What Type of Delay Analysis is Required Under the Contract?
This article considers the contractual requirements regarding the most appropriate and accepted method of delay analysis in the commonly used Australian Standard General Conditions of Contract.
There are two methods of delay analysis to consider – prospective and retrospective.
Prospective Analysis
“A prospective delay analysis identifies the likely impact of historical progress or delay events on a completion date,” says SCL Protocol.
“The conclusions of a prospective delay analysis may not match the as-built programme because the Contractor’s actual performance may well have been influenced by the effects of attempted acceleration or the re-sequencing or redeployment of resources in order to try to avoid liability for liquidated damages or due to other Employer and Contractor Risk Events.”
In short, a prospective analysis is theoretical and does not measure actual delay.
Retrospective analysis
“A retrospective delay analysis identifies the actual impact of the delay events on the identified actual or as-built critical path,” according to SCL Protocol.
Retrospective analysis is conducted after a delay event and is therefore based on fact. In contrast to prospective delay, retrospective delay measures actual critical delay.
The Extension of Time Claim Clause
The Australian Standard General Conditions of Contract - namely AS 4902 and AS 2124 - do not specifically prescribe which method of delay analysis should be used.
Contracts generally require the contractor to notify the principal, as soon as practicable, of any delays or potential delays to Practical Completion and to provide details of the causes of the delay (the EOT).
The principal is then responsible for assessing the EOT claim and determining whether an extension of time (EOT) is warranted.
The specific method of delay analysis to be used in determining the impact of delay is not specified in these contracts, rather selected depending on the circumstances of the delay.
Conventional wisdom dictates that a retrospective method of analysis is suitable when the delay event has delayed Practical Completion – it is conducted after the fact. In contrast, a prospective method of analysis is suitable if the delaying may delay Practical Completion – it is conducted during the project.
If Practical Completion has been achieved and updated as-built critical path programs exist, why conduct a prospective delay analysis?
Where a prospective method of analysis is carried out retrospectively[1], the results should be verified against actual records of what occurred and when. For example, if a delay event theoretically impacted a completion date at the time the delay event occurred, the actual (matter of fact) completion date should be the same or very similar. If not, the analysis is fundamentally flawed. This is common sense.
Three real life examples of relevant EOT clauses that demonstrate the syntax in relation to the accepted methods of delay analysis.
Case: V601 v Probuild[2] - Australian Standard Contract (AS4902–2000)
The plaintiff asserted that clause 34.3 prescribed a prospective method of delay analysis, whereas the defendant’s Expert undertook a retrospective analysis.
Interestingly, the defendant’s Expert was instructed to prepare an additional, prospective analysis in reply to the plaintiff’s experts’ assertion that the Contract required a prospective form of delay analysis, based upon his interpretation of clause 34 of the Contract.
The defendant’s Expert prepared a simple, supplementary prospective analysis (impacted as-planned) to demonstrate the similar resultant EOT entitlement that resulted from the 2 different analysis methodologies he prepared.
In relation to clause 34.4, Justice Digby concluded that clauses 34.4(a) and 34.4(b)(i) refer to a retrospective analysis[3]:
“I consider that cl 34.4(a) also contemplates that the relevant delay has already occurred. Clause 34.4(b)(i) in my view contemplates a retrospective analysis of delay.”
Justice Digby goes on to explain his preference for a retrospective analysis in paragraphs 587 and 588:
[587] “Furthermore, I consider it to be more practical and more accurate and sensible to analyse delay and the effect of delay retrospectively, with the benefit of hindsight, and the higher level of assurance now achievable from a retrospective delay analysis utilising the ‘as build’ facts to ascertain how the WUC were actually constructed and actually delayed.”
[588] “My reasons for the above conclusions are principally:
(a) A prospective delay assessment is a theoretical forecast of what will transpire on the Project, without regard to what would actually happen during the course of the Works.
(b) A prospective assessment is inferior to an assessment of delay undertaken when the facts affecting the progress of the Project are known and the actual delay can be assessed. Parties and experts do not need to rely upon a theoretical delay model when the actual delay to the relevant construction activities can be established.”
Justice Digby specifically mentions the reasons why he prefers the retrospective analysis of the defendant’s Expert over the claimant’s experts’ prospective analysis:
“I prefer, and I am persuaded, that Lyall’s retrospective delay analysis is, in the circumstances, a contractually permissible and probative, practical, logical, persuasive, and appropriate method of assessing and determining the effect caused by a critical and compensable occurrence in the nature of a delay to the critical path of the WUC.”
“I accept and prefer Lyall’s expert evidence in respect of delay and I find unpersuasive, and do not accept, Abbott’s delay-related prospective assessments and evidence in respect of the delays claimed by Probuild. Consequently, I do not accept, and I am unpersuaded, by Abbott’s prospective delay assessments.” [4]
But it’s not always quite as clear cut as the following two cases demonstrate.
