Concurrency of Delays in Projects

Concurrent delay in a project occurs when 2 or more parties are late at the same time. What, you may well ask, is the problem with concurrency? The project is late and the first order of business is to reduce or eliminate the lateness through re-planning, acceleration, or any other means.The elimination of the delay to the project is indeed the first order of business – absolutely correct. However, the elimination or mitigation (reduction by as much as possible) of the delay quite often involves acceleration*¹ by resource increase and/or re-planning*², both of which are potentially costly exercises involving a reduction in resource efficiency and an increase in gear, equipment and supervision on site.

These measures [re-planning and acceleration] must be put in place by whosoever is responsible for the activities to be crashed on the instruction of the responsible manager – and paid for by whoever is responsible for the delay. That is, the party incurring the cost of the delay reduction must be reimbursed their costs by the party responsible for causing the delay (the route generally taken through the hierarchy of contracts established in the execution of a large project is that the Owner will pay the costs of the innocent party and recover these through his contract with the responsible party).

The very first question that arises where there is a delay of any sort is therefore generally, whose fault is it? And who pays the costs of lateness and/or of delay reduction?

In a number of instances the delay has clearly originated with one party and dependant upon the contract conditions governing the works, that party will contribute to the costs of delay reduction or be suitably penalised or mulcted in damages for their failure to perform timeously (or both) in terms of the agreed programme.

However, there are instances [and these occasions are much more frequent than is generally appreciated] where more than one party is responsible for a delay to the project.

Let us take, ab initio, a very theoretical and unlikely example of a conveyor subcontractor whose task is the supply, installation and commissioning of a conveyor on foundations to be supplied by another civil works subcontractor.

The conveyor subcontractor is informed by the Owner that the foundations for his conveyor are not in place.

He claims delay costs from the Owner.

On investigation of the circumstances, the Owner discovers that the conveyor subcontractor’s steelwork for installation on the foundations is also not ready for delivery to site. And that the delay started and ended on exactly the same dates as the civil engineering foundation delays.

Both delays are exactly equal in duration of impact on the project critical path.

What does the Owner (usually acting through his EPCM*³ contractor) do? And why does he take such action? Well – let us examine every possible action by the Owner:

  1. He can reject the conveyor subcontractor claim for costs and apply sanctions [liquidated damages, delay damages, or damages for breach of the “time is of the essence” provision of the contract] as provided for by the common law or contract conditions.
  2. He can accept the conveyor subcontractor claim for costs and award an extension of time.
  3. He can reject the subcontractor claim for costs and award a no-cost extension of time.

Important principle that must be applied: Any party in default is not entitled to benefit from his default.

With that principle in mind, let us examine the Owners possible actions:

1. Reject conveyor subcontractor claim for costs and take damages from him
In this instance he is rejecting the subcontractor claim – and that appears to be correct, because the subcontractor was late and he is not entitled to be enriched as a result of his failure to comply with the contract.

He is also taking money from the subcontractor because of the subcontractor lateness – but this is wrong, because now the owner is benefiting from his lateness. So the action proposed in 1 is not entirely wrong, but is also not correct.

2. Accept the conveyor subcontractor claim for costs and award an extension of time
In this instance he is paying the subcontractor for lateness that is the fault of the subcontractor – which is not appropriate as the subcontractor should not benefit from his lateness.

He is also awarding an extension of time to the subcontractor – which means that he cannot claim damages from the contractor for lateness – and this would appear to pass the test of the principle that the Owner cannot benefit from his own lateness.

3. Reject the subcontractor claim for costs and award a no-cost extension of time
It would appear to be correct to reject the subcontractor claim for delay costs as he can be regarded as having been the instrument of his own delay and consequently is not entitled to benefit from his default.

Similarly the Owner can be regarded as the source of his own delay and therefore should not be entitled to any compensation from the Contractor.

This solution would therefore, in the circumstances, appear to be the correct solution based on the equitability of the principle that I tabled above.

Additional Notes:

The probability of any two delays commencing and ending on the same dates on any project is very small. Consequently in most instances we need to deal with different instances of delay commencing at different times with different sequential impacts on the overall project critical path, and very often contaminated with the impact of force majeure events and further delays by both parties… These matters are never simple and are generally not amenable to resolution on the basis of only a single principle.

There are also many and varied judgements that have been generated internationally from cases involving concurrency of delay, and some of these are difficult to justify from normative principles – proving the adage that hard cases make bad law.

The reader is therefore warned that any instance of concurrent delay should be examined very carefully and all the facts uncovered, tabulated and laid bare to any consultant or legal adviser that is briefed to address the matter.

Bottom line – it is unwise to enter into a formal dispute resolution process before you have taken all the facts and documentation to a consultant or legal adviser so that you are as aware of the negative potential of the delay as of the positive potential.

Glossary

  • *¹ The term “acceleration” in the context of this note is loosely used to incorporate resource-intensive approaches to program crashing.
  • *² The term “re-planning” in the context of this note is loosely used to incorporate all non-resource intensive forms of programme duration decrease.
  • *³ The term EPCM is an acronym for Engineering, Procurement, and Construction Management
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