Are You Experiencing Delays to

Your Project?
13TH APRIL 2016 | BY TBH

What is a Delay?

Delays to progress and to completion occur, to varying extents, on a

majority of projects. A severe drain on cash-flow and a ‘profits crash’
often result. While there are several potential causes of those delays, the
risks of bearing the effects of those delays are allocated in various ways,
under the terms of the Contract or at Law, between the Principal and the
Contractor.
Very often the effects and costs for these delays are compounded when
they result in prolonged and costly disputes. The problem is generally
caused by the Principal, Contract Administrator or the Contractor failing to
grasp the basic principles relating to project planning, programming and
management and contract administration. Applying basic principles
properly and quickly prevents/mitigates the cause or effects of the delays.
Before explaining the various standard practices for project planning and
analysing delays,it is first important to recognise the general types of
delays.

What is a Delay?
The term “delay” is commonly understood to be a comparative measure
of the difference in time between two situations from which the “delay” is
concluded. The measure of time may be by date, such as a start date or a
completion date, or by the duration of any given activity.

There are a number of definitions for delay:

• to make something happen later than expected,
• to cause something to be performed later than planned, or
• to not be carried out in a timely manner.

Each of these definitions can describe a delay to an activity in a

programme or contract.
The three possible combinations of the excusability/compensability factors
referred to above result in the following three types of delay:

1. Non-Excusable (and, therefore, non-compensable)

Delays

This is known as “Contractor‘s Delay” which is an expression commonly

used to describe any delay caused by a Contractor‘s risk event. The SCL
Protocol also calls it “Culpable delay”. For this source of delay, to the
extent that it affects the critical path, the Contractor cannot obtain an
extension of time or recover prolongation costs and may be held liable for
the Principal‘s delay damages or be forced to accelerate to make up the
time lost.

2. Excusable - Compensable Delays

This is known as “Principal’s Delay” which is an expression commonly
used to describe any delay caused by a Principal’s Risk Event. The SCL
Protocol also calls it “Excusable Delay” in respect of which the Contractor
is entitled to an extension of time for the Completion Date and damages
are then to be considered. In any event, the delay must affect the critical
path to completion as described above.

3. Excusable - Non-Compensable Delays

These are delays caused by conditions outside the control of either party.
The Contractor is entitled to an extension of time if the delay has an
impact on the overall project duration. However, the Contractor is not
allocated damages for excusable non-compensable delays.

In many construction contracts, Principal‘s damages resulting from delay

to Completion Date will be expressly regulated by way of liquidated or
general damages provisions. The measure of damage in the event of such
a delay will be largely governed by the type of project undertaken.

What are the General

Classifications of Delays?
Critical and Non-critical Delays

The Society of Construction Law (SCL) protocol distinguishes the type of

delays as being “Delay to Completion” or “Delay to Progress” .

The “Delay to Completion” is identified as “either delay to the date when

the Contractor planned to complete its works, or a delay to the Contract
Completion Date”. This type of delay is generally considered as critical
delay. A Critical Path Method (CPM) technique or schedule is generally
used to identify which delays are critical and which are non-critical.

Conversely, the “Delay to Progress” is identified as “a delay which will

merely cause delay to the Contractor‘s progress without causing a
contract Completion Date not to be met”. Accordingly, this type of delay is
generally considered as a non-critical delay. Whilst “Delay to Progress”
may not lead to a time extension and time extension costs, it may still be
compensable by way of other delays or disruption costs.

Excusable and Non-Excusable Delays

These types of delays are initially categorised by whether or not a time

extension or other form of relief will be given to the Contractor as a result
of the delay. In general, a delay is excusable if its cause is an
unforeseeable event or beyond the contractor’s control. Non-excusable
delays are events within the contractor’s control, or are foreseeable.
Specifically, the circumstances of excusable and/or compensable delays
are outlined in the particular contract for the project.

Compensable and Non-Compensable Delays

If an excusable delay is compensable, the contractor is entitled to

additional monetary compensation. Conditions of contracts generally
distinguish between compensable and non-compensable delays as well as
how compensation is to be determined.

