Article in Civil Engineering Surveyor, February 2002
A Lighthouse in the Desert? Definitely Not
by David Carrick
A Winter(s) Tale
Just before Christmas I attended a meeting of expert witnesses
at the instigation of an Arbiter. My opposing expert and I were
trying to find some common ground in a dispute over extensions of
time and extra costs. Frankly we weren't doing very well at all.
His approach was so different to mine that it was sometimes hard
to believe that both our reports considered the same event on the
same project. We made it to lunchtime without making any significant
progress and decided to have a break. As often happens when one
does not know the opposing expert too well it can be difficult to
find something non contentious to talk about. We shared no hobbies.
Golf has always been a sport that has eluded me. Someone once said
in a stage whisper that I would have trouble hitting a cow on the
backside with a banjo. That's about right. He was fanatical. Motor
sport and flying were pastimes from another planet so far as he
was concerned. Finally I came up with a thought. At the last meeting
I attended with that rather diverse but fascinating group of professional
bodies known as 'Like Minded Professions' the Society for Construction
Law's representative told us about their new protocol soon to be
published in draft. HQ Cairo (as us warlike northern hordes are
prone to calling Sale) had sent me a copy that we had received from
the Society. I had glanced at it but had not yet had time to absorb
it. I asked my lunch companion if he had read the protocol. Big
mistake. "Yes", he replied "Like a lighthouse in
the desert. Tall and shining brightly but absolutely useless".
Had he seen the Harry Potter film? "Yes, rubbish". Pass
the pepper please. The afternoon was the expected waste of time.
What is the Protocol?
Well now I have had the chance to read the draft I have to say
that I am impressed. It isn't quite there yet and it has something
of an identity crisis. However it is good, well structured and easily
read. It is also a brave step to take. I have little doubt it will
suffer a fair few knocks, of which very few are deserved. Our industry
likes to knock endeavour and innovation. It is clear that a great
deal of thought and drafting effort has already gone into the document.
Some familiar faces are involved including Jeremy Winter (The Chairman
of the Drafting Committee) who is well known to readers of our journal
and fellow members of our Commercial Management Practices Committee.
Sorry about the dreadful pun at the start of this article Jeremy.
The Society launched the draft protocol on 4 December 2001. The
document can be viewed in summary on the Society web site: http://www.scl.org.uk/
or http://www.eotprotocol.com/ and, after getting a password, the
full version can be downloaded. Hard copy can be purchased via the
web site or by post. You can access the Society web site via the
ICES site links. I know that the Society will welcome comments and
suggestions. The purpose of this brief article is to provide an
overview of the protocol with the hope that you, dear reader, will
take the time to participate in the review process of the protocol.
As I started with talk of expert witnesses please do not think that
the protocol is restricted to use by experts or even in dispute
circumstances. It has a much wider potential application extending
into live projects as well as for use in retrospective analysis.
Indeed, as you will find plainly stated in the protocol, if practitioners
adopted the methodology of the protocol on live projects there would
be fewer disputes.
The protocol however suffers a little, in my humble opinion, from
not knowing precisely what it is. It is difficult to categorise.
In its introduction it states that it cannot in its present form
become a contract document. It is however suggested that, if the
parties have agreed to use the protocol as an aid to contract interpretation
that it should prevail over case law but the terms of the contract
should prevail over the protocol. To be frank there is not a great
deal of really useful case law that has general application. A few
such as J Crosby & Sons Ltd v Portland UDC (1967) 5 BLR and
Balfour Beatty Building Ltd. v Chestermount Properties Ltd. (1993)
62 BLR have resolved issues neglected by contracts and rarely addressed
conclusively by the Courts. With the notable exception of ECC/NEC
few contracts really provide any practical guidance on delay and
disruption. The choice seems to be to adopt the protocol (when it
is in its final form) as the methodology for dealing with delay
and disruption when they conclude the contract or they adopt it
later when the going gets rough and disputes arise.
