the dicta of Devlin J in Heskell v Continental Express Ltd, an approach approved by the Court
of Appeal in the more recent cases of Banque Keyser SA v Skandia (UK) Insurance [1990] 1 QB
665, County Ltd and another v Girozentrale Securities [1996] 3 All ER 834 and Flanagan v Greenbanks
Ltd (t/a Lazenby Insulation) [2013] EWCA Civ 1702.

If the above approach is applied, it only requires Party A to prove that Party B was an effective cause of
the delay. Party A does not need to prove that Party B was more effective than itself in causing delay.
Accordingly, the claim assessor does not need to identify the dominant cause of delay, so long as they
are satisfied that Party B was an effective cause of the delay.

Apportionment of damages in cases of concurrent causation


This approach requires the claim assessor to consider the respective potency of both parties' conduct to
the overall delay and allocate the financial consequences depending on the respective potency.
It is correct to state that the courts have historically tended to apply the principles of causation in an 'all
or nothing' way. In the absence of statutory authority, the courts have declined to apportion damages as
between two or more competing causes. The Law Reform (Contributory Negligence) Act 1945 permits
apportionment of loss by the reduction of the claimant's damages where they 'suffer damage as the
result partly of their own fault and partly of the fault of any other person'. The Act only applies to claims
in contract in certain exceptional cases.
However, in recent cases determined by English courts, the court has apportioned damages in cases
involving competing causes, even though in each case the Law Reform (Contributory Negligence)
Act1945 was held to have no application. (See Tennant Radiant Heat Ltd v Warrington Development
Corporation.)
The case of Tennant was considered briefly by the Court of Appeal in Bank of Nova Scotia v Hellenic
Mutual War Risks Association (Bermuda) Ltd [1990] 1 QB 818 at 904. The Court of Appeal did not
disapprove of the decision, although May LJ said, obiter:
'Similarly, we think that the facts and circumstances of the present case are such that it can and
should be easily distinguished from those in Tennant Radiant Heat Ltd v. Warrington Development
Corporation [1988] 1 E.G.L.R. 41, decided in this court on 16 December 1987. We merely add
respectfully our view that the scope and extent of this last mentioned case would have to be a
matter of substantial argument if the principle there applied were to arise for consideration in another
case.'
However, the case of Tennant was applied by HHJ Hicks QC in W Lamb Ltd (t/a The Premier Pump &
Tank Co) v J Jarvis & Sons Plc. In fact, the judge considered that the decision in Tennant was binding
upon him.
There is also the dicta of Brandon J in the case of The Calliope, Carlsholm (owners) v Calliope (owners)
[1970] 1 All ER 624 at 638, supporting the view that in principle, concurrent causation should be capable
of being reflected in the apportionment of damage.
More recently, in the Scottish case of John Doyle Construction Ltd v Laing Management (Scotland)
Ltdthe court's opinion was that even if it cannot be said that events for which the employer is
responsible are the dominant cause of the loss, it may be possible to apportion the loss between the
causes for which the employer is responsible and other causes. In such a case it is obviously necessary
that the event or events for which the employer is responsible should be a material cause of the loss.
Provided that condition is met, however, the judges were of opinion that apportionment of loss between
the different causes is possible in an appropriate case. This approach was followed again by the
Scottish courts in City Inn v Shepherd Construction Ltd.

Malmaison approach
John Marrin QC, in an article on concurrent delay ((2002) 18 Const LJ at 436), submits that the correct
approach is what has been described as the Malmaison approach, derived from the case of Henry Boot
Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd [2001] Q.B. 388. It is important to note that
this case did not directly consider the correct approach to apply to causation in claims for money under
the contract or for damages for breach of contract in cases where the causes of delay were
concurrent. This approach was recently validated in the case of Walter Lilly and Co Ltd v Mackay [2012]
EWHC 1972 (TCC).

