concurrent delay

Introduction

Construction industry is considered as a high risk industry. One of the main risks is project delay.

Construction projects are delayed by numerous causes, such as bad weather, employers late decisions,

delays caused by contractor and its subcontractors, or maybe due to the change of government policy. Now,

what is actually a delay?

The term delay is used when we would like to express that the works are not progressing as quickly as

intended and as a result, the completion of the project may not be achieved by the completion date as

specified in the contract document. Delay in construction is a complex matter. It will surely affect all parties

to contract, whether the employer, the contractor, the consultant and others. Because of delays, the

employer receives their project later than what has been agreed and as a result, he will suffer losses from

any benefits of what the project would be generated if the project completed within the agreed time.

Therefore, it is understandable if the employer would like to apply liquidated damages whenever the

contractor makes a late delivery. On the other hand, the contractor is also affected by delays. He may suffer

from the increasing of construction costs such as overhead, labour salary, and also overall project

productivity. As a result of this delay, if the delay caused by the employer, of course the contractor may

The Overview of Concurrent Delay, Global Claim and

Liquidated and Ascertain Damages

Seng Hansen

Master Student of Construction Contract Management UTM

Email: [email protected]

productivity. As a result of this delay, if the delay caused by the employer, of course the contractor may

claim their losses and expenses. Whenever a delay occurs which is not caused by the contractor, he may

make a claim for a time extension, a monetary settlement, or both. Delays due to bad weather normally

result in extension of time only, while delays caused by the subcontractors probably result in compensation.

And if the delays caused by the employer such as change orders issuance, both monetary compensation

and time extension may be given.

The case of Wells v Army & Navy Co-operative Society Ltd (1902) 86 LT 764 has showed us that the

contractor may claim extension of time due to the employer-responsible delay and the employer may not

deduct the payment for contractor. In this case, a building contract provided that certain matters causing

delay and other causes beyond the contractors control were to be submitted to the decision of the

directors of the employer. There was one year delay. It was also established that the employer failed to give

possession of site and provided plans and drawings in due time.

This paper is specifically talking about the concurrent delays, global claims and LAD (liquidated and

ascertained damages) in construction industry.

Concurrent Delay in a Nutshell

There are so many types of delay in construction industry. One of them is concurrent delay. Concurrent

delay refers to delay situations when two or more delays occur at the same time or overlap to some degree,

which would have affected the project completion date. It is very difficult to treat this kind of delay since

there are so many parties involved in the delay. It seems that the more complex the project, the more likely

that this delay will arise.

1

Duncan Wallace in Hudsons Building and Engineering Contracts 10th Edition said that First, different causes

of delay may overlap, and this will be intellectually troublesome if one is an event justifying an extension

and one not; e.g. information or access may not be available, but due to culpable delay or an event not

justifying an extension, the contractor would not have been able to take advantage of them if they had

been. 1

In analyzing concurrent delays, each delay should be assessed separately and its impact on other activities

and the project date for completion calculated. Much will turn on the quality of planning and programming,

and record keeping.2

Now, the next question is how can it become a concurrent delay? It is surely not easy to determine whether

two or more delays are considered as concurrent delay or not. Therefore, the understanding of project

critical path will be necessary. Generally, there are three situations where the concurrent delays can

happen:

1. Only one party causes two or more delays which then effect to the completion date

2. Both two parties cause two or more delays which then effect to the completion date

3. Either one or both party accompanied by uncontrollable events which then effect the completion date

Moreover, there are two possible scenarios to be considered in relation to concurrency:3

1. Two causes actually operating at the same time causing the same delay to progress which is likely to have

the same effect on completion

2. Two causes operating sequentially and which are likely to have the same effect on completion

For more understanding, figure 1 up to 3 will tell us how to differentiate a delay and a concurrent delay.

No Name Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

1 Project Duration 21

2

1. Page 639.

2. Roger Gibson. 2008. Construction Delays: Extensions of Time and Prolongation Claims. pg. 133

3. Pickavance, K. 2005. Delay and Disruption in Construction Contracts 3rd Edition. London: LLP. pg. 620.

2 Design 10

3 Excavate 3

4 Order Rebar 2

5 Order Formwork 2

6 Order Concrete 2

7 Reinforcement 3

8 Shuttering 2

9 Concreting 2

10 Curing 3

Figure 1. Sample of a project original schedule

Figure 1 shows a very simple sequence of project activities with a critical path (red color).