The Problem Rears its Head (or Carrick's Rant)
That's where 'The Problem' may well arise. Parties to a contract
agree the terms of that contract don't they so what's the problem
of agreeing to adopt the protocol? In legal terms the parties do
agree the terms but in practice the dominant party dictates the
terms and the subservient party has little, if any, say in their
formulation and precious little influence on changing them between
invitation to tender and contract formation. Will the dominant party
willingly adopt this or any protocol? Not blooming likely! Most
employers (unless the few more enlightened ones) want as little
certainty for the contractor to rely upon in terms of extensions
of time and recovery of compensation for delay and disruption as
possible. Main contractors employing sub-contractors are unlikely
to take any steps towards providing more certainty for the sub-contractor
than they can enjoy in terms of the main contract. A cynical view?
Perhaps but unfortunately one I suspect born of experience of the
cut throat contracting handed down from HM Government departments
amongst others. "Latham and Egan embraced by all" is a
headline one might yet see but the real commercial contracting world
is some way off such ideals. If the construction industry does not
embrace innovation such as the protocol, disputes will remain commonplace
and the resolution of disputes more uncertain. I say more uncertain
as enforced arbitration or statutory adjudication resolves the majority
of disputes. Neither process is reported and neither provides binding
decisions for others to follow. Adjudication all too often ends
up in court. However, it is not the substantive issues generally
that can be taken to court but jurisdictional and procedural issues.
Some of the Adjudicators' decisions I have seen would certainly
have benefited from guidance such as is contained in the protocol.
Indeed some would have benefited from assistance from any source!
When the protocol is finalised will adjudicators and other decision
makers either be able to refer to it or be bound to refer to it?
Unless the contract between the parties or between the parties and
the adjudicator so binds the adjudicator then the answer must be
that the adjudicator is not obliged to use the protocol but may
refer to it. The alternative of voluntary adoption after problems
arise seems unlikely as the parties usually cannot agree the time
of day by then.
In many ways this seems to me to be a bit of a waste. I hope that
the Society receives sufficient support to encourage it to promote
universal adoption of the protocol into standard forms of contract
and sub-contract. We all know what happens to construction when
we do not take steps to improve our dispute resolution reputation.
We get a half-baked statutory procedure utterly dominated by the
legal profession. Just in case there is any doubt I mean Housing
Grants etc etc.
None of the foregoing rant detracts from possible adoption by adjudicators,
arbritators, judges or expert witnesses.
Down to Brass Tacks
Anyway, that's enough on the role that may be appropriate to the
protocol. What does it cover and how does it cover it? Section 2
provides a useful summary of the contents. Included are:
1. Time and Programmes
2. Extensions of time: purposes, entitlement, procedure for granting
3. Float
4. Concurrent delay
5. Mitigation
6. Retrospective delay analysis
7. Prolongation compensation
8. Global claims
9. Disruption
If you are involved in dealing with delays in any capacity either
during or after the currency of the project then doubtless you grapple
with these matters. Some aspects of the protocol reinforce and amplify
the present case law. Other aspects confirm present thinking and
some even break new(ish) ground. Needless to say some will be controversial.
I feel that in some areas it does not fully come to absolutely clear
recommendations with regard to difficult issues. An example is concurrency
of delays in ascertaining compensation for delay.
I do not intend to go through each of these matters in detail.
Pick up a copy for yourself and don't take my brief summary as definitive.
Time and Programmes
The use of CPA (critical path analysis) programmes is promoted.
Within these programmes standard formats and application software
are also encouraged. No particular format or software is promoted
and that must be right. Other good practice items such as integration
of programmes and method statements, updating and approval of programmes
and record keeping are dealt with in comprehensive and practical
terms. There is no intention that the programme ever becomes a contract
document and the dangers of doing so are spelt out. With the possible
exception of incentivising the production of programmes (a concept
found in ECC) there should be little to attract debate or criticism
here.
