Extension of Time Flashcards
Contracts generally include a clause (or a series of clauses) relating to the management of the completion date and the granting of extensions of time to that completion date. With reference to a standard form building contract, identify:
i. The key components of the time-related clauses in it
i. Key components of the time-related clauses in a standard form building contract include:
The date for completion: This specifies the date by which the works are to be completed.
The obligation to proceed with due diligence: The contractor is required to proceed with the works with due diligence and in accordance with the contract.
Extension of time: The contractor may be entitled to an extension of time if they are delayed by certain events beyond their control, such as weather or strikes.
Liquidated damages: The contract may include a provision for the employer to claim liquidated damages if the contractor fails to complete the works by the date for completion.
Contracts generally include a clause (or a series of clauses) relating to the management of the completion date and the granting of extensions of time to that completion date. With reference to a standard form building contract, identify:
i. The key case law which underpins the need for these clauses – with brief notes as to which case applies to which component.
The key case law which underpins the need for these clauses are:
Henry Boot Construction (UK) Ltd v Alstom Combined Cycles Ltd (2005) - This case established the principle that the contractor has an implied obligation to complete the works by the date for completion, even if the contract does not explicitly state this.
Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (2007) - This case clarified that an extension of time will only be granted if the relevant event causing delay falls within the contractual definition of a relevant event, and if the contractor has used due diligence to avoid or mitigate the delay.
Jerram Falkus Construction Ltd v Fenice Investments Inc (2011) - This case highlighted that an express obligation to proceed with due diligence is necessary in order for the employer to be able to rely on this obligation to refuse an extension of time.
Pick two of the major delay-related cases from the past 20 years and, in under 500 words, briefly outline the specific issues discussed by the judge and note his findings. Provide enough detail to demonstrate an understanding of the relevant principles/key “Delay Analysis” issues raised in it.
Walter Lilly & Company Ltd v Mackay (2012)
In this case, Walter Lilly & Company was hired by Mackay as the main contractor to construct a house under a JCT contract. The contract had a completion date of 31 May 2008, which was later extended to 30 November 2008. However, due to various delays, the project was not completed until 22 December 2009. Mackay claimed that Walter Lilly was liable for liquidated damages for the delay, while Walter Lilly claimed that they were entitled to an extension of time.
The judge found that Walter Lilly was entitled to an extension of time as they had been delayed by events beyond their control, such as late instructions from Mackay and issues with the design. The judge also found that Mackay was not entitled to liquidated damages as the clause in the contract was a penalty rather than a genuine pre-estimate of loss, and therefore unenforceable.
Carillion Construction Ltd v Emcor Engineering Services Ltd (2017)
In this case, Carillion was the main contractor for a construction project, and Emcor was a subcontractor hired to carry out mechanical and electrical works. The contract required Emcor to complete their works by a specified date, and stated that time was of the essence. Emcor did not complete the works by the specified date, and Carillion terminated the contract and claimed damages for delay.
The judge found that Emcor was in breach of contract for failing to complete the works by the specified date, and that time was indeed of the essence. The judge also found that Emcor had failed to show that they were prevented from completing the works on time due to circumstances beyond their control, and therefore Carillion was entitled to damages for the delay.
List any five cases in which the judgement discusses matters pertaining to the construction programme or delay analysis. Briefly outline the specific issues discussed by the judge, noting his findings in sufficient detail to demonstrate an understanding of the relevant principles.
Here are five cases that discuss matters pertaining to the construction programme or delay analysis:
Royal Brompton Hospital NHS Trust v Frederick A Hammond & Ors (2001)
In this case, the judge considered the validity of a delay analysis carried out by the contractor’s expert, which used a method known as “impacted as-planned”. The judge ultimately found that the analysis was flawed as it did not take into account the actual progress of the works, and instead relied on assumptions that were not supported by the evidence.
City Inn Ltd v Shepherd Construction Ltd (2010)
In this case, the contractor claimed an extension of time due to delays caused by the employer’s failure to provide access to the site. The judge considered the delay analysis carried out by the contractor’s expert, which used a “collapsed as-built” method. The judge found that the analysis was flawed as it did not properly take into account the impact of other delays on the critical path of the works.
North Midland Building Ltd v Cyden Homes Ltd (2017)
In this case, the contractor claimed an extension of time due to delays caused by the employer’s instructions to carry out additional work. The judge considered the delay analysis carried out by the contractor’s expert, which used a “time impact analysis” method. The judge ultimately found that the analysis was valid and that the contractor was entitled to an extension of time.