No Name Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24


2 Design 10

3 Excavate 3

4 Order Rebar 2

5 Order Formwork 2

6 Order Concrete 3

7 Reinforcement 3

8 Shuttering 2

9 Concreting 2

10 Curing 3

delay

delay but not considered

Figure 2. Sample of a project schedule with non-concurrent delays

Figure 2 identifies two periods of delay. First is a one-day delay to the excavation activity. Let us say it is a

non-excusable delay due to the low contractors labour productivity. The second delay is also a one-day

delay to order concrete. It is an excusable delay due to the late of concrete order approval by the employer

or SO. The one-day excusable delay in ordering concrete caused a one-day delay completion and therefore

the contractor is entitled to one-day extension of time. However, although there are two delays appear in

this project, there is no concurrent delay takes place.

No Name Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25


2 Design 10

3 Excavate 3

4 Order Rebar 2

5 Order Formwork 2

6 Order Concrete 4

7 Reinforcement 3

8 Shuttering 4

9 Concreting 2

10 Curing 3

delay

delay

Figure 3. Sample of a project schedule with concurrent delay

Figure 3 also identifies two periods of delay. The first delay is a two-day excusable delay to the ordering

concrete, and the second is a two-day non-excusable delay due to contractors late formwork installation.

There is now concurrent delay with a two-day critical delay effect on completion.

From the above explanation, it is clear that concurrent delays must have elements of: two or more delays

occur during the same time period, both delays impact the critical path which then of course affects to the

completion date, and delays may be caused by either or both party or unforeseen events. In order to give a

3

2. Haniz Zuraiha bt Zaharullil. 2009. Enforcement and Challenging of Arbitration Award. M.Sc. Johor Bahru: UTM. Page 56.

3. Oxford Law Dictionary. Seventh Edition. See page 229, 502 and 593.

completion date, and delays may be caused by either or both party or unforeseen events. In order to give a

more understanding, below are some situations in determining concurrent delays.

1. Concurrent delay by both employer and contractor.

It is excusable but not compensable.

Contractor delay: 7 days lost in fabrication

Employer delay: 7 days lost in reviewing the drawings

Critical Path Activity

This will result in 7 excusable days to contractor (non compensable).

2. Concurrent delay by contractor and uncontrollable events.

It is excusable but not compensable.Contractor delay: 7 days lost in fabrication

5 days of heavy rain


This will result in 5 excusable days to contractor (non compensable), while the other 2 days are non-

excusable.

3. Concurrent delay by employer and uncontrollable events.

It is excusable.

Employer delay: 7 days lost in resolving a design issue

5 days of heavy rain


This will result in 5 excusable days to contractor (non compensable), and 2 excusable compensable days.

There are so many methods in concurrent delays assessment. Furst et al (2006) in Keating on Building

Contracts gives three approaches to concurrent delay, i.e. the Devlin Approach, the Burden of Proof

Approach and the Dominant Cause Approach.

The Devlin Approach

The approach itself was set out by Mr. Justice Devlin (where the name of the approach comes from) in

Heskell v Continental Express [1950] W.N. 210. He said that if a breach of contract is one of two causes of

a loss, both causes co-operating and both of approximately equal efficacy, the breach is sufficient to carry

judgement for the loss.. Williamson condemns this approach referring to its obvious logical flaws that

could result in an absurd position where both a contractors claim for loss and expense and an employers

claim for liquidated damages succeeded in view of the same period of delay. This is also identified by Furst

et al as the observe problem. Neither Eggleston (1997) nor Marrin (2002) provide comment on this

approach, whilst Chappell (1998) and Knowles (2000) accept the Furst et al view but do not provide further

4

4. Paul David Baines. 2007. Would a common law right to apportion liability in contract facilitate justice in concurrent delay

disputes?. M.Sc. Leeds Metropolitan University. pg. 6.

