Construction Contracts &

Project Delays

Chintan Kumar C Munvar

Project Delays
Construction Contracts and Project Delays

• Construction Contracts have Completion Dates and Liquidated Damages

(LDs) are tied to Completion Date.

• Extension of Time (EoT) clauses maintain the enforceability of LD

provisions where there has been failure/breach by Owner.

• If Owner causes a delay and there is no EoT clause, time may become ‘at
large’ and LD clause fails.

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Time is the essence

• Contracts contain a statement ‘Time is the essence’

• Not only is the contractor bound by it to perform in time, but owner is also
required to review and approve drawings and payments at contractual
terms.

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Provisions in Contracts
• No-Damages-for-Delay-Clauses

• Contractor waives his right to any cost adjustment for any delay whatsoever, even if
owner caused delay
• Only an extension of time allowed for proven delays
• Classic example of an ‘exculpatory clause’

• Judiciary is loathe to enforce this clause, as contractor is in “a take it or

leave it situation”
• When owner caused delays are egregious, courts refuse to enforce the clause

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Contracts with No Provisions for Delays

• No express language which either establishes or denies contractor’s right to be

paid for extra costs associated with owner caused delays

• Only way to recover costs is through a lawsuit proving breach of contract on part
of the owner

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Notice Requirements

• Purpose of the Notice Requirement

• Must furnish a written notice to owner within a stated period of time

following any event which he perceives will cause a delay

• Without such a notice, owner may not know that some act or failure to
act is delaying the contractor

• It is also necessary to establish a start date for the delay. In case of a

dispute this will prove valuable

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Constructive Notice

• Means that, even though not specifically notified formally, the

owner knows that work is being delayed

• E.g. An act of god shuts down work or the owner has issued a
notice to suspend work.

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 Compensable
Types of Delays Delays
Excusable delays
According to Non-Compensable
liability Non-excusable Delays
delays
Delays
Independent
According to Delays
occurrence
Concurrent Delays

Critical Delays
According to
effect and impact Non-Critical
Delays
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Compensable vs Excusable Delays

Excusable Delays

• An excusable delay is a non-compensable loss of time for which the

contractor will receive an extension of time but no additional payment

• Not a fault of either party

• Contactor must bear costs associated with delay

• Owner absorbs time related costs

• e.g. Strikes, inclement weather

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Compensable vs Excusable Delays

Compensable Delays

• Entitles the contractor to both time extension and to compensation

for extra costs

• Unless ‘no-damage for delay’ clause is present, owner caused delay is

a compensable delay

• An excusable delay may become a compensable delay if it flows from

an earlier compensable delay

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Consecutive and Concurrent Events
• Consecutive Events

• A series of events/work activities if they follow one after another along

the same path of the network

• Concurrent Events

• When events occur on separate parallel paths

• May or may not occur within the same time frame

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Types of Delay events
NN Delay: Events for which the contractor
Non-excusable assumes the risks of the costs and time
Non Compensable
Delay Events
consequences involved. (Contractor Caused
Delays – CDR)

EC Delay: Events for which the contractor is

Excusable entitled to both time extensions and
Compensable recovery of extra cost consequential upon
the delay (Owner Caused Delays - ODR)

EN Delay: Those events for which no party

Excusable Non has control over or bears the risks involved
Compensable (e.g. acts of God and strikes)

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 Responsibility
Related

External
Delay Resource
Causes Related
Causes
Contract
Condition
Related

Project Delays
• Lack of on time finance and • Subcontractors related problems
payments • Poor site management and
• Interference on execution of work performance
• Slowness in decision making • Ineffective project planning and
• Late in site delivery for construction scheduling
work and design • Inappropriate construction methods
• Improper project feasibility study • Poor communication and
• Poor communication and Client related Contractor coordination
coordination causes related causes • Inadequate contractor experience
• Late in supply of owner scope • Rework for correcting unsatisfactory
materials work
• Late/Limited Notice to proceed

Designer related Consultant

• Unclear and inadequate details causes related causes • Inadequate experience of
and specification consultant
• Late design and design documents • Late in approving and receiving of
• Design mistakes and errors complete work
• Misunderstanding of client’s • Poor supervision and late testing &
requirement inspection
• Poor communication and
coordination

Project Delays
• Lack of quality materials • Problem of process of financial
claims
• Slow delivery of material
• Government funding processes
• Changes in material types and
specifications • Late release budget/ funds
• Damage of materials • Global financial crisis
Construction Finance
• Inflation/price increases in
materials Material related
related causes causes

