(DD11) Delay and Disruption

Concurrent Delay and the AS Forms

 Introduction

To date, I have written four articles on concurrent delay. The first provided an overview of concurrent delay (DD07), the second identified what concurrent delay is not (DD08), and the third (DD09) explored the interrelationship between the ‘prevention principle’ and concurrent delay. The fourth article (DD10) looked at approaches to assess contributory causes of delay and additional cost.

This article looks at four Australian Standard (“AS”) forms of contract[1] in relation to the provisions and some of the issues concerning concurrent delay.

The Australian Standard (“AS”) Form Contracts

The AS2124-1992 and the AS4000-1997 General conditions of contract are the AS foundation contracts; that is, they are Head Contract Standards and other subsequent AS Contract Standards elaborate further on these two forms.

AS2124-1992 and AS4000-1997, together with their respective design and construction variants AS4300-1995 and AS4902-2000, have their own different suites of Contract Standards, and, despite their similarities, are very different.

We now look at the contract clauses and some of the considerations in relation to the provisions dealing with concurrent delay in the following four standard forms:

  • AS2124-1992
  • AS4300-1995;
  • AS4000-1997; and
  • AS4902-2000.

AS2124-1992

Clause 35.5 of AS2124-1992 states:

“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 Superintendent a written claim for an extension of time for Practical Completion setting out the facts on which the claim is based, the Contractor shall be entitled to an extension of time for Practical Completion.

The causes are-

(a) events occurring on or before the Date for Practical Completion which are beyond the reasonable control of the Contractor including but not limited to-

      • industrial conditions;
      • inclement weather;

(b) any of the following events occurring before, on or after the Date for Practical Completion-

i. delays caused by-

        • the Principal;
        • the Superintendent;
        • the Principal’s employees, consultants, other contractors or agents;

ii. actual quantities of work being greater than the quantities in the Bill of Quantities or the quantities determined by reference to the upper limit of accuracy stated in the Annexure (otherwise than by reason of a variation directed under Clause 40);

iii. latent conditions;

iv. variations directed under Clause 40;

v. repudiation or abandonment by a Nominated Subcontractor

vi. changes in law;

vii. directions by municipal, public or statutory authorities but not where the direction arose from the failure of the Contractor to comply with a requirement referred to in Clause 14.1;

 viii. delays by municipal, public or statutory authorities not caused by the Contractor;

ix. claims referred to in Clause 17.1(v);

x. any breach of the Contract by the Principal;

xi. any other cause which is expressly stated in the Contract to be a cause for extension of time for Practical Completion.

Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a cause referred to in the preceding paragraph, then to the extent that the delays are concurrent, the Contractor shall not be entitled to an extension of time for Practical Completion.”

[Author’s emphasis added]

There is therefore no contractor entitlement to an extension of time where there is concurrent delay and ‘at least’ one of the events causing the concurrent delay is not a cause referred to in clause 35.5(a) or (b); that is, one of the causes of delay does not give the contractor an entitlement to an extension of time.

The Standards Australia User Guide says that the intention of this provision is to encourage contractors to minimise its own delay(s).[2]

Concurrent delay not defined

AS2124-1992 does not define concurrent delay. It is therefore unclear as to what would constitute concurrent delay under AS2124-1992 and the parties to the contract could argue that it is one or more of the following:

    • True concurrency;
    • Overlapping delay where employer delay starts first;
    • Overlapping delay where contractor delay starts first; and/or
    • Other creative argument(s).

What is and is not concurrent delay is covered in DD07 and DD08 and the reader is referred to those two articles.

Prevention principle and liquidated damages

Two issues debated where a contract denies a contractor an entitlement to an extension of time where there is concurrent delay are:

    1. By applying the prevention principle, time is set at large and the liquidated damages provisions are unenforceable.[3]
    2. Where a contract denies a contractor an extension of time where there has been concurrent delay, could the levy of liquidated damages where there is concurrent delay be considered a penalty and therefore unenforceable? And would the employer be unjustly enriched by receiving liquidated damages for a delay that it had caused?

It is submitted that the parties, having