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Analysing Extensions of Time:What the Courts Have to SayBy Kevin Reeves, Director, KSKR Consultants Sdn Bhd

I n the past, it is probably true thatcontract administrators took a moregeneral approach to evaluate

extensions of time (EOT). It would appearfrom law cases over the last decade thatthis is no longer acceptable (if it ever was),and a more detailed analysis is necessary.One of the first cases to make this clearwas the English case of John BarkerConstruction Ltd v London Portman HotelLtd (1996), where the judge criticised thearchitect for approaching his assessmentof EOT in an impressionistic manner. Inparticular, the architect’s lack of a properdetailed analysis meant that he wasunaware of changes in the critical pathduring the course of the project. As aresult, his assessment was based on theeffect of events that delayed work thatwas not critical to completion, and did nottake proper account of events which didin fact cause delay to the completion date.That was fatal to his evaluation.

I would suggest that the requirement formore detailed analyses arises from thesimple fact that, particularly over the pasttwo decades, we have developed theability and capacity to carry out suchanalyses relatively easily. With thedevelopment of critical path methods ofanalysis (CPM) and, more significantly, theadvent of personal computers andpowerful programming software, we cannow update and revise programmes veryeasily, enabling us to carry out detailedanalyses of the impact of delaying events.While the contract provisions for grantingEOT have evolved, they remainprescriptive of the procedures to befollowed – when and what submissions

are to be made; when the contractadministrator is to make a decision; andwhat events entitle the contractor to anEOT – but give little information as to howthis is to be assessed. The only exceptionis that the decision is usually required tobe fair and reasonable, whatever that maymean in each particular situation.

In answer to the question of how theevaluation is to be carried out,construction people (and particularlycontractors and their advisors) haveutilised the power of proprietaryprogramming software to carry outdetailed methodical analyses of the causeand effect of delaying events on theprogress of the works. Such analysis isbecoming more common as a means ofdemonstrating entitlement (or lack ofentitlement) to EOT in the industry, as wellas in the courts.

Things to consider

Some of the issues to be taken intoaccount when analysing an entitlement toEOT, and which were inherent in theanalysis in the John Barker case, are:� The need for a programme.� The need to take into account the

actual progress and update theprogramme.

� The need to consider the critical path(including changes in the critical path).

The programme

Invariably an assessment of EOT will bemade based on the programmessubmitted by the contractor. It may seem

surprising therefore that while mostcontracts call for an as-plannedprogramme, many do not expresslyrequire them to be taken into accountwhen assessing EOT. However, the courts,in tune with practice, regularly make theirdecisions taking into accountassessments based on as-plannedprogrammes. That is, of course, providedthat the programmes are realistic andapplicable in the first place. See forexample the English case of SkanskaConstruction UK Limited v Egger (Barony)Limited (TCC July 30, 2004) where the judgeheld that the programming expert hadbased his analysis on a programme whichhad become “virtually redundant, almostat the outset”.

This leads neatly to my next point.

Actual progress and updatedprogrammes

It is all well and good to have aprogramme at the start of a project whichcan be used to evaluate EOT, but actualprogress will invariably deviate from whatwas originally planned. It will then not bea reliable basis for evaluating the impactof delaying events. That was the problemwith the programme used by the expertin Skanska Construction.

In the Malaysian case of Gasing HeightsSdn Bhd v Pilecon Building ConstructionSdn Bhd (1999), the judge said that thePAM form of contract (PAM69) andarchitectural practice require the principleof “concurrent delays” and “overlappingworks” to be taken into account when

Differences of opinion about entitlements to extensions of time are regular causesof disputes in the construction industry. Often, they arise because of differentmethods of analysing the facts, leading to different results. In recent years, thecourts have given some useful guidance on the type of analysis needed to tacklethis sticky issue.

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assessing EOT, and that requires theassessor to consider the “actual progress ofworks in situ at the relevant time whenassessing the actual or estimated delaycaused by the [employer’s variation]”

Following these same principles, in theEnglish Court of Appeal case of The RoyalBrompton Hospital v Hammond andOthers (February 9, 2001), the judge set outwhat the parties had underlined as thenature of the architects’ task when issuingEOT certificates. When considering thedelay caused by a relevant event, he saidthat the architect would have to firstestimate the likely date for finalcompletion without allowing for anydelay caused by the relevant event. Hecould then determine the extent (if any)that the relevant event will cause that dateto be delayed. What that means is thatbefore impacting the delaying effect of anevent on a programme, the programmewould have to be updated to show theestimated completion date before thatevent occurred.

