Thursday, April 15, 2010

Construction Concurrent Delays?

Many disputes on delay boil down to issues of concurrent delay. Then, concurrent delays commonly give rise to the question on who owns the float and establishing whether a contractor is entitled to an EOT inevitably causes difficulty.

A large number of cases have dealt with this problem, but none clearly gives guidance of universal application. In the case may be, there are times that parties do not clearly understood on what concurrent delays are due to the reason that the term has been widely used, yet it is still often misunderstood. While most project participants toss the term concurrent delay about freely, it is rare that any two individuals can agree on what it actually means. The lack of consistency is characteristic of the systemic confusion within our industry.

From the Protocol, it has been made known that the SCL has partially recognized such problem in defining the terms and conditions to concurrency. Therefore, the Protocol had stated that concurrency is a contentious issue both because there are differing views on the correct approach to concurrency when analysing entitlement to EOT and because there are differences about the meaning of concurrency itself. Furthermore, the Protocol also promotes the thought that in the event where contractor delay has caused the delay to the completion date occurs concurrently with principal’s delay; the contractor’s concurrent delay should not reduce any EOT due. Such rights and liability do also apply to a reverse situation.

As the subject of delay analysis becomes more sophisticated, judges and arbitrators may begin to consider these distinctions and provide clearer guidance on the issue of the concurrent effect of several competing causative events.

There have been cases that have dealt with concurrency and apportionment of delay. Some may have gone as far as the 1800s, such as in the case of Weeks v. Little[1]. Weeks, a decision made by the New York Court of Appeals had looked at contractor and owner caused delays and affirmed the trial court’s finding that the contractor caused delays did not delay the overall completion of the contract. The Court noted that:

“the contractor could gain nothing by haste and pressure in one direction so long as entire completion was delayed by his principals.” The decision in Weeks illustrates that the contractor’s delay was not a concurrent source of delay because the contractor delays were not “critical,” to use current schedule lexicon.”

Here, the issue in dispute is only whether there is a concurrent delay that had involved a detailed study of the cause of the delay, the contractor’s resources, and its ability to get the work done within the contracted period. If such dispute had occurred on our present time, a different question might have been brought forth. Due to the lack of definition relating to the term “concurrent” delay, it may be argued that concurrent delay will only occur when two or more delays are running simultaneously. These delays can be principal-caused delays, contractor-caused delays or a combination of both. The important point is that concurrent delays run simultaneously, irrespective of who caused them. Concurrent delay can also occur where the effects of several causative events occurring at different times.

Culpable delay is also another delay factor that should be taken into consideration in understanding the definition of concurrent delay. This is a “factoring” in any delay for which the contractor is responsible, even where the effect of the culpable delay is running concurrently with a principal caused delay. It is arguable and even likely that consideration of culpable delay will be case and/or contract specific. These are the important point in which parties must consider in each delay of whether the causative event and the effect of the event should be considered together or separately. Such distinction between cause and effect is of increasing importance in delay analysis of the present time.

In understanding the common law approach in defining concurrent delay, the paper will now discuss a few landmark cases that have dealt with concurrent delay.

In the case of Balfour Beatty Building Ltd v Chestermount Properties Ltd[2], the court had accepted that a contractor is entitled to an EOT to the completion date for an principal caused delay occurring after the date by which the contractor ought to have properly achieved the completion of the works. Therefore, the contractor is entitled to an EOT to the completion date for principal caused delays notwithstanding any concurrent contractor caused delay. The completion date is to be the total number working days in which the contractor ought fairly and reasonably to have completed the works allowing for the principal’s event starting from the date of possession/commencement.

An example to the practical effect to this decision is if the work was to be completed in week 52 and a variation is issued in week 59, the extension of time for the variation is to start from week 52, not week 59.

Another landmark case commonly cited is the case of Henry Boot Construction (UK) Limited v Malmaison Hotel (Manchester) Ltd[3]. Here, the contractor is entitled to an EOT to the completion date for principal caused delays notwithstanding any concurrent contractor caused delay and such principle was already agreed by the parties prior to the commencement of proceedings. Notwithstanding this pre-agreed position of the parties, the court said that the Architect, the contract administrator of the Contract, was entitled to consider the effect on the completion date of any contractor caused delays. This is arguably a contradiction of the pre-agreed position of the parties.

This case should therefore be treated with caution in the context of concurrent delay due to the effect on the decision of the pre-agreement of the parties and the arguably circular argument relating to the exercise of the architects opinion. The Judge in this case had qualified his decision due to the consequence of the principal caused delay. Therefore, it is not sensible for one to benefit from own’s breach, the contractor was only entitled to an EOT for causes of delay that were the principal’s responsibility and which delayed the project as a whole.

Differing from the Henry Boots case, in the case of Motherwell Bridge Construction Ltd v Micafil Vakuumtechnik[4] the Judge stated that in assessing EOT involving issues of concurrency, it is necessary to apply a test of common sense and fairness. The Judge had considered that a full EOT should be awarded where there is concurrent contractor caused and principal caused delay, if it is fair and reasonable to do so.

Therefore, it is important to note that when a contract administrator or even an arbitrator assesses the extent of which the EOT to be granted, he is under a duty to consider the principles of concurrent delays should the delays be caused by both the principal and the contractor.

This duty is recognised in many courts and among it is the Malaysian case of Gasing Heights Sdn Bhd v Pilecon Building Construction Sdn Bhd[5] where the applicant engaged a contractor to carry out works under the PAM form of building contract (a standard form of contract by the Malaysian Architect Association). Disputes arose between the parties whereupon arbitration proceedings commenced.

The arbitrator, in arriving at his award, failed to assess the extension of time in accordance with the principles of concurrent delays and overlapping works. The arbitrator’s award favoured the contractor as the arbitrator had failed to consider the delays caused by the contractors own acts. As such, the applicant brought an action to set aside the arbitrator’s award.

The High Court held that the arbitrator’s methodology in such assessment was wrong in law. Since the arbitrator did not assess the extension of time in accordance with the principles of concurrent delays, that there was an error on the face of the arbitrator’s award. It seems clear from this case that where parties refer their disputes on extension of time to an arbitrator, unless the arbitrator has the pre-requisite expertise and skill to properly.

From the illustration given, notwithstanding the introduction of the SCL Protocol, it has been identified that there is a lack of consistency in the definition of “concurrent” delay. The result is an even greater inconsistency in a case such as the principal alleges that there was a concurrent contractor caused delay, the owner needs to show that the contractor would not have been able to meet the original schedule if there was no principal caused delay. If the principal has established a concurrent delay, the question then turns to how much of the overall delay is the contractor’s responsibility. Therefore it is also important to note that every contract and factual situation is different, so each party’s obligations are determined on a contract-by-contract basis.

[1] (1882) 89 N.Y. 566

[2] (1993) 62 BLR 12

[3] (1999) CILL 1572

[4] (2000) TCC

[5] (2000) 1 MLJ 621