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15 Sep 2017

A general overview of concurrent delay in England and the US

by Craig Silcock, President, Americas - Americas

Often, changes or problems that arise during construction and engineering projects may involve delays in a particular activity on a programme or schedule, increasing time and costs with severe negative impacts on the bottom line for owners and contractors.Often, changes or problems that arise during construction and engineering projects may involve delays in a particular activity on a programme or schedule, increasing time and costs with severe negative impacts on the bottom line for owners and contractors.

The situation where both parties bear  some  of  the responsibility for those delays or when there are multiple delays that overlap to some degree, each impacting project completion at the same time, is generally referred to as “concurrent delay”. Here, typically, both the contractor and the owner contend that the other has caused  the  delays  and, consequently, the contractor will argue that it is entitled to an extension of time (and perhaps damages) and the owner, to liquidated damages.

Definition of concurrent delay

Experts, courts and academics  in  England  and  the U.S. alike have found it difficult to define concurrent delay and even  more  so  has  proved to apply consistent legal principles to it. However, from a general point of view, the following common characteristics are mostly accepted when referring to concurrent delay in both jurisdictions:

  • The delays are the  contractual  responsibility of different parties, but one may be a force majeure event or caused by a third party;
  • They must be critical, i.e. must affect completion/be on the critical path 1/substantial 2;
  • Either delay would have delayed the project even if the other delay did not exist:
  • They must be unrelated to each other/ independent of other concurrent delays in terms of when they start and end;
  • Whether the delay events are simultaneous or sequential the focus should be on the effects 3;
  • They must be involuntary.

How do courts deal with concurrent delay?

The starting point must always be the contract. Increasingly, more contracts (particularly on international projects) set out what will happen in the event of concurrent delay. Nevertheless, if the contract does not expressly address the point, going beyond the characteristics mentioned above, there is a wide disparity in how courts apply and measure concurrent delay in both jurisdictions.

In English common law, the contractor will usually be entitled to an extension of time for owner’s delay (Relevant Event), even if that delay runs concurrently with a contractor’s delay 4. Several  cases  adopt  this criterion, and although  there  are  a  number of possible formulations, a prevailing definition is found in the so called “Malmaison” approach, which states that:

“…it is agreed that if there are two concurrent causes of delay, one of which is a relevant event, and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event.”5

This position was somewhat muddied by the Scottish decision in “City Inn Limited”6 which held that if a dominant cause of delay cannot be established between each party’s delaying event, then delay should be “apportioned” (it will be seen below how “apportionment” is a major difference with the U.S. modern approach to concurrent delay).

Walter Lilly 7 expressly rejected City Inn and apportionment generally. Thus, it is safe to say that the correct way to deal with concurrent delays in extension of time claims under English law is the one set in Malmaison – albeit applied in later cases in a more restricted form 8. This view is reflected in the Society of Construction Law’s delay and Disruption Protocol (Protocol) 2017 and indeed in the earlier edition. It should be noted that the 2017 Protocol introduces an exception to the previous approach; in the event of a contractor’s delay which delays completion, and an owner’s delay starting and finishing within that period of contractor’s delay but not affecting completion, then the contractor has no right to an extension of time on the grounds that the owner’s delay has not delayed completion. It remains to be seen whether this will enable an owner to take advantage of an ongoing contractor’s delay to introduce changes/variations without awarding an extension of time.

At the time of writing, the above cases are all first instance decisions and the strict school of thought that the owner may not take account of contractor risk events is not settled law. There are therefore uncertainties. For example, the different methods of delay analysis 9 originate divergent decisions depending  on  the  circumstances,  the   parties   or the contract. Also, the Prevention Principle 10, fundamental to the justification for the award of an extension of time to cases of concurrent delay, has been questioned 11.

As for the U.S., unfortunately, despite several discussions by the courts, the clarity regarding various issues involved in the term seems to be insufficient and minimal and a definite accurate definition of concurrent delay is still not readily available.

To provide guidance and best practices for analysis of concurrency, the American Society of Civil Engineers (ASCE) defines concurrent delay as:

…a situation where two or more critical delays are occurring at the same time during all or a portion of the delay time frame in which the delays are occurring.

And the Association for the Advancement of Cost Engineering International (AACE) has defined concurrent delay as when:

• Two or more delays that take place or overlap during the same period, either of which occurring alone would have affected the ultimate completion date.

• …there are two or more independent causes of delay during the same time period.

Nonetheless, U.S. courts have struggled to apply a consistent method and currently adopt different approaches.

