Practical Law

Have you read the SCL’s delay and disruption protocol? I am sure you have, as the SCL website notes that it has been downloaded 38,500 times. But if not, I would recommend it to you, in particular its helpful glossary of terms, its reminder of the various formulae for calculating lost overheads and profit, and its description of various methods of delay analysis.

Unlike the first edition of the protocol, which recommended time impact analysis, the second edition (published in February 2017) does not recommend one particular method, but sets out the following six methods together with their features, and pros and cons:

• Impacted as-planned analysis.
• Time impact analysis.
• Time slice windows analysis.
• As-planned v as-built windows analysis.
• Longest path analysis.
• Collapsed as-built analysis.

What the protocol lacks, of course, is any standing either in terms of incorporation into contracts or judicial recognition. The SCL website carries a list of judicial references not just from the courts of England and Wales but also from Australia, Hong Kong and Norway. However this list is disappointingly short (just 12 cases) and a reading of the cases shows an underwhelming lack of support from judges.

In the courts of England and Wales, recent judicial discussion of delay analysis has tended to revolve around the distinction between the various prospective and retrospective methods of delay analysis and whether the method used influences the conclusion. In Fluor Ltd v Shanghai Zhenhua Heavy Industries Ltd, the TCC acknowledged (at paragraph 275) that retrospective and prospective methods of delay analysis were likely to lead to different outcomes.

From Australia, New South Wales to be precise, comes another case to add to the SCL’s list of judicial references. Unfortunately, White Constructions Pty Ltd v PBS Holdings Pty Ltd follows the same pattern as the other cases.

Background

White, a property developer, sought to develop a saddle-shaped piece of land in New South Wales. It engaged PBS to produce a sewage design. The development was delayed, and White claimed that the delay was caused by PBS’ failure to prepare a satisfactory sewer design within a reasonable time.

White alleged that the sewer design delays caused the development to be delayed from July 2016 to March 2017. In order to prove its case, it engaged a civil engineer programmer, Mr Shahady. PBS instructed its own programmer, Mr Senogles. Although the experts were able to agree an as-built programme, and that nothing prior to May 2016 had any effect on the completion date, they were unable to agree on anything else, for example which methodology to adopt.

Mr Shahady, using an as-planned versus as-built windows analysis, concluded that the development could have been completed by July 2016, had it not been for the 240 days of critical delay caused by the late provision of the sewer design, and changes to that design. Mr Senogles adopted a collapsed as-built analysis, to create a hypothesis of what might have happened had the delay events not occurred. He concluded that the works could not have been completed before 10 February 2017 in any event, in part due to variations unrelated to the sewer works.

Decision

The court noted the comments of Bleby J in Alstom Ltd v Yokogawa Pty Ltd (No 7) that a particular method of delay analysis adopted by an expert was:

“… not… an accepted method of delay analysis for construction programming practitioners and…  was not mentioned in the [SCL] Protocol as an accepted method of delay analysis.”

However, it disagreed with this analysis commenting that:

“… the fact that a method appears in the [SCL] Protocol does not give it any standing, and the fact that a method, which is otherwise logical or rational, but does not appear in the [SCL] Protocol, does not deny it standing.”

Relying on an expert engineer to assist it, the court held that neither method adopted by the parties’ experts was appropriate for this case.

The court was critical of both approaches. White’s expert:

• Did not consider the additional time to complete non-sewer works.
• Assumed logic links applied to the as-planned programme, meaning that it assumed causation rather than identifying evidence of causation.

PBS’ expert’s approach on the other hand:

• Didn’t accord with common sense.
• Used logic links that were unsustainable.
• Obscured the inefficient performance of the works.

Instead, the court accepted the expert advisor’s opinion that it should apply a common sense approach to causation. It was necessary to look at the “raw data”, such as the site diary, to identify the true causes of delay, and to assess whether White had proved its case that the sewage design delayed the project as a whole. White failed to discharge the burden of proof and the case was dismissed.

What can we learn?

Obviously as an Australian case this is not binding on the English courts. And in the types of complex disputes we come across, delay analysis evidence is both necessary and helpful in making sense of the ever increasing volume of “raw data”.

However, this case acts as a reminder that we do need to remain aware of the differing outcomes provided by the various methods, and to sense check experts’ reports by cross-referencing them with the evidence.