Multiplex Construction Europe Ltd v Bathgate Realisations Civil Engineering Ltd (2007)
In this case, the contractor claimed an extension of time due to delays caused by the employer’s failure to provide access to the site. The judge considered the delay analysis carried out by the contractor’s expert, which used a “windows analysis” method. The judge found that the analysis was flawed as it did not properly take into account the impact of other delays on the critical path of the works.
Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar (2014)
In this case, the contractor claimed an extension of time due to delays caused by the employer’s interference with the works. The judge considered the delay analysis carried out by the contractor’s expert, which used a “collapsed as-built” method. The judge found that the analysis was valid and that the contractor was entitled to an extension of time.
Overall, these cases demonstrate the importance of carrying out a thorough and accurate delay analysis in construction disputes, and the various methods that can be used to do so. They also highlight the need for delay experts to take into account all relevant factors and to ensure that their analysis is supported by the evidence.
There is a dearth of settled case law dealing with delay analysis generally and specifically in relation to different techniques. Discuss the reasons for this. Identify the key problems that exist in this area. Refer to headline cases and/or protocols to develop your answer.
The lack of settled case law on delay analysis in construction disputes can be attributed to several factors. Firstly, the complexity of construction projects makes it difficult to accurately identify the causes of delays and their impact on the project timeline. Additionally, the use of different delay analysis techniques, each with their own strengths and weaknesses, further complicates matters. Finally, the lack of standardization in the construction industry, particularly in relation to project management and record-keeping, makes it difficult to compare delay analysis methods across different projects.
One of the key problems in this area is the lack of agreement on which delay analysis technique is the most appropriate to use in a given situation. This issue was highlighted in the case of Walter Lilly & Company Ltd v Mackay (2012), where the judge noted that there is no single “right” way to carry out a delay analysis, and that the choice of method will depend on the specific circumstances of the case. This lack of standardization means that delay experts may use different methods to analyze the same set of facts, leading to inconsistent and sometimes conflicting results.
Another problem in this area is the difficulty of accurately quantifying the impact of delays on a construction project. This was discussed in the case of City Inn Ltd v Shepherd Construction Ltd (2010), where the judge noted that delay analysis requires a high degree of skill and experience, and that it is not always possible to accurately predict the impact of delays on the project timeline. This problem is exacerbated by the fact that delays often occur simultaneously, making it difficult to isolate the impact of each delay on the overall project timeline.
Finally, the lack of standardization in project management and record-keeping in the construction industry can make it difficult to accurately assess the impact of delays on a project. This was highlighted in the Society of Construction Law Delay and Disruption Protocol (second edition, 2017), which notes that the absence of contemporaneous records can make it difficult to accurately assess the impact of delays, and that delay experts must rely on incomplete or unreliable information in some cases.
In summary, the lack of settled case law on delay analysis in construction disputes can be attributed to the complexity of construction projects, the use of different delay analysis techniques, and the lack of standardization in the construction industry. The key problems in this area include the lack of agreement on which delay analysis technique is the most appropriate, the difficulty of accurately quantifying the impact of delays, and the lack of standardization in project management and record-keeping. These issues highlight the need for greater standardization in the construction industry, and for delay experts to exercise a high degree of skill and expertise in carrying out delay analysis.
With respect to analysis of delay, describe the concepts of critical path, dominant delay,
concurrent delay and prevention, citing relevant case law in support of your answer.
(50% of mark)
Discuss the challenges that these concepts may present in assessing awards of extension
of time. (50% of mark)
The concepts of critical path, dominant delay, concurrent delay, and prevention are all important considerations in delay analysis for construction projects.
The critical path is the sequence of activities in a construction project that must be completed in order to meet the project’s completion date. The critical path determines the overall duration of the project and is the focus of delay analysis. In the case of Jerram Falkus Construction Ltd v Fenice Investments Inc (2011), the judge emphasized the importance of identifying the critical path in order to properly assess delay claims.
Dominant delay refers to the delay that has the greatest impact on the critical path of the project. In other words, it is the delay that would cause the project to be completed later than the original completion date. In the case of Adyard Abu Dhabi v SD Marine Services (2011), the judge noted that it is important to identify the dominant delay in order to properly assess the extent of delay and the impact on the critical path.
Concurrent delay occurs when two or more delays are happening at the same time. In the case of Royal Brompton Hospital National Health Service Trust v Hammond (2002), the judge noted that it is important to properly assess the impact of concurrent delay on the project timeline, as it can be difficult to determine the impact of each delay separately.
Prevention refers to the actions of the employer or other parties that prevent the contractor from completing the project on time. In the case of North Midland Building Ltd v Cyden Homes Ltd (2018), the judge noted that prevention is a key consideration in assessing extension of time claims, and that the contractor must show that the prevention event caused a delay to the critical path.