Case: Built v Pro-Invest[5] - Design and Construct (as Amended) AS4902-2000 (Incorporating Amendment No. 1)
The Contract
Excerpt from clause 34.3 of the Contract:
34.3 Claim
The Contractor shall be entitled to such EOT for carrying out WUC (including reaching practical completion) as the Superintendent assesses, if:
(a) the Contractor is or will be delayed in reaching practical completion by a qualifying cause of delay;
(b) the Contractor gives the Superintendent, within 14 days of when the Contractor should reasonably have become aware of that qualifying cause of delay occurring, a written claim for an EOT evidencing the facts of causation and of the delay to WUC (including extent);
(c) the qualifying cause of delay was beyond the reasonable control of the Contractor and affects the critical path of the activities required to complete WUC as shown on the approved construction program;
(d) the Contractor or others for whom it is responsible did not contribute to the cause;
(e) the Superintendent is satisfied that WUC was actually delayed;
(f) the Contractor has taken all reasonable steps to mitigate the effect of the delay; and
What happened
The plaintiff asserted that the contract calls for a prospective delay analysis based on Clause 34.3(a), and other clauses in the contract that support this position[6].
The defendant contended that either a retrospective or prospective analysis could be used[7], though the defendants experts’ analysis should be preferred.
Clause 34.3(a) is drafted in a way that mixes tenses (is or will), whereas 34.3(e) does not (was). Clause 34.3(e) suggests a retrospective analysis.
The plaintiff deemed that a prospective analysis was appropriate because the delay was greater than 14 days, citing clause 34.5 of the Contract, which states that within 14 days of receiving the claim, the Superintendent is to have assessed the claim, or the claim is deemed to have been assessed.
The defendant submitted[8] that clause 34.5 cannot be used to “place the Court in the shoes of the superintendent at the time of assessment” so long after the delay event and Practical Completion.
Justice Williams concluded that[9]:
“Accordingly, it is open on the proper construction of clause 34.3 of the Contract for either a prospective or a retrospective methodology to be used to determine the entitlement to an extension of time.”
Case: Civil Mining v WICET[10] - Modified AS2124-1992 General Conditions of Contract
Similarly, Justice Flanagan in the case of CMC v WICET interprets clause 35.5 of AS2124 to permit either a prospective or retrospective methodology:
“My interpretation of clause 35.5 as permitting both a prospective and retrospective delay analysis rest on the ordinary meaning of the term “has been or will be actually delayed”.
“Both parties referred to the Society of Construction Law Delay and Disruption Protocol which is an industry publication concerning delay analysis. This Protocol has been updated by a Rider prepared in July 2015 (Rider 1).
“The Protocol recognises the primacy of the Contract in undertaking any delay analysis. It states that a Contract will take precedence over the Protocol, and that the method of delay analysis will be dictated by the relevant Contract.”
Excerpt from clause 35.5 of the Contract:
35.5 Extension of Time for Practical Completion
When it becomes evident to the Contractor that anything, including an act or omission of the Principal, the Principal’s Representative or the Principal’s employees, consultants, other contractors or agents, may delay the work under the Contract, the Contractor shall promptly notify the Principal’s Representative in writing with details of the possible delay (including the extent of the delay) and the cause.
When it becomes evident to the Principal that anything which the Principal is obliged to do or provide under the Contract may be delayed, the Principal shall give notice to the Principal’s Representative who shall notify the Contractor in writing of the extent of the likely delay.
If the Contractor is or will be delayed in reaching Practical Completion by a cause described in the next paragraph and within 28 days after the delay occurs the Contractor gives the Principal’s Representative a written claim (with all the necessary supporting documentation to enable the Principal's Representative to properly assess the claim) for an extension of time for Practical Completion setting out and evidencing the facts on which the claim is based (including the extent of the delay), the Contractor shall be entitled to an extension of time for Practical Completion.
In conclusion, while each circumstance has its own nuances, there are two methods of delay analysis, recent Australian judgements favour a retrospective analysis where possible. As Justice Digby said, “more practical and more accurate and sensible to analyse delay and the effect of delay retrospectively, with the benefit of hindsight”.
[1] E.g., post Practical Completion
[2] Justice Digby V601 Developments Pty Ltd v Probuild Constructions Pty Ltd [2021] VSC 849
[3] VSC849 [585]
[4] VSC849 [1396 & 1397]
[5] Built QLD Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd [2021] QS 224
[6] Clauses 34.3(c), 34.2, 32.2(b), and 32.2(c)
[7] QSC224 [1053]
[8] QSC224 [1060]
[9] QSC224 [1065]
[10] [663] Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85
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