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Dealing with concurrency in construction projects

Pramod Oommen, Director

PramodOommen@hka.com

“To evaluate concurrency, it is vital to establish if the event would have had concurrent effect to the progress of works and thereafter arrive at a suitable method to ascertain the contribution of this event to the critical delays incurred within the period analysed.” 

Introduction

The word concurrent delay is often misunderstood and wrongly interpreted within the construction industry due to a lack of appreciation of the criticality of events, wherein, derivations are mostly construed to the advantage of one party. It is more often the case that contractor time extension claims are submitted seeking compensable1 delay periods for prolongation costs without taking into consideration concurrent delays.

In general terms, a concurrent delay is used to express a situation when an employer and contractor delay, occurring at the same time, drive the completion date of the project. A contractor is entitled to time but not time related costs if concurrency exists, it is the lack of concurrency that determines eligibility to prolongation costs (indirect2 resource cost or time related costs). However, it is possible for bespoke contracts to have amended clauses wherein the contractor’s entitlement to extension of time is lost as result of contractor’s concurrent delays . This paper however does not consider this scenario, it adopts a logical approach to evaluate contractor and employer critical delays under the contract.

The primary purpose of my paper was to establish how concurrent delays should be dealt with under English Law to arrive at compensable delay periods. The areas covered are types of concurrent delay, their relevance in time extension entitlement, their relation to pacing events and their significance to compensable delay periods.

What are concurrent delay events?

A delay event is construed as concurrent only if it causes critical delays on the longest path. In this regard, the longest path is defined as the minimum time required to complete the project, any delay to this path will cause critical delays to completion. The delay event should be capable of causing critical delays to qualify as being concurrent event.

During the course of a project, any delay to the longest path activities will imply the programme has slippages which translate to critical delays. In this regard, it is noted that the critical driver on the longest path may relate to employer, contractor, or a neutral event (not attributed to either party). It is concurrency which determines the contractor’s entitlement to compensable delay periods. In this situation, the employer is not solely responsible for critical delays but shares responsibility with the contractor for the critical delays.

In the figure below, the delay to foundation works is a contractor event while the authority permit approval is an employer event, the two delay events are stated to be concurrent at this point and contribute to critical delays to the building erection works on the longest path to the completion of the overall works.

Figure 1 – Illustration of Concurrency

Recommended practice statements on concurrency

In case of concurrency, though eligibility to time extension is not impaired, time related costs will not apply. The Society of Construction Law protocol (SCL Protocol) gives guidance on concurrency within construction projects:

“True concurrent delay is the occurrence of two or more delay events at the same time, one an employer risk event, the other a contractor risk event, and the effects of which are felt at the same time. For concurrent delay to exist, each of the employer risk event and the contractor risk event must be an effective cause of Delay to Completion (i.e. the delays must both affect the critical path). Where contractor delay to completion occurs concurrently with employer [owner] delay to completion, the contractor’s concurrent delay should not reduce any EOT [Extension of Time] due.”

“Where Employer Delay to Completion and Contractor Delay to Completion are concurrent and, as a result of that delay the Contractor incurs additional costs, then the Contractor should only recover compensation if it is able to separate the additional costs caused by the Employer Delay from those caused by the Contractor Delay. If it would have incurred the additional costs in any event as a result of Contractor Delay, the Contractor will not be entitled to recover those additional costs.”

The SCL Protocol further provides basis for its position on concurrency:

“The Protocol’s position on concurrent delay is influenced by the English law ‘prevention principle’, by virtue of which an Employer cannot take advantage of the non-fulfilment of a condition, the performance of which the Employer has hindered. The approach to the treatment of concurrent delay (once established) prevents arguments about whether an Employer Delay acting concurrently with a Contractor Delay actually hinders the progress of the Contractor in any way.”

The SCL Protocol is consistent with Association for the Advancement of Cost Engineering (AACE) International 29R-03’s interpretation, when contractor and employer driven issues are attributed to the delay, the contractor is eligible to an extension of contract time with no prolongation costs. Here, the primary purpose of any time extension claim is satisfied, this being for the contractor to avoid any liquidated damages.

According to guidance within AACEI ‘29R-03’ recommended practice,

“Concurrent delays occur when there are two or more independent causes of delay during the same time period. The same time period from which concurrency is measured, however, is not always literally within the exact period of time. For delays to be considered concurrent, most courts do not require that the period of concurrent delay precisely match. The period of concurrency of the delays can be related by circumstances, even though the circumstances may not have occurred during exactly the same time period.”

Concurrent delay events and derivations

Based on the SCL and AACEI literature, it would imply that the contractor and employer delay event can have two different trigger (or start) dates, but the test of causation must be satisfied, i.e., both must be effective causes of the critical delay. A key requirement being that each event, cause critical delay to completion of the works, causation is defined as the link between the relevant event (contractor or employer) and the critical delay to completion.

