45392317 construction delay claims khalil hassan

CONSTRUCTION DELAY CLAIMS:RECOMMENDED STANDARD, PRINCIPLES AND GUIDELINES FOR THEIR EFFECTIVE

RESOLUTION By

Khalil Tayab Hasan

Analysis of complex construction delay issues has always been contentious leading to disputes

between the Parties

Contentious Issues in Delay Analysis

– Critical Path

– Who own the Float?

– Concurrent (or Contractor) Delays and how these effect Entitlement

– EOT and its relation with Compensation for Delay

– Method of Analysis

» As-Planned Vs. As-Built Comparison

» Impacted As-Planned

» Collapsed As-Built / But-For

» Time Slice / Sub-Networks / Time-Impact

» Etc.

In order to overcome and facilitate settlement of

disputes, experts agreed on a standard called the

SCL Delay and Disruption Protocol

The SCL Protocol was finalized in October 2002 after several years of deliberations and considerable debate and agreement between experts from different backgrounds

The objective of the SCL Protocol was to bring reasonableness and

fairness into the delay assessment process and to eliminate

widespread manipulation of complex delay issues

Referral to case law from jurisdictions from around the world was a further cause for

concern. The Protocol aimed at (and was able to considerably) reduce or

eliminate references to case law from complex and alien

jurisdictions

The SCL Protocol tried to standardize

the issues such that disputes would be

reduced or eliminated

Hundreds of Contracts are ongoing in the UAE. Generally, these

Contracts do not specifically define a standard system of dealing with

contentious delay issues.

This makes it even more imperative to adopt a Standard

It is recommended that;

should be adopted as a Standard and should be, where possible,

incorporated in the Construction Contracts

The SCL Protocol can be downloaded,free of cost, from:

www.eotprotocol.com

http://www.eotprotocol.com/

Contents of the SCL Protocol (Sheet 1 of 2)

IntroductionCore Principles relating to delay and compensationGuidance notes1. Guidance Section 1

Guidelines on the Protocol’s position on Core Principles and on other matters relating to delay & compensation1.1 Introduction1.2 Extensions of time1.3 Float as it relates to extensions of time1.4 Concurrency as it relates to extensions of time1.5 Mitigation of delay1.6 Financial consequences of delay1.7 Valuation of variations1.8 Compensation for prolongation1.9 Relevance of tender allowances for prolongation and disruption compensation1.10 Concurrency as it relates to compensation for prolongation1.11 Time for assessment of prolongation costs1.12 Float as it relates to compensation1.13 Mitigation of loss1.14 Global claims1.15 Claims for payment of interest1.16 Head office overheads1.17 Profit1.18 Acceleration1.19 Disruption1.20 Claim preparation costs: are they recoverable?

2. Guidance Section 2Guidelines on preparing and maintaining programmes and records2.1 Introduction2.2 The programme2.3 Software2.4 Records

3. Guidance Section 3Guidelines on dealing with extensions of time during the course of the project3.1 Introduction3.2 Extension of time procedure

4. Guidance Section 4Guidelines on dealing with disputed extension of time issues after completion of the project – retrospectivedelay analysis

The terms of the contractThe nature of proof requiredThe factual material availableThe amount in dispute and the cost of the analysis

5. Concluding notes and dedication

AppendicesAppendix A – Definitions and glossaryAppendix B – Model specification clauseAppendix C – Model records clausesAppendix D – Graphics illustrating points in this Protocol

Contents of the SCL Protocol (Sheet 2 of 2)

The remaining slides of this lecture will review and discuss the basic Principles

suggested and recommended by the

SCL Protocol

Basic Principles suggested and recommended by

the SCL Protocol

The Principles suggested by the SCL Protocol are simple.

Some of the key principles suggested by the Protocol are;

RULE NO. 1

If there is an Employer’s delay, which is beyond the Contractor’s control, and if this delay impacts the Completion Date of the Works,

the Contractor should be entitled to receive an Extension of Time (EOT).

[This will effectively result in an extended Time for Completion and will relieve the Contractor from having to pay penalties for delay (or

Liquidated Damages under FIDIC)]

RULE NO. 2

For the case of recovery of delay (or prolongation) costs incurred due to the Employer delays, the Contractor must be able to prove that there has been no other delay, which is in his own control, and which is equally

(or partly) contributing for delaying the Time for Completion.

This category of delay is called a ‘Concurrent’ (or Contractor’s) Delay

[In order to win a Delay Costs Claim, the Contractor must be able to prove that he has not been responsible for Concurrent Delays to

the Time for Completion]

RULE NO. 3

Where Contractor’s Delay to Completion occurs concurrently with Employer’s Delay to Completion, the Contractor’s concurrent

delay should NOT reduce anyExtension of Time (EOT), which is due.

[Result of Rule No. 1 will not change and is irrespective of the result of Rule No. 2]

The foregoing Rules proposed by the SCL Protocol are meant to bring fairness and reasonableness into the

delay assessment process.

