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04 Nov 2019

Delay analysis under the microscope: common sense wins out over methodology

by Stephen Rayment, Group Managing Director -

This article considers recent incremental legal developments concerning the often murky world of delay analysis methodology and offers a salutary warning to expert delay analysts who ignore facts, unwittingly or otherwise, in preference for recognised but hypothetical analysis methodologies.

Here, I focus on a recent development concerning the Society for Construction Law: Protocol for Delay and Disruption, 2nd Edition, 2017, cognisant that other methods of delay analysis have been published that are also held persuasive by Courts in a variety of jurisdictions.

Background

The Society of Construction Law (SCL) first published its Delay and Disruption Protocol in 2002 with an update published in 2017 [1]. The Protocol represents guidance only on some of the common delay and disruption issues that arise on construction projects and aims to be consistent with good practice, “but is not put forward as the benchmark of good practice in the construction industry.”

Whilst various methodologies containing the Protocol have been persuasive in Court proceedings – they are not binding on contracting parties or any court or tribunal unless the parties expressly agree. Notwithstanding, the Protocol has, more so in Australia than the UK, been used as the benchmark reference point for delay and disruption issues.

Early adoption of the SCL Protocol 2nd Edition came in the 2017 Supreme Court of Queensland’s decision in Santos v Fluor [2] . That decision gave credence to the Protocol in determining party culpability for delays and disruption on construction projects. A significant element of the Protocol deals with methods of delay analysis.

Core principle No.4 (“”Do not “wait and see” regarding impact of delay events (contemporaneous analysis)”” recommends that “the parties should attempt so far as possible to deal with the time impact of Employer Risk Events as the work proceeds” but if, in the event, this is not possible, Protocol Section 11 of Guidance Part B: Guidance on Core Principles, lists six alternative methods of retrospective delay analysis and offers guidance on their individual application;

1. Impacted As-Planned Analysis
2. Time Impact Analysis
3. Time Slice Windows Analysis
4. As-planned versus As-Built Windows Analysis
5. Retrospective Longest Path Analysis
6. Collapsed As Built Analysis

The Protocol offers guidance as to the composition of each of these methodologies, which can in practice involve highly complex analysis and in some cases where contemporaneous records are not readily available, a fair degree of hypothesis which is then used to persuade a tribunal on the balance of probability.

A change in perspective: White v PBS, 2019

The 2019 New South Wales Supreme Court Judgment in White Constructions v PBS Holdings [3] examines retrospective expert delay analysis based on hitherto recognised methodologies, offering a common sense solution based on facts.

The case concerned claims arising out of disputed project delays. Each party disputed and proffered a different type of delay analysis methodology enumerated by the Society for Construction Law Delay and Disruption Protocol to support their hypothetical argument.

The Claimant (Employer) claimed AUD$ 1,935,000 (originally AUD$ 3,000,000) for sewerage system design delays it said were caused by (two) Defendants (a water servicing coordinator and a sewer designer) that consequently caused significant overall delays to completion of the whole project.

Each party appointed an expert delay analyst. Although the delay experts managed to agree the as-built programme, they could not agree on an appropriate delay analysis methodology to be adopted. Consequently, two alternative analyses were produced using different SCL protocol methodologies and which arrived at diametrically opposing outcomes. The Defendant’s expert used the so-called “collapsed as-built” (or “but for”) analysis whereas the Claimant’s expert used the “as-planned versus as-built windows analysis”. Each expert then sought to discredit the other’s approach.

Hammeschalg J sagely observed: “Plainly both experts are adept at their art. But both cannot be right. It is not inevitable that one of them is right.” [4] And; ….”It is not inevitable that one of these methods is the appropriate one for use in this case. The expert reports are complex. To the unschooled they are impenetrable. It was apparent to me that I would need significant assistance to be put in a position to critically evaluate their opinions and conclusions”. [5]

And so, off went the Judge, invoking UCPR r 31.54 [6] to appoint his own expert, an appointment with which the parties agreed, but whose expert advice “demonstrated that the complexity that has been introduced (by the party appointed delay analysts) is a distraction [7].

Whereas the Defendant’s expert hypothesised using “logic links” about what might have happened had delay events not occurred, the Claimant’s expert used windows framed by contemporaneously updated programmes, milestones or significant events to determine the cause of slippage and delays.

The Judge noted the Court appointed expert’s opinion that “the fact that a method appears in the Protocol does not give it any standing, and that the fact that a method, which is otherwise logical or rational but does not appear in the Protocol, does not deny it standing.” [8]

The Court appointed expert’s approach was to take close consideration and examination of the actual evidence of what was happening on the ground to reveal whether the claimed delays caused overall project delays.

“The only appropriate method is to pay close attention to the facts” [9]…..the primary source of evidence as to what was happening on the ground is the Cleary Bros (Contractor’s) site diary (the diary).[10]

Surprisingly, the Judge did not say in his Judgement whether either party appointed expert had attempted to reference factual data and discounted that approach, or identified any limitations on another common sense approach using contemporaneous records. Even if one or both experts did make some attempt to do so, this was not made sufficiently evident to the Judge, or clearly signposted within respective expert reports.

Ultimately, the Court appointed expert reported his opinion based on an analysis of contemporaneous records, concluding that the Claimant’s delay claim was not made out on the facts. The Judge accepted this opinion and dismissed the claim.

At the time of writing, the outcome of any cost award, in particular amounts for expert’s costs, is not known. Considering the Judge’s treatment of the party appointed experts’ reports leading to a Court appointed expert, it would not be a surprise to learn that the winning party’s cost award reflects this turn of events.

Conclusion

White v PBS reinforces the requirement to produce logical and coherent expert delay analysis.

Often, one or more methodologies listed in the Protocol, or other recognised methodologies are cited in cases. Failure to adopt a recognised methodology can, in certain situations, result in outright rejection of the expert’s evidence.

However, credible application of a recognised delay analysis methodology, evidenced where possible with facts and evidence, is key to delivering a persuasive expert opinion.
Where available, contemporaneous records and factual evidence take priority over hypothetical analysis and expert opinion (that may disregard facts which are readily available).
An expert’s duty is to the tribunal. Respective party experts should cooperate with one another and seek agreement where possible.

An unwanted by-product of failing to take account of facts where evidence is clearly available, may result in adverse cost issues, even for the successful party, when a party appointed expert delay analyst’s report is rejected.

References

  1. 2nd Edition
  2. Santos Ltd v Fluor Australia Pty Ltd [2017] QS 153
  3. White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166
  4. Judgment para 18
  5. Judgment para 21 and 22
  6. Uniform Civil Procedure Rules 2005 (NSW) (UPCR) rule 3.54 Assistance to the court by other persons (i.e.; court appointed experts.)
  7. Judgement paragraph 26
  8. Judgment paragraph 191
  9. Judgement paragraph 197
  10. Judgement Paragraph 204
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