approach, whilst Chappell (1998) and Knowles (2000) accept the Furst et al view but do not provide further

comment in favour or aganst this approach. Eggleston and Marrins ignorance of this approach is suggestive

of the lack of support that it has received in construction context. Furst et al also refer to the possibility that

application of the Devlin approach may result in the same outcome as the dominant cause approach (which

is set out below), as in Fairfield-Mabey v Shell U.K [1989] 1 All E.R. 576 where it was found that, on the

facts, a concurrent cause was the dominant cause.4

In other words, this method is used when there are two causes operating together and one is a breach of

contract, then the party responsible for the breach will be held liable for the loss.

But there is a weakness in this approach. The difficulty is that it must be applied to both the claim of the

contractor for damages and the counterclaim of the employer for liquidated damages. In those

circumstances, one could have the absurd position that the contractors claim for direct loss and expense

succeeded in relation to a period of delay and the employers claim for liquidated damages succeeded in

respect of exactly the same period of delay. In the end, there may be no affirmative recovery. Referring to

the case of J.A. Jones Construction Co v Greenbriar Shopping Center, when a project was concurrently

delayed by both a compensable and non-excusable delay, neither party was allowed any affirmative

recovery from the other. In this case, the main contractor caused delay through the failure of its

subcontractor and workers to timely perform, and the employer caused delay by changes to the design and

late issuance of drawings. The court held that neither party was entitled to any affirmative recovery. Both

the employer and the contractor bore their own costs.

The Burden of Proof Approach

The second approach identified by Keating (2006) is the Burden of Proof approach, which is said to be as

follows:

If part of the damage is shown to be due to a breach of contract by the Claimant, the Claimant must show

how much of the damage is caused otherwise than by his breach of contract, failing which he can recover

nominal damages only.

Williamson again identifies that this approach has the reverse logical consequence of the Devlin position,

that on this test neither the contractor nor employer would be able to succeed with their respective claims,

i.e. the obverse problem identified by Furst et al in reverse. Eggleston (1997) and Chappell (1998) both

express reservations regarding this approach, adding that it does not appear to have much support in the

construction context.5

In other words, this method is used when there are two causes and the claimant is in breach of contract,

it is for the claimant to show that the loss was caused otherwise than by his breach.

The Dominant Cause Approach

The third, and the one to which the most weight is given by Furst et al, is the Dominant Cause Approach,

which is said to be as follows:

If there are two causes, one the contractual responsibility of the Defendants and the other the contractual

responsibility of the Claimant, the Claimant succeeds if he establishes that the cause for which the

Defendant is responsible is the dominant cause.

This position has the obvious advantage of being applicable to both claim and counterclaim, thus avoiding

the obverse problem. Williamson sets out that if the dominant cause is demonstrated as being the

contractual responsibility of the employer, then the contractor would recover loss and expense, as well as

immunity from liquidated damages for the period of delay. Conversely, if the dominant cause was found to

be the contractual responsibility of the contractor, then his claim for extension of time would fail, allowing

the employer to recover liquidated damages. The decision as to which cause I dominant is a question of

fact, which is not necessarily resolved by the chronological order in time, but is to be decided by applying

common sense standards, as applied in Leyland Shipping v Norwich Union Fire Insurance Society [1918]

A.C. 350.6

This method is used when there are two causes, the dominant cause is to be considered as the deciding

factor. This is best to be used where the delays are unequal, or where an employer-responsible delay is

followed by a contractor-responsible delay (or vice versa) on the same or parallel critical paths, and it is

unclear as to whether the second was triggered by the first.

Besides the above Keating approaches, there are some other approaches that we can use in assessing

concurrent delays, such as First Past the Post, Apportionment and Malmaison Decision. But here I just

explain one more approach which I think it will be beneficial for us to know, i.e. the Malmaison Approach.

5

5. Ibid. pg. 6-7.

6. Ibid. pg. 7.

The Malmaison Approach

Finally, there is one more method that can be used in assessing concurrent delay, i.e. Malmaison Approach.

