Practical Law

Some of you may recall that last year I wrote about Rider 1 to the SCL’s Delay and Disruption Protocol. Well, we now have the long-awaited second edition, which has been published in draft form for consultation.

Delay and disruption touches on many of the disputes that you will be involved in, so I would encourage you to comment if possible. The consultation closes on 8th July 2016, and comments should be sent to feedback@eotprotocol.com.

Rider 1

The review committee was asked to tackle eight issues, and Rider 1 only dealt with two of those issues, namely:

• 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 draft second edition incorporates the amendments included in Rider 1 in response to these two issues, and also includes changes in response to the remaining six issues:

• Whether the Protocol should identify case law that has referenced the Protocol.
• Records.
• Global claims and concurrent delay in light of recent case law.
• The approach to considering claims (prolongation, disruption, time and money) during the currency of a project.
• Model clauses.
• Disruption.

I will only touch on records, concurrent delay and disruption but, before doing so, I must congratulate the review committee (and, in particular, its chair Kim Rosenberg) on the outstanding effort in producing the draft second edition. There are strong views on many of the above issues and, by the sounds of things, getting to this stage required negotiations as sensitive as those we will be seeing in Brussels over the next couple of years.

Records

It was Max Abrahamson who famously once wrote:

“A party to a dispute, particularly if there is arbitration, will learn three lessons (often too late): the importance of records, the importance of records and the importance of records. It is impossible to exaggerate the extent to which lawyers can find unexpected grounds, often quite real, on which to cast doubt on evidence if it is not backed by meticulously established records.”

The keen eyed among you will note that this is at least the third occasion that I have used Max’s famous quote (although, in fairness, that is still a fair amount less than George Osborne said he would “fix the roof whilst the sun shines“). However, that is because it is such an important principle. The first edition of the Protocol contained a model records clause, but not any detailed guidance on why it is so important to keep records, the format and storage of records, the categories of records, and so on. These issues are comprehensively addressed over ten pages of the draft second edition, together with a seven-page list of examples of records that should be kept.

If parties to construction contracts follow the guidance on record keeping set out in the draft second edition, it will make the lives of construction lawyers, experts and tribunals considerably easier and (in some instances) may help to avoid disputes altogether.

Concurrent delay

To describe concurrent delay as a contentious issue really does do it a disservice. The draft second edition has bravely gone where pretty much no other commentary on the subject has gone before, namely it has set out the meaning of concurrent delay in some detail and included a recommended approach. To date, most of the commentary on the subject of concurrency (including SCL papers) has very ably tackled how the law treats concurrent delay, but few have dealt with its actual meaning in any detail. So hats off to the review committee I say!

The draft second edition:

• Sets out the meaning of true concurrency, namely the occurrence of two or more delay events at the same time, one an employer risk event, the other a contractor risk event, the effects of which are felt at the same time.
• Recognises that a more common usage of the term “concurrent delay” concerns a situation where two or more delay events arise at different times, but the effects of them are felt at the same time.

The draft second edition stresses that in both cases, concurrent delay does not become an issue unless each of an employer risk event and a contractor risk event lead or will lead to a delay to completion, that is, they must be effective causes of delay to completion. This is quite clearly correct.

The most controversial part of the section on concurrent delay is likely to be how it deals with the question of whether an employer delay is an effective cause of delay to completion where it occurs after the commencement of a contractor delay to completion but continues in parallel with the contractor delay. The following scenario is provided:

“…a Contractor Risk Event will result in five weeks Delay to Completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in Delay to Completion from 6 February to 20 February.”

After setting out the competing approaches to this scenario, the draft second edition recommends that the employer risk event should be seen as not causing delay to completion, and therefore there is no concurrency. The only effective cause of the delay to completion is the contractor risk event.

Comment on concurrent delay

Alexandra Clough wrote an interesting piece last week that went into some detail on how the draft second edition deals with concurrency. In her view, in this scenario:

“…they are both effective causes of delay for the period of overlap. I think there is a strong argument that the contractor should be entitled to an EOT for the employer delay.”

Alexandra notes that there is much focus in the draft second edition on the importance of the critical path. In her view, this could lead to an over-reliance on delay analysis, and:

“…distract the parties from applying the legal test of causation (and a healthy dose of common sense) to the facts.”

However, in my view, understanding where the critical path ran is fundamental to the determination of concurrent delay.

When acting as adjudicator I often see contractors relying on employer risk events during a period of contractor culpable delay and claiming that these events resulted in concurrent delay, thereby giving rise to an entitlement to an extension of time. However, what these contractors often fail to appreciate is that if the employer risk event does not impact on the critical path then it has not, as a matter of fact, resulted in critical delay. As such, there is no concurrent delay or any entitlement to an extension of time. It is therefore vital to understand where the critical path runs. I don’t think this leads to an over-reliance on delay analysis, because identifying where the critical path ran is often a matter of common sense, particularly on less complex projects.

Whether you agree or disagree with the draft second edition’s approach, in my view the clear guidance provided will undoubtedly help parties to navigate their way through what can often be choppy concurrency waters.

Disruption

Despite the fact that the first edition was titled “Delay and Disruption Protocol”, it very much focused on delay, rather than disruption. Thankfully, this has now been addressed in the draft second edition, which not only provides a clear explanation of the differences between delay and disruption, but also contains detailed guidance on disruption claims, including setting out the differing methods of analysis.

The draft second edition looks at both productivity methods and cost based methods of disruption analysis, and unsurprisingly concludes that:

“The most reliable and accurate are project-specific studies, particularly a properly implemented measured mile analysis.”

Conclusion

I appreciate that the closing date for comments doesn’t give you long and that there are many other pressures on your time (including following the trials and tribulations in Westminster!), but if you do have an opportunity to take a look at the draft and comment then I know the review committee will greatly appreciate it. This is too much of an important topic not to have your say.