Under the literal and functional concurrency theories, the delay events are in literal concurrency when they occur at the same time and in functional concurrency when they do not start / finish at the same time, but the effect is felt in the same period. Hence, concurrent events may either be in a state of literal and functional concurrency and contribute to overall critical delays. In practice however, literal concurrency is unachievable since time is infinitely divisible.

Based on the above and with the help of four scenarios shown in the figure below, I have illustrated as to how concurrency should be analysed. I have further arrived at excusable and compensable delay periods for each scenario.

Figure 2 – Concurrent delay event scenarios

In the first three scenarios, the analysis period is five days, i.e. from 7 to 11 while in the last scenario, the analysis period is eight days, i.e., from 4 to 11. Here, the event duration indicates the period where the event causes critical delay to completion of the works.

In scenario A, the employer (EDE) and contractor (CDE) delay events are said to be in literal concurrency, the events are stated to be truly concurrent which is a hypothetical situation. In this scenario, the contractor is entitled to excusable period of five days with no compensable delay periods, the reason being that the causative period for EDE and CDE overlap. In this case, the critical delays would have incurred in the absence of employer event, the contractor is therefore not be eligible to any compensable delay periods.

Concurrent events may either be in a state of literal and functional concurrency and contribute to overall critical delays. In practice however, literal concurrency is unachievable since time is infinitely divisible.

In the next two scenarios, the employer delay event has a greater effect than the contractor event. In scenario B, EDE and CDE are effective causes of critical delay, EDE continue to cause critical delays wherein CDE ceases to exist. In scenario C, EDE is an effective cause of critical delays earlier to CDE, thereafter, both continue to cause critical delays and cease at the same point. In both scenarios, the causative period of CDE does not completely overlap with EDE and should therefore entitle the contractor to compensable delay period. It is easy to see that the same result would be achieved, if the window were segregated into two smaller periods to correspond with the event trigger dates. The results confirm to Section 14 of the SCL Protocol wherein it was possible to segregate additional costs caused by the employer and contractor. The argument also satisfies AACE 29R-03, wherein concurrent delay periods do not have to match.

In scenario D, though EDE and CDE do not overlap, the cause of critical delay within the window period is borne by the two delay events. Here, EDE and CDE are stated to be in functional concurrency. In this scenario and based on the arguments formed above, the contractor is eligible for five days excusable and two days compensable delay periods. Here, though the causative periods of EDE and CDE do not overlap in the literal sense they have functional overlap, EDE and CDE are treated as concurrent events.

Legal background to concurrency

Concurrent delays on Entitlement to Extension of Time

In the English case, ‘Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd ’, the court concluded that concurrent delays entitle contractor to extension of time:

“If there are two concurrent causes of delay, one of which is a relevant event [an employer risk event] , and the other is not, then the contractor is entitled to an extension of time for the periods of delay caused by the relevant event notwithstanding the concurrent effect of the other event.”

The verdict which later came to be known as the ‘Malmaison’ approach was adopted under the SCL Protocol which states that,

“Where concurrent delay has been established, the Contractor should be entitled to an EOT for the Employer Delay to Completion, dealt with in accordance with Core Principle 5. The Contractor delay should not reduce the amount of EOT due to the Contractor as a result of the Employer Delay.”

Concurrent delays on Entitlement to Compensable Delay Periods

In De Beers v Atos , the court held that if concurrent delay events exist, the contractor cannot expect entitlement to compensable periods:

“The general rule in construction and engineering cases is that where there is concurrent delay to completion caused by matters for which both employer and contractor are responsible, the contractor is entitled to an extension of time, but he cannot recover in respect of the loss caused by the delay.”

As noted earlier, causation (to critical delays) is vital to determine concurrency. The cases have identified two approaches to establish causation and thereby provide for apportionment of responsibility to critical delays driven under concurrency:

  1. The Dominant-Cause Approach
    If there are two causes (to critical delays), one the employer’s responsibility and the other the contractor’s, the contractor succeeds if he establishes that the cause for which the employer is responsible is the effective, dominant cause. Which cause is dominant is a question of fact, which is not solved by the mere point of order in time, but must be decided by applying common sense standards. However, if it is not possible to determine which delay causing event is the “dominant cause”, under such circumstances the architect, project manager, engineer, etc, as the case may be, should exercise his/her discretion in determining an outcome which is “fair and reasonable”.
  1. The “But-for” Test
    If the contractor-caused delay is ignored, would the completion date of the project be overrun by the employer’s event. The but-for test to evaluate responsibility requires to think away from the employer’s risk event and the delay would not as a matter of fact also disappear, then the employer is not liable for the delay. However, the approach has been criticized in the field of construction law, in instances wherein concurrent delays occur that are of equal causal potency.

Concept of Pacing Events

A pacing is a scenario when critical delay (by employer) on first activity occurs, and a conscious decision is made by the other party (contractor) to pace progress on the second activity. The contractor deliberately slows down work because of delay to the first activity. Hence, pacing must not be construed as concurrent delay event wherein the circumstances on pacing are to be established by the party with positive case. AACE 29R-03 recognizes pacing delay as a manifestation of the principle that work expands to fill the time available to perform them.

