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Calculation of delay duration - forecast PC vs contractual PC date

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Gavin Bradley
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Hi all

please assist me in the following matter:

A recent project has been the subject of numerous (approx 300No.) notifications of potential delay and 25No. actual EOT claim submissions by the Contractor. These have largely been rejected by the principal agent, but have been overturned and awarded, in certain instances, in the subsequent adjudication process. The client has nonetheless chosen the route of arbitration to attempt to get these adjudications reversed.

My query relates to a recent adjudication award in favour of the Contractor - the adjudicator has determined that all the contractual requirements have been met in terms of the EOT submission (relevant clause and time bars met, impact to critical path shown etc) but has then gone on to offer a different interpretation/calculation of the delay duration.

To simplify the matter slightly the following example may assist:

The scope of the delay relates to additional work introduced into a nearly completed area of the works. The claim was submitted prior to the contractual PC date, with the delay events being impacted into the latest programme update prior to the issued of the new information (date the delay ceased). The forecast PC date in that programme update was PC date + 50 days (some delays subject to further EOT claims and some delays subject to contract events). The impact of the introduction of the new scope of works was shown to be PC date + 100 days. This calculation included all possible contractor mitigations.

The adjudicator has confirmed that the delay event is a client risk event but has awarded an EOT based on his calculation of the duration by subtracting the forecast 50 day delay from the actual 100 day delay - in other words he has calculated the delay duration as the difference between the forecast PC date at the time of delay submission and the forecast PC date of the delay impact assessment, rather than the difference between the Contractual PC date and the forecast PC date of the delay impact assessment.

Surely the forecast PC date in a progress update has no contractual relevance to a delay determination other than being the basis of deciding if the contractors entitlement exists (ie the delay event extends beyond the contractual and forecast PC date). The calculation of the delay duration should be the extent beyond the contractual PC date rather than the extent beyond the forecast PC date.

your comments will be gladly received,

Gavin

Replies

Rafael Davila
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Techniques and Methods for Assessing Delays

The Contemporaneous Method hinges on the principle that in order to determine the impact of delaying events, the status of the project must be established at the time those events occurred. In essence, the schedule first needs to be updated at the time of the delay and, second, to be updated to incorporate any planning changes to coincide with the contractor’s plan for pursuing the work. The goal of this method is to develop a freeze-frame picture of the project — identifying the delaying event, the impact of the delay, and the plan to complete the remaining work at the time the delay occurred.

Two approaches are commonly used as part of this method: Time Impact Analysis, which looks at a particular point in time and utilizes a series of chronological time slices to evaluate major scheduling variations that occurred during the project, and Window Analysis, which examines the critical path between two points in time and assesses the delay as it occurs.

Courts and boards hold that contemporaneous schedule updates should be considered in evaluating delay. The Contemporaneous Method is favored because it provides a baseline for measuring delay; the status of the project at the time a delay occurs; the impact of delaying events on remaining work; and insight into float, changes to critical path, and revisions to the plan to complete.

AACE Recommended Practice - Time Impact Analysis-52R-06

Forensic Schedule Analysis:  Example Implementation - The techniques explored here or variations on these techniques have been commonly referred to as “windows Analysis” or “Time Impact Analysis.”

Please be reminded that there are other delay analysis methods and their calculations will differ.

Construction Delay Analysis Techniques

Good luck.

Gavin Bradley
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Hi Patrick

Thanks for the response. The contract terms around adjudication/arbitration are indeed as per your response and we are investigating that option going forward.

As stated I am more interested in getting an opinion around the adjudicators decision regarding the delay duration calculation, than the contractual ramifications.

thanks anyway

Gavin

Patrick Weaver
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I disagree with Mike but this may be jurisdictional - Adjudication laws differ.... 

Generally, the Adjudication determination is binding and cannot be challenged in itself - the intention is to get a quick resolution and payment made to the contractor or subcontracts.  BUT it is an interim determination.  Depending on your contract (and jurisprudence) the fact an Adjudication determination has been delivered in the space of a few weeks does not preclude moving the subject of dispute to a final determination in either the Courts or Arbitration at the appropriate time. 

These processes are not about attacking the Adjudication determination - this is final and very difficult to dispute. The Court case / Arbitration is about moving from an interim determination reached through a 'quick-and-dirty' process to a final determination reached through proper judicial processes.  Adjudicators are allowed to get things wrong (which would appear to be your situation) and their determination is still binding.

It is because Adjudication is only an interim process to free up cash flow its determinations cannot be appealed - the solution to a perceived wrong determination is to follow the contractual processes defined in the agreed contract (usually Arbitration). The only effect of the Adjudication is in settling the final payments in a judgment/award.  If you have paid $100,000 under an adjudication determination and the Arbitrator finds you should have only paid $80,000 the contractor owes you $20,000 (and you have 'won' the case so may be entitled to your costs).

But seek proper advice from a suitably qualified (and experienced) lawyer in your country. 

Pat (former Australian Adjudicator). 

Gavin Bradley
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Hi Mike

Thanks for the response, I am aware that the adjudication would need to be overturned in court but was more interested in opinion around the adjudicators assessment of the delay duration  - ie only awarding time beyond the forecast PC date in the progess update rather than beyond the contractual PC date. Any thoughts on that?

Gavin

Mike Testro
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Hi Gavin Until challenged in court the adjudicator's award stands and that can only be overturned if he is wrong in law. So you are stuck with it. An Arbitration will not change an adjudication. Best regards Mike Testor
Mike Testro
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Hi Gavin Until challenged in court the adjudicator's award stands and that can only be overturned if he is wrong in law. So you are stuck with it. An Arbitration will not change an adjudication. Best regards Mike Testor