2 Rules of Engagement in Resolving Construction Delays

2 Rules of Engagement in Resolving Construction Delays
Created by John Jackson
Mar 8, 2016

2 Rule of Engagement in Resolving Construction Delays

Most disputes remain unresolved for one or more of the following reasons: 1) the delay entitlement has not been settled (acknowledgement of who is responsible for a particular issue), and/or 2) the understanding of delay resolution concepts is not understood (see the article on concurrent delays), and/or 3) there is no understanding of the Rules of Engagement in the delay resolution process.

There are two fundamental Rules of Engagement that must be followed in order to resolve the dispute over delays: 1) agreement to the method of delay analysis, or which Time Impact Analysis (TIA) to use for evaluating the delay impacts, and 2) once the method is selected, agree to adhere to the guidelines built into the particular evaluation method. Both are essential. It is not enough to establish an analysis method. Both parties must agree to work within its parameters.

I have two children, and as angelic as I want to believe they are, I constantly have to step into a dispute and establish a plan for resolution, as in "taking turns". It seldom fails that one will cry for enforcement of the rules when it benefits their position and will want to claim alternate reasoning when the rules are not in their favor. I must remind them that, although the rules may not seem fair in some situations, in the long run, following the established rules will work both ways and is the fairest way to resolution.

I recently worked with an associate who was in the process of buying into a partnership with an optional buy-back clause. This associate spent a lot of time and effort attempting to calculate the best method for evaluating the value of the shares of the business he was buying. The seller had proposed a specific evaluation method for the purchaser’s shares, at a discount, with the agreement that in a set time frame the same evaluation method would be used in buying back the shares at full value. Through the process we came to the conclusion that as long as the evaluation method was reasonable at the beginning and was the same for both transactions, whatever part of the formula may work against him during the purchase would be in his favor when he sells. In the end it would be fair and equitable as long as the formula was consistent for both parties, and both transactions.

In attempting to resolve delay issues on construction projects, the same reasoning will typically apply. It helps to start with the best methodology. But even if the best methodology is not selected, if both parties will follow specific guidelines of the agreed upon method, equitable resolution can be accomplished.

1) Establishing the Best Delay Analysis Method

AACE established Recommended Practices identify numerous analysis methodologies. In general however, delay analyses fall into four basic categories:

  • "Total Time Analysis" – used mostly in efficiency claims when the budgeted time is compared to the total time.
  • "Adjusted As-Planned Analysis" – delay activities are inserted into an “As-Planned” or “Baseline” schedule to measure impacts to the critical path.
  • "Adjusted As-Built Analysis" – an as-built schedule is prepared from project documentation and delay activities are removed to collapse the schedule back to a “but for” status to quantify the impacts.
  • "Contemporaneous Time-Frame Analysis" – delays are inserted into the current updated schedule to determine impacts to the current critical path including the current as-built conditions and the contemporaneous critical path.

One delay analysis method does not fit every situation. Over the past 20 years I have reviewed court cases that have supported all of these analyses methods, and I have worked with contracts that specified which method to use. Although the most effective method in measuring and resolving delays, in most disputes, is the “Contemporaneous Time-Frame Analysis”, it is only effective when the schedule has been updated and managed contemporaneously with the project. Even though this method is the most favorable, if the schedule has not been managed and/or maintained properly, then it may not be the best method. It can be difficult when Agencies, Owners, and/or their consultants try to limit resolution to one type of Delay analysis technique. They should be reminded that one method does not always fit every situation. So, with the several evaluation methods that are available, the key is to find the best one to fit the project situation and be consistent in the review as it favors one party on one issue and the other party when other issues are evaluated.

As an example, I was recently involved in a delay resolution scenario where the Owner had determined that the only acceptable method for analyzing delays to the project would be based on “the sequential evaluations of the approved schedule submittals”. The only problem was that no updated schedules had been submitted. The baseline had not been approved until 14 months into the project for various reasons, and there were no updates available until the fifteenth month.