Why Do We Need to Analyse

Delays?
When a construction programme is in delay, the obvious questions are
what is the delay, how did it occur, why did it happen and who is
responsible? More often, there are multiple delay events, often
overlapping or related, causing delays to progress and completion and it
is not always easy to see which events have caused the delay and to what
extent. A proper method of analysis such as CPM, is therefore
indispensable to establish the cause of these delays, who is responsible
and what the relevant effect is on the completion date.

Speak with one of our experts today and put your project back on
track. www.tbh.com.au

Disclaimer: This article does not constitute advice, legal or otherwise, and is provided only as general commentary. Appropriate professional advice

should always be obtained before taking or refraining from taking any action in relation to such information and/or the application of applicable law.
This article and the materials contained in it are provided on the basis that all liability for any loss or damage, whether direct or indirect, arising out

of or in connection with any use or reliance upon this article is excluded to the fullest extent permitted by law.
Culpable delay in construction contracts

Construction contracts generally allow the construction period to be extended where there is
a delay that is not the contractor's fault. This is described as an extension of time (EOT).
The contractor may (but is not necessarily) also be entitled to claim for loss and expenseassociated
with the delay.

Culpable delay on the other hand is a delay that is entirely the fault of the contractor. Where
the contractor is culpable for a delay, they have no entitlement to an extension of time or loss and
expense.

Where there is a culpable delay, the period of time after the contractual date for completionhas
passed is referred to as the period of contractor culpable delay, and during this period,
the contractor will be liable to pay liquidated and ascertained damages (LAD's) to the client.

Concurrent delay refers to the complex situation where more than one event occurs at the same time,
but where not all of those events enable the contractor to claim an extension of time. For more
information, see Concurrent delay.

In Carillion Construction Ltd. v Woods Bagot Europe Ltd. and others [2016], the Technology and
Construction Court (TCC) held that a subcontractor who had caused a delay, was also entitled to
an extension of time and that this should run contiguously from the contractual completion date. This
meant that the subcontractor’s period of culpable delay was extinguished, and they were no longer
liable for their own delay.

Find out more

Related articles on Designing Buildings Wiki

 Certificate of non-completion.
 Common refusals of extensions of time.
 Compensation event.
 Completion date.
 Concurrent delay.
 Delays on construction projects.
 Disruption claims in construction.
 Extension of time.
 Octoesse LLP v Trak Special Projects Ltd.
 Relevant event.
Common refusals of extensions of time

Construction contracts generally allow the construction period to be extended where there is
a delay that is not the contractor's fault. This is described as an extension of time (EOT).

When it becomes reasonably apparent that there is, or that there is likely to be, a delay that could
merit an extension of time, the contractor should give written notice to the contract
administrator identifying the relevant event that has caused the delay. If the contract
administrator accepts that the delay was caused by a relevant event, then they may grant
an extension of time and the completion date is adjusted.

Common reasons for the refusal of an application for extensions of time include:

 Where the contractor has underperformed, for example, as a result of insufficient workforce
or failure to obtain plant, goods or service.
 When there has been poor, but not exceptionally adverse weather.
 When the evidence or other information presented to demonstrate that the contractor has suffered
irrecoverable delays is insufficient.
 If an extension of time has already been given for that event.
 Where more than one event occurs at the same time. See Concurrent delay for more information.
 The event cited does not constitute a relevant event.
 An event does not constitute force majeure.
 An event does not constitute a specified peril.
 The contractor has not taken steps to mitigate the delay

Find out more

Related articles on Designing Buildings Wiki

 Acceleration of construction works.

 Change order.
 Compensation event.
 Contract administrator.
 Contract claims.
 Culpable delay.
 Delay damages.
 Extension of time.
 Extension of time - approval letter example.
 How to prepare a claim for an extension of time.
 Practical completion.
 Project programme.
 Time extension.
 Time Risk Allowance TRA.
 Variations.
Concurrent delay

Concurrent delay is a complex term, the legal status of which remains unclear.