Assessing awards of extension of time can be challenging, particularly when dealing with these concepts. For example, determining the critical path can be a complex and time-consuming process, and different delay analysis techniques can lead to different results. Additionally, identifying the dominant delay can be difficult, especially when dealing with concurrent delays that impact the critical path. In some cases, the parties may also dispute whether an event constitutes prevention, leading to further complexity in assessing extension of time claims.
In summary, the concepts of critical path, dominant delay, concurrent delay, and prevention are important considerations in delay analysis for construction projects. However, assessing awards of extension of time can be challenging, particularly when dealing with these concepts. This highlights the need for delay experts to exercise a high degree of skill and expertise in carrying out delay analysis, and for greater standardization in the construction industry to ensure consistency in the approach to delay analysis.
Describe and contrast the extension of time mechanisms in JCT D&B and NEC3 standard forms of contract. (30 marks)
Discuss the significance of these differences with respect to how analysis of delay might properly be conducted citing examples of appropriate and inappropriate delay analysis methodologies. Your answer should demonstrate your understanding of prospective and retrospective assessment of
delay, dominant cause, concurrency and the prevention principle. (70 marks)
Extension of time mechanisms are an important feature of construction contracts, allowing contractors to seek additional time for completion of the project in case of delays caused by the employer or other factors beyond their control. The two commonly used standard forms of contract in the UK, JCT D&B and NEC3, have different approaches to extension of time mechanisms.
In JCT D&B contracts, the contractor is required to notify the employer of any delay and provide an estimate of the delay that is likely to occur. The employer is then required to assess the delay and provide the contractor with an extension of time (EOT) within a reasonable time. If the employer fails to provide an EOT, the contractor is entitled to compensation for the loss and expense incurred as a result of the delay.
In contrast, NEC3 contracts have a more collaborative approach to EOTs. The contract provides for a “compensation event” mechanism, which allows the contractor to notify the project manager of an event that is likely to cause a delay. The project manager then assesses the event and provides the contractor with an EOT and/or compensation for the delay. The contractor is required to give early warning of any potential delay and work collaboratively with the project manager to mitigate the impact of the delay.
The differences between the JCT D&B and NEC3 extension of time mechanisms have significant implications for how delay analysis should be conducted. In JCT D&B contracts, delay analysis is typically conducted retrospectively, as the contractor is required to provide an estimate of the delay that has already occurred. The focus of delay analysis in JCT D&B contracts is on determining the “dominant cause” of the delay, which is the event that has the greatest impact on the critical path. In the case of City Inn v Shepherd Construction (2010), the court emphasized the importance of identifying the dominant cause of the delay in order to determine the appropriate extension of time.
In NEC3 contracts, delay analysis is typically conducted prospectively, as the project manager is required to assess the impact of the compensation event and provide the contractor with an EOT and/or compensation. The focus of delay analysis in NEC3 contracts is on determining the impact of the compensation event on the project timeline and identifying any concurrent delays that may impact the critical path. In the case of Walter Lilly & Co Ltd v Mackay (2012), the court noted that it is important to assess the impact of concurrent delays in order to properly determine the EOT and compensation due.
In terms of appropriate and inappropriate delay analysis methodologies, both prospective and retrospective delay analysis can be valid in different circumstances. However, it is important to ensure that the delay analysis is based on reliable and accurate data, and that appropriate methodologies are used to determine the impact of the delay on the project timeline. In the case of Ove Arup & Partners Ltd v Mirant Asia-Pacific Construction (Hong Kong) Ltd (2007), the court emphasized the importance of using appropriate delay analysis methodologies, and criticized the use of “smoothing” techniques that were not based on the actual progress of the project.
Other key principles that should be considered in delay analysis include the prevention principle, which requires the contractor to show that the delay was caused by an event that was beyond their control, and the principle of concurrency, which requires the contractor to show that the compensation event and any other concurrent delays caused a delay to the critical path. In the case of North Midland Building Ltd v Cyden Homes Ltd (2018), the court emphasized the importance of the prevention principle in assessing EOT claims, and noted that the contractor must show that the prevention event caused a delay to the critical path.
In conclusion, the differences in extension of time mechanisms in JCT D&B and NEC3 contracts have significant implications for how delay analysis should be conducted.
Describe four of the commonly recognised methods of delay analysis, identifying for each their potential benefits and shortcomings.
(40 marks)
Discuss the significance of contract wording in respect of how analysis of delay might properly be conducted, citing examples of crucial differences between commonly used standard forms. Your answer should demonstrate your understanding of prospective and retrospective assessment of
delay, dominant cause, concurrency, “nett v gross” delay and the prevention principle.