A traditional view has been that if delays are inextricably “intertwined”, there is no recovery 12. Intertwined delays are represented by cases where there is an inability to separate owner’s delays from contractor’s delays – due to, e.g. lack of modern scheduling  techniques  typical  of  the  beginning  of the 20th century – or a reluctance to allocate responsibility based on culpability and segregation of the delays- proper of the Juris Verdict method.

Nowadays, with the  development  of  forensic  delay analyses, the modern view is that a party(or potentially both parties) may recover damages where there are multiple causes of delay to project completion, but only when clear “apportionment”  of the delays attributable to each party has been established.

This type of analysis requires the use of a Critical Path Method (CPM)13 to identify and determine critical paths and the parties responsible for those delays. With the assistance of delay analysts, the courts aim to segregate the delays along the critical path and allocate the delay to the responsible party 14. It should be noted that this is also called “apportionment” but here, allocation is based on factual evidence (provided by the CPM) rather than culpability (as in the Juris Verdict method).

However, if the delay cannot be allocated among the parties (where CPM is not available or not workable), then, as long as sufficient evidence is provided, the courts will allow proportionate fault to govern recovery akin to a comparative fault analysis (i.e. Verdict Method, which is the position taken in the Scottish case of City Inn and rejected in England).

Conclusion

Despite  numerous   judicial   decisions,   neither the English nor the U.S. law has a coherent or comprehensive approach to the consideration of concurrent events.

In the circumstances, since delay will ultimately involve a forensic exercise trying to establish the precise facts  and  circumstances  that  gave  rise  to such delay, much will turn on the quality and maintenance of properly updated programmes/ schedules as well as good project record keeping. Dealing with this issues in the contract would also be advisable.

  1. 1 i.e. in Saga Cruises BDF Ltd & Anor v Fincantieri SpA1 the court emphasized that unless there is concurrent delay affecting a contractor’s completion date, the contractor will not be entitled to an extension of time. See also AACE RP29R -03; Santa Fe, Inc, VABCA No’s 1943 -1946, 84-2 BCA 17,341 (1984); SCL;
  2. Per AACE RP29R -03. In English law cases referring to a “dominant cause” i.e. H Fairweather & Co Ltd V London Borough of Wandsworth. (1988) 39 BLR 106) though this approach has been superseded by Malmaison.
  3. The more common form of concurrency is a delay with sequential causes and concurrent effects.
  4. English law follows a “time but no money” approach as cost relief requires to satisfy a more stringent “but for” test. The SCL and the AACE International are consistent in that the contractor is entitled to a time extension for the amount of delay caused by the owner despite the contractor- caused concurrent delay, but the contractor is not entitled to delay costs for the period of concurrent delay.
  5. Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32
  6. City Inn v Shepherd Construction Limited ScotCS CSOH 190 (30 Nov 2007)
  7. Walter Lilly & Co. Ltd v. GPC MacKay and DMW Developments Ltd [2012] EWHC 1773
  8. For example, in Saga Cruises BDF Ltd v Fincantieri SpA [2016] EWHC 1875 (Comm), the contractor’s approach was held to be too broad. The court
    narrowed Malmaison by stating that the owner’s delay must affect completion date
  9. In the first edition of its the Protocol, the SCL favoured time impact analysis. However, the second edition no longer has a preferred methodology.
  10. Also implemented in the U.S. (Peter Kiewit Sons Company v. Pasadena City Jr. College Dist. (1963) 59 C2d 241, 245, 28 CR 714, 379 P2d 18)
  11. Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848; Jerram Falkus Construction Ltd v Fenice Investments Inc [2011]
  12. Plato Gen. Constr. Corp./EMCO Tech Constr. Corp., JV, LLC v Dormitory Auth. of State of N.Y. 89 A.D.3d 819 at 826; Essex Electro Engineers.,Inc. v Danzig, 224 F3d 1283, 1295 [2000])
  13. Prevailing views are that courts have a preference for CPM as a quantitative technique, there is however no requirement that parties must use CPM in order for a claim to succeed. City of New York v. Black & Veatch, No. 95 Civ. 1299, 1997 U.S. Dist. LEXIS 15510, 1997 WL 624985, at *1 (S.D.N.Y. Oct. 6, 1997); R.W. Granger & Sons Inc. v. City Sch. Dist. of Albany, 296 A.D.2d 636, 744 N.Y.S.2d 567 (3d Dep’t 2002)
  14. In England delay analysis will never be determinative but may assist in establishing what is fair and reasonable.
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