Disputes associated with schedule delay are, after issues involving change orders, perhaps the most common type of construction contract dispute. One reason is that both general and subcontracting is becoming increasingly competitive, and places even greater importance on precise pricing and execution of the work. This is particularly true for the types of costs that are the subject of delay claims, including jobsite costs such as salaries, vehicle rentals, trailers, telephone, utilities, etc.
This article will briefly outline some of the issues that recur in the typical damages analysis in a construction delay dispute and the use of the CRITICAL PATH METHODOLOGY in proof..
SCHEDULE DELAY ANALYSIS:
When work is delayed or impacted, the various parties can incur additional jobsite costs that accumulate over time. If and when a dispute arises over responsibility for these extra costs, the parties will often perform schedule delay analysis in an attempt to prove their damages claims. Schedule Delay Analysis is the analytical process through which an expert employs Critical Path Method (CPM)techniques, in concert with a forensic review of project documentation and other relevant data, to assess and apportion the effects of delays and other impacts on the project schedule.
The results of the analysis typically indicates the amount of time for which a party may be entitled to recover damages. The use of retrospective CPM scheduling techniques in contract disputes has become increasingly common over the past 40 years. This is, at least in part, a direct result of the courts' increasing awareness of, and reliance on, CPM, and their growing dependence upon experts to explain these techniques.
Expert evaluations of schedules and time-related claims compare planned versus actual schedule performance, and focus on:
1. The manner in which the project was planned to be constructed in terms of activities, work sequences, activity durations, manpower, and capital expenditures;
2. The actual duration and sequences of the activities;
3. The variances between the planned and actual performance of the work;
4. The causes of the variances between the planned and actual performance of the work;
5. The effects of the variances in work sequences, activity durations, manpower, and resources on the incurred costs of the party(s).
ADMINISTRATIVE GUIDELINES
The genesis of CPM schedule evaluations can be found in decisions from the U.S. federal court system, along with administrative guidelines issued by various government agencies such as the Veteran's Administration (VA) and the U.S. Army Corps of Engineers (Corps). In particular, relevant decisions of the U.S. Court of Claims, the General Services Board of Contract Appeals, the Armed Services Board of Contract Appeals, and the Veterans Administration Board of Contract Appeals provide direction and understanding of the elements required to prove schedule delay, acceleration, and loss of labor productivity.
CPM SCHEDULING AND THE COURTS
Courts, arbitration panels and other legal forums now prefer CPM scheduling techniques to identify and quantify schedule delays, impacts, accelerations, and disruptions on construction projects. Authorities have shown an almost universal acceptance of, and preference for, CPM scheduling in their decisions.
CRITICAL AND NON-CRITICAL PATHS
Legal authorities have consistently held that delays to activities on the critical path(s) are of primary importance in evaluating schedule delay claims. For example, courts have held that a contractor will not be entitled to a time extension for an excusable delay unless the delay extends the overall project completion, i.e., extends the duration of the critical path. Conversely, a contractor may be entitled to the recovery of delay-related costs for non-critical path work activities. Essentially, compensable delay to the work need only be shown to be the sole cause of an increase to the contractor's costs. For example, owner-caused delays to an off-site storage tank and pipeline, resulting from defective and deficient specifications, may not have delayed the overall completion of the project but may have increased the contractor's time-related costs for building the storage tank and pipeline. In these cases, the contractor may be entitled to recover delay-related costs despite the fact that the overall project was completed within the required contract period. Often, these delay-related costs are for lost productivity, disruption, or other direct costs.
PRIMACY OF DELAY
As previously stated, schedule analyses tend to focus on the critical path and delay events which impact the critical path. This restricted focus on the critical path is based on a concept called "primacy of delay", which presents the argument that only delays to the critical path are meaningful in assessing impacts to the project completion date. Delays to non-critical path activities merely absorb existing float, or slack, and any additional float created by critical path delays. While the foregoing is true in general, there are certain circumstances where it may be appropriate to consider delays to non-critical activities in the assessment and allocation of delay-related damages. One school of thought presents the argument that non-critical delay is merely absorbing the float created by the critical path delay and, therefore, are not truly concurrent. For example, an owner's critical delay to the approval of a finish hardware schedule may also cause delay to the non-critical fabrication of the door bucks. But consider the situation when the non-critical delay is truly independent of the critical path delay. The argument can then be made that the non-critical delay is only absorbing float created by the critical path delay, but when the critical delay is removed, part or all of the non-critical path delay may then become critical. The answer to such questions can have direct bearing on the allocation of delay-related damages.
CONCLUSION:
The issues discussed above are common to all delay claims. Retention of appropriate experts will allow introduction of such analysis into evidence but the wise construction professional will understand from the outset of troubles on the project the criteria for damages analysis that will eventually be vital in proof of damages.