Delays on a project will have different contractual consequences depending on the cause of
the delay:

 Where a delay which impacts on the completion date is caused by the contractor (culpable delay),
the contractor will be liable to pay liquidated and ascertained damages (LADs) to the client.
 Where a delay which impacts the completion date is not caused by either party, the contractor may
be entitled to an extension of time.
 Where the delay is caused by the client, the contractor may be able to claim an extension of
time and loss and expense.

Concurrent delay refers to the complex situation where more than one event occurs at the same time,
but where not all of those events enable the contractor to claim an extension of time or to claim loss
and expense.

As it is rare for events to happen at precisely the same time, concurrent delay is sometimes defined
as ‘Two or more delay events occurring within the same time period, each independently affecting
the Completion Date’ (Judge Seymour - Royal Brompton Hospital National Health Trust v Hammond
and Others), or where the events may have happened at different times, but their effects (at least in
part) are felt concurrently.

The difficulty arises in determining whether concurrent delays allow an extension of time and loss and
expense claims, or liquidated and ascertained damages.

For example, the contractor may already have been delayed through their own fault, when another
event occurs for which the client is at fault.

In the case of Royal Brompton Hospital National Health Trust v Hammond and Others, Judge
Seymour stated that concurrent delay did not mean ’ …a situation in which, work already being
delayed, let it be supposed, because the contractor has had difficulty in obtaining sufficient labour, an
event occurs which is a Relevant Event and which, had the contractor not been delayed would have
caused him to be delayed, but which in fact, by reason of the existing delay, made no difference.’

In this scenario, the event did not in fact impact on the completion date, which was already delayed by
the contractor. Where this is not the case – for example, in the case of Walter Lilly & Company Ltd v
Giles Patrick Cyrill Mackay, it was considered that ‘ …provided the relevant events can be shown to
have delayed the works, the contractor is entitled to an extension of time for the whole period
of delay caused by the relevant events. There is nothing to suggest an extension should be reduced if
the causation criterion is established.’
 In the case of City Inn v Shepherd Construction, The Scottish Appeal Court decided that
apportioning delay was appropriate where there was no dominant cause of delay. They concluded
that:

 The relevant event must delay or be likely to delay the works.

 If a dominant cause can be identified, this must be the relevant event.
 If no dominant cause can be identified, an apportionment should be made in a fair and reasonable
way.

However, if the client contributes to an event, then they may not be entitled to liquidated and
ascertained damages. For example, in the case of Peak Construction v McKinney Foundations, the
judge ruled ‘... I cannot see how, in the ordinary course, the employer can insist on compliance with
a condition if it is partly his own fault that it cannot be fulfilled…’

Furthermore, in Henry Boot Construction v Malmaison Hotel it was ruled that ‘…to take a simple
example, if no work is possible on a site for a week not only because of exceptionally inclement
weather (a relevant event) but also because the contractor has a shortage of labour (not a relevant
event) and if the failure to work during that week is likely to delay the worksbeyond the completion
date by one week, then if it considers it fair and reasonable to do so, the architect is required to grant
an extension of time of one week. He cannot refuse to do so on the grounds that the delay would
have occurred in any event by reason of the shortage of labour.'

The situation is complex, and cases tend each to have circumstances that are unique in some way.
Furthermore, cases of concurrent delay do not often reach the courts as they tend to be settled
through alternative dispute resolution procedures. The resulting uncertainty is compounded by the
differences in wording between various contract types.

Keating states that ‘..a proper analysis of entitlement to extension of time and any associated loss and
expense in each case must involve a careful consideration of the wording of the relevant clauses and
an assessment of the (possibly different) tests of causation that should be applied to them in order for
the contractor’s actual entitlement to be arrived at.’

What is clear is that it is important for both parties to ensure they keep good records to demonstrate
that the event did actually occur and that it did impact on the completion date. If it is possible to carry
out a critical path analysis that demonstrates the effect of events on the completion date, then this is
beneficial, however, in the absence of such information it is likely that the courts will take a ‘common
sense’ approach.