This method is often considered to be the leading modern decision on concurrent delay. In Henry Booth

Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (2000) CILL 1572, Mr Justice Dyson stated,

Secondly, it is agreed that if there are two concurrent causes of delay, one of which is a relevant event,

and the other not, then the contractor is entitled to an extension of time for the period of delay caused

by the relevant event notwithstanding the concurrent effect of the other event. Thus, to take a simple

example, if no work is possible on site for a week not only because of exceptionally inclement weather (a

relevant event), but also because the contractor has a shortage of labour (not a relevant event), and if the

failure to work during that week is likely to delay the works beyond the completion date by one week, then

if he considers it fair and reasonable to do so, the architects is required to grant an extension of time of one

week. He cannot refuse to do so on the grounds that the delay would have occurred in any event by reason

of the shortage of labour.

Conclusion

Finally, we may conclude that concurrent delay in construction industry cannot be avoided, especially for

large and complex projects. If the delay caused by the employer, then the contractor is entitled to claim for

loss and expense or damages. If the delay caused by the contractor, then the employer is entitled to claim

for liquidated and ascertained damages (LAD).

There are so many methods to assess the concurrent delay. However, we must remember that whatever

the methods to be used, we should assess concurrent delays based on fairness, consistency and certainty.

6

Liquidated and Ascertain Damages in a Nutshell

Before we move on to talk about LAD in construction industry deeper, it is better if we know the differences

between damages, liquidated (and ascertained damages), and unliquidated damages. According to Oxford

Dictionary of Law, damages are a sum of money awarded by a court as compensation for a tort or a breach

of contract. Liquidated Damages are a sum fixed in advance by the parties to a contract as the amount to

be paid in the event of a breach. They are recoverable provided that the sum fixed was a fair pre-estimate

of the likely consequences of a breach, but not if they were imposed as a penalty. While unliquidated

damages are damages the amount of which is fixed by the court.7 In other words, they are actually

remedies, defined as methods available at law for the recovery of rights.

The rule as to what is recoverable as damages in contract is established in Hadley v Baxendale (1854) 9 Ex.

341, which said: Where two parties have made a contract, which one of them has broken, the damages

which the other party ought to receive in respect of such breach of contract should be such as may fairly

and reasonably be considered either arising naturally, i.e., according to the usual course of things from such

breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both

parties at the time they made the contract, as the probable result of the breach of it.

77. Oxford Dictionary of Law, Seventh Edition, pg. 151.

8. Robinson, N. et al. 1996. Construction Law in Singapore and Malaysia 2nd Edition. Singapore: Butterworths Asia. pg. 242.

The term liquidated has a meaning that the sum is agreed to in advance of the event by both parties, while

the term unliquidated means that there is no sum agreed before by both parties and therefore they need

the court to assess the damages after the event of a breach. Lord Mansfield said: Where the precise sum is

not the essence of the agreement, the quantum of the damages may be assessed by the jury, but, where

the precise sum is fixed and agreed upon between the parties, that very sum is the ascertained damage and

the jury are confined to it.

And now, the term ascertained in the phrase Liquidated and Ascertained Damages only emphasis that the

sum stated has been properly computed as a genuine pre-estimate of the consequence of the delay. This

has made it less challengeable rather than a penalty. Any stipulated sum payable in the event of a breach of

contract that is not a genuine pre-estimate of the loss may be challenged as being a penalty and this may be

made the remedy become unenforceable. For example, a sum per day to become due on delayed

completion of 50 apartments may be enforceable, but the same sum could not also be imposed for delay to

the first half of the scheme only, as in that case, it could not consistently be a genuine pre-estimate. The

fact that a clause is described as a penalty clause, however, does not prevent it from being enforceable as

LD if the sum has in fact been properly ascertained.8

The Nature of Liquidated and Ascertained Damages

Under a construction contract, a contractor is obliged to complete the works within the specified time and

if he fails to do so, he is liable to the employer for breach of contract. This breach entitles the employer to

get remedy from the contractor and is normally known as liquidated and ascertained damages (LAD). It is

important to have this clause in a contract so that both parties will know where they stand and can do some

mitigation to avoid the breach of contract.

It is also important to highlight that the LAD must be of a genuine pre-estimate of loss to be enforceable.

