There are several different types of delay that can occur during the progress of the works on a construction project, each of which, depending on the terms of the applicable contract, give different entitlements and/or liabilities.
The types of delay that can occur and covered in this article are:
Excusable non-compensable delay;
Excusable compensable delay; and
An overview of each now follows
Non-excusable delays are delays that are either caused by the contractor and/or are delays where the contractor takes the contractual risk in relation to time and money.
Because a non-excusable delay does not give the contractor an entitlement to an extension of time or money, the contractor will be exposed to liquidated damages for the delay and will have no entitlement to delay damages.
Excusable non-compensable delay
An excusable non-compensable delay is one which gives the contractor an entitlement to an extension of time, hence relief from liquidated damages, but no entitlement to delay damages.
Neither the contractor nor the employer may have caused an excusable non-compensable delay, that is, neither party may be at fault. However, in accordance with the applicable terms of the contract, the parties may have agreed to share the risk should such a delay occur. An example of an excusable non-compensable delay in many construction contracts is a “force majeure” event, or exceptionally inclement weather conditions.
Excusable compensable delay
An excusable compensable delay gives the contractor an entitlement to an extension of time, hence relief from liquidated damages, plus an entitlement to delay costs.
Excusable compensable delays are caused by the employer and/or where both time and money are at the employer’s risk under the contract.
This type of delay may also occur because of changes instructed by the employer. Payment for delay caused by an employer variation may be valued differently to the delay caused by an employer breach of one or more of its obligations under the contract; one may be a valuation exercise depending on the terms of the contract, the other loss and expense under the contract or for general damages at common law.
There is no single accepted definition of concurrent delay. True concurrent delay is where the employer and contractor independently delay the critical path, both of which occur at the at the same time, and either of which, in the absence of the other, is likely to cause delay to the completion of the works.
However, concurrent delay has also been described as: each delay event in the absence of any competing event has caused delay, each event is on the critical path, and the delays caused by the employer and contractor overlap.
The SCL Protocol says that a more common usage of the term concurrent delay concerns the situation where two or more delay events arise at different times, but the effects of them are felt at the same time.
The differences between the above concurrent delay scenarios will be explored in more detail in the next article on concurrent delay.
Concurrent delay in relation to extensions of time and delay damages often present problematic and complicated issues. Not only is it necessary to identify the causes of delay but, depending on the terms of the contract and the applicable law, it may also be necessary to apportion liability when there has been contribution by both the employer and the contractor to the delay experienced. Further, and at the same time, there may also be neutral events such as force majeure, during a period of concurrent delay. All these scenarios impact differently on the contractor’s entitlement to time and money. There may also be parallel critical paths to be considered, together with contractor acceleration and/or mitigation measures.
The preferred approach for assessing extensions of time and delay damages where there is concurrent delay is uncertain. This is partly due to the uncertainty and confusion in relation to the definition and categorisation of different types of concurrent delay in construction contracts. The standard form contracts differ in their apportionment of risk in relation to concurrent delay and in relation to what concurrent delay is. Further, contract provisions often provide very little, if any, guidance on how concurrent delay is to be assessed.
In addition to the uncertainty and confusion in construction contracts, is the limited judicial guidance from the courts on the principles to govern the correct approach to analysing entitlement to both extensions of time and damages when there is concurrent delay.
As a result, the correct application and approach to assess concurrent delay in relation to both time and money gives rise to differences of opinion and to potential and actual disputes.
The next articles take a deeper dive into the complex issues concerning the various approaches on how to assess the time and financial impacts due to concurrent delay and the types of contract provisions that address concurrent delay that arise in standard form contracts.
Delay and Disrupion Protocol (2nd ed, Society of Construction Law, 2017).