CONSTRUCTION DELAYS: WHICH METHOD SHOULD BE USED TO CALCULATE DELAY?

If you need to prove and allocate construction project delays, you should engage a scheduling consultant qualified with CPM (critical path method) analysis.  You should also engage counsel to assist in preserving your rights, as well as presenting and maximing your arguments for delay.

There are numerous methodologies used to quantify and allocate delay. You want to discuss the most effective analysis for your case and facts including whether you want/should use a forward-looking prospective analysis or a backward-looking retrospective analysis that factors in as-built data.  In doing so, you want to make sure you understand the pros and cons of each methodology including the bases to attack the methodology that will be subject to cross-examination.  The five primary CPM methodologies are as follows:

 

 

 

 

  1. As-Planned Versus As-Built. This methodology compares the as-planned baseline schedule to an as-built schedule reflecting progress to assign delay.  An as-built schedule that reflects progress includes actual start dates, finish dates, and durations.  The actual dates and durations are compared with the as-planned dates and durations on the baseline schedule to determine delay.  Under this methodology, the delay impact is determined retrospectively.

 

  1. Windows Analysis. This methodology divides the project into windows of period of time and focuses on an as-built critical path analysis that relies on progress schedule updates and as-built data.  The as-built critical path is then quantified for each of the periods (or windows).   The methodology compares the as-planned baseline schedule’s critical path to the as-built schedule (and as-built conditions) during the window to quantify delay. Under this methodology, the delay impact is determined retrospectively.

 

  1. Collapsed As-Built. This methodology is the “but for” methodology as it analyzes the earliest date the project would have been completed “but for” identified delays.  This methodology removes delay events from the as-built schedule to determine when the project would have been completed “but for” the delay event(s).  Under this methodology, the delay impact is determined retrospectively.

 

  1. Impacted As-Planned. This methodology inserts potential delay events/activities into the as-planned baseline schedule to determine impacts.  By inputting new delay activities into the baseline as-planned schedule, new logic and a new critical path is created to result in a new completion date (i.e., an impacted, as-planned schedule).  The difference between the completion date in the impacted, as-planned schedule and the (unimpacted) as-planned baseline schedule represents the delay.  This methodology does not rely on as-built data and prospectively determines delay.

 

  1. Time Impact Analysis. This methodology analyzes delay events individually based on the schedule update immediately prior to the delay event.  The difference between the project’s completion date before and after the delay event quantifies the delay.  Under this methodology, the delay event is added into the updated schedule closest to the event to see if the project completion date changes based on the event’s impact to the completion date.  This methodology does not rely on as-built data and prospectively determines delay based on when the event occurred.

 

It is not uncommon for parties to use different methodologies to quantify and assign delay.  It is also not uncommon for the parties to attack the other methodology as unreliable– whether not focusing on what actually occurred or not focusing on an event the moment it occurred based on the schedule or plan in-place as of the delaying event(s).  As an example only, in K-Con Building Systems, Inc. v. U.S., 131 Fed.Cl. 275 (Fed.Cl. 2017), a contractor asserted claims relative to the government’s delay. The contractor claimed the critical path should be analyzed with a prospective analysis predicated on its as-planned performance.  The government disagreed claiming the critical path should be analyzed based on a retrospective as-built analysis.  The Court of Federal Claims agreed with the government “that the proper way to determine what activities were on the critical path of performance in this case is to examine what actually occurred during contract performance.”  K-Con Building Systems, supra, at 329.  The Court reached this conclusion because: (1) “a critical path schedule that relies solely on the [baseline] schedule set forth in the contract specifications does not account for subsequent changes to the schedule authorized by the contracting agency” and (2) “the use of a contractually based critical path schedule does not reflect that the [contractor] did not actually perform in accordance with the [baseline] schedule set forth in the contract specifications.”  Id. at 329-330.  Stated differently, the as-planned approach that the contractor employed did not “fully reflect the reality of what occurred on the project.”  Id.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DELAYS CAUSED WHEN GOVERNMENT (OWNER) PUSHES CONTRACTOR’S WORK INTO RAINY / ADVERSE WEATHER SEASON

There are a number of horizontal construction projects where a contractor’s sequence of work and schedule is predicated on avoiding the rainy season (or certain force majeure events).  The reason is that the rainy season will result in delays due to the inability to work (and work efficiently) during the adverse weather (including flooding caused by the weather).   If the work is pushed into the rainy season, is such delay compensable if the government (or owner) delayed the project that pushed work out into the rainy season?  It very well can be.