(60 marks)
Part 1: Commonly Recognized Methods of Delay Analysis
Impacted As-Planned Analysis (IAA) - IAA is a retrospective delay analysis method that compares the as-planned schedule with the as-built schedule, accounting for events that impacted the progress of work. The method benefits from being relatively simple to apply and enables the identification of delays to specific activities. However, IAA does not account for concurrent delays or identify which delays were the dominant cause of project delays.
Time Impact Analysis (TIA) - TIA is a prospective or retrospective delay analysis method that assesses the impact of delay events on the project schedule by incorporating them into the as-planned schedule. The method allows the user to model the effects of delays on the critical path and assesses the impact of different delay scenarios on the overall project schedule. However, TIA does not consider concurrent delays or identify the dominant cause of project delays.
Windows Analysis (WA) - WA is a retrospective delay analysis method that involves dividing the project into delay windows and comparing the planned progress for each window with the actual progress. The method enables the identification of delays to specific activities and considers the effect of concurrent delays. However, the method is labor-intensive and may require subjective judgments when defining the delay windows.
Collapsed As-Built (CAB) - CAB is a retrospective delay analysis method that compares the critical path of the as-built schedule with the critical path of the as-planned schedule. The method identifies which delays impacted the critical path and considers concurrent delays. However, the method can be complex and may require the reconstruction of the project schedule.
Part 2: Contract Wording and Analysis of Delay
The wording of a construction contract is crucial in determining how the analysis of delay should be conducted. Different standard forms of contract may have significant differences in the mechanisms for awarding extensions of time and how delays are assessed.
For example, the JCT Design and Build (D&B) contract provides for extensions of time to be awarded where the completion of the works is delayed by a Relevant Event, which is defined as an event that is beyond the Contractor’s control, such as exceptionally adverse weather. The Contractor is also entitled to an extension of time where delay is caused by a Relevant Matter, which is defined as a matter that is the responsibility of the Employer, such as late provision of drawings. In contrast, the NEC3 contract provides for compensation events, which are events that are not the Contractor’s fault, and instructs the Contractor to provide an early warning of any matter that could cause delay.
These differences can have a significant impact on how delay is assessed. For example, in a JCT D&B contract, the Contractor may argue that a Relevant Event has caused delay to the works and is entitled to an extension of time. In contrast, in an NEC3 contract, the Contractor may argue that a compensation event has occurred and that he is entitled to compensation for any resulting delay.
In analyzing delays, it is important to consider the principles of prospective and retrospective assessment of delay, dominant cause, concurrency, nett v gross delay, and the prevention principle. The retrospective assessment of delay involves analyzing the impact of delay events that have already occurred, while the prospective assessment involves predicting the effect of future events on the project schedule.
The dominant cause principle requires the identification of the main cause of delay, which is the cause that had the most significant impact on the project schedule. The concurrency principle requires the analysis of concurrent delays, which occur when two or more delay events are happening simultaneously. The nett v gross delay principle distinguishes between delays that are caused by the contractor and delays that are beyond the contractor’s control.
Finally, the prevention principle requires the employer to take steps to prevent delays and mitigate the effects of delay events.
Critical Path analysis question. - differences between causation and entitlement based approaches to delay analysis citing examples analysis methods which might be used to present each of them.
Part B - dominant, concurrent, and non-critical delays.
From the perspective of determining extension of time to the Completion Date:‐
a) Describe how the mechanism contained in the NEC3 standard forms of contract differs from that contained in other commonly used standard forms such as JCT.
25 marks
b) Discuss the significance of these differences with respect to how analysis of delay might properly be conducted under NEC3, citing examples of appropriate and inappropriate methodologies.
Your answer should demonstrate your understanding of prospective and retrospective assessment, causation, concurrency and the prevention principle. It should include appropriate references to
case law and/or authoritative publications which have opined on such matters.
75 marks
a) The NEC3 standard forms of contract differ from other commonly used standard forms such as JCT in the mechanism for determining extension of time to the Completion Date in several ways. One of the most significant differences is the use of a “compensation event” mechanism in NEC3 as opposed to a “relevant event” mechanism in JCT.
Under the NEC3, a compensation event is an event that has occurred which is not the contractor’s fault, but which will cause delay to the completion date. The contractor is entitled to both an extension of time and additional payment for the additional costs incurred as a result of the compensation event. The contractor is also required to notify the project manager of the compensation event as soon as practicable, which triggers the assessment process.
