SCL Delay and Disruption Protocol: SCL promotes common sense approach to “dark art” of delay analysis
This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.
Summary and implications
In July 2015 the Society of Construction Law (SCL) published amended guidance to its first edition of the Delay and Disruption Protocol (the Protocol) titled “Rider 1”. This first revision tackles the much debated issue of time impact analysis in the assessment of extensions of time (EOT).
Background
The Protocol was first published in October 2002 and the response from the wider construction industry at the time was very positive. The Protocol is now used both in contract drafting to impose discipline on contractors' progress reporting and in dispute resolution when looking at the analysis of delay. It is often cited as the principal authority to support the use of a prospective delay analysis in relation to post contract disputes.
The objective of the first edition to the Protocol was to provide useful guidance of general application on some of the common issues in respect of the management of delay and disruption. While the provisions of the relevant contract would always take precedence, the Protocol highlighted key issues for early consideration by the parties, ideally during contract negotiation and drafting. The ultimate aim being that by applying the Protocol’s core principles, parties to a construction contract could seek to resolve and avoid costly and time consuming disputes.
The first edition stated: “The aim is that, in time, most contracts will adopt the Protocol’s guidance as the best way to deal with delay and disruption issues.” The Protocol recognised that at the time while the common standard form contracts provided for the management of delay and disruption, they did not cover all the applicable issues or provide for assessment using the same methodology.
However, in recent years criticism began to circulate that use of the Protocol had promoted an increase in disputes, and an increase in the cost of dispute resolution in the industry, by encouraging the postponement of EOT assessment and by encouraging the use of prospective delay analysis after events in question have occurred.
Recent developments
On 16 April 2013 a conference was held by the SCL to mark the tenth anniversary of the publication of the Protocol, chaired by Mr Justice Jackson and attended by over 100 individuals. While the SCL initially said it had no intention of amending the Protocol, one of the six conference speakers called for the Protocol’s revision. Their concerns fell into the following two categories:
- Contrary to its aims the Protocol encourages the postponement of EOT assessment. While the Protocol recommends that an EOT should be assessed contemporaneously, the Protocol’s post contract recommendation contradicts this guidance advising that even years later a contemporaneous analysis can still be carried out. Therefore, there is no incentive to carry out an EOT assessment contemporaneously.
- The various methods of delay analysis set out within the Protocol require updating to include a number of the most widely used and popular techniques currently omitted (e.g. windows analysis).
Following an impromptu conference vote, overwhelmingly supported by the attendees, it was decided that the SCL should carry out a review and consider issuing amendments to the Protocol on the basis of the issues raised.
As a result, a drafting sub-committee was formed to focus on eight key issues. The Protocol focuses solely on the following first two issues echoing the concerns raised at the conference:
a) “Whether the expressed preference should remain for time impact analysis as a programming methodology where the effects of delay events are known.”
b) “The menu and descriptions of delay methodologies for after the event analysis, including to incorporate additional commonly used methodologies.”
What is time impact analysis?
The authors of the first edition of the Protocol recommended the use of time impact analysis to determine entitlement to an EOT in respect of both concurrent and after the event analysis.
Time impact delay analysis involves updating the as-planned programme and then impacting onto it the assumed effect of the delay event(s). It is a prospective form of analysis that seeks to analyse the position of the project at the time a delay event occurred and to prospectively model the likely effect of the delay event on the completion of the project. This method relies on theoretical modelling as opposed to an analysis of the relevant actual sequence of events in respect of the delay.
Amendments to the Protocol
Following the review by the SCL drafting sub-committee, the key amendments made to the Protocol include:
- the replacement of the entirety of the previous guidance on retrospective delay analysis with an expanded menu of delay analysis methods (i.e. after the fact in formal dispute resolution);
- user-friendly guidance is provided on the selection and application of an appropriate method dependent upon a range of possible criteria relevant to the parties’ dispute;
- the elevation to a core principal that an EOT should be based on conclusions derived from a fact based common sense approach irrespective of the method selected; and
- the recommendation that time impact analysis method be employed in prompt contemporaneous evaluation of delay (i.e. during the project) is further encouraged.
Signalling a significant departure from the first edition, the key guidance is now that for delay analyses undertaken some time after the delay event (regardless of selected method) “there is an overriding objective of ensuring that the conclusions derived from that analysis are sound from a common sense perspective”.
Recent discussion of time impact analysis
Recent case law has shown the TCC’s support for a pragmatic factual analysis over a theoretical approach to delay analysis, as demonstrated by the judgment given in Walter Lilly & Company Limited v Giles Patrick Cyril Mackay (2) DMW Developments Limited [2012] EWHC 1773 (TCC).
In his judgment Mr Justice Akenhead stated that in relation to the fixing of an appropriate EOT: “How the court or arbitrator makes that decision must be based on the evidence, both actual and expert.” In this case the parties’ delay experts debated the merits of “prospective” versus “retrospective” delay analysis. In response Mr Justice Akenhead stated that: “The debate about the "prospective" or "retrospective" approach to delay analysis was also sterile because both delay experts accepted that, if each approach was done correctly, they should produce the same result.” He added that both delay experts' approach “involved in reality doing the exercise that the Court must do which is essentially a factual analysis as to what probably delayed the Works overall.”
It would seem likely that the TCC’s support for a fact based approach to delay analysis will have been considered by the SCL sub-committee in the drafting of Rider 1 which now supports the same approach.
Comment
A standard form construction and engineering contract will typically establish a contractual procedure for assessment of EOT applications. For any assessment, it is important to note that the starting point will always be the contract requirements as imposed upon the decision maker/contract administrator (CA).
As the contract requirements are of primary importance, the CA should always ensure that they familiarise themselves with the assessment process and its limits prior to the commencement of the works.
Unless it is expressly incorporated into a construction contract, the Protocol (as amended) remains a secondary, but useful tool for parties to pre-empt and manage disputes arising from delay and disruption.
The amendments effected show that the SCL have rightly moved away from advocating a prescriptive approach to delay analysis in all cases towards a common sense approach focusing on the specific facts and circumstances relevant to the EOT application in question and as endorsed by recent TCC case law.
What next?
The industry will look forward to the publication of further amended guidance following the sub-committee’s review of the remaining six key issues, including controversial issues such as global claims and concurrent delay. A second edition of the Protocol and any other amendments will be made available for public consultation by the end of 2015.
