Practical Law

A few weeks ago a group of people emerged from a dark and smoky room after years of negotiations and announced to the world that they had at last reached agreement. No, I am not talking about the recent Iranian nuclear deal, but rather the first amendment to the Society of Construction Law’s Delay and Disruption Protocol. This has the rather catchy title of “Rider 1”.

As many of us will be aware, the dark art of delay analysis can provoke some vociferous views, and the review committee, led by Kim Rosenberg, should be commended for their efforts in reaching a consensus.

Rider 1

The Protocol’s review was prompted by an SCL meeting in April 2013 to mark its 10th anniversary. The review committee was asked to tackle eight issues, and it’s important to note that Rider 1 only covers the first two issues:

• Whether the expressed preference should remain for time impact analysis as a programming methodology where the effects of delay events are known.
• The menu and descriptions of delay methodologies for after the event analysis, including to incorporate additional commonly used methodologies.

The amendments that form part of Rider 1 will be incorporated into a second edition of the Protocol once the review of the other issues has been completed. In my view, the amendments go slightly further than addressing these two issues, but the Protocol is certainly the better for it.

Don’t wait and see

Rider 1 addresses the thorny issue of prospective versus retrospective analysis during a project. In particular, the review committee recognised that awarding an extension of time (EOT) on a prospective analysis can sometimes lead to unrealistic results if it subsequently transpires that the EOT claimed is significantly more than the delay attributable to an employer risk event. However, like the drafters of the first edition, the review committee decided that clarity is of prime value to the project participants, and have elevated the contemporaneous submission and assessment of EOT claims to a core principle:

“Applications for EOT should be made and dealt with as close in time as possible to the delay event that gives rise to the application (see Guidance Section 1.2.4). A ‘wait and see’ approach to assessing EOT is discouraged.”

This makes a great deal of sense and I agree that it is certainly an aim the SCL should be promoting. However, there is little point in those involved in construction law promoting this aim without those involved in live projects taking it on board. We’ve somehow got to get this message across to the industry and, in particular, those involved in projects other than multi-million pound schemes involving an army of programmers.

After the event analysis

Those of you familiar with the first edition of the Protocol will be aware that it recommended the use of time impact analysis to determine a contractor’s entitlement even when the analysis was being undertaken some time after the delay event. In a nutshell, it recommended the use of a prospective method retrospectively. The first edition recognised that the resulting EOT “may not precisely reflect the actual delay suffered by the Contractor”, but stated that it nevertheless reflected the contractor’s entitlement. The first edition also stated:

“The Protocol recommends that, in deciding entitlement to EOT, the adjudicator, judge or arbitrator should so far as is practicable put him/herself in the position of the CA at the time the Employer Risk Event occurred.”

Obviously, the method adopted will depend on the provisions in the relevant contract, but ignoring that for a moment, applying a prospective method retrospectively makes little sense to me. I have dealt with a fair amount of extension of time claims over the years, whether as the contract administrator or acting as the adjudicator. The concept that a contractor could be entitled to an extension of time of, say, eight weeks on the basis of a time impacted analysis, even though the delay actually suffered was, say, four weeks, has always troubled me. It can lead to situations where the contractor is, in theory, entitled to an extension of time beyond the date when practical completion was achieved.

Thankfully, the drafters of Rider 1 have recognised the above problems and have removed the preference for time impact analysis for assessments undertaken some time after the delay event. The entirety of the guidance on retrospective analysis has been replaced, and there is now a menu of delay analysis methodologies. The selection of which method is appropriate for a particular dispute is dependent upon a range of criteria, including the available documentation.

I have to say that the review committee have done an excellent job in drafting descriptions of the different delay analysis methodologies that are simple and user friendly. Most importantly though, the review committee have recognised the importance of common sense in delay analysis. As they say in the preamble to Rider 1:

“…irrespective of the methodology, fundamentally the conclusions of the delay analysis must be sound from a common sense perspective in light of the facts that actually transpired on the project. This is because a theoretical delay analysis which is divorced from the facts and common sense is unhelpful in ascertaining whether in fact the relevant delay event caused critical delay to the completion date and the amount of that delay.”

I could not have put this better myself, and the importance of a common sense analysis based on the facts cannot be underestimated. You don’t need a logic-linked analysis to tell the tribunal that a roof cannot be completed without the structural frame in place.

Rider 2 awaited

I enjoyed reading Rider 1, but I’m now looking forward to the next instalment, which will have to grapple with more controversial issues, such as global claims and concurrent delay. The resulting Rider might prove to be a bit of a storm!