Delivering effective Expert Evidence is becoming harder, at least in the UK, Australia and most likely other Commonwealth jurisdictions. Traditionally the role of a Judge was to apply the law to the evidence presented by the parties to a dispute. In the case of expert evidence, this could include expert opinion, and where experts disagree, the Judge could choose one expert’s views over another, or combine the views. This approach seems to be changing with significant implications for the experts when preparing their reports and evidence.
It now seems acceptable in the UK and Australia that ‘the court is not compelled to choose only between the rival approaches and analyses of the experts. Ultimately it must be for the court to decide [what occurred] as a matter of fact… from a common-sense perspective’.
Our latest article: Delivering Expert Evidence is Becoming Harder discusses a number of recent judgements that seem to have re-framed the challenge of delivering effective expert evidence in the UK, Australia and potentially many other jurisdictions. Download the article from: https://mosaicprojects.com.au/PMKI-ITC-020.php#Process2
The central elements of the dispute arose out of a contract between Blackburn with Darwen Borough Council (Council) and Thomas Barnes & Sons Plc (TB) to construct a new bus terminal in Blackburn (Project). The Project suffered significant cost increases and delays for which TB claimed extensions of time. The Council denied TB’s claims, terminated the construction contract for delay and appointed a replacement contractor to complete the works. TB subsequently commenced proceedings against the Council for monies said to be due under the contract on a proper valuation of the works done at termination (including delay costs due to prolongation) as well as damages for wrongful termination.
The case revolved around two competing causes of delay to the Project. The first, which supported TB’s EOT claim and for which the Council was responsible, was caused by deflection issues within the steelwork that required investigation and remediation which ultimately delayed subsequent activities on the critical path. The second, for which TB was responsible, arose out of delays to TB’s roof covering works, which the Council alleged caused concurrent delay to the critical path at the same time as the steel deflection delay.
Both parties relied on expert delay evidence and each expert adopted methodologies in the Society of Construction Law Delay and Disruption Protocol to undertake their respective analyses. The judge, in assessing the methods of the opposing experts, stated that ‘[109]. ….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‘. As a consequence of the experts’ diverging opinions, the judge stated that the court would need to come to its own conclusion as to whether the steel deflection delay and the roof covering delay were concurrent.
Despite the fact that the roof covering delay was resolved while the steel deflection delay was ongoing (and did not cause an independent delay to the critical path), the court determined that the delays were in fact concurrent, stating:
‘[140]. In my judgment this is a case where these causes were concurrent over the period of delay caused by the roof coverings. That is because completion of the remedial works to the hub structural steelwork was essential to allow the concrete topping to be poured and the hub SFS to be installed, without which the hub finishes could not be meaningfully started, but completion of the roof coverings was also essential for the hub finishes to be meaningfully started as well. It is not enough for the claimant to say that the works to the roof coverings were irrelevant from a delay perspective because the specification and execution of the remedial works to the hub structural steelwork were continuing both before and after that period of delay. Conversely, it is not enough for the defendant to say that the remedial works to the hub structural steelwork were irrelevant from a delay perspective because the roof coverings were on the critical path. The plain fact is that both of the work items were on the critical path as regards the hub finishes and both were causing delay over the same period.’ Further, the court stated that TB could not seek to use the steel deflection delay as ‘a convenient hook on which to seek to hang all of the delay to the works’. To do so ignored the fact that there was also a problem caused by the delays TB suffered to the roof coverings, which was itself a cause of delay to the critical path.
When considering concurrency, the Society of Construction Law Delay and Disruption Protocol, 2nd edition (SLC Protocol) simply requires the delays and their effects (or parts of the delays and their effects) to be experienced at the same time for concurrency to exist. It has two relevant sections which appear to have been followed by the Judge:
10. Concurrent delay – effect on entitlement to EOT
True concurrent delay is the occurrence of two or more delay events at the same time, one an Employer Risk Event, the other a Contractor Risk Event, and the effects of which are felt at the same time. For concurrent delay to exist, each of the Employer Risk Event and the Contractor Risk Event must be an effective cause of Delay to Completion (i.e. the delays must both affect the critical path). Where Contractor Delay to Completion occurs or has an effect concurrently with Employer Delay to Completion, the Contractor’s concurrent delay should not reduce any EOT due.
14. Concurrent delay – effect on entitlement to compensation for prolongation
Where Employer Delay to Completion and Contractor Delay to Completion are concurrent and, as a result of that delay the Contractor incurs additional costs, then the Contractor should only recover compensation if it is able to separate the additional costs caused by the Employer Delay from those caused by the Contractor Delay. If it would have incurred the additional costs in any event as a result of Contractor Delay, the Contractor will not be entitled to recover those additional costs.
Applying the fundamental principal in the SLC Protocol that separates disruption and delay costs from the consideration of EOTs, the court held that: (n) EOT and prolongation – conclusion [157]. The claimant is entitled to an additional EOT of 119 days (or 17 weeks), but to prolongation of only 27 days. After allowing for the EOTs already granted and agreed, which take the completion date to 13 April 2015, that would entitle the claimant to a revised completion date of 10 August 2015.
The overall period of the roof covering delay included a 31 day delay in starting the roof covering work and an increased duration of the roof works of 26 days compared to the original plan. In considering these contractor delays, the judgement seems to imply ‘pacing’ is not a valid basis for not considering (or reducing) concurrent contractor delays that are in parallel with client delays. TBs expert claimed: “there may have been some works to the externals that could be progressed, however this would not change my opinion that the [steel] works were critical in delay and that it was within TBS’s gift to pace any non-critical works”.