However, from the cases regarding this matter, if the employer cannot claim his losses under LAD, he still

can claim under unliquidated damages, but of course the sum will normally not be larger than the sum of

the LAD claim.

Most standard form of construction contract will include a provision for deduction of damages at a certain

rate if the contract completion date is not meet. The rate is usually in an amount per day or per week,

depends on the agreement of both parties when the contract is being made. The rate is intended to be an

estimate of loss that the employer suffered in the event that the completion date is delayed. This has raised

a problem: how to ensure that a proper estimate of the likely loss has been made. This is a problem

normally occurs during the negotiation of contract construction by both parties.

Whatever the circumstances, the amount of the LAD must not exceed the maximum amount that could

flow from the delay to completion of the works, or the damages will be regarded as a penalty rather than

genuine damages, and will be unenforceable. The House of Lords set out the criteria for judging if a sum

were to be regarded as a penalty in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co [1915] AC

79. The rules were summarized as:9

1. If the sum is extravagant and unconscionable in amount in comparison with the greatest loss that could

possibly flow from the breach then it will be regarded as a penalty

2. If the obligation is to pay a sum of money, and failure to do so results in a larger sum being payable, then

the larger sum will be regarded as a penalty

3. Subject to the above two rules, if there is only one event upon which the sum is to be paid then the sum

is liquidated damages

4. If a single lump sum is to be payable on the occurrence of one or more events, some of which are serious

and others minor, then there is a presumption that the sum is a penalty

We should also remember that the contract must clearly define the date of completion, and from which the

damage are to be calculated. If the contract uses partial or sectional completion, then the amount of LAD

must be calculated from the date of partial or sectional completion.must be calculated from the date of partial or sectional completion.

Calculating Liquidated and Ascertained Damages

In principle, we can calculate foreseeable loss resulting from delayed completion in three stages.10

Stage 1. The employer should estimate what would be its likely outgoings at the end of the contract period

if the work was continuing on site. These costs may include, on a daily or weekly basis: unproductive staff

costs, storage costs, extended head office overheads, extended preliminaries, reimbursable delay damages

payable to other contractors, interest and financing expenses, and costs of retaining architects, engineers

and other consultants for the delay period.

Stage 2. The employer should estimate what would be its likely consequential losses at the end of the

contract period if the project could not be put into use. These costs are likely to be fixed costs which may

have to be depreciated over time: rent of alternative premises, lost investment value of rents, cost

escalations, asset depreciation, and lost profits.

Stage 3. This comprises depreciating the total of the figure produced by stage 2 over the notional period it

would take to overcome any default (for example, half the original contract period) and adding this to the

figure which is arrived at by calculating stage 1.

89. Mullen, P. 2009. Evaluating Contract Claims 2nd Edition. Cornwall: Wiley-Blackwell. pg. 187.

10. Pickavance, K. Delay and Disruption in Construction Contracts 3rd Edition. 2005. London: LLP. pg. 755.

Conclusion

In construction contract, LAD is a lawful method used by the employer to remedy his losses due to the

breach of contract by the contractor. Normally, the breach is the late of work completion. There are two

ways that the employer can get the amount of LAD, i.e. by deducting the progress amount in interim

payment certificate, or by direct payment from the contractor to the employer. It is often the case that

before the employer can impose LAD to contractor, the pre-conditions in LAD clause must be satisfied. This

may be by way of the issuance of certificate of non completion by the SO.

We should also remember that LAD clause is not a compulsory in a construction contract. If the employer

has decided that he does not need LAD clause in the contract, he is under no compulsion to have it.

9

Global Claim in a Nutshell

As what I have been said earlier, if the contract was breached by the employer, the contractor is entitled to

claim for loss and expense. This claim sometime is not an easy part to do for contractor. There are many

forms of claim that can be imposed by the contractor; one of these is global claim.

Global claim is also known as composite claim, rolled-up claim, total-loss claim, and total cost claim.

