What is Concurrent Delay in Construction Claims?
Meaning of concurrent delay (from SCL Delay and Disruption Protocol 2nd Edition)
True concurrent delay is the occurrence of two or more delay events at the same time, one an Employer Risk Event, the other a Contractor Risk Event, and the effects of which are felt at the same time. True concurrent delay will be a rare occurrence.
A more common usage of the term ‘concurrent delay’ concerns the situation where two or more delay events arise at different times, but the effects of them are felt at the same time.
In both cases, concurrent delay does not become an issue unless each of an Employer Risk Event and a Contractor Risk Event lead or will lead to Delay to Completion. Hence, for concurrent delay to exist, each of the Employer Risk Event and the Contractor Risk Event must be an effective cause of Delay to Completion (not merely incidental to the Delay to Completion).
As shown in the figure below, two parallel activity paths are each delayed by five workdays during the same window by separate causes, one delay was caused by the owner and the other delay was caused by the contractor, and both affected activities are on the critical path. The two 5-work day delays are concurrent.
From a legal perspective, there are two competing views as to whether an Employer Delay is an effective cause of Delay to Completion where it occurs after the commencement of the Contractor Delay to Completion but continues in parallel with the Contractor Delay. This can be illustrated by the following
On one view, the two events are both effective causes of Delay to Completion because they each would have caused Delay to Completion in the absence of the other.
On the other view, the Employer Delay will not result in the works being completed later than would otherwise have been the case because the works were already going to be delayed by a greater period because of the Contractor Delay to Completion. Thus, the only effective cause of the Delay to Completion
is the Contractor Risk Event.
The Protocol recommends the latter of these two views (SCL D&D, paragraph 10.10, page 31) (the same opinion is stated in AACE RP 29R-03, page 17, 5th paragraph), i.e. that where an EOT application relating to the situation above is being assessed, the Employer Risk Event should be seen as not causing Delay to Completion (and therefore there is no concurrency). Concurrent delay only arises where the Employer Risk Event is shown to have caused Delay to Completion or, in other words, caused critical delay (i.e. it is on the longest path) to completion.
Allocation of Delay Responsibility When Concurrent Delay Occurs
Types of Delays
Delays can be categorized into two main areas:
- Excusable Delays: occur due to events which are outside the control of contractor like storms, strikes, fire, client suggested changes, differing site conditions, change of government policy… etc. When there are excusable delays, the contractor is entitled to a time extension in case the date of the project completion is extended. Excusable delays can be further classified into compensable and noncompensable delays:
- Excusable Compensable Delays: are those in which the contractor is entitled to extra payment (compensation) i.e. monetary compensation and time extension as well. But the decision that a delay is compensable or noncompensable is taken as per the contract between owner and contractor. An example of such delay could be that the owner doesn’t allow access to the site even after notice to proceed is given. Such delays which are due to the owner are compensable.
- Excusable Noncompensable Delays: are those in which the contractor is entitled to only time extensions, no monetary compensation is provided. Both contractor and owner are not responsible for such delays. An example of such delay could be extreme adverse weather, Act of God.
- Non-Excusable Delays: are such that they don’t have any excuse or no excuse can be given for them. They arise due to carelessness or actions and inactions of the contractor. For such delays, no time extensions and monetary compensation are given to the contractor if it has affected the whole duration of the project. In such cases, the owner is liable to get liquidated damages. An example of such delay could be constructing something wrong which is not given in drawings, improper resource allocation, etc.
Basic Principles to Assess Concurrent Delay
- The Contracts between the parties:
- Contracts may state that neither party is to receive compensation; (No Cost – Have Time)
- Some contracts state that when a concurrent delay occurs, not only is no delay compensation available to either party, but the contractor is not entitled to a time extension. (No Cost – No Time)
- The most commonly applied principle applied in the international construction industry: The contractor would not be entitled to compensable delay damages and the owner would not be entitled to its actual delay or liquidated damages.
