Test of 'common law common sense' for any delay analysis methodology!

In the recent NSW Supreme Court (NSWSC) decision of White Constructions Pty Ltd v PBS Holdings Pty Ltd, the NSWSC dismissed the delay analysis method used by BOTH Party’s experts, even though their selected delay analysis methods used were referred to in the Society of Construction Law’s Delay and Disruption Protocol. A historic moment for profession to step back, think about gaps and opportunities for practical improvement and take actions to mitigate this risk for future projects.

I still remember supporting a Client against its Contractor’s $30m claim over 6 months delay, when our forensic schedule reviews revealed the Contractor’s scheduler had removed scheduling logic between the detailed schedule and the Client’s Summary Schedule and replaced them with hard constraints on the milestones!

For decades, forensic delay and disruption analysis has been a discipline of art and science not only involving professional judgment based on knowledge and experience but also depending on project specific circumstances, nature of delay or disruption and available historical data as well as objectives and constraints of analysis, e.g. prospectively or retrospectively.

Since the 1960’s and as Critical Path Method (CPM) has grown in application in the construction projects as a useful tool to plan and monitor project schedule, the use of forensic schedule delay and disruption analysis techniques has been the other side of the coin to support disputes and claims. 

Selecting the most suitable method of schedule delay analysis is extremely important not only because the various methods may generate in different results even when applied to the same set of data, but also it heavily depends on the type of the Contract as well as the nature of the schedule as a logic-driven schedule or resource-driven schedule and allocation of schedule contingency within the schedule.

In another case in a Competitive Alliance Contract, in addition to the Time Impact Analysis (TIA) method of delay analysis, we had to develop and run a Schedule Risk Analysis (SRA) for a major rail project retrospectively to assess the approximate confidence level of the Baseline Schedule and reasonableness of schedule contingency allocations in activity durations, disciplines, and key interim and final contractual milestones.                      

Disagreements about the quality of the schedule, risk allocation, reasonableness of the schedule risk, contingency distribution, causes of delays, their impact on the construction process, and which contracting party must bear the consequences can become contentious. However, by working with and analysing CPM construction schedules combined with schedule risk analysis, often it is possible to assess the cause of and responsibility for delays occurring on a project.

Forensic Schedule Delay Analysis Methods

As per the 2nd Edition of Society of Construction Law Delay and Disruption Protocol, there are six commonly methods of delay analysis. Certain methods start with the identification and description of an event (a cause) and thereafter seek to establish its impact (the effect) – these are cause and effect type analyses. Other methods start with identifying critical delay (an effect) and thereafter seek to establish what might have caused that delay – these are effect and cause type analyses. Where the EOT application is assessed after completion of the works, or significantly after the effect of an Employer Risk Event, then the effect and cause methods are generally considered to be more forensically reliable because they consider any and all potential causes of the delay incurred.

• Impacted As-Planned Analysis
• Time Impact Analysis
• Time Slice Windows Analysis
• As-Planned versus As-Built Windows Analysis
• Retrospective Longest Path Analysis
• Collapsed As-Built Analysis

Just these ones then? Definitely NOT! Other methods, which may be reasonably deployed in particular circumstances include project wide retrospective as-planned versus as-built analysis, time chainage analysis, line of balance analysis, resource curve analysis (especially for resource-driven schedules for example power transmission line projects, and even earned value analysis, and many more!

AACEi recommended practice 29R-03 sets nine Method Implementation Protocols (MIP), as below.

• 3.1. Observational / Static / Gross (MIP 3.1)
• 3.2. Observational / Static / Periodic (MIP 3.2)
• 3.3. Observational / Dynamic / Contemporaneous As-Is (MIP 3.3)
• 3.4. Observational / Dynamic / Contemporaneous Split (MIP 3.4)
• 3.5. Observational / Dynamic / Modified or Recreated (MIP 3.5)
• 3.6. Modelled / Additive / Single Base (MIP 3.6)
• 3.7. Modelled / Additive / Multiple Base (MIP 3.7)
• 3.8. Modelled / Subtractive / Single Simulation (MIP 3.8)
• 3.9. Modelled / Subtractive / Multiple Base (MIP 3.9)

Let’s back to the recent NSWSC decision of White Constructions Pty Ltd v PBS Holdings Pty Ltd. The developer brought proceedings against its sewer designer and its water servicing coordinator, for failing to design and submit a sewer design acceptable to requirements of Sydney Water, allegedly causing delay to the completion of the project and additional costs.

