Knowledge Bank ~ Delay Analysis – Prevention is better than Cure

Although this is a very familiar topic for many, the practical uses and application of delay analysis have been shrouded by the overly complicated technical debate on which method to use.

Looking at some of the papers on the subject presented to the Society of Construction Law shows the level of distrust and conflicting opinions; Harry Potter inspired ‘Beware the Dark Arts’ and a call-to-arms ‘A Better Way than the Best Way’.

These papers make valid points about the need to make appropriate choices when it comes to delay analysis methods; they also call into question some of the “accepted” approaches and whether they are still appropriate for today’s projects.

However, I would like to step back and look at the positive benefits of Delay Analysis, when it is needed and the questions you should be asking.

In layman’s terms, Delay Analysis is identifying and quantifying the amount of time that has been lost on a project, or may be lost in the future. The more specific Forensic Delay Analysis focuses almost exclusively on historical data from complete or partially completed projects, and is the area most prone to confusion and debate.

Supporting Informed Decision Making

So much of the debate is focused on its use for extensions of time and alleviating exposure to liquidated damages, while this is important it really is only part of the story.

The myriad of delay analysis methods may be used in a more prospective and positive manner to aid with optioneering. During the lifetime of a project, there are inevitably variations and situations that affect the original programme. Decisions need to be made when looking at alternative construction sequences and methods, and delay analysis is an excellent tool to provide robust information to support decision-making.

For projects that are struggling to deliver on time and on budget, delay analysis can also prove critical when trying to turnaround the situation. Whilst ideally it could help lead to significant cost savings, it will almost certainly support communications between employer and contractor and help prevent a breakdown in relationships. In the worst case scenario – a dispute – it will provide a record-keeping trail and demonstrate ‘best efforts‘ had been made in an attempt to deliver the project on time. Ultimately this will help increase the chances of a successful claim.

Asking the Right Questions

The thorniest issue surrounding delay analysis, and the most contested, is which is the best method to use? I would argue this is the wrong question. In truth, as with many things in the construction and engineering industries, there are no right answers – just many alternatives. Which method is the most appropriate really does depend on the nature of the project and the particular circumstances of the case including:

• Specific delay terms in the contract
• Circumstances of the delay (e.g. is concurrency an issue)
• Size of the dispute claim and lead time available
• Quality of the original construction plan and record keeping.

I believe it is far more important to ask what is the objective of the analysis, and how will it be used.

If it is for internal use to give an indication of the impact of project changes, and support optioneering on keeping the project on track then Impacted-as-Planned would be sufficient. This would also be a practical starting point for determining whether there were any potential entitlements to apply for.

However for a dispute that is going to court, then a more robust method would be needed; in Great Eastern Hotel vs John Laing Construction [2005] Judge Wilcox said the Impacted-as-Planned delay analysis ‘…takes no account of the actual events which occurred on the project and gives rise to an hypothetical answer.’ What is also becoming clear is that judges are not impressed with an overly complicated analysis, and that common sense will prevail. The Stelux Case in Hong Kong is another good example of this (see our other article on Expert Witnesses to learn more about this case).

So in conclusion, as every project is different it is impossible to be prescriptive on which method to use. What is important is using delay analysis to make informed decisions, and when necessary support those decisions in dispute resolution to get the right outcome. To decide which is the most appropriate method to achieve this – use someone skilled in its practical application to recommend the most appropriate method to you.