Extensions of Time
A clear distinction between EOT and recovery of prolongation compensation
is made. It might seem self-evident but there must still be an elderly
hermit in a cave in north Wales who hasn't heard this. Those who
deal with EOT are urged to do so as close in time as possible to
the delay occurring. Have you heard the one about the Engineer waiting
to see if the EOT is actually needed? No more of that nonsense then
- want a bet. The matter of delays occurring after the due (or extended)
completion date is dealt with in conformity with both Chestermount
and the mechanism set forth in ICE 6th and 7th Editions. In other
words the net delay is 'dotted on' to the completion date.
There are two issues I would have like to have seen dealt with
in more detail. The first is the matter of constructive acceleration.
The protocol says (quite correctly) that EOT awarded but not accepted
can be challenged at the time under HGCRA. There is then a presumption
that all will be well when the adjudicator weaves his or her spell
and the contractor will be certain about the completion date. However,
some contractors I know would rather eat cold Brussel Sprouts twenty
times a day from Christmas to the September bank holiday than risk
adjudication on matters such as these. The limited time available
(and some might say the limited ability of the average adjudicator
- not me you understand!) make the resolution of complex EOT matters
on large projects a lottery with only the subsequent recourse being
to arbitration or court as appropriate. Some contracts do not permit
such referral until completion anyway. If the Engineer or Architect
gets it wrong and the contractor decides to accelerate, and such
acceleration is eventually found to have been necessitated by the
incorrect EOT award or no award at all, then what happens? At present
I am unaware of any clear UK authority on this and the protocol
could perhaps help. The second is not an uncommon problem. The Engineer
varies the work and causes a delay. During the same period of delay
either the contractor carries out an operation involving a lesser
quantity than expected or another variation reduces the scope of
the project. Can the Engineer do an 'add and deduct account' on
EOT? My view is that, subject to no odd conditions of contract,
he cannot. The terms of most contracts make no such provision. That
silence to me means that no such option exists. This might be a
useful matter to consider in the protocol, as it is quite distinct
from concurrent delays.
Float
Who owns it? The project does according to the protocol. The contractor
gets no extension until the float is used up. This will be controversial
but it is clear. As it so happens I agree with this approach and
having said so will receive no more calendars from contractors.
Concurrent Delay
This is surely another old chestnut. The protocol deals with this
matter simply and I believe correctly. In terms of EOT (as opposed
to recovery of compensation) any contractors delay event concurrent
with an employers risk event does not reduce the EOT entitlement.
Certain? Yes. Likely to encourage employers to incorporate the protocol
into their contracts? What do you think?
Mitigation
The protocol tells us what is not required but what about some
examples of what is?
Retrospective Delay Analysis
Inevitably the methodology of retrospective analysis was going
to be a bit [big?] part of the protocol. After all it comes from
the Society for Construction Law. Equally inevitably, records (or
rather the lack of them) is a matter that frequently curtails such
analysis and again guidance is given on record keeping. The protocol
recognises that it is too late to start worrying about missing or
non-existent records when the Arbitrator is clamouring for a report
on delays.
From the start don't expect the protocol to be an idiot's guide
to delay analysis. It isn't intended to be this and should not be
criticised as if this is a failing. It is what it says it is on
the tin - a protocol containing principles to be applied by intelligent
practitioners.
The protocol considers various techniques and places them in descending
order of preference:
Time impact analysis - The winner
Window analysis - A version of the overall winner
Collapsed as built - Worthy of a few votes from the Monegasque jury
Impacted plan - Norwegian entry
Global assessment - Nil pointes
The protocol recognises that various factors such as the conditions
of contract, time availability, record availability, programme availability,
the practitioners skills and the nature of the causative events
may alter that preference.
Prolongation Compensation
Do the same principles apply as discussed in relation to EOT? No
they don't and here is where one of the most contentious matters
comes under scrutiny. I t is seldom the case the contractor suffers
employer risk delay completely free from contractor risk delay.
Although perhaps not as clearly stated as it might be in the protocol
the time only risks do not usually find full reflection in time
compensation events. In ICE 6th and 7th Editions for example (but
not ECC) weather carries EOT entitlement but not entitlement to
delay compensation. However, let's keep this discussion pure and
lets consider the circumstances where a delay resulting from the
late issue of a variation coincides (or partly coincides) with a
delay to another section of the works caused by the insolvency of
a domestic subcontractor. The employer risk carries full EOT entitlement.