In a separate related decision on the RoyalBrompton Hospital v Hammond andOthers case, this time in the Technologyand Construction Court on October 11,2002, the judge dealt with the specificissue of the late provision of drawings tothe contractor. He commented that if theinformation arrives later than the daterequested by the contractor, but stillearlier than the time when the contractoractually needs it, there will be noconsequences either in terms of breach ofcontract, or delay or disruption qualifyingfor consideration of EOT. In other words,the delay (if any) is to be measured againstactual progress at the time of issue of thelate information.

All three cases advocate the need toevaluate delay by taking into accountactual progress and not simply what wasoriginally planned. So what does thismean in practical terms?

It means that the original as-plannedprogramme can only be used to evaluateEOT in so far as it is still applicable; that isas far as actual progress still meets theprogramme. After a short time on site, thatwill usually no longer be the case. Theprogramme must therefore be regularly

updated if it is to form a realistic basis forevaluation of EOT. It is all about therequirement in law to show causation –the linking of cause (the delaying event)with the effect (the delay of completion ofthe project). If the event does not in factcause delay at the time it occurs becauseactual progress is behind that planned,then it cannot be said to have causeddelay to completion.

Critical path

Considerations of EOT will necessarily berequired to be evaluated against thecritical path at the time that the delayingevent occurred. It is only delay to thecritical path (where there is no float) thatwill cause the completion date to bedelayed. Recent court cases dealing withdelay usually follow this approach. Forexample, in the English case ofDepartment of National Heritage vSteensen Varming Mulchay and Others(July 30, 1998), when considering theresponsibility for delays the judgecommented that it was necessary todetermine what delays are on the criticalpath.

It must also be emphasised that it is thecritical path at the time that the delayingevent occurred which must be considered.The critical path may well change duringthe course of the project. This is anothercompelling reason to update theprogramme regularly in accordance withwhat has actually happened. It was thefailure to take account of actual progresson the as-planned programme which ledto the architect in John Barker to miss thefact that the critical path had changedfrom one passing through the hotelbathrooms to one passing through thebedrooms.

Establishing the critical path may notalways be an easy task, however. In therecent English case of Great Eastern HotelCompany Ltd v John Laing Construction Ltd(February 24, 2005), the judge consideredat length the critical path analysesprovided by the two parties’ experts. Thetwo analyses had been prepared usingdifferent methods and there were anumber of times when the expertsdiffered in their opinions as to where thecritical path ran during particular periods

of the construction of the project. Thejudge methodically and carefully studiedthe evidence to decide where the criticalpath did in fact run, and then went on toconsider what caused the delays to thesecritical activities.

So what does a contractor need to do?

The judge in the English case of BalfourBeatty Construction Ltd v The Mayor andBurgess of the London Borough of Lambeth(2002) gave a good summary of theinformation a contractor should provideto establish its entitlement to EOT:

(a) A reliable original programme.(b) The establishment of valid critical

path(s) initially and at every latermaterial point in time.

(c) Sound revisions on the occurrence ofevery event to demonstrate causeand effect.

(d) A means of demonstrating the effectof concurrent or parallel delays.

This is in line with the points raised above.The key is to establish regularly updatedprogrammes on which delaying events canbe impacted to demonstrate the delay ofcompletion. This needs to be done – or atleast the groundwork needs to be done –as the project progresses, in a methodicaland logical manner. A common problem iswhen consideration of EOT (and loss andexpense for that matter) is not made untilnear completion of the work. That is oftentoo late. The inability to trace actualprogress retrospectively makes it verydifficult to assess the true effects ofdelaying events when they occurred. Thatis made even more complicated whenconsiderations of mitigation, accelerationand concurrent/parallel delays are alsotaken into account.

So don’t leave it too late. Keep properupdated programmes and other records.Without them it may be very difficult tomake a convincing case later. MBJ

Kevin Reeves is a construction contractconsultant specialising in delayanalysis and management. He is adirector of KSKR Consultants Sdn Bhd.Email: kevinreeves@myjaring.net.Phone: 03-7785 8537