On the other hand, under JCT, a relevant event is an event that has occurred which is not the contractor’s fault, and which will cause delay to the completion date. The contractor is entitled to an extension of time for the delay caused by the relevant event, but not to additional payment. The contractor is required to give notice of the relevant event as soon as practicable, which triggers the assessment process.
b) The differences between NEC3 and JCT have significant implications for how delay analysis should be conducted under NEC3. One of the key differences is the requirement to assess the effect of a compensation event on the critical path of the project. This means that the contractor must demonstrate that the compensation event caused a delay to the critical path of the project, which in turn caused the delay to the completion date. This requires a detailed analysis of the project’s schedule, including identification of the critical path, and the determination of the impact of the compensation event on the critical path.
The prevention principle is also relevant to the analysis of delay under NEC3. The prevention principle means that if the employer prevents the contractor from completing the works on time, then the employer cannot then rely on the delay caused by the contractor’s failure to complete the works on time as a reason for imposing liquidated damages. This principle has been recognised in case law, including in the case of North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC), which held that the prevention principle was incorporated into the NEC3 standard form.
In summary, the compensation event mechanism in the NEC3 standard form of contract requires a different approach to the analysis of delay compared to other standard forms such as JCT. The contractor must demonstrate the effect of the compensation event on the critical path, and the prevention principle is relevant to the analysis of delay under NEC3. The use of appropriate methodologies, such as retrospective delay analysis and the consideration of causation and concurrency, can help to ensure that the analysis of delay is conducted in a fair and accurate manner, and can provide a basis for determining the appropriate extension of time to the Completion Date.
Describe and contrast the extention of time mechanisms in JCT SBC/XQ/2016 and NEC4 standard forms of contract.
Part 2 - discuss the significance of the differences between those forms of contract with respect to how analysis of delay might properly be conducted. Your answer should cite examples of appropriate and inappropriate delay analysis metholodies and include explantion and retrospective assessment, dominant cause, concurrency and the prevention principal.
Extension of Time Mechanisms in JCT SBC/XQ/2016 and NEC4 Standard Forms of Contract:
JCT SBC/XQ/2016 standard form of contract provides for the contractor to apply for an extension of time if there is a delay that is not caused by the contractor’s breach of contract. The contractor must give notice to the architect and provide details of the delay and the cause of the delay, the effects of the delay on the completion date, and the length of the extension of time sought. The architect then has to determine if the delay was caused by a relevant event and if it has caused a delay to the completion date. If the architect agrees, the extension of time is granted.
On the other hand, NEC4 standard form of contract provides for an assessment of compensation events rather than the granting of an extension of time. The contractor notifies the project manager of the compensation event and provides details of the event, the effects on the works and the forecast of the effect on the completion date. The project manager then assesses the compensation event and its effect on the completion date. If the compensation event has caused a delay, the project manager adjusts the completion date and notifies the contractor of the adjusted date.
Significance of the Differences:
The key difference between the two standard forms of contract is that the JCT SBC/XQ/2016 grants an extension of time to the completion date, while the NEC4 adjusts the completion date. This difference has an impact on how delay analysis is conducted. For instance, under the JCT SBC/XQ/2016, a prospective assessment of the delay is required, and the contractor must show that the delay was caused by a relevant event, that the delay caused a delay to the completion date, and that the extension of time sought is reasonable. In contrast, under NEC4, a retrospective assessment is required, and the contractor must show that the compensation event caused a delay and that the delay was not concurrent with other events.
In conducting the delay analysis, it is crucial to establish the dominant cause of the delay, i.e., the cause of delay that was most significant in delaying the works. In JCT SBC/XQ/2016, if the contractor’s delay was concurrent with the relevant event, the contractor would not be entitled to an extension of time. However, under NEC4, if the contractor’s delay was concurrent with the compensation event, the contractor would still be entitled to compensation for the delay caused by the compensation event.
It is also essential to consider the prevention principle in delay analysis. The prevention principle states that a party cannot rely on the other party’s failure to perform its obligations as a ground for claiming damages. In JCT SBC/XQ/2016, the prevention principle is implied, while in NEC4, it is explicitly stated.
In terms of appropriate and inappropriate delay analysis methodologies, prospective delay analysis would be appropriate under JCT SBC/XQ/2016, while retrospective delay analysis would be appropriate under NEC4. Inappropriate methodologies would include “net” delay analysis, which fails to take into account concurrent delays, and “window” analysis, which involves ignoring periods of delay outside of a defined window.
In conclusion, the differences between JCT SBC/XQ/2016 and NEC4 standard forms of contract have a significant impact on how delay analysis is conducted, particularly in terms of the type of assessment required, the dominant cause, concurrency, and the prevention principle. It is essential to consider these differences in selecting an appropriate delay analysis methodology.