Find out more

Related articles on Designing Buildings Wiki

 Alternative Dispute Resolution.

 Certificate of non-completion.
 Compensation event.
 Completion date.
 Culpable delay.
 Extension of time.
 Liquidated and ascertained damages.
 Loss and expense.
 Relevant event.
 Royal Brompton Hospital National Health Trust v Hammond and Others.

External references

 North Midland Building Ltd v Cyden Homes Ltd.

Delays on construction projects

See also: International research into the causes of delays on construction projects.

Contents

[hide]

 1 Introduction
 2 Types of delay
 3 Delays resulting from neutral causes
 4 Delays that are the fault of the client
 5 Delays that are the fault of the contractor
 6 Concurrent delay
 7 Compensation events
 8 Early warning
 9 Mitigation and acceleration
 10 Find out more
 10.1 Related articles on Designing Buildings Wiki
 10.2 External references

Introduction

Construction projects tend to be one-offs. A project team comes together to create a

unique development on a particular site under circumstances that will never be repeated.

They are very complex, requiring the co-ordination of permissions,

people, goods, plant and materials. Construction can begin despite many ‘unknown’ matters such as
incomplete design information, uncertain site conditions, suppliers, and so on. As a
consequence delays are common.

In Modernising Construction: Report by the Comptroller and Auditor General, published in 2001, the
National Audit Office found that 70% of government construction projects were delivered late.

Delays might be caused by:

 The uniqueness of the project.

 Speed of decision making.
 Poor or unrealistic scheduling.
 Poor communication.
 Lack of information.
 Labour productivity.
 Availability of resources.
 Adversarial relationships.
 Third party dependencies.
 Lack of finance.
 Availability of the site.
 Site conditions.
 Weather.

Delays can be minimised by:

 Detailed site investigations.

 Careful monitoring and regular meetings.
 Effective site management.
 Collaborative working and effective coordination.
 Careful scheduling.
 Full commitment to the project by all parties.

Types of delay

Very broadly, there are two types of delay

 Delays in activities for which there is programme float available (i.e. they can be delayed without
impacting on the completion date).
 Delays that will impact on the completion date.

Construction contracts tend provide for four categories of delay:

 Delays resulting from neutral causes.

 Delays that are the fault of the client.
 Delays that are the fault of the contractor (culpable delay).
 Concurrent delays.

Delays resulting from neutral causes

Neutral events (which may be 'relevant events'), which are not the fault of either party might entitle
the contractor to an extension of time. Typically, this might include:

 Exceptionally adverse weather.

 Civil commotion or terrorism.
 Statutory undertaker’s work.
 Force majeure (such as a war or an epidemic).
 A specified peril such as flood.
 National strikes.
 Changes in statutory requirements.
 Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

This does not necessarily entitle the contractor to claim loss and expense.

Delays that are the fault of the client

 Where the progress of the works is materially affected by a matters for which the client is responsible,
the contractor may be entitled to claim direct loss and expense incurred. Such matters might include:

 The client instructing variations in the works.

 Failure by the consultant team to provide information.
 Delay on the part of a nominated sub-contractor.
 Failure by the client to supply materials or goods.
 Delay in giving the contractor possession of the site.

These matters (described in some contracts as 'relevant matters') may also constitute 'relevant
events' allowing the contractor to claim an extension of time, however a relevant matter need not
necessarily result in a delay to the completion date, and so claims for loss and
expenseand claims for extensions of time do not necessarily always run together.

Delays that are the fault of the contractor

Where a delay which impacts on the completion date is caused by the contractor, the contractor will
be liable to pay liquidated and ascertained damages (LADs) to the client.

For more information, see Culpable delay.

Concurrent delay

Concurrent delay refers to the complex situation where more than one event impacts on
the completion date at the same time, but where not all of those events would entitle
the contractorto claim an extension of time or loss and expense.

Some form of apportionment is likely here, however such situations are complex and each case will
tend to have circumstances that are unique in some way. What is clear is that it is important for both
parties to ensure they keep good records to demonstrate that the event did actually occur and that it
did impact on the completion date.