• Insufficient or shortage of Equipment Labour

equipment related related • Low productivity
• Less motivation and morale
• Low efficiency and causes causes • Unqualified/inexperienced
productivity of equipment
• Failures of equipment and lack workers
of spare parts • Discipline problem ( conflicts
• Equipment allocation or and Absenteeism)
mobilization problem • Labor accidents and injuries
• Equipment out dated

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Contract Absence of alternative dispute resolution (ADR)
condition
Mistakes & ambiguities in contract document
related
causes Unrealistic contract durations and cost

Inadequate delay penalties/poor incentives in contract

Insufficient details in contract documents,

Lack of clear understanding of contract documents

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External Adverse weather condition
Causes
Force majeure (acts of God)
Corruption
Effect of social and cultural factors
Policy and commitment of government
Unavailability of utilities at site
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Construction Contracts and Project Delays

Contract provisions define the basis of entitlement for EoT.

• But most (if not all) Contracts are silent as to how to demonstrate delay
and prove entitlement.

• Debate about actual delay and contractual entitlement.

• Hence ‘Delay Analysis Methodology’ has been developed.

• Delay to be on the critical path.

Project Delays
 Delay Analysis

Prospective Intermediate Retrospective

Analysis Analysis Analysis

If anticipated If impact of delays are If all project delays

delays are analyzed when they occur
incorporated as and appropriate time and
discrete activities in cost adjustments are
an as-planned made to the contract
schedule progressively as the
project proceeds
are incorporated
into an as-built
network after all
project work has
been completed

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Prospective Analysis
• This is performed in REAL time prior to delay even or in real time
contemporaneous with the delay event.
• Based on Foresight.

Retrospective Analysis
• This is performed in after the delaying event(s) or change work has been
performed, such that the actual sequence, timing, and resources of the
work related to the subject event(s) is known.
• The timing may be soon after the delay events or prior to the completion
of the overall project or after the completion of the entire project.
• Based on Hindsight

Project Delays
A Case Study – As Planned Schedule
Activity Name Start Finish Original Duration(d)

Inverter Room 01-Jun-18 10-Jul-18 40

Excavate Foundation 01-Jun-18 05-Jun-18 5

Concrete Foundation 06-Jun-18 08-Jun-18 3
Brickwork up to plinth
level 09-Jun-18 14-Jun-18 6
Brickwork up to Roof
Level 15-Jun-18 28-Jun-18 14
Concrete to Floor Slab 15-Jun-18 18-Jun-18 4
Fix roof structure 29-Jun-18 04-Jul-18 6
Waterproof roofs 05-Jul-18 06-Jul-18 2
Fix Doors 05-Jul-18 06-Jul-18 2
Paint and clean Up 07-Jul-18 10-Jul-18 4
IDT 01-Jun-18 30-Jun-18 30
Clear and excavate 01-Jun-18 15-Jun-18 15
Foundation 16-Jun-18 25-Jun-18 10

Pedestal for Transformer 5

26-Jun-18 30-Jun-18
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Primavera Schedule

Project Delays
Primavera Network Diagram

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As Built Schedule
Activity Name Start Finish Original Duration(d)

Inverter Room 01-Jun-18 21-Jul-18 51

Excavate Foundation 01-Jun-18 05-Jun-18 5

Concrete Foundation 03-Jun-18 08-Jun-18 6

Brickwork upto plinth
level 09-Jun-18 14-Jun-18 6
Brickwork upto Roof
Level 15-Jun-18 01-Jul-18 17
Concrete to Floor Slab 15-Jun-18 19-Jun-18 5
Fix roof structure 02-Jul-18 07-Jul-18 6
Waterproof roofs 08-Jul-18 12-Jul-18 5
Fix Doors 08-Jul-18 12-Jul-18 5
Paint and clean Up 18-Jul-18 21-Jul-18 4
IDT 01-Jun-18 17-Jul-18 47
Clear and excavate 01-Jun-18 22-Jun-18 22
Foundation 20-Jun-18 08-Jul-18 19

Pedestal for Transformer 09-Jul-18 17-Jul-18 9

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As-Built Network Diagram

Project Delays
 Delay Events
Activity As Chronolog Delay information Type Start (day) End (day) Delay
planned y of Duration
Duration delays (days)

Concrete Contractor had a labour problem so it 3

3 1 took 3 days extra to complete activity NN 6 9
Foundation

Contractor encountered unforeseen

Clear and 7
15 2 adverse ground condition during EC 10 17
Excavate excavation of the drive in

Activity did not start immediately after

Brickwork to roof completion of its predecessor as planned 1
14 3 due to 1 day delay by the contractor’s NN 15 16
level
brick supplier.

