Law and regulation of concurrent delay in the US

Yes, there is a large body of case law dealing with concurrent delay.

Broadly speaking, concurrent delay refers to two or more delays which occur at the same time, each of which would independently delay the critical path. This definition of concurrent delay is reflected in the two most widely accepted technical publications dealing with delay analysis in the United States: the American Association of Cost Engineering’s Recommended Practice 39R-03, Forensic Schedule Analysis (the “AACE RP-FSA”) published in 2011 and the American Society of Civil Engineers’ Schedule Delay Analysis Standard published in 2017 (the “ASCE SDAS”).

The AACE RP-FSA separates the timing element of concurrent delay into literal and functional categories. Literal concurrent delay is defined as requiring the delay events to occur literally at the same time (usually on the same day) whereas functional concurrent delay requires only that they occur within the same analysis period (usually coinciding with a monthly reporting period). The functional theory seeks to recognise the real-world limitations of precisely measuring the occurrence of delaying events and recognises the fact that delays are often reported together at the end of the relevant period.

A more contentious concept is “offsetting delay”, described in the ASCE SDAS’s Guideline 4.6 and accompanying commentary as follows:

4.6 In situations where the completion date is adjusted properly for change orders and the contractor is behind schedule, owner delays that occur thereafter on a separate path may have a mitigating effect on assessment of damages.

In certain situations when the current, as adjusted contract completion date has passed or the current, updated schedule is projecting a completion date that is later than the contract completion date, owner-responsible delays occurring thereafter may mitigate the assessment of liquidated damages. This type of delay is referred to as “offsetting delay,” recognizing that an owner-caused delay may result in recognizing a noncompensable time extension to offset all or a portion of any potential liquidated damages.

This concept is also addressed in the AACE RP-FSA by reference to divergent views as to whether criticality is to be determined by the longest path to completion only, or may also refer to any activity which has a negative float relative to completion (i.e. the activity is planned to complete after the contractual completion date). As this document notes (at 4.3.A.2):

Which one is correct depends on which principles are considered. If only CPM principles are used to evaluate the theories, the [longest path to completion] school is correct. The [any negative] float school may have an arguable point if contractual considerations are brought into play, since all paths showing negative float are impacting (albeit not equally) the contractual completion date.

Parties are generally free, subject to the limitations of public policy and relevant legislation, to stipulate how concurrent delay is to be defined and treated within their contract. In the absence of express provisions dealing with the topic, general common law principles apply as discussed below.

If concurrent delay is found to exist between events which would have otherwise entitled each party to claim against the other, the so called “no harm, no foul” rule applies and neither party may benefit monetarily from the delay. The contractor may not claim for the costs of delay and receives an extension of time so that the employer does not recover delay damages.

Questions may arise as to whether one of the parties has intentionally delayed in response to the other party’s delay – termed “pacing”. Generally speaking, pacing is legitimate and will not result in a finding of concurrent delay, a principle often voiced by the phrase: “Why hurry up to wait?” However, parties taking such action run the risk that the delay being responded to reduces or resolves in the future, or that subsequent delay analysis shows the supposed pacing to be the original cause of delay.

Earlier cases had found that any concurrent delay would deprive the parties of a financial remedy for delay altogether. These cases pre-date critical path analysis and the popularity of liquidated damages clauses and have now been overtaken by what is referred to as the “apportionment rule” whereby the court will attempt to segregate delays were possible. This is not to be confused with the apportionment of liability for concurrent delay based on relative fault as applied in some other jurisdictions (such as Scotland). Apportionment in the United States refers simply to the process of allocating responsibility for different parts of an overall project delay to individual parties based on a critical path analysis. Where such an analysis shows specific delays to be concurrent, the “no harm, no foul” rule noted above applies and neither party may claim financially in respect of those delays.

The treatment of offsetting delay has recently given rise to controversy as a result of the 2017 ASCE SDAS noted above. This document suggests that delay which is not on the longest path to completion may nonetheless be treated in the same way as concurrent delay if it would independently cause any activity to be delayed beyond the contractual completion date as adjusted. Ultimately the position depends on whether criticality is defined by reference to the contractual completion date or by reference to the longest path to completion. There are cases supporting either approach: see for example Framlau Corp, 71-2 BCA (CCH) and In re Fire Security Systems, Inc, 02-2 BCA (CCH) in favour of offsetting delay being treated in the same way as concurrent delay and Electronic & Missile Facilities, Inc, GSBCA No. 2787, 71-1 BCA for the opposite conclusion. However, the more commonly accepted position (supported by the AACE RP-FSA) is against treating offsetting delay in the same way as concurrent delay and to adopt the longest path to completion as the basis for measuring criticality.

In the United States, the parties appoint programming (schedule) experts/delay analysts as expert witnesses; each such expert will select an appropriate method of analysis out of a number of possible methods which are discussed in detail in AACE RP-FSA and ASCE SDAS some of which are also included in the Society of Construction Law’s Protocol. Whilst the choice of an appropriate method will be governed by a number of factors, including the available evidence, there is a general preference for contemporaneous methods where possible (i.e. those methods which assess the impact of delays by reference to contemporaneous evidence).

It is unclear whether such a clause would be effective. There is, however, a substantial body of case law on the interpretation and enforceability of “no damage for delay” clauses which provide that a contractor is not entitled to compensation for delays which would ordinarily be compensable (e.g. for acts of prevention by the employer). The authors of one leading text book note that, “No other type of contract clause used to allocate and apportion time delays and impacts has generated the controversy and litigation caused by the ‘no damage for delay’ clause” (Bruner & O’Connor on Construction Law § 15:75). Some States have enacted legislation to limit or bar the enforceability of such clauses. Others have developed judicially recognised exceptions such as for uncontemplated delay or delay caused by fraud or bad faith. Many will also give such clauses a strict reading, giving the contractor the benefit of any doubt.

There do not appear to be any reported cases in the United States involving a clause which allocates the risk of concurrent delay to one of the parties – thereby allowing the other party to maintain their right to claim financially in relation to the delay. A clause which sought to give such a right to an employer is likely to give rise to many of the same arguments which have plagued “no damage for delay” clauses.

An event that is at the Contractor’s risk under the contract (a “Contractor Risk Event”) will result in five weeks delay to completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in delay to completion from 1 February to 14 February.

7.1 Is the Contractor entitled to an extension of time in respect of the variation? If so, for how long?

This question raises the issue of offsetting delay as discussed above. The ASCE SDAS and some cases suggest that the Contractor would be entitled to an extension of time. However, the more commonly accepted position, supported by the AACE RP-FSA, is against such an approach.

7.2 Assuming the Contractor is contractually entitled in principle to recover delay-related costs relating to the variation, for what period (if any) could it recover those delay-related costs?

On neither of the above approaches would the Contractor be entitled to delay related costs.