 

For example, in Meridian Engineering Co. v. U.S., 2019 WL 4594233 (Fed. Cl. 2019), a contractor was hired by the Army Corps of Engineers to construct a flood control project for a channel in Arizona. Due to delays, including those caused by the government, the project was pushed into the monsoon season, which caused additional delays largely due to flooding caused by the heavy rain.  One issue was whether such delays were compensable to the contractor – the government raised the argument that the contractor assumed the risk of potential flooding from the rainy season.  The Court found this argument unconvincing:

[The contractor’s] initial construction schedule planned for a completion of the channel invert work, a necessary step in protecting the site from flooding, to be completed by late June 2008…[M]any issues arose in the project’s early stages that led to cumulative substantial delay, including those caused by the government’s failure….The government cannot now claim that [the contractor] assumed the risk of flooding from monsoon season when the government was largely responsible for [the contractor’s] inability to complete the project prior to the beginning of the monsoon season.  Simply put, the government cannot escape liability for flood damages when the government is responsible for causing the contractor to be working during the flood-prone season.

Meridian Engineering, 2019 WL at *7 (internal citations omitted)

In other words, but for delays caused by the government, the contractor’s work would not have been pushed into the monsoon season.  The Court’s outcome, perhaps, would have been different if the contractor was the sole cause of delays that pushed the project into the monsoon season or the contractor’s original schedule was unrealistic to begin with.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

THE CONSTRUCTION PROJECT IS LATE – ALLOCATION OF DELAY

images-1The construction project is late.  Very late.  The owner is upset and notifies the contractor that it is assessing liquidated damages.   The contractor, in turn, claims that the project is late because of excusable, compensable delays and, perhaps, excusable, noncompensable delays.  This is a common and unfortunate story between an owner and contractor on any late construction project.  Now the fun begins regarding the allocation of the delay!

 

Through previous articles, I discussed that in this scenario the burden really falls on the contractor to establish that the liquidated damages were improperly assessed against it and, thus, it is entitled to additional time and/or extended general conditions as a result of excusable delays.   Naturally, this requires the contractor to develop a critical path analysis (time impact analysis) allocating the impacts / delays (and the reasons for the impacts/ delays) to the project completion date. The reason the burden really falls on the contractor is because the owner’s burden is relatively easy – the project was not complete on time pursuant to the contract and any approved changed orders. 

 

In a recent opinion, East Coast Repair & Fabrication, LLC v. U.S., 2016 WL 4224961 (E.D.Va. 2016), the court contained a very detailed and sound discussion regarding this common story between an owner and contractor.   Although this is a case involving a ship repair company overhauling and repairing a Navy  (government) vessel, the court’s discussion would apply to any late construction project and the allocation of delay to a late project.   Please take the time to read the Court’s discussion below as it lays the framework for the allocation or apportionment of delay. 

 

In the context of litigating liquidated damages assessed by the government in a construction contract, the government first must meet its initial burden of showing that “the contract performance requirements were not substantially completed by the contract completion date and that the period for which the assessment was made was proper.” Once the government has met that burden, the burden then shifts to the contractor “to show that any delays were excusable and that it should be relieved of all or part of the assessment.

In order for the contractor to carry its burden it must “demonstrate that the excusable event caused a delay to the overall completion of the contract, i.e., that the delay affected activities on the critical path” because the contractor “is entitled to only so much time extension as the excusable cause actually delayed” completion of the contract.

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Having considered the somewhat conflicting positions taken on this issue in prior federal cases, this Court finds that the better legal interpretation regarding the proper treatment of “sequential delays” (where one party causes a delay followed by a separate-in-time delay caused by the other), is that “apportionment” should be permitted when the evidence provides a reliable basis on which to determine which party is responsible for which delay. Stated differently, the fact that the Government was solely responsible for some delays in this case…does not preclude the Government as a matter of law from recovering some amount of liquidated damages as a result of subsequent, and conceptually distinct, delays deemed to be solely the fault of ECR/Técnico [Contractor and its subcontractor].

 

As to performance delays deemed to be “concurrent,” (both parties causing a delay at the same time), the established law reveals that ECR [Contractor] is permitted to seek an extension of the project completion date for such delay, as long as the delay caused by the Government would have disrupted the “critical path” in the absence of the delay caused by the contractor. However, while ECR may seek an extension of the performance period for a concurrent delay, ECR is precluded by law from obtaining a monetary award to compensate it for “delay damages” for such delays, with the appropriate relief being only the extension of the project completion date (which, in effect, results in a day-for-day reduction of the Government’s liquidated damages claim). 

East Coast Repair & Fabrication, supra, at *13-14 (internal quotations omitted).

 

 

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.