Contractor advised the owner on the

Concrete to floor need to increase the thickness of the
4 4 floor slab. Thischange required 1 extra EC 19 20 1
slab
day to accomplish.

After 5 days of working on activity D2,

the owner suspended works for 3 days
Foundation 10 5 as a decision on the suitability of the EC 24 28 4
foundation ofProject
IDT Delays
 Delay Events
Activity As Chronolog Delay information Type Start (day) End (day) Duration
planned y of (days)
Duration delays

Brickwork to roof Contractor had a labour problem so it 2

3 6 took 3 days extra to complete activity EC 30 32
level
A QC test revealed that certain sections
of the foundation were poorly 5
Foundation 10 7 constructed. This defective work resulted NN 31 36
in a 5 days rework

Pedestal for
5 8 Holding of works by Owner EC 38 42 4
transformer

It took contractor 3 more days to

Waterproof roof 2 9 complete activity NN 40 43 3

The owner changed the specifications of

the door types and adviced contractor for
Fix Doors 2 10 a variation. This caused 3 extra days of EC 40 43 3
work Project Delays
Model Project Delay Analysis using various
techniques

1. As Planned vs. As-Built

2. Impact As-Planned
3. As-Planned But For
4. Collapsed As-Built
5. Window Analysis

Project Delays
Model Project Delay Analysis using various
techniques

1. As Planned vs. As-Built

2. Impact As-Planned
3. As-Planned But For
4. Collapsed As-Built
5. Window Analysis

Project Delays
As Planned vs. As-Built

Project Delays
As Planned vs. As-Built

Project Delays
As Planned vs. As-Built
• The difference between the as-planned and as built completion dates is
the amount of time for which the claimant will request for
compensation.
• Net Delay= 51 – 40 = 11 days

• Sum of the contractor caused delays (NN) = 3+1+5+3 = 12 days

• Sum of the owner caused delays (EC) = 7+1+4+2+4+3 = 21 days
• Concurrent Delays = Lowest of the above = 12 days

• Net project delays for which owner is responsible = 21 – 12 = 9 days

• Net project delays for which contractor is responsible = 11 – 9 = 2 days

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Impacted As-Planned (Impact of first delay)

Project Delays
Impacted As-Planned (Impact of first delay)

Project Delays
Impacted As-Planned (Impact of second delay)

Project Delays
Impacted As-Planned (Impact of second delay)

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Impacted As-Planned (Impact of third delay)

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Impacted As-Planned (Impact of third delay)

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Impacted As-Planned (Impact of fourth delay)

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Impacted As-Planned (Impact of fourth delay)

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Impacted As-Planned (Impact of fifth delay)

Project Delays
Impacted As-Planned (Impact of fifth delay)

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Impacted As-Planned (Impact of sixth delay)

Project Delays
Impacted As-Planned (Impact of sixth delay)

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Impacted As-Planned (Impact of seventh delay)

Project Delays
Impacted As-Planned (Impact of seventh delay)

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Impacted As-Planned (Impact of eighth delay)

Project Delays
Impacted As-Planned (Impact of eight delay)

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Impacted As-Planned (Impact of ninth & tenth delay)

Project Delays
Impacted As-Planned (Impact of ninth & tenth delay)

Project Delays
Impacted As-Planned

Duration Impact
Chronology of delays Type
(days) (days)

1 NN 3 3
Owner responsible delays = 6
2 EC 7 0
Contractor responsible delays = 8
3 NN 1 1
4 EC 1 0
5 EC 4 1
6 EC 2 1
7 NN 5 4
8 EC 4 4
9 NN 3 0
10 EC 3 0

Project Delays
Impacted As-Planned

• The sum of the delays (6+8=14 days) is greater than 11 days of actual
project delays.
• Limitations of this technique:
Maintaining the original finished-start relationship as per the as plan schedule.

Project Delays
As-Planned But for

• This method entails injecting the as-planned schedules with all

the delays of a particular party form an adjusted schedule.

• The completion date of this adjusted as-planned schedule

compared with the actual completion date gives the amount of
delay for which other party is responsible.

Project Delays
As-Planned But for (with contractor’s delays only)

Project Delays
As-Planned But for (with contractor’s delays only)

Project Delays
As-Planned But for (with contractor’s delays only)

• Adjusted as-planned schedule completion date = 47 day

• Actual completion day = 51 day
• Owner is responsible for delays = 51-47 = 4 days.
• Contractor is responsible for = 47-40 = 7 days.

Project Delays
As-Planned But for (with owner’s delays only)

Project Delays
As-Planned But for (with owner’s delays only)

Project Delays
As-Planned But for (with owner’s delays only)

• Adjusted as-planned schedule completion date = 49 day

• Actual completion day = 51 day

• Contractor is responsible for = 51-49= 2 days.

