Reasonability in Constructing Fragnets: A Crucial Perspective Required for the Resolution of any Type of Dispute

Reasonability¹ is a crucial perspective required for the resolution of any type of dispute. Whilst construction disputes are not an exception, practitioners in the construction industry often fail to develop a common understanding of reasonability in delay analysis. In many instances, this turns the dispute resolution procedure into a blame game. Therefore, a clear understanding and application of reasonability is a crucial factor for a fair and reliable delay analysis.

Various delay analysis methods are available to the construction industry and all of them comprise various crucial steps for their correct implementation. Many of these steps require reasonability checks during the application of the selected methodology.

Among these delay analysis methodologies, the industry and the courts recognise Time Impact Analysis carried out in windows of time (“TIA”) as one of the most robust and reliable delay analysis methodologies. If it is performed prospectively, TIA provides a structured approach for the contemporaneous analysis of delay events.

Conversely, when performed retrospectively, especially in cases where the project is complete and recognising that court’s preference is generally analysis based on the factual as-built data, TIA still supports the delay analysis process with its capability to demonstrate critical path movements, especially in complex projects, and adaptability for concurrency analysis. Where the analysis uses contemporaneous progress information through to completion it provides an encapsulation of the as-built data progressively through to completion of all of the works. Thereby fully satisfying the court’s natural preference to demonstrate what factually occurred on the project whilst still addressing those issues otherwise missed by a static analysis of the planned and final as-built positions on a project.

In relation to TIA’s capability to capture critical path movements, in Mirant Asia-Pacific Construction (Hong Kong) Limited – and – Ove Arup and Partners International Limited² Judge Toulmin stated that:

Windows analysis, reviewing the course of a Project month by month, provides an excellent form of analysis to inform those controlling the Project what action they need to take to prevent delay to the Project. 

Without such analysis those controlling the Project may think they know what activities are on the critical path but it may well appear after a critical path analysis that they were mistaken.

Similarly, in Walter Lilly & Company Limited v Giles Patrick Cyril Mackay, DMW Developments Limited³ Mr Justice Akenhead provided that:

Very few programmes were formally issued by WLC after 16 February 2007. In particular, there is no programme of all the works outstanding at that date which could sensibly be used as a baseline in a retrospective programme analysis.

It is therefore not possible to carry out a “traditional” delay analysis, which uses the Claimant’s programmes to identify the critical path during the period after 16 February 2007 in the way one might normally expect. It will instead be necessary for the experts to form a view as to what were the critical (or driving) delays in the period after 16 February 2007 without the assistance, which would normally be available from contemporaneously produced programmes.

In other words, TIA’s capabilities to demonstrate critical path movements, especially in complex projects, and adaptability for concurrency analysis make it an extremely useful tool for the assessment of delays both prospectively during the course of the projects or retrospectively upon completion.

Implementation of TIA in windows of time, the delay analyst is simply required to:

Step 1: Divide the analysis period into windows of time
Step 2: Identify the delay events and associated facts
Step 3: Model the delay events as fragnets4
Step 4: Incorporate the fragnets into the schedules in chronological order at the start of each window
Step 5: Update the impacted schedules for actual progress at the end of each window; and
Step 6: Ascertain the impact of the delay event in each window.

There are several factors that affect the successful application of these steps, and fragnet construction is one of them.

A fragnet consists of a group of activities that represent a mathematical model of a delay event. Therefore, Step 3 of the foregoing procedure unveils one of the most important questions within the delay analysis practice:

How should, the delay analyst model the delay event fragnet so that it, and its imposed impact, represent the reasonable effect of the delay event?

The importance of this query stems from the fact that fragnet modelling and insertion into the schedule largely defines the threshold where delay analysis results fluctuate from ‘hypothetical and/or exaggerated’ to ‘reasonable, reliable, and robust’.

In order to avoid unreasonable and unreliable TIA results, fragnets used in a delay analysis should be tested against a reasonability criteria that clarifies whether the fragnet should extend beyond a window cut-off date or otherwise be split into multiple ‘subfragnets’ which extend up to, but not beyond, the cutoff date of the window.

The foregoing reasonability test becomes more crucial if the delay analysis is being performed retrospectively when all the facts and the as-built information related to the delay event is available to the delay analyst.

Accordingly, this article seeks to address the above query by examining the following two delay event scenarios that are analysed retrospectively:

Scenario I: Instruction to hold design; and
Scenario II: Change in site access strategy.

SCENARIO I: INSTRUCTION TO HOLD DESIGN

In this scenario, the Employer instructed the Contractor to hold part of the design on 5 January 2016.

Following design discussions that took three months, on 5 April 2016, the Employer released the hold and instructed the Contractor to proceed with the design.

The analysis periods and the actual start and finish dates of the delay event mentioned in the foregoing scenario are illustrated in the figure below: Figure 1 shows that the actual event starts in Window No. 2, extends through several windows and ends in Window No. 5.

Figure 1 shows that the actual event starts in Window No. 2, extends through several windows and ends in Window No. 5.

Accordingly, the analyst has two options to analyse the effect of this delay event, namely:

  • Impacting the Dec-15 schedule at the beginning of Window No. 2 with the fragnet constructed using the as-built dates; or
  • Dividing the as-built fragnet into four segments based on cut-off dates of the windows and impact the corresponding schedules at the beginning of each window.

 

The first option is not a reasonable option because, at the time of instruction, the Contractor could not reasonably foresee that the Employer would release the design hold on 5 April 2016 unless in its instruction the Employer provided the planned release dates.

Furthermore, the use of Dec-15 schedule as the baseline schedule and inserting the full as-built fragnet into it may result in hypothetical and exaggerated results similar to the forecasts estimated by an Impacted as Planned (“IAP”) methodology, which lacks credibility and court support.

In conclusion, for this scenario, the reasonable approach is the insertion of the fragnet partially in each window. In other words, in Window No. 2 the analyst should insert a fragnet that ends at the cut-off date of Window No. 2. Then, in the next window, the schedule should be updated to the beginning of Window No. 3 and the fragnet that already constructed in Window No. 2 should be extended up to the cut-off date of Window No.3. This procedure should be repeated until Window No. 5. In Window No. 5, the analyst is required to extend the fragnet up to 5 April 2016, the date when the hold was released, because this information was available to the Contractor during the period of Window No. 5.

It is crucial to note that if the Contractor was supposed to perform additional engineering activities subsequent to the hold release, the fragnet used in each window should consist of those additional engineering activities together with the subsequent review and approval cycles.

A clear understanding and application of reasonability is a crucial factor for a fair and reliable delay analysis.”
Hakan Arslan, Managing Consultant, HKA
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