Any contractor confronted with unexpected delays to a project can be excused for feeling overwhelmed by the plethora of methodologies for proving delays. Some of these methodologies have similar names, or the same methodology may be called by different names. Indecision often leads to a delay in submitting a proper delay claim. Imagine that: the delay claim itself is delayed.
The good news is that the best delay analysis is rather easy to identify and implement. Let us start by eliminating any delay analysis that is not timely. As-Built vs. As-Planned? No. Collapsed As-Built? No. Neither of these analyses can be performed until the project is over. When it comes to time extensions, instant gratification should be our goal.
The impediment to negotiating time extensions in a timely fashion are twofold:
- Time extension requests submitted by the contractor that lack any methodology or supporting documentation
- Owners who fail to specify a particular methodology or required supporting documentation
As it might be surmised, the two problems are intertwined. The contractor provides almost no proof of a delay claim other than a request for a particular number of days. The owner is unhappy with this approach yet invites it by not putting anything in the contract that would explain the proper procedure for obtaining more time.
Many years ago a firm I worked for tried very hard to make a distinction between “disputes” and “claims”, believing the latter term is controversial. I suppose the idea of promoting or encouraging claims might seem a little like ambulance chasing. My employer preferred to be the firm that helped its clients settle disputes, not drag them out in arbitration or the courts.
But are disputes different from claims? I think so. Disputes happen during the project. Claims follow the project. Disputes are normal. Claims are (thankfully) not. It’s a matter of timing. We are trying to put out the fire, not figure out why the building burned to the ground.
The best delay analysis is therefore forward-looking. This should be rather obvious. Owners expect contractors to price additional work before it is performed so why should they make an exception for additional time? Before answering “I tried that and it didn’t work” go back to item one on my list.
Contractors need to submit time extension requests quickly so that time extensions can be obtained within a reasonable period of time. What is reasonable? I would say no more than two months after the delay occurred. If the parties have not agreed on a time extension within that period of time it is far more likely that attorneys will be involved at some point.
Trust me when I say that most delay analyses submitted by contractors are woefully inadequate even by the rather vague standards of most owners. Just filling out a certain number of days in that spot on AIA Form G701 is decidedly not a delay analysis unless there is something else attached.
Having worked on more than a thousand delay analyses over the years I am certainly aware that there are exceptions to the rules. Some owners are adamant about not giving any time no matter how much supporting documentation is provided. Facts are replaced by opinions. You would almost think it would kill that person to grant one measly additional day of time.
It might seem easier just to “sort things out” at the end of the project, but the biggest time extension I have negotiated in my career was during the project, not after. Nobody even considered calling an attorney. Yet on this project that supposed to take 400 calendar days we were able to obtain 570 calendar days in time extensions for a series of unanticipated events.
To be fair, this particular project was delayed so much that the owner awarded work to my client that was otherwise planned for the next phase. Nevertheless, the time extension discussions were quite amicable. Our baseline schedule showed a well-defined sequence of work among 18 transit stations. The owner was unable to grant access to these stations in the order we had requested and there very little the contractor could do to mitigate the situation.
Getting back to the forward-looking analysis, I will admit that I am not giving it a name that most people might recognize yet. Perhaps “Time Impact Analysis” sounds more familiar. The U.S. Army Corps of Engineers has been using that term since the 1970s so most of us started with this type of analysis in mind. The USACE created one of the first guides for analyzing construction delays and it is still relevant today.
I still prefer to call it a forward-looking analysis because it is more descriptive than “Time Impact Analysis”. Ignoring the nomenclature, let’s consider the advantages of this method:
- The remaining logic in the schedule does not need to be validated. In a forensic (after the fact) analysis the owner can challenge every assumption in the original logic with the benefit of hindsight. Validating the actual sequence of events can be quite time-consuming, which is to say, expensive.