If it is possible to carry out a critical path analysis that demonstrates the effect of events on
the completion date, then this is beneficial, however, in the absence of such information it is likely that
the courts will take a ‘common sense’ approach.

Compensation events

NEC contracts deal with these issues under the single heading ‘compensation events’. They do not
treat compensation events as an allocation of blame, but rather an allocation of risk. Any risk that is
not specifically identified as being attributed to the client is borne by the contractor.

Early warning
 When it becomes reasonably apparent that there is a delay, or that there is likely to be a delaythat
could merit an extension of time, the contractor must give written notice to the contract
administrator identifying the relevant event that has caused the delay.

On NEC contracts both parties must give early warning of anything that may delay the works. They
should then hold an early warning meeting to discuss how to avoid or mitigate impacts on the project.

Mitigation and acceleration

The contractor is generally required to try to prevent or mitigate delay, even where the fault is not their
own.

If there is nonetheless a delay, the client may wish to instruct acceleration of the works.
An acceleration agreement can be used as a “wrap up” agreement expunging all
outstanding claims for extensions of time and loss and expense.

Measures taken to accelerate the works might include

 Additional resources of manpower, plant and materials directly employed or subcontracted.

 Revised methodologies including off-site prefabrication, extra scaffolding, temporary
weatherproofing and so on.
 Proposals for phased completion.
 Increasing working hours on and off site, including weekends, holidays, night working and shift
working.
 Additional supervision.
 Changes to the design or specification (for example standardisation replacing bespoke solutions)
 Reduction in scope (for example transferring work to a separate post-contract agreementfor
occupational works).

Find out more

Related articles on Designing Buildings Wiki

 Acceleration.
 Compensation event.
 Concurrent delay.
 Conflict avoidance.
 Construction disputes.
 Constructive acceleration.
 Culpable delay.
 Dispute resolution.
 Disruption claims in construction.
 Extension of time.
 International research into the causes of delays on construction projects.
 Liquidated damages.
 Loss and expense.
 Programme for building design and construction.
 Relevant event.
  Relevant event v relevant matter.
 Relevant matter.

External references

 Walter Lilly and Co Ltd v Mackay 2012.

 Royal Brompton Hospital National Health Trust v Hammond and Others.
 City Inn v Shepherd.

 Share
Disruption claims in construction

In construction contracts, the term 'disruption' refers to a loss of productivity due to a hindrance or
interruption of the progress of the construction works which reduces the rate of efficiency.

If disruption is caused by the employer, the contractor may have grounds to seek
compensation. Disruption, and claims arising to try and recoup losses incurred from it, are common
on construction projects, particularly on larger and more complex projects.

The difference between disruption and delay is that the latter relates to lateness rather
than productivity, although they can often be related. Delays can cause disruptions, and vice versa.
Despite their inter-relation, they require a different approach to assessing claims.

When evaluating claims for delay, the terms of the specific contract are the usual starting point, and
evidence is required that certain circumstances caused the delay. The terms of the contract are less
useful when evaluating disruption claims. Instead, the contractor must provide reasonable evidence
that:

 Progress of the works has been disrupted.

 Which element of the works and which trades have been disrupted, why losses occurred, and so
on.
 The disruption incurred additional costs.
 The cause of the disruption constitutes a breach of contract.

Evidence will normally take the form of documented records demonstrating that disruptioncaused
losses. However, this can prove difficult as the contractor can often not detect disruption until after it
has occurred. In addition, isolating the loss of productivity to the cause of the disruption can be
difficult as it may coincide with several other factors, and the effect of the disruption may be hidden by
other issues.

Several methods can be used to estimate loss in relation to disruption, including:

 Measured mile analysis: Compares actual labour performance between two periods – a normal
measured mile period and an impacted period.
 Baseline productivity analysis: A more conservative estimate used when an unimpacted section of
the works is too difficult to isolate.
 Earned value analysis: Compares the amount and cost of work that was planned to have been
done by a particular stage with the amount that has actually been done and what it has
actually cost.