• Owner is responsible for delays = 49-40= 9 days.

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Collapsed As-Built

• It is a form of “but for”.

• It rather uses the As-Built schedule.
• It involves removing the delays of each party from the as-built
networks so that the resulting schedule will give the completion date
of the project but for the delays of the other party.

Project Delays
Collapsed As-Built (with owner’s delay subtracted)

Project Delays
Collapsed As-Built (with owner’s delay subtracted)

Project Delays
Collapsed As-Built (with owner’s delay subtracted)

• Adjusted Collapsed as-built schedule completion date = 45 day

• Actual completion day = 51 day

• Owner is responsible for = 51-45= 6 days.

• Contractor is responsible for delays = 45-40= 5 days.

Project Delays
Collapsed As-Built (with contractor’s delay subtracted)

Project Delays
Collapsed As-Built (with contractor’s delay subtracted)

Project Delays
Collapsed As-Built (with contractor’s delay subtracted)

• Adjusted Collapsed as-built schedule completion date = 47 day

• Actual completion day = 51 day

• Contractor is responsible for = 51- 47 = 4 days.

• Owner is responsible for delays = 47- 40 = 7 days.

Project Delays
Window Analysis

• This technique involves interim assessment of delay on updated

schedules at specific periods of the project.
• The schedule within each window is updated to reflect the actual
durations and sequence at the time of delay while remaining as-
planned schedule beyond the window period is maintained.
• Analyses are performed to determine the critical path and new
completion date.
• This new completion date is compared with the as-planned
completion date prior to this analysis to give the amount of delay
during that window period.

Project Delays
Window Analysis

• The time period of the project broken down to 5 windows.

Windows set at day:
10
21
32
40
51

Project Delays
Window Analysis (update schedule on day10)

Project Delays
Window Analysis (update schedule day 10)

Project Delays
Window Analysis (update schedule on day 21)

Project Delays
Window Analysis (update schedule on day 21)

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Window Analysis (update schedule on day 32)

Project Delays
Window Analysis (update schedule on day 32)

Project Delays
Window Analysis (update schedule on day 40)

Project Delays
Window Analysis (update schedule on day 40)

Project Delays
Window Analysis (update schedule on day 51)

Project Delays
Window Analysis (update schedule on day 51)

Project Delays
Window Analysis

Delay in window
Schedule Update Completion date
Window Number
(day No) (day No) EC NN

0 (start) 0 40 0 0

1 10 41 0 1

2 21 42 0 1

3 31 44 2 0

4 39 49 3 2

5 (completion) 51 51 2 0

Total 7 4

Project Delays
Summary of delay analysis results for the case study
Delay in window
Delay analysis methodology
EC NN
As planned vs. As-Built 9 2
Impacted As-Planned 6 8
As planned but-for
Contractor’s point of view 4 7
Owner’s point of view 9 2
Collapsed As-Built
Contractor’s point of view 6 5
Owner’s point of view 7 2
Window Analysis 7 4

Project Delays
 Summary of delay analysis results for the case study
Delay Analysis Methodology
10
9 9
9
8
8
7 7 7
7
6 6
6
5
5
4 4
4

3
2 2 2
2

0
As planned vs. As- Impacted As- As planned but-for As planned but-for Collapsed As-Built Collapsed As-Built Window Analysis
Built Planned (Contractor’s POV) (Owner’s POV) (Contractor's POV) (Owner’s POV)
EC NN

Project Delays
Concurrent Delays
Option One:

• Contractor has no entitlement to an extension of time if a concurrent delay occurs.

Option Two:

• Contractor has an entitlement to an extension of time if a concurrent delay occurs.

Option Three:

• Causes of delay are apportioned between the parties and the Contractor receives an
extension of time equal to the apportionment (for example, if the concurrent causes
of a 10-day delay are apportioned 60:40 Owner: Contractor, the Contractor would
receive a six-day extension of time).

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Option One: Contractor not entitled to an extension of
time for concurrent delays

Project Delays
 Delay Event Concurrent with Net Effect

Compensable to contractor, Non-

Owner Delay Another Owner Delay or nothing
excusable to owner

Excusable but not compensable to

Owner Delay Contractor Delay
both parties

Excusable but not compensable to

Owner Delay Force Majeure Delay
both parties

Non-excusable to contractor,
Contractor Delay Another Contractor Delay or nothing
compensable to owner

Excusable but not compensable to

Contractor Delay Force Majeure Delay
both parties

Excusable but not compensable to

Force Majeure Delay Another force majeure Delay or nothing
contractor
Project Delays
Thank You

Project Delays