In the Malmaison case, Dyson J determined an appeal relating to a dispute on the pleadings in an
arbitration as to the extent of the inquiry which the arbitrator was entitled to undertake to resolve one of
the contractor's extension of time claims. The judge recorded that it was common ground between the
parties that if there were two concurrent causes of delay, one a 'relevant event' (as defined in a standard
form contract) and the other not, then the contractor would be entitled to an extension of time for the
period of delay caused by the relevant event, notwithstanding the concurrent effect of the other event. A
simple example was given (at 37, para. 13):
'If no work is possible on site for a week not only because of exceptionally inclement weather (a
relevant event), but also because the contractor has a shortage of labour (not a relevant event), and
if the failure to work during that week is likely to delay the works beyond the completion date by one
week, then if he considers it fair and reasonable to do so, the architect is required to grant an
extension of time of one week. He cannot refuse to do so on grounds that the delay would have
occurred in any event by reason of the shortage of labour.'
The suggested rationale for this approach is that it does no more than reflect the allocation of risk
agreed upon by the parties when they entered into their contract. The suggestion is that, in allocating
risks as between themselves, the parties may be taken, first, to have recognised that any one delay or
period of delay might well be attributable to more than one cause and, secondly, to have agreed,
nevertheless, that provided that one of those causes affords grounds for relief under the contract, then
the contractor should have his relief. (See also the case of Royal Brompton Hospital NHS Trust v
Hammond (No. 7) [2001] 76 Con LR 148, QBD (TCC) per HHJ Seymour.)
The following points might be made in relation to the article by John Marrinand
the Malmaison approach.
Although doubts are expressed about the dominant cause approach, it is thought that this is in the
context of a contractor's rights to extensions of time, rather than causation generally.
Even if the Malmaison approach is applied and the subcontractor is entitled to an extension of time,
notwithstanding concurrent causes of delay, it does not follow that the sub-contractor should be entitled
to any compensation for the period of the extension. This is recognised in the Delay and Disruption
Protocol: Hunting Snarks Const. L.J .2003, 19(3), 135-143 published by the Society of Construction
Law.
The Protocol suggests that the contractor should not be entitled to any compensation unless it can
separate out additional costs caused by the employer's delay from those caused by its own delay. This
gives rise to the question of what approach should be taken to causation in determining a
subcontractor's money claim for prolongation under the contract.
The Protocol does not expressly deal with this issue, but from its formulation of the contractor's
entitlement, it appears to advocate the 'but for' test. In other words, unless the subcontractor can prove
that but for the delay caused by the contractor it would not have incurred additional costs, its claim for
compensation will fail.
The suggested rationale for the Malmaison approach is that the parties have agreed to allocate the risk,
in the knowledge that any one period of delay might be attributable to more than one cause. It is
submitted that this rationale is highly questionable. It is difficult to see why (or how) the parties should be
taken to have allocated the risk, in circumstances where it is conceivable that both the contractor's claim
for prolongation and the passing down of liquidated damages might fail because of the subcontractor's
entitlement to an extension of time. A subcontractor's claim for compensation will also fail, unless it can
prove that its loss and damage was caused exclusively by the contractor's delay, as opposed to its own.
In addition, this scenario potentially gives rise once again to the obverse problem.
This text is derived from an opinion prepared by Jonathan Lewis, a barrister at 9 Stone Buildings. It has
been subsequently edited and is included here with his kind permission.

Records

Delay analyses, particularly when undertaken retrospectively are highly dependant on the availability of
contemporaneous records and therefore preparation should be carefully managed by those
administrating contracts from the commencement of each project.
Most contractors maintain various contemporary records on construction projects as a matter of policy,
as a management tool, because of contract requirements and to comply with statutory duty. Many of
these record the progress of the works and what in the event occurred. These types of record include:

progress meeting records;

programme progress updates;

short-term programmes and updates;

marked-up drawings;

progress photographs;

general correspondence;

concrete-pour records;

daily site diaries and labour allocation sheets;

general meeting minutes; and

subcontractors' formal handover sheets.