Both Parties engaged forensic schedule delay experts to assess the alleged delay. The Plaintiff’s expert used an "as planned vs. as-built windows analysis", concluded there had been a critical delay of 240 calendar days. The Defendants' expert, used a "collapsed as-built (or ‘but-for') analysis", concluded that, at best, the works could only have been completed only 19 days earlier than it in fact was, but for the alleged delay.

Although the delay experts managed to agree the as-built schedule, they could not agree on an appropriate schedule delay analysis methodology to be used. They also could not agree with how the other had applied the methodology the other had selected. “Plainly, both experts are adept at their art. But both cannot be right. It is not inevitable that one of them is right”. To resolve the impasse, the judge decided to engage a court-appointed expert, whose methodology and opinion he adopted, dismissing both experts' evidence and the methods they adopted.

The judge preferred in reviewing the evidence to determine whether the delay in providing the sewer design caused delay to the entire project. In doing so, he paid considerable attention to the contemporaneous records of progress during the works, including what those records did and did not say on the subject of the alleged delay.

The judge has cast doubt on the importance and relevance of commonly used schedule delay analysis methodologies being referenced in the Protocol without any ‘close attention to the facts’ and ‘common sense’!, stating "the fact that a method appears in the Protocol does not give it any standing, and the fact that a method, which is otherwise logical or rational, but does not appear in the Protocol, does not deny it standing." He concluded: "[t]he only appropriate method is to determine the matter by paying close attention to the facts, and assessing whether [the Plaintiff] has proved, on the probabilities, that [the] delay … delayed the project as a whole and, if so, by how much."

Conclusion: the proceedings are dismissed and it was ordered that White is to pay the costs of IWS and SWC.

Key lessons learnt and practical takeaways

• This case is a fantastic reminder to parties and delay experts that they should pay close attention to facts, common sense, contemporaneous records not only opinion alone, cooperate with one another, seek agreement where possible, and present their findings in a logical and coherent manner. 
• Like any other industry recommended practices and industry standards, simply adopting a SCL Protocol-recommended method alone does NOT represent appropriateness and relevance for the case.
• It is important to not only keep contemporaneous record of delays, but also to ensure that such records are specific: mere generalities, or the failure to record the effects of delay events, can create complications further down the road.
• As highlighted by SCL Protocol, in order to avoid or at least minimise disputes over methodology, it is recommended that the parties try to agree an appropriate method of delay analysis before each embarks upon significant work on an after the event delay analysis.
• AACEi recommends eleven factors that should be considered by the forensic schedule analyst when making a recommendation to the client and its legal counsel concerning this decision. I can add few factors too.

1. Factor 1: Contractual Requirements
2. Factor 2: Purpose of Analysis
3. Factor 3: Source Data Availability and Reliability
4. Factor 4: Size of the Dispute
5. Factor 5: Complexity of the Dispute
6. Factor 6: Budget for Forensic Schedule Analysis
7. Factor 7: Time Allowed for Forensic Schedule Analysis
8. Factor 8: Expertise of the Forensic Schedule Analyst and Resources Available
9. Factor 9: Forum for Resolution and Audience
10. Factor 10: Legal or Procedural Requirements
11. Factor 11: Custom and Usage of Methods on the Project or the Case

In addition, I should highlight few important factors including attitude of the client, the nature of the schedule, i.e. logic-driven schedule vs. resource-driven schedule, type of the Contract, methodology of progress performance measurement and approach to schedule contingency determination as well as its allocation across the schedule.

In the fourth edition of Delay and Disruption in Construction Contracts, in 2010 Keith Pickavance highlighted “However, the names commonly given to particular methods of analysis and analytical processes are not without difficulty, because, historically, the usage of these names throughout the construction industry has been undisciplined”. He continued that, “it can be hoped that debate about what an analytical method should be called, how it should be carried out and what it does and does not do, should, in the future, diminish significantly”.

I believe ten years later; we still have a long way to go!

Your views and experiences are always welcomed and appreciated.

The views expressed in this presentation are those of Pedram Danesh-Mand and do not reflect or represent the official policy, position or recommendation of the KPMG Australia, Engineers Australia (EA) or Risk Engineering Society (RES). Any written or verbal recommendation has a general nature and should not be used for any decision making without further assessment for specific project and organisation requirements.