By: Rick Moffat
One of the most overlooked (whether intentionally or unintentionally) areas of delay analysis is the issue of concurrent delay. The importance to determining cause and responsibility for delays has been widely published and addressed by the courts, however it continues to be ignored by project schedulers and delay experts.
When investigating the cause of a delay to a project, it is common to find that there is more than one delaying event and often those delays are overlapping. When determining the compensability of a delay, one of the primary issues an analyst has to consider is whether the delaying events were concurrent and, if so, to segregate their individual impacts.
The following is an example of the effect of concurrency on compensability based on a recent query raised by a client. While the facts have been greatly oversimplified for the purposes of this article, the circumstances are indeed an example from an actual construction dispute that I was asked to review.
The Program Schedule
The Program involved the construction of two projects by two different contractors. The projects were interrelated and the completion of both was necessary to complete the overall Program. For this example we will identify the projects as follows:
- Project 1 built by Contractor ABC
- Project 2 built by Contractor XYZ
The two projects were mostly independent except for an interface point at a critical contract milestone that required the completion of Project 1 two months before the completion of Project 2.
A sudden change introduced by the Owner
After month 4 of the Program, both contractors’ schedules showed that they were both on schedule. However, during month 5 the Owner issued a change order (CO) for changes to the work on Project 1 that increased the Project 1 schedule by 3 months. Because of the direct relationship between completion of Project 1 and completion of Project 2, the Owner took the responsible step of notifying Contractor XYZ that the critical milestone was being delayed and requested that the subsequent schedule update contain a delay activity that showed the impact of this change. Accordingly, Contractor XYZ issued a schedule that included an Owner’s Delay Activity, as requested, and indicated the 3-month delay to Project 2 because of the delays to Project 1 caused by the Owner’s CO.
Review of the impacted schedule shows other delays
The next logical step in the schedule analysis was to remove the Owner’s CO delays from the Project 2 schedule and see what happened to the end date of the project. Presumably, if the only delay was the Project 1 CO work, removing it should return the completion date to the Baseline completion date.
On the surface, the Project 2 schedule seemed consistent with the impact from the delay of the late completion of Project 1. However, a more in-depth analysis of the Project 2 schedule showed that things were not as they seemed. As part of the schedule review, the schedule analyst removed the Delay Activity from the CPM network and the schedule re-calculated. Surprisingly, when the delay was removed, the end date of Project 2 only improved by 1 month. Therefore, there were events other than the CO work that were affecting the project’s Critical Path.
A further analysis was undertaken and it was determined that in addition to the delay activities, Contractor XYZ has also modified logic and increased duration of activities that were not impacted by the changes on Project 1; these changes to the schedule, on their own, resulted in a delay of 2 months to the completion of Project 2. After discussion with Contractor XYZ, it was determined these were simply errors that were within the original schedule that Contractor XYZ had avoided disclosing to the Owner and were attempting to hide behind the delay on Project 1.
Because Contractor XYZ’s error was discovered during the same time as the Owner’s CO delay, it was determined that the delay due to Contractor XYZ’s scheduling error was concurrent with the Owner’s CO delay.
Determining compensability for concurrency
The hotly debated discussion that ensued between the Owner and Contractor XYZ related to the compensability for the delays on the Project. While it did not deny that it had some logic and duration “anomalies” in its original schedule, Contractor XYZ insisted that because the 3 month delay caused by the Owner’s change was greater than the 2 month delay due to the scheduling errors, it was entitled to not just a 3 month extension of time, but also to be compensated for the costs associated with the entire 3 month delay.
However, this is not how concurrency works. The purpose of reviewing concurrent delays is to determine if there are other factors delaying the project. In this instance, if it had not been for the delay to Project 1 due to the Owner’s changes, Contractor XYZ would have finished the project 2 months late due to its own planning errors. Even though the Owner’s delay was greater than Contractor XYZ’s delay, the Contractor XYZ was not entitled to be paid for the entire time associated with the delay.
After much negotiating with Contractor XYZ, it was ultimately agreed that it was entitled to a time extension of 3 months of which 2 months were non-compensable and 1 month was compensable.
Contractor XYZ was not particularly pleased with the outcome but understood that, if it weren’t for the Owner’s changes on Project 1, it would have been forced to acknowledge its own scheduling errors and would have been responsible for the 2 month delay, all of which would be non-compensable.
Endnote: One other consideration
One issue that always has to be considered when reviewing concurrency is the concept of “hurry up and wait”: if a critical component of the project is delayed, is the contractor obligated to maintain the schedule on the rest of the work, even if it ultimately knows that it will eventually have to stop because of the critical delay?
This can be a difficult issue to overcome. If outside influences cause portions of the work to be delayed, the contractor may choose to slow down the other elements of the work to pace the rest of the project with the delayed portions.
When forensically analyzing schedules, it can be difficult to tell whether a concurrent delay is due to poor performance or if it is the result of the contractor “pacing” the other work. If any party on a project is intending on slowing down its work due to the delays of the other, it is always best practice to inform the other party so that the pacing is not viewed as concurrent delay.
There is a rightful argument to be made that the final resolution was very generous to Contractor XYZ. The fact that the “discovery” of Contractor XYZ’s schedule errors overlapped with the Owner’s CO minimized the fact that Contractor XYZ was already behind schedule BEFORE the changes occurred. In a forensic analysis that looks at the delays in the order they impact the critical path, Contractor XYZ’s delay would have been a non-excusable delay. If the contract included liquidated damages, those damages could arguably have been enforced for the 2 months of critical path delay that occurred before the Owner’s CO.
Furthermore, it was also grossly inappropriate that Contractor XYZ withheld its scheduling errors from the Owner and attempted to bury them in the schedule containing the Owner’s delays.
Nonetheless, the parties at the time agreed that, notwithstanding Contractor XYZ’s less than honorable approach, the Owner’s delay denied Contractor XYZ the opportunity to mitigate its delays and therefore allowed the 3 month time extension.