NB The term ‘disruption’ can also refer to the impact of new technologies and techniques on an
industry. For more information, see Construction is an industry ripe for tech disruption.
 Find out more
Related articles on Designing Buildings Wiki

 Compensation event.
 Construction disputes.
 Culpable delay.
 Delays on construction projects.
 Extension of time.
 Loss and expense.
 Prolongation.
 Relevant event.
 Variations.
Extension of time EOT in construction contracts

Construction contracts generally allow the construction period to be extended where there is
a delay that is not the contractor's fault. This is described as an extension of time (EOT).

When it becomes reasonably apparent that there is, or that there is likely to be, a delay that could
merit an extension of time, the contractor gives written notice to the contract administrator identifying
the relevant event that has caused the delay.

If the contract administrator accepts that the delay was caused by a relevant event, then they may
grant an extension of time and the completion date is adjusted.

Relevant events may include:

 Variations.
 Exceptionally adverse weather.
 Civil commotion or terrorism.
 Failure to provide information.
 Delay on the part of a nominated sub-contractor.
 Statutory undertaker’s work.
 A delay in giving the contractor possession of the site.
 Force majeure (such as an epidemic or an 'act of God').
 Loss from a specified peril such as flood.
 The supply of materials and goods by the client.
 Strikes.
 Changes in statutory requirements.
 Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault
is not their own.

Assessing claims for an extension of time can be complicated and controversial. There may be
multiple or concurrent delays, some of which are the contractor's fault and some not. There are many
occasions where contractors contribute to delay themselves by their performance during design
periods, when producing drawings, mock ups and samples or in inter-facing with sub-contractors.

Crucial in assessing applications for extension of time is the quality of the information provided and
records available.

For more information, see How to prepare a claim for an extension of time.

Claims should be judged against the actual progress of the works, not the programme, and must
demonstrate the link between the breach (cause) and the delay.
 The contract administrator may review extensions of time after practical completion and further adjust
the completion date.

Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there was no
such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would
no longer be required to complete the works by the completion date and would only then have to
complete the works in a 'reasonable' time. The client would lose any right to liquidated damages.

Claims for extension of time can run alongside claims for loss and expense (relevant matters)
however, one need not necessarily lead to the other.

It is very important when deducting liquidated damages to ensure that the correct contractual
procedures are adhered to. In the case of Octoesse LLP v Trak Special Projects Ltd [2016], Justice
Jefford held that Octoesse was not entitled to deduct liquidated damages as they had agreed to
an extension of time after a certificate of non completion had been issued. The JCTIntermediate
Building Contract is constructed such that:

'If the Contractor fails to complete the Works or a Section by the relevant Completion Date,
the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is
made after the issue of such certificate, the extension shall cancel that certificate and
the Architect/Contract Administrator shall where necessary issue a further certificate.'

As Octoesse had not issued a further certificate of non completion, they were not entitled to
deduct liquidated damages.

To find out more, see Octoesse LLP v Trak Special Projects Ltd.

Find out more

Related articles on Designing Buildings Wiki

 How to prepare a claim for an extension of time

 Variations in construction contracts
 Extension of time - approval letter example
 Liquidated damages in construction contracts
 Loss and expense
 Relevant event
 Adverse weather during construction
 Certificate of non completion
 Concurrent delay
 Common refusals of extensions of time
 Delays on construction projects
 Relevant events v relevant matters
 Acceleration of construction works
 Force majeure in construction
 Contract administrator for construction contracts
 Octoesse LLP v Trak Special Projects Ltd
 Completion date in construction contracts
 Statutory undertakers
 Nominated sub-contractor
 Relevant matters in construction contracts
 Contract claims in construction
 Prolongation in construction contracts
 Time at large
 Practical completion
 Defects in construction

External references

 Herbert Smith, Extensions of Time: What Happens If the Contractual Machinery Breaks Down?
 Atkinson Law, Delay and Disruption - The Contractor's Obligations as to Time.