[The emphasis of the SCL Protocol is that no one Party should benefit from default of the other Party]

What should be the EOT and Period of Compensation?

Principles & Provisions of the SCL Protocol relevant to Figure 2 of Appendix D

Core Principle No. 7 - Float as it relates to timeUnless there is express provision to the contrary in the contract, where there is remainingfloat in the programme at the time of an Employer Risk Event, an EOT should only begranted to the extent that the Employer Delay is predicted to reduce to below zero the totalfloat on the activity paths affected by the Employer Delay.

Guidance Section 1.12.1If as a result of an Employer Delay, the Contractor is prevented from completing the worksby the Contractor’s planned completion date (being a date earlier than the contractcompletion date), the Contractor should in principle be entitled to be paid the costsdirectly caused by the Employer Delay, notwithstanding that there is no delay to thecontract completion date (and therefore no entitlement to an EOT), provided also that atthe time they enter into the contract, the Employer is aware of the Contractor’s intention tocomplete the works prior to the contract completion date, and that intention is realistic andachievable.

Core Principle No. 4 - Procedure for granting extension of timeThe EOT should be granted to the extent that the Employer Risk Event isreasonably predicted to prevent the works being completed by the thenprevailing contract completion date…..The goal of the EOT procedure isthe ascertainment of the appropriate contractual entitlement to an EOT; theprocedure is not to be based on whether or not the Contractor needs anEOT in order not to be liable for liquidated damages.

Core Principle No. 5 – Effect of delayFor an EOT to be granted, it is not necessary for the Employer Risk Eventalready to have begun to affect the Contractor’s progress with the works,or for the effect of the Employer Risk Event to have ended.


Guidance Section 1.2.11 …an EOT should be granted to the extent that the Employer Risk Event ispredicted to prevent the works being completed by the then prevailingcontract completion date. This process requires consideration of theavailable float…

Guidance Section 1.4.12…Where there has been Employer Delay, this may prevent the Employercharging the Contractor with LDs for failure to achieve a contractcompletion date…


Guidance Section 1.4.8Where an Employer Risk Event occurs after the contract completion date, in asituation where failure to complete by the contract completion date has been causedby Contractor Delays, the principle set out in Section 1.4.7 above should apply,except where the Employer Risk Event is a non-compensable Employer Risk Event.In such an event, no EOT (or compensation) should be due. Where an EOT is dueafter the contract completion date, the Employer Risk Event does not exonerate theContractor for all its delays prior to the Employer Risk Event occurring. The effectof the Employer Risk Event should be assessed as described above and any EOTfound due should simply be added to the contract completion date.


Guidance Section 1.4.1Where Contractor Delay to Completion occurs concurrently with Employer Delay toCompletion, the Contractor’s concurrent delay should not reduce any EOT due.

Guidance Section 1.4.7Where Employer Risk Events and Contractor Risk Events occur sequentially buthave concurrent effects, here again any Contractor Delay should not reduce theamount of EOT due to the Contractor as a result of the Employer Delay.

Concurrency (Appendix A – Definations and Glossary)True concurrent delay is the occurrence of two or more delay events at the sametime, one an Employer Risk Event, the other a Contractor Risk Event and the effectsof which are felt at the same time. The term ‘concurrent delay’ is often used todescribe the situation where two or more delay events arise at different times, butthe effects of them are felt (in whole or in part) at the same time. To avoidconfusion, this is more correctly termed the ‘concurrent effect’ of sequential delayevents.

Principles & Provisions of the SCL Protocol relevant to Figure 9 of Appendix D – Slide 1/2

Core Principle No. 9 - Concurrent delay – its effect on entitlement to extension of timeWhere Contractor Delay to Completion occurs or has effect concurrently with EmployerDelay to Completion, the Contractor’s concurrent delay should not reduce any EOTdue.

Core Principle No. 14 - Link between extension of time and compensationEntitlement to an EOT does not automatically lead to entitlement to compensation (andvice versa).

Core Principle No. 10 - Concurrent delay – its effect on entitlement to compensation for prolongationIf the Contractor incurs additional costs that are caused both by Employer Delay andconcurrent Contractor Delay, then the Contractor should only recover compensation tothe extent it is able to separately identify the additional costs caused by the EmployerDelay from those caused by the Contractor Delay. If it would have incurred theadditional costs in any event as a result of Contractor Delays, the Contractor will not beentitled to recover those additional costs.

Principles & Provisions of the SCL Protocol relevant to Figure 9 of Appendix D – Slide 2/2

Guidance Section 3.2.13Although the programme should be the primary tool for guiding theCA in his determination of EOT, it should be used in conjunctionwith the contemporary evidence to ensure that the resulting EOT isfair and reasonable. It will also be necessary for the parties to applycommon sense and experience to the process to ensure that allrelevant factors are taken into account, and that any anomalousresults generated by the programme analysis are managed properly.

Key Guideline, Suggestion and Advice of the SCL Protocol

45392317 construction delay claims khalil hassan

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