The three fundamental essential elements of any construction contract are PRICE, TIME and SCOPE. Price and Scope are often only perceived as required by contracting parties, without any serious consideration for TIME.
How long will it all take to build? Between what dates will it all be done? In what order do you need to build it so as to achieve these dates?
Time is money, so on any construction project it is little wonder that often when a project is late a fight will start. Imagine the Client procuring a building where he will lose say £30,000 per week in lost revenue when he does not get the building on time and likewise the builder who claims the client has delayed him and, as a result, he is losing £30,000 per week. Immediately, you have a £60,000 per week dispute. If the Client has agreed liquidated and ascertained damages (LAD’s) with the builder in the contract the onus or burden of proof is on the builder to prove why he is late. If our example runs on for six months the difference between the parties can be huge and run into millions of pounds.
If delays occur it is essential for the builder to notify the Client of such and keep good records of the impact each event has on the programmed works. Only Rumpelstiltskin can turn straw into gold, without any evidence and facts there will be a struggle later to produce a delay claim. The builder should make "Extension of Time" claims as works proceed and the substantiation behind this process is called "Delay Analysis".
Under the Standard Form of Contract there are normally "mechanisms" in place to extend time and the responsibility for assessing such is with the Employer or his representative. Care should be taken by the Employer therefore to deal with delays seriously as it can lead to huge liabilities later on in adjudication. It is common practice for Employers to amend the contract provisions and Contractors should be aware of the implications of these, particularly if they claim to be a "condition precedent".
The Delay Analysis should not just be procured after the works are complete but should be deployed throughout the construction process, many complications can occur and the contract mechanism must be adhered to in order to reduce the risk of loss or dispute. In simple terms, delays can be caused by either party, the offender paying for it, however there are "neutral events" where nobody is to blame and also cases where both parties are to blame, often known as concurrent delays.
Delay analysis and time assessments can be a very complex science. There are factors and risks such as mitigation of delays, critical paths, programmes, notices of delay, completion and non-completion notices, common law rights, time at large, float, methods of delay analysis, disruption, risk, design delays, procurement of time, relevant events, third parties, instruction delays, postponements, antiquities, condition precedents, milestones, key dates, section completions, subcontractors, variations, acceleration, all of which can impact on time or result from delay and careful management and understanding of all of this must be considered in managing any project.
Arbicon are experts in the preparation of, or defending, time claims using Delay Analysis and dealing with the same in adjudication proceedings. It is important to manage the time with records as work proceeds and to understand how an Adjudicator is likely to deal with the claim, whether by a critical path analysis or otherwise.
Although common sense may prevail it is recommended that a clear understanding of the concept of time management for any construction project and all the risk factors that can arise be appreciated to avoid unnecessary losses.