What about delay compensation? The protocol says that only costs
that can be separated are allowable. At first reading that seems
fine. The variation prolongs scaffolding not connected with the
insolvent subcontractor and is therefore admissible. The variation
delay effect continues beyond the subcontractor delay and so the
costs from the conclusion of the subcontractor delay are admissible.
What about the site agents cost? Can his time be allocated in the
period where both delay effects are running? What difference does
it make if one delay is critical and the other is not? I have my
own views but a more direct view could have been expressed. I wonder
if what we have is an acceptable form of words that satisfied hawks
and doves? This is one of only two real criticisms of the protocol
but unfortunately it relates to a notoriously difficult matter.
When calculating costs the protocol makes it clear that we should
use the actual period of delay not the period resulting from the
delay period at the end of the project. The other matter that causes
problems is dealt with in clear terms. The contractor is entitled
to delay compensation even if the end date is not affected and thus
no EOT entitlement exists.
Global Claims
Basically the protocol says that they are a load of glowballs!
It generally follows the J Crosby & Sons Ltd v Portland UDC
(1967) 5 BLR lead in that it recognises that in exceptional circumstances
it may be necessary to analyse as many events as can be properly
dealt with leaving the residue global.
I have no fundamental disagreement with this approach. However,
I wonder if it is just a little trite? Recently I was faced with
a major project where literally thousands of events delayed completion
on a project. The only reliable programme comprised about a dozen
bars because the work had not been designed when it was formulated.
The thousands of events were all instructions conveying the design.
Records were thin on the ground. Does this mean that the contractor
has no entitlement to EOT? I think not. I am aware of but cannot
yet discuss a case where the English courts have endorsed global
claims under circumstances similar to those just described. More
of this another day. Could it be that the protocol is just a bit
too politically correct and could perhaps distinguish practical
circumstances where the only approach can be global?
Disruption
This is a thorny area and usually one that leads to difficulty
in establishing a value even where disruption is accepted in principle.
The protocol says that disruption "…has to be established
in the normal cause and effect manner." Some causes are listed.
The effect must surely be lost productivity but how are they to
be linked? The classic way is to compare a part of the project unmolested
by disrupting events and compare that with disrupted parts. The
protocol accepts that unaffected areas may not exist. It also notes
potential shortcomings such as including learning cycles. That is
the only technique described so that must be the normal cause and
effect manner referred to. I have rarely found that records exist
to the degree of detail needed to calculate resource input and production
output. I do not dismiss this method, in fact I think it is the
best method but my experience suggests that this Holy Grail is elusive.
The protocol restricts a percentage addition to very simple contracts
where disruption can be demonstrated and suggests that 5% maximum
is acceptable. It does not say how the disruption can be demonstrated
if it cannot be calculated.
All in all the disruption section does not add much to the collected
pool of knowledge on the calculation of disruption. A better description
might be shared ignorance. That is my second criticism and I accept
it may be unfair in the light of the vagaries of the topic.
My Overall Impressions
The protocol is well structured and well drafted. Much thought
has gone into it and it deserves praise. The Society deserves support
and I believe that ICES members should assist by making constructive
comments and suggestions. CMPC will have discussed the protocol
and is more than prepared to act as the focus for your comments.
Please write to Bryan Spain c/o HQ Cairo, sorry Dominion House,
Sale or just mail back to the Society. A copy of comments would
be appreciated.
I think that the Society should be rather less modest and lobby
hard for its incorporation into standard forms. If this is not done
then I fear it will have insufficient take up to be effective in
the war against disputes. It would be a shame if it became solely
a standard by which expert reports are to be judged.
My only criticisms are in relation to concurrent delays in calculating
delay compensation and in relation to the notoriously difficult
subject of disruption.
David Carrick LLM FCIArb FInstCES MAE MCIPS
Reproduced with permission from the Editor of Publications,
Institution of Civil Engineering Surveyors
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