According to Duncan Wallace (1995), global claims are defined as those where a global or composite sum,

however computed, is put forward as the measure of damages or of contractual compensation where there

are two or more separate matters of claim or complaint, and where it is said to be impractical or impossible

to provide a breakdown or sub-division of the sum claimed between those matters. While according to

Harban Singh (2007), a global claim is a form of claim where no nexus or linkage is established between the

cause of the alleged compliant and its effect i.e. the redress sought.

Global claim may take into two forms: claim of money and claim of time. Due to its characteristic to lump all

the amount of the claims, this kind of claim is difficult to be accepted by the employer. Even the Society of

Construction Law Protocol on Delay and Disruption has stated that such claims are discouraged by the

Protocol and rarely accepted by the courts. Despites this, global claims are common and in some

circumstances, gained recognition. It is therefore very important to anyone considering the quantification of

such claims.

In the case of London Borough of Merton v Stanley Hugh Leach (1985) 32 BLR 51, Mr Justice Vinelott laid

down the main conditions for a composite or global award as being:

1. The contractor should not have delayed unreasonably in making the claim

2. The loss or expense attributable to each head of claim cannot in reality be separated

3. Apart from the practical impossibility of separating costs between causes, the conditions that have to be

satisfied in relation to each head of claim before an award can be made, include:satisfied in relation to each head of claim before an award can be made, include:

a. It must be clear that only the events under consideration caused the global loss, and

b. It must be clear that the employer is responsible for all these events

In the case of J. Crosby & Sons Ltd v Portland Urban District Council (1967) 5 BLR 121, there had been

some forty six weeks delay to completion due to various causes of which thirty one weeks had been held

by the arbitrator as the compensable for the contractor. The arbitrator proposed to award a lump sum to

compensate for the delay of this thirty one weeks delay and the employer appealed claiming that the

arbitrator should arrive at his award by determining the amounts due under each individual head of claim.

It was held that, provided the arbitrator did not include an element of profit in the amount awarded, and

that there was no duplication, then if the claim depends on an extremely complex interaction in the

consequences of various denials, suspensions and variations, it may well be difficult or even impossible to

make an accurate apportionment of the total extra cost between the several causative events, the

arbitrator was entitled to make a lump sum award for the delay and disruption.

In another case, Wharf Properties Ltd and Anor v Eric Cumine Assoc and Ors (1988) 45 BLR 72, (1991) 52

BLR 1 PC, this type of claim is criticized. In this case, the employer pursued a rolled-up or global claim

against his architect. The Court of Appeal of Hong Kong did not accept the claim. On the face of it, there

appears to be an anomaly which places doubt on the validity of this type of claim.

But in the case between Mid-Glamorgan County Council v Devonald Williams & Partners [1992] 29 ConLR

129, held that provided the circumstances were appropriate, such a claim could succeed.

10

Mr Recorder Tackaberry QC said that Where, however, a claim is made for extra costs incurred through

delay as a result of various events whose consequences have a complex interaction which renders specific

relation between the event and time/money consequence impossible and impractical, it is possible to

maintain a composite claim.

Loss and Expense

It is a common practice for the contractor to claim for his losses and expenses. In the case where the

employer caused delay in a construction project, the contractor is entitled to loss and expense, but he must

show that he would have made a profit or reduced his loss.

The term loss and expense can be determined using common law principles for assessment of damages

for breach of contract. According to the general principles stated in Hadley v Baxendale, damages for

breach of contract may be recovered if:

1. They arise naturally from the breach, according to the usual course of thing (direct damages), or

2. They may reasonably be supposed to have been in the contemplation of both parties at the time they

made the contract as the probable result of breach (indirect/consequential damages).

Conclusion

As a conclusion, global claim is still a common practice in construction industry. Due to the characteristics of

construction industry itself large, complex, high risk, fast; we cannot avoid global claims that the

contractor submits to his employer. However, looking at different cases of global claims and their

judgments, I think we should consider global claim as the last effort, not just because it is very difficult to be

accepted by the employer, but also by some jurisdictions. Again, we must also understand that theaccepted by the employer, but also by some jurisdictions. Again, we must also understand that the

contractor may find difficulties to particularize a number of claims and may be such particularization is

impossible due to complex entanglement with numerous overlapping or concurrent matters.

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concurrent delay

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