The Judge in considering this opinion stated: ‘[133]. If by this [the expert] meant to suggest that the roof coverings could have been progressed but they were non-critical and could have been performed in a more leisurely manner as a result, this seems to me to ignore the fundamental fact that throughout the crucial period from October 2014 through to January 2015 the claimant could not have known how long the remedial works to the hub steelworks would take and could not therefore reasonably have proceeded on the basis that there was no need to worry about the roof coverings until the hub steel deflection issue was completely resolved’. This part of the judgement clearly sets a high bar for any ‘pacing’ claim to be successful.
Also, implicit in the court’s reasoning is a rejection of the ‘first in time’ approach to assessing concurrent delay in favour of the pragmatic approach in the SCL Protocol that does not allow either party to benefit from a fault on its part.
In preparation for the IAMA National conference later this week I have just finished developing and updating a short series of papers focused on addressing schedule delay and disruption.
Assessing Delay and Disruption – an overview of the accepted methods of forensic schedule analysis [ view the paper ]
Prolongation, Disruption and Acceleration Costs – an overview of the options for calculating costs associated with approved delays and acceleration [ view the paper ]
One of the more difficult management decisions is how hard to pursue a contract claim. The claim will inevitably have a deleterious impact on a key stakeholder relationship and any significant claim will have proportionally high costs associated with legal and other expenses. Balancing the inevitable costs against the possible gains is a difficult but necessary decision before moving forward. Usually, the potential yield of a claim is given as a subjective assessment based on experience.
Dr. John Lancaster of Hill International has recently published a paper that seeks to remove the subjectivity from the assessment of which claims are worth pursuing (see 1 below). Lancaster proposes using a risk assessment approach to determine the likely range of outcomes and which claims contribute the most to the likely settlement. He suggests using the following factors:
Entitlement confidence:
The strength of the contractual argument for entitlement; and
Contractually compliant notices.
Magnitude confidence:
The quality and quantity of supporting records;
The quality of the project schedules (and any necessary corrections and/or repairs), cost records, etc; and
The certainty with which the effect/s of each event is known.
Applying a percentage weighting to these factors and using Monte Carlo analysis the likely range of cost and time outcomes can be assessed and the key claims identified.
It is important that the right people complete this assessment: the entitlement confidence categories should be assessed by counsel and the magnitude confidence categories assessed by the domain experts with input from the project staff.
The results of this analysis will identify:
The likely outcomes under the prevailing entitlement and magnitude confidence ratings;
The probabilities of securing different outcomes; and
Identifying the claims that are the most important to the overall claim and which ones require more work.
Based on this assessment and after factoring in the costs and consequences of making the claim, pragmatic decisions can be made on:
whether or not to pursue a claim;
where to set negotiation limits (see 2 below); and
which of the claims, with more work on establishing entitlement and/or substantiation, could contribute the most to a robust claim.
In an ideal world effective stakeholder relationship management would remove the need for contractual claims. When they become necessary, Dr. Lancaster’s ideas will help remove much of the unnecessary ‘heat’ from the assessment process and provide a pragmatic baseline for managing any claim in a professional and business like way.
Lancaster, John, “The use of risk analysis techniques to evaluate potential delay claim outcomes,” Project Control Professional: The Journal of the Association of Cost Engineers, February 2010. The full article is available on request from johnlancaster@hillintl.com.
Late last year the British High Court delivered a very interesting judgement on the assessment of delay, disruption and prolongation claims.
A delay to an activity may disrupt the work and it may delay the completion of the project. The two factors are independent (this is the fundamental principle in the UK Delay and Disruption Protocol).
In Costain Ltd v Charles Haswell & Partners Ltd [2009] EWHC B25 (TCC) (24 September 2009), the High Court has determined that for prolongation to occur, the actual delay has to flow through to a delay in the completion of the works. The mere fact the delayed activity was on the then critical path when it occurred is not of itself evidence the delay flowed through to the completion of the works. At paragraph 200(ii) the Justice Richard Fernyhough QC stated I find that it has not been shown by Costain that the critical delay caused to the project by the late provision of piled foundations to the RGF and IW buildings necessarily pushed out the contract completion date by that period or at all.
The fundamental issues relate to the definition of the critical path were canvassed inin my 2006 paper ‘Float is it real’.
At page 7 I argued:
Despite the CPM requirement for a single duration estimate, durations are variable; changing the estimate of a planned (future) duration or differences between the actual duration and planned duration on completed activities may change the critical path.
In the example above, at the ‘Initial Claim’ the critical path was running through the top chain of activities and ‘delay x’ was encountered. As no one can predict the future, at the time of the dealay it would be reasonable for everyone involved in the project to assume this is a critical delay and administer the contract accordingly.
Later, changes in the duration of the activities cause the critical path to move (either reduction in the time needed to complete some activities in the top chain or increases in duration in the lower chain, or both). When ‘delay y’ occurs as a ‘Later Claim’, this is also a critical delay based on the schedule at the time of the delay.
However, given the definition of the ‘Critical Path’ is: Generally, it is the longest path through the project. …that determines the duration of the project. The difficult question to answer is what happens to ‘delay x’, it appeared to be critical based on the best information available at the time the delay occurred. But changes over time (and after the time of the initial delay) have shown ‘delay x’ to actually be non-critical.
Certainly based on the Constain’s case, scheduling experts will need to define far more than simply a delay to an activity on the current critical path. As a minimum it will be necessary to show the delay impacted the overall completion and the extent of the impact. It will also be necessary to show the delay caused a general increase in costs for a prolongation claim to be sustained.
Pat Weaver
Lynda Bourne
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