The figure below shows two typical scenarios of pacing by the contractor. In scenario ‘1’, the contractor has extended the wiring installation because the employer driven conduit material delivery is in delay. The direct pacing occurs when the duration of the successor activity is extended due to a delay in a predecessor activity on which the progress of the successor activity is dependent. In scenario ‘2’, the contractor slows down piping installation for unit B because of employer’s delay to delivery of equipment delivery which will delay piping for unit A. In indirect pacing, the paced activity (contractor) has no direct relation to the other activity (driven by the employer).

Figure 3 – Pacing scenarios by contractor

In general, contractor is not eligible to compensable periods arising from concurrent delays, if however genuine pacing is accepted, the contractor event should be treated as a pacing event and not as a concurrent event. By definition, a pacing delay cannot exist alone, it can only exist in relation to a parent critical delay which has necessitated the pacing delay. The pacing event is not legitimate if the contractor does not have the ability to resume to its normal mode upon removal of parent critical delay. The burden of proof lies with the contractor to prove that he has / had the capability to perform the paced works.

In most claims, pacing arguments are made at a later stage wherein delay analysis would reveal that, activities not driven by employer were delayed or critical to the progress of the works. If any contractor issue was documented and if they are concurrent with an employer driven issue at that stage, then the contractor’s argument for pacing is flawed. However, if the contractor has intimated the employer of his intention to optimize his labour or equipment resources, the pacing delay should not be treated as a concurrent delay. The onus is on the contractor to establish a pacing argument to avoid being classified as contractor concurrent delay.

Conclusion

It is best to adopt a common-sense approach to deal with concurrent delay events. Any delay event which causes critical delay to the completion of the works qualifies to be a concurrent event. The assignment of compensable delay periods, thereafter, must be evaluated based on the possibility of concurrency while taking into consideration any pacing delay that may exist at that time. To arrive at unbiased results, it is necessary to identify the relevant concurrent delay event and account for any pacing.

The liability for concurrent delay event is almost always an award for time extension with no costs or award of time with partial costs to the contractor, the extent of which will have to be determined through delay analysis supported with factual evidence. It is good practice for the contractor (claimant) to take into consideration all relevant delay events based on factual circumstances, including events asserted by the employer (respondent).

In any legal jurisdiction, it is normal for the burden of proof to lie with the party who raised the concurrency argument as a positive case. In summary, concurrency should not reduce any time due to the contractor, however, time related costs are reduced.

About the Author

Pramod Oommen holds a bachelor’s degree in mechanical engineering (B.Tech) and master’s degree in construction law (LLM) with over 20 years of work experience in the construction industry. He has a wealth of knowledge working in commercial buildings, international airports, oil & gas, power plant and other infrastructure projects.

He has worked in contractor and consultant roles in United Arab Emirates, Sultanate of Oman, State of Qatar, Saudi Arabia, Kuwait, Indonesia and Japan. In the last eight years, he’s worked solely as delay analyst on prolongation and disruption claims. He holds multiple certifications as Project Management Professional (PMP), Planning and Scheduling Professional (PSP) and Certified Cost Professional (CCP). Pramod is well versed in most forms of forensic delay analysis techniques and has helped Contractor’s win time extension and compensation claims. He is familiar with the Society of Construction Law (SCL) protocols, AACEI recommended practice 29R-03 and FIDIC suite of contracts.

1 Any compensable delay period falls under the permit of excusable delay wherein the contractor is not responsible for the critical delay. On the contrary, if non-excusable, the contractor is deemed culpable for the critical delay. 2 The management and supervisory resources which are employed at site to manage the project. It could also include head office overheads who are related to the project. 3 North Midland Building Ltd v. Cyden Homes Ltd [2018] EWCA Civ 1744 4 The Society of Construction Law founded in 1983 has worked to promote for the public benefit education, study and research in the field of construction law and related subjects both in the UK and overseas. 5 SCL Delay & Disruption Protocol – 2nd Edition (Section 10). 6 SCL Protocol (Section 14). 7 SCL Protocol (Section 10.16). 8 AACEI is a non-profit organization founded in 1956 at the University of New Hampshire, United States of America which provides recommended practice (RP) in the construction industry. 9 Published on 25 April 2011. 10 AACEI 29r-03 (Section 4.2 B, 3). 11 AACE 29R-03 (Section 4.2 D). 12 Concurrent Delay and Pacing Delay in Construction Project by Do Duy Khuong. 13 QB 388 & [1999] 70 Con LR 32 (TCC). 14 (1999) 70 Con LR 32 (TCCC). 15 SCL Protocol (Section 10.12). 16 De Beers UK Ltd v Atos Origin IT Services UK Ltd [2010] EWHC 3276 (TCC).