Delay analysis under the microscope: common sense wins out over methodology

A decision of an Australian court last month has considered the evidential requirements for proving delay claims in construction disputes. The decision comments on the relevance of the 2nd Edition of the SCL Delay and Disruption Protocol and on two popular delay analysis methodologies contained in the Protocol. In the circumstances of this case, the court ultimately rejected both methodologies and preferred a broad common sense approach paying close attention to the facts. The court’s approach is likely to be relevant to construction disputes elsewhere in the world where these methodologies are deployed.

Delay analysis and the SCL Protocol

The SCL Delay and Disruption Protocol (the “Protocol”) is a document published by the Society of Construction Law (now in its 2nd Edition) which has as its object to “provide useful guidance on some of the common delay and disruption issues that arise on construction projects”. Among other things, the Protocol sets out six commonly used forms of delay analysis in construction disputes, together with certain criteria it recommends be applied to determine the most suitable method.

Two popular methods of delay analysis referred to in the Protocol are “As-Planned v As-Built Windows Analysis” and “Collapsed As-Built Analysis”. In the former, certain chunks of time or “windows” are taken (usually based on milestones or fixed periods of time) and as-planned and as-built programme records are considered to identify the critical path during the relevant window and the amount of delay it incurred. This delay is then sought to be attributed to causes during the period through a close review of the project records.

The Collapsed As-Built Analysis requires a detailed logic-linked as-built programme. Once this has been developed, the programme is “collapsed” by identifying delaying events and removing them from the programme to provide a hypothesis as to the delay caused by those events. The use of programming software allows the as-built programme to be easily probed in this way to provide an assessment of the way in which the works would have proceeded had certain delay events not occurred. The method is heavily dependent on the logic-links included when preparing the as-built programme.

Both of these methods were considered by the decision reported below.

White Constructions Pty Ltd v PBS Holdings Pty Ltd

White was the developer of a housing development in Kiama, just south of Sydney in Australia. It engaged Illawarra Water & Sewer Design Pty Ltd (“IWS”) as sewer designer for the development. Considerable delay was suffered in having IWS’s sewer design approved by Sydney Water (the relevant public authority). White alleged that IWS’s original design had been flawed and that the resulting delays in obtaining approval for a revised design caused a knock-on delays to the development as a whole of more than 7 months.

White submitted evidence from a delay expert, which supported its delay case and relied on an As-Planned v As-Built Windows Analysis. IWS submitted a report from a delay expert claiming that, at most, only 19 days of delay were caused. IWS’s expert relied on a Collapsed As-Built Analysis. Both of the experts criticised the other’s choice of methodology.

The New South Wales Supreme Court accepted the criticisms made by both experts as to the others’ approach. Some of the key criticisms were:

• That the logic-links in the as-built programme prepared by IWS’s expert were not sustainable.
• That IWS’s Collapsed As-Built Analysis was too simplistic and obscured the inefficient performance of work caused by the delayed sewer approvals.
• The Windows Analysis prepared by White’s expert had not taken into account certain delays un-related to the sewer design and had assumed unjustifiable as-built logic links.
• The Windows Analysis was also flawed because it “assumes causation rather than identifies actual evidence of it”.

Justice Hammerschlag opined that while both experts were adept at their art, both could not be right and it was not inevitable that one of them was right. The court therefore rejected the evidence of both experts and proceeded to appoint its own expert. On the advice of that expert, the approach favoured by the court was an open-textured one, unbounded by any specific methodology. The court considered that:

“close consideration and examination of the actual evidence of what was happening on the ground will reveal if the delay in approving the sewerage design actually played a role in delaying the project and, if so, how and by how much. … the Court should apply the common law common sense approach to causation … The only appropriate method is to determine the matter by paying close attention to the facts, and assessing whether White has proved, on the probabilities, that delay in the [sewer design] delayed the project as a whole and, if so, by how much.”

The court also declined to give any special standing to the delay analysis methodologies included within the Protocol: “for the purpose of any particular case, the fact that a method appears in the Protocol does not give it any standing, and the fact that a method, which is otherwise logical or rational, but does not appear in the Protocol, does not deny it standing.”

Applying the court’s common sense approach to the delay issues, White’s delay case was dismissed on the basis that significant gaps in the evidence existed, meaning there was insufficient proof of the specific delaying effects of the revised sewer design.

Conclusions and implications

Although of limited effect as a legal precedent (even in Australia because of the structure of the Australian legal system), the comments made in this case as to the two delay analysis methodologies referred to, as well as the common sense approach preferred by the court, are likely to be highly persuasive in other Australian jurisdictions and of broader relevance to construction disputes elsewhere in the world. Some of the criticisms made of those methodologies could be said to be of general application, while others may be the result of poor records. The overall impression from the judgment is that the court considered each of the experts to be advancing methodology at the expense of evidence.

There is some support for the court’s common sense approach in the SCL Protocol itself. Paragraph 11.2 notes that: “Irrespective of which method of delay analysis is deployed, there is an overriding objective of ensuring that the conclusions derived from that analysis are sound from a common sense perspective.”

The court’s decision also highlights the importance of delay experts attempting to agree on an appropriate methodology at the outset. Although differences in methodology can favour one parties’ case over another, disagreement over methodology can prove extremely wasteful. Debates over methodology can take on a life of their own and distract from a focus on important factual issues. The court in this case felt unable to support either of the positions adopted and was forced to do its best with a broad common sense approach.

References:

White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166.