In practice many of these records contain insufficient detail, are inaccurate or incomplete, and in some
cases not kept at all. The quality and detail of the records are likely to vary considerably for different
sections and time periods of the works and it is not unusual to find that the client's team have made no
formal requests for records required under the contract nor for that matter a formal complaint when they
do not appear.
Record keeping tends to improve as the risk of a dispute increases with the parties looking a little more
closely at the terms of the contract. The importance of keeping adequate and appropriate records
cannot be over emphasised.

Carrying out a delay analysis


There are 5 main delay analysis techniques:

as-planned v as-built;

as-planned impacted;

collapsed as-built;

windows analysis;

time impact analysis.


The as-planned v as-built is a simple comparison between the planned programme and the as-built
programme. It is therefore a simple graphical comparison between what was planned to happen and
what in the event actually did happen.
The as-planned impacted method operates by adding or 'impacting' the claimed delaying events onto
the planned programme. By adjusting the programme to take account of the effect of these events a
revised programme is produced indicating their impact.
The collapsed as-built involves removing the claimed delaying events from the as-built programme
causing it to become shorter or to 'collapse'. The aim is to produce a programme which reflects what
would have happened 'but for' the effects of the delaying events.
Windows analysis breaks the works into discrete periods of time or 'windows'. By utilising
contemporaneous progress information the status of the progress achieved in each window can be
determined and explanations sought.
Time impact analysis is similar to the windows analysis but rather than looking at delays within defined
windows of time the actual timing and duration of the delaying event forms the period for analysis.
Which technique should be used will be dependent on many factors including whether the delays are
being considered during the course of the works 'prospectively' or retrospectively; the terms of the
contract; the information available; the nature of the work; and the amount in dispute.
All of these techniques attract a certain amount of criticism and it is likely that they will produce differing
results. With the exception of the as-planned v as-built, the above methods rely on the technique known
as critical path analysis which brings with it problems associated with the need for certainty and possible
theoretical and deterministic results. The use of critical path based software often results in the delay
analyst concentrating more on the manipulation of the software and generation of voluminous
programme charts than a review of the factual evidence.
Whichever method is used to analyse delay it must be robust and produce a result that accords with
common sense and the factual evidence.

Concluding the evaluation


Having raised queries and made requests for information, and given due time for the receipt of the
same, the claim assessor may conclude the evaluation on the basis of data to hand.
The burden of proof remains with the contractor. The claim assessor cannot be expected to speculate
some time after the event as to why, for example, additional resources were employed. This is
particularly relevant where details that could have been supplied were not. In this respect, allegations
must be substantiated and every opportunity should be given to ensure that facts are verified at the
time.
Wholly unsupported details and lump sums or claims valued on the basis of anticipated cost set against
actual costs are not generally acceptable evidence of actual additional expense caused by events for
which the employer is responsible. In such circumstances, the claim assessor should determine an
evaluation based on details to hand.
Failure with regard to the timely or adequate provision of necessary information is justification for the
claim assessor to complete the evaluation using only the information made available, in accordance with
the conditions of the contract. It is also justification for deductions to be made to finance charges if the
late information has delayed payment.
Failure in this respect by the contractor may also lead to a refusal to pay such expense in cases where
delay has genuinely prevented or substantially prejudiced the investigation of any claim by the claim
assessor.
However, it should be remembered that an adjudicator or arbitrator is usually given full powers to open
up and review all opinions, decisions, certificates and so on. Therefore, if information is provided after
the final account has been prepared, this must be considered by the claim assessor when advising the
client on potential liabilities in any adjudication or arbitration.
Having concluded the recommendation on the above basis, no further detailed review need be
progressed until reasonable data is to hand. However, attempts at resolving disagreement over
valuation of loss, expense or delay may be undertaken, bearing in mind the option of referring the
dispute to adjudication or to arbitration.