Question 2 of 6: Litigation — delay claims, their prevention and their forensic analysis

Question 2: Litigation — delay claims, their prevention and their forensic analysis (20 marks)

Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.

Part (a) — why delay claims arise. Almost every delay claim can be traced to one of five families of cause. The largest is owner-driven change: scope growth, late or incomplete design information, drawings and specifications that are defective or internally inconsistent, and slow decisions on submittals, shop drawings and requests for information. Because the owner impliedly warrants the adequacy of the documents it supplies under a stipulated-price contract, defects in them are the owner’s risk, and they surface as delay at exactly the moment the contractor is committed to a resource plan. The second family is access and pre-condition failure — land not expropriated, permits and environmental approvals not in hand, utilities not relocated, owner-supplied material or equipment late, and other contractors on the same site interfering with the work. The third is site condition: subsurface material that differs materially from what the geotechnical report indicated, contamination, or archaeological and heritage finds. The fourth is neutral risk — weather materially worse than the historical norm, labour disruption, and genuine force majeure. The fifth is the contractor’s own performance: under-manning, late procurement, low productivity, rework, subcontractor default, and, very often, an as-bid schedule that was never achievable and contained no float to absorb ordinary disturbance.

Contractual modifications that reduce claims. The most effective single change is to make the schedule a contract deliverable rather than a courtesy: a baseline programme submitted and accepted within a stated period, monthly updates in native electronic format, and a requirement that the contractor identify the critical path and report changes to it. Once that exists, the parties can argue about facts instead of reconstructing them years later. To it should be added an explicit float-ownership clause (float belongs to the project and is available to whichever party needs it first, rather than being owned by the contractor), short and strictly enforced written-notice periods for events likely to cause delay — CCDC 2 GC 6.5 and GC 6.6 already set these out, and Canadian courts have upheld notice as a condition precedent where the wording is clear — a defined weather baseline expressed in days lost against a ten-year mean so that “abnormal” is not a matter of opinion, a differing-site-conditions clause that allocates geotechnical risk to the party best able to investigate and manage it, and liquidated damages set as a genuine pre-estimate of the owner’s loss, since a figure that is really a penalty is unenforceable. A duty to mitigate and to give early warning, a tiered dispute-resolution ladder ending in arbitration rather than litigation, and the statutory prompt-payment and interim-adjudication regimes now in force federally and in Ontario, with similar reform under way elsewhere in Canada, all move disputes forward while the evidence is fresh and the parties still need each other.

Analyses needed to validate and judge a claim. Entitlement is decided first and quantum second. The entitlement analysis asks what actually happened, in what order, and whether the delaying event was on the critical path when it occurred. The recognised techniques form a spectrum. As-planned versus as-built comparison is the simplest and the weakest, because it shows the outcome without proving causation. Impacted as-planned analysis inserts the alleged events into the baseline and is prospective but ignores what else was happening. Collapsed as-built analysis subtracts the events from the as-built programme and is retrospective but depends entirely on the quality of the as-built record. The method the Society of Construction Law Delay and Disruption Protocol and AACE International RP 29R-03 both prefer is time impact analysis performed in contemporaneous windows: the programme is updated to the moment before each event, the event is modelled, and the movement of the completion date is read off. It respects the fact that the critical path migrates during a job, which is the single feature the simpler methods miss. Disruption and lost productivity, which are not the same thing as delay, are best proved by a measured-mile comparison of productivity in unimpacted and impacted periods, supported by earned-value indices; total-cost and modified total-cost claims are last resorts that tribunals accept only when nothing better is possible. All of this rests on documentary evidence — daily reports, schedule updates, RFI and change-order logs, minutes, weather records, timesheets and cost codes — which is why the contractual reforms above are, in practice, the analysis strategy.

Part (b) — the three axes of delay classification. Excusable versus non-excusable answers the question “does the contractor get more time?” A delay is excusable when it arises from a cause beyond the contractor’s control and without its fault or negligence: owner acts, differing site conditions, abnormal weather, strikes, force majeure. It entitles the contractor to an extension of time and, with it, relief from liquidated damages. A non-excusable delay is one the contractor caused or assumed — late mobilisation, insufficient crews, subcontractor failure, rework — and it carries no time relief, so liquidated damages run and the owner may also demand an acceleration plan at the contractor’s cost.

Compensable versus non-compensable is a subdivision of the excusable class and answers “does the contractor also get money?” A compensable delay is one for which the owner is responsible — late drawings, changes, denied access, owner-supplied material — and it supports recovery of extended site overhead, escalation, idle plant, and a properly evidenced share of head-office overhead. A non-compensable excusable delay is one neither party caused, such as abnormal weather or a general strike; the contractor gets time but each party bears its own costs, which is the classic risk-sharing bargain in a standard-form contract. A no-damage-for-delay clause attempts to convert compensable delays into time-only events, and Canadian courts will enforce clear wording but read it narrowly, declining to apply it to delay caused by the owner’s bad faith or by an event outside the contemplation of the clause.

Concurrent versus non-concurrent answers “whose delay was actually operative?” True concurrency exists when two or more delays of different responsibility affect the critical path in the same period and each, on its own, would have delayed completion — typically one compensable owner delay and one non-excusable contractor delay. The orthodox outcome is time but no money: the contractor obtains the extension because an excusable cause was operative, while the owner escapes delay damages because the project would have been late in any event. A non-concurrent delay has a single operative cause on the critical path, so entitlement follows that cause cleanly and both time and money are decided together. Distinguishing the two requires care, because delays that merely overlap in time are not concurrent unless both were critical; the Protocol separates true concurrency from sequential delays whose consequences overlap, and where the evidence permits, Canadian tribunals will apportion rather than apply an all-or-nothing rule.