Extension of time claims before the event

Settling on a response to extension of time claims before the event.

Summing up

The issue:

Using prospective rather than retrospective delay analysis.

The implication:

By agreeing the philosophy for resolving extension of time claims prospectively rather than retrospectively can disputes be minimised?

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In the construction industry, extension of time claims are all too common. Many projects finish over budget and over time and if the parties involved cannot settle their differences amicably, then some form of dispute resolution is required.

The form of resolution can vary from mediation, adjudication, arbitration or litigation, with many disputes being reviewed at more than one of these forums before final determination at either arbitration or litigation.

At each stage of a dispute, it is normal practice for one or both of the parties involved to employ the services of a delay analyst. The role of the analyst is to either demonstrate, on behalf of one party, its full extension of time entitlement not yet awarded or to defend, on behalf of the other party, the extension of time awarded to date.

As part of this role, there are several methods of analysis that can be employed, the most common methods being 'impacted as-planned', 'as-planned versus as-built', 'time slice analysis', 'windows analysis' or 'as-built-but-for analysis', all of which have been well documented for their benefits and shortfalls.

Analysis choice

The choice of the analysis to be used is in itself problematic and it is common for two opposing analysts, acting as experts, to use different methods of analysis and arrive at different answers in relation to the disputed extension of time entitlement. This situation may even occur when the analysts are using the same method.

It is thought that when any outstanding extension of time entitlement is looked at retrospectively, this will always be the case due to differing opinions as to the progress of the works achieved at the time of the delay, the construction logic of the works going forward at the time, as well as the mitigation measures that were or were not put in place.

Therefore, rather than resolving the dispute, if not carried out correctly with agreed data and an agreed method, retrospective analysis may move the parties further apart rather than closer together.

NEC form of contract

It may be too simplistic to say, but one way of avoiding the problem described above is to not let it develop in the first instance. In other words, do not allow the situation to occur when retrospective analysis is the only solution available. One such approach is that adopted by the NEC form of contract.

Although to date the NEC form has not been as widely taken up as the JCT with only about 10% of construction projects using it, whether adopted or not, its philosophy on resolving extension of time type problems should not be ignored.

In general terms, the method required to be used is that delay issues are looked at prospectively rather than retrospectively. Once it is known by either party that a delay is likely to occur on the project, then a meeting should be held to discuss the issues and agree the best course of action to either minimise the delay or remove it in its entirety.

For example, it may be the case that the client has indicated that it wants to issue a variation such as changing the type of tile in a reception area. Once investigated by the contractor, it may found that such a variation will add 12 weeks to the overall duration of the project.

At this point, the client could decide not to change the tiles or alternatively, issue the variation and award a full extension of time.

For this process to work successfully, a sufficiently detailed and logic-linked construction programme is required that has been regularly kept up to date with actual progress of the works and the impact of previous events.

Without such a tool it would be hard for either party to have a clear understanding of the impact that such a change would have on the works and thus a dispute would be generated regardless of the agreed philosophy to be used.

Summing up

In summary, when parties use inconsistent retrospective analysis methods to resolve time related disputes, major differences can occur that widen rather than narrow the argument.

However, if the analysis of a delay is carried out prospectively, if the right tools are used to demonstrate such a delay, and if both parties are in agreement on the philosophy of resolution to be used, then surely disputes will be minimised?