Chapter 27 - § 27.4 • THE DELAY CLAIM

• Jurisdiction: Colorado

§ 27.4 • THE DELAY CLAIM

Ideally, resolution of any delay claim should start contemporaneously with the occurrence of delay, and while the construction project is underway. Timely completion of construction contracts is of overriding importance to all parties. Construction time determines when the project can be put in use or sold by the owner. For the contractor, any delay may result in increased costs, loss of productivity, and ultimately lost profits. Delay claims may be resolved during the course of the project through change orders, back-charges, or other means addressed in the contract documents. Alternatively, delay claims may be resolved through litigation or other means of formal dispute resolution outside of the construction process. This section will first address practical means and advice for resolution of delay claims and then turn to legal theories for recovery of damages attributable to delay in Colorado.

§ 27.4.1-CPM Schedules as a Tool for Determining Responsibility for Delay

Most construction contracts require some type of agreement or approval of a baseline or as-planned schedule between the owner and the contractor. This is typically done at the time of contracting, time of award, time of issuance of a notice to proceed, or time of agreeing upon a price or a guaranteed maximum price.³⁹ This as-planned or baseline schedule is the basis for all later schedule updates during the course of the project. Eventually, the baseline schedule, as updated throughout the project, becomes the final schedule and will be considered the "as-built schedule." Scheduling experts rely on various techniques for quantifying delays and determining fault for those delays. These techniques rely upon comparisons of baseline and as-built schedules, as well as schedule updates. There are many methods for analyzing and determining the responsibility for delays and/or changes on a construction project. Each project will have unique circumstances that determine which method is applicable. Below is a description of a few techniques that are used often in the construction industry:

Total Time Approach

The total time approach merely compares the baseline schedule to the as-built schedule and allocates a day of delay for every day that the contractor is late. As with the total cost claim, which assumes every dollar the contractor expends beyond his or her contract price is owed to the contractor, the total time technique assumes that every day of delay is not attributable to the contractor, or those within the contractor's control, and that all delays are caused by others. The total time approach is not favored by the courts and has widely fallen out of favor.

Impacted As-Planned Technique

This schedule analysis technique measures the impact of the delays on the contractor's as-planned CPM schedule by identifying project delays or changes, typically caused by the owner, and then inserting or adding activities, which represent these delays or changes, into the baseline construction schedule. A new completion date is then calculated. This new completion date is then compared to the baseline schedule's completion date to demonstrate the effect of the delays or changes on a project's completion date. In other words, the amount of delay equals the difference in completion dates between the schedules before and after the impacts. This is generally a simple analysis to perform and can be easier to understand, but does not take into account concurrent delays, changes in the critical path between updates, multiple critical paths, or the contractor's best efforts to mitigate the delay. Because of these shortcomings, this technique is not widely used in the industry on more complex delay claims. Therefore, several federal boards and courts have rejected this technique.

Time Impact Analysis

Time impact analysis (TIA) is a widely recognized and accepted technique for analyzing schedule impacts caused by changes or delays. This technique analyzes the impact of delays by inserting actual delays or changes into the most-current, updated CPM schedule. The as-planned schedule is then modified from the delay point forward in order calculate a new projected completion date. The updated schedule now incorporates the actual start/finish dates, changes, delays, and impacts, and the impact of the particular delay can be determined by comparing the original completion date to the newly projected completion date. This process is done for each delay until the impacts of all delays have been assessed. While this is an effective technique because the updates and impacts are analyzed contemporaneously with the occurrence of delays, there are limitations, including the fact that it is often the most time-consuming, and therefore costly, delay-analysis method. The added activities help demonstrate the impact to the as-planned critical path at the time the impact first occurred. TIA can be a good tool to help resolve time extensions as they occur during the construction phase of the project, which can prove to be more time and cost effective than more involved forensic techniques.

Window or Contemporaneous Period Analysis Technique

The window or contemporaneous period analysis technique is very similar to the time impact analysis and is a widely recognized technique that compares a chosen period of the project, usually a monthly update, back to the previous update period. This systematic and chronological approach helps sort out concurrent delays at each period and provides a method to assign responsibility between the contractor and owner. For this technique to be effective, the project must have accurate baseline and schedule-update records. As with the time impact analysis, the actual delays or changes are inserted into the most-current, updated CPM schedule, but during a period or "window" of project time. This allows the as-built critical path to be analyzed by period, which provides an accurate depiction of the delays as the project progressed. The schedule within the window is updated to reflect the actual durations and sequence at the time of the delay. But the remaining as-planned schedule beyond the window period is maintained. When analyzing each period, the previous update period becomes the baseline of comparison. An analysis is run to determine whether the delay impacted the critical path, and a new completion date is calculated. This new completion date is compared with the baseline completion date prior to this analysis to ascertain the amount of delay during the window.

There are various advantages and disadvantages to this technique. While this approach is widely accepted, there is a weakness in that the expert performing the analysis determines the window period and the number of windows. This leads to controversy if it appears that the expert may have chosen the window or windows to suit a particular side's interest. However, this technique is helpful because it shows the planned sequence each period and how an impact directly affected the plan from period to period. Another shortcoming to this technique is the possibility of the delay not being represented completely in the month it is first reported, as a contractor should typically try to mitigate changes and impacts as they arise. This can result with a mitigated impact with an aggressive plan that may not be viable. To ensure that this does not happen, a project team must report realistic schedules with the planned sequence and durations that are well thought out.

Collapsed As-Built Technique

The collapsed as-built technique provides a retrospective approach of taking the as-built schedule and subtracting or removing the delays from the schedule (typically excused delays or delays caused by the other party) to show when the project would have finished without delay or change. This is often referred to as "collapsing" the schedule. This collapsed as-built schedule is then analyzed to demonstrate that "but for" the delays caused by the other party (or excusable delays, as the case may be), the project would have been substantially completed on time. This technique is valuable in situations where the contractor did not prepare any updates, or prepared infrequent updates of the baseline schedule, but it does have its shortcomings, including the fact that the expert is often forced to insert logic ties that did not exist in the baseline schedule and that are therefore subject to attack by competing experts; it is not "real time." This method is typically used when the baseline and/or update information is not consistent or reliable enough to provide an accurate by-period delay analysis. Though this technique gives actual delay information, it does not take into account the planned sequence and if the sequence had to be altered due to the impact.

Selecting an Appropriate Technique

Each schedule analysis technique has its merits and its drawbacks and is quite different in application and utility. The general view among scheduling experts is that no single technique is suitable for all delay claims and that the most appropriate technique is dictated by a number of factors or criteria that require particular expertise. Several factors must be taken into consideration when evaluating which technique should be used with a particular claim, including availability and accuracy of project records; the quality of the as-planned schedule; existence of and frequency of progress updates; the timing of the analysis - during or after construction is completed; the expense and availability of resources; and the type or basis of the delay. Accordingly, the attorney should rely on and work with the scheduling expert to determine the best analysis technique for any given claim.

§ 27.4.2-Practical...