In an initial effort to resolve the delay issues that occurred prior to the first update, a series of Time Impact Analyses for delays were prepared by inserting the delay activities into the approved baseline schedule based upon an adjusted “as-planned” or baseline schedule methodology. These TIAs were rejected with a comment that this method of evaluating delays was unacceptable, as if there was no more than one method of evaluation. The Owner stated that the only “acceptable” method of analyzing delays was with “updated monthly progress schedules for the sequential and chronological evaluation of events and determination of the controlling critical path activities, at the time of the delay event.” This description defined the “contemporaneous time-frame analysis”. However, the only scenario where this method should be the only acceptable method is when there are truly “contemporaneous” updates. In this case it was not possible since the baseline schedule was approved after significant changes and delays were already occurring on the project. The owner suggested that the Contractor recreate updates for each month prior to the approval of the baseline schedule and prepare analyses based on those updates. As a result, the contractor was preparing updates and fragnets to appear “contemporaneous” with sequential data dates, when in fact they were not. This was an exercise at overlaying as-built information into a baseline schedule that was already old when it was approved – hardly contemporaneous, and probably not the best delay analysis methodology for that particular situation.

Each delay analysis method includes certain evaluation guidelines. For this analysis method (which the Owner had determined as the ONLY acceptable method) to be effective, each submittal had to be reviewed sequentially since each was built upon the previous submittal, and acceptance or rejection of any one submittal in the sequence impacted subsequent analyses. Those are part of the guidelines that are consistent with the “contemporaneous time-frame” analysis methodology.

2) Working within the Guidelines of the Established Methodology

Although the "contemporaneous time-frame" methodology may not have been the best methodology in this scenario, it could work if the appropriate guidelines were adhered to. Once again, the Contractor had to submit one schedule (update or TIA) at a time, have it reviewed to the point of acceptance, and then, based on the accepted submittal, prepare and submit the next one in sequence. This would obviously be a long arduous task, but it is the process that goes along with this method of analysis. In my example, all the parties, including the contractor, were under such pressure to get the issues submitted that the process immediately veered outside of the guidelines of the prescribed methodology by submitting schedules prior to the previous submittal response. The series of updates, schedule revisions, and fragnets were submitted in sequential order to provide a “sequential and chronological evaluation of events” per the owner’s request. But since the review process was being overlooked in the sequence, multiple submittals were being submitted prior to review of the previous ones. So, initially both parties began to work outside the guidelines of the established methodology.

Since there were multiple concurrent owner delay issues, some of the delay evaluations resulted in zero days of impact. In other words, other issues were driving the critical path in that particular schedule and it only got worse. The owner did not review the issues in chronological order, and the issues including request for days were rejected, while issues with no days requested, because of concurrent delays, were accepted. The Owner either failed to see, or intentionally ignored the fact that if one issue in the sequence was rejected, then all subsequent submittals needed to be revised.

At this point, there was no valuable response to the Owner’s rejection comments since the reviews were not performed “sequentially” according to the prescribed methodology.

Both parties in dispute must adhere to the same guidelines. If the Owner determines the only “acceptable” method for preparing the analyses, it is imperative that their review be based on the guidelines appropriate for the same method they prescribe for the Contractor. In this case, not only did the Owner review the submittals out of sequence, they drew data for rejection comments from “as-built” conditions in the field, unrelated schedule submittals, and a broad range of other project data. While they limited the Contractor’s methodology and base of information to prepare their analyses, they left their own review parameters wide open and undefined. If the Owner’s review methodology does not follow the same methodology the Contractor is constrained to in preparation of the delay analysis, it is easy to use the established guidelines, or rules when convenient, but when it is not convenient, it becomes easy to find something else to bring into the process to keep the dispute unresolved. An excuse to deny a time extension can always be discovered if the rules of engagement are left undefined.

Here is the bottom line. It is not enough just to select that appropriate methodology for preparing the analyses. Unless an Owner is willing to live by the guidelines of preparation and review that they deem “acceptable”, there is not much hope that the delay issues will be resolved with2out lengthy dispute.

Ultimately, the best method is dependent on the individual situation. Owners and Contractors should realize that what may work in your favor for one scenario may work against you in another, no matter what method is used. As long as both can agree to work within the consistent and acceptable guidelines of the agreed upon methodology, then resolution can be possible and reasonable.