- AACE International Recommended Practice No. 29R-03 Forensic Schedule Analysis (Section 4.1. C, page 100-101) states the following with respect to compensability when a concurrent delay occurs:
“Thus, entitlement to compensability, whether it applies to the contractor or the owner, requires that the party seeking compensation shows a lack of concurrency if concurrency is alleged by the other party…
Based on this symmetry, contractor entitlement to a time extension does not automatically entitle the contractor to delay compensation. The contractor would first have to show that an owner delay impacted the critical path, and then if the owner defends alleging concurrent delay, the contractor would have to show the absence of concurrent delays caused by a contractor delay or a force majeure delay in order to be entitled to compensation…”
- SCL Delay and Disruption Protocol 2nd Edition states the following with respect to compensability when a concurrent delay occurs:
“Where Employer Delay to Completion and Contractor Delay to Completion are concurrent and, as a result of that delay the Contractor incurs additional costs, then the Contractor should only recover compensation if it is able to separate the additional costs caused by the Employer Delay from those caused by the Contractor Delay. If it would have incurred the additional costs in any event as a result of Contractor Delay, the Contractor will not be entitled to recover those additional costs.”
Concurrent Delay Scenarios and Results
The various permutations of concurrent delay are summarised in the table below.
Equal Delay Duration
There is usually no requirement that concurrent delays must be equal in duration.
If the Contractor incurs additional costs that are caused both by Owner Delay and Contractor Delay, then the Contractor should only recover compensation if it is able to separate the additional costs caused by the Owner Delay from those caused by the Contractor Delay.
“Where an Employer Delay to Completion and a Contractor Delay to Completion are concurrent, the Contractor may not recover compensation in respect of the Employer Risk Event unless it can separate the loss and/or expense that flows from the Employer Risk Event from that which flows from the Contractor Risk Event. If it would have incurred the additional costs in any event as a result of concurrent Contractor Delay, the Contractor will not be entitled to recover those additional costs. In most cases, this will mean that the Contractor will be entitled to compensation only for any period by which the Employer Delay exceeds the duration of the Contractor Delay.”
(The Society of Construction Law Delay and Disruption Protocol 2nd edition, February 2017, Guidance on Core Principles No.14.3)
This concept is shown in the figure below. In this example:
- The owner caused 5 workdays of delay to an activity.
- The contractor caused 3 workdays of delay to a different activity.
- The contractor receives a 5-work day time extension due to owner-caused delay, but no compensation for the 3-work day of concurrent delay.
Concurrent Delay Vs. Pacing Delay
What is Pacing Delay?
Pacing delay occurs when the delay caused by the owner occurs in one activity, and based on that event a conscious and contemporaneous decision is made by the contractor to pace progress in a second and independent activity. So, the contractor deliberately slowed down its work.
However if the delay in the second activity is caused by factors independent from the first activity, it becomes a concurrent delay.
As shown in the figure below, the owner delayed the pump delivery. So the contractor deliberately slowed down its pump foundation work.
The Purpose of Pacing Delay
A contractor’s decision to “pace” its work was a recurring action, and in many situations, “pacing” was the most appropriate and practical action by a contractor in order to reduce the financial risks caused by an owner-caused delay to the critical path.
The reasons behind a contractor’s decision to pace its work could be the following:
- Optimising labor and equipment by reducing work in non-critical areas (a contractor is not required to “hurry up and wait”);
- Reducing on-site material storage;
- Holding the delivery of weather-sensitive equipment.
Pacing Delay Scenarios and Results
The various permutations of pacing delay are summarised in the table below.
Concurrent Delay Vs. Pacing Delay
In its evaluation of potential concurrent delay vs. a pacing delay, the following generally accepted international construction industry guidelines (AACE International Recommended Practice No. 29R-03 Forensic Schedule Analysis, 25 April 2011, Section 4.2.G, p. 113. It does not appear that the SCL has addressed pacing) apply, as follows:
- A “main” delay must precede a “pacing” delay;
- The contractor needs to demonstrate that it could resume progress at an un-paced rate; and
- The contractor needs to provide evidence that a conscious and deliberate decision was made at the time to pace the work as a result of the other delay.
Unfortunately, many contractors failed to diligently inform the owner or adequately document in the contemporaneous project records its decision to “pace” other work. Contractors usually inform the owners after the fact, and so owners are not given the opportunity to understand the implications of the contractor’s action. As a consequence, an atmosphere of distrust between the parties can adversely influence the ability of the parties to reach an amicable resolution regarding a delay claim.