- The owner’s defacto “concurrent delay” defense is easier to diffuse with a forward-looking analysis because the only possible concurrent delays are the ones happening right now. In a forensic analysis the owner will point to every activity that did not start or finish according to plan and claim a concurrent delay.
The concurrent delay defense is so difficult to break that I will tell a contractor that a time extension request will cost “X” dollars but if the contractor wants time and money it will cost “3X”. I will be reviewing every daily report, meeting minute, RFI, etc. to explain events that have nothing to do with the issue I feel is causing the biggest delay.
In a forward-looking analysis the current status of the project is irrefutable. The update has been prepared, reviewed and accepted. In an arbitration hearing several years ago the owner claimed he never bothered reviewing the monthly updates and therefore the story they told had no significance. The arbitration panel – which included two former employees of the owner – found that argument to be ridiculous.
A forward-looking analysis is also the easiest to perform, with one caveat. Each delay to the project needs to analyzed quickly and in chronological order. “Quickly” can be defined as not waiting until the next schedule update has been submitted to go back and analyze delays during the current period. There is the risk that the contractor will start changing durations or logic in the next schedule update that contradicts the delay that would otherwise be demonstrated in the previous update.
Also, the owner will be thoroughly confused by time extension requests that stack up or are submitted in no particular order. How is the owner supposed to interpret multiple time extension requests? Are the delays cumulative or do some of them overlap? The contractor must explain this or risk having the owner put off making a decision because the contractor has provided no guidance whatsoever.
Delays fall into two basic categories:
- Some unexpected event prevents contract work from starting
- Some unexpected event prevents contract work from finishing
The unexpected event might be additional work, waiting for an answer as to how to proceed, or unusually severe weather. In any case, the process is the same: develop a delay “fragnet” to represent the unexpected event and insert this fragnet into the schedule update that immediately precedes the start of the unexpected event. There may be several unexpected events that occur during the same period. Each will need a fragnet. An example of a delay fragnet appears below:
Not exactly calculus, right? Granted, sometimes we have just the kernel of a delay presents itself during the current update period so we are not prepared to submit the analysis immediately. A question from the contractor generates a response from the owner. The response prompts the contractor to submit a change order request, which is then negotiated, and then the contractor has to order the materials for the additional work and, finally, perform the work. But we do not necessarily wait for the entire event to play itself out to estimate the impact.
When there are multiple delays during the same period it is crucial to explain to the owner how they interact. I prefer to insert all of the fragnets in the schedule update at the same time and then explain in a brief narrative which event is the biggest delay, the second-biggest delay, and so forth. The point is to make the owner aware that if the primary delay is rejected there are other, shorter, delays that must still be considered.
For a contractor, procrastination is a far bigger sin than a less-than-perfect delay analysis. When a contractor estimates the cost of work there are obvious assumptions that go into that estimate. Even if the estimated production rates are based on extensive historical records, the reality is the contractor only has a chance of achieving those exact rates. We therefore should not get too hung up on the perfect delay analysis. The only perfect delay analysis is the as-built schedule and we are not waiting that long!
It takes a serious commitment to stay on top of the project schedule and analyze each unexpected event, and very few construction companies have full-time schedulers. But one rogue project can wipe out all the profits earned by all the other projects combined. For some construction companies, their first claim was also their last, as they are no longer in business.
Even in my 20s I would tell contractors that not knowing the expected end date of the project can lead to unintended consequences. The owner demands a “recovery schedule” because the contractor is behind schedule and has not proven that any of the delays are excusable. So now the contractor is accelerating the remaining work. Or the contractor revises logic on the remaining tasks to hide the delay from the owner, which makes it hard to justify the delay after the fact.
When the contractor knows the project end date is being extended it becomes much easier to plan the remaining work. Even if the time extension is denied, at least the contractor has an understanding of how to proceed. Sometimes it is more expensive to accelerate the project as opposed to paying the liquidated damages. Pride and other considerations may not allow that scenario to happen, but still, we are in a better position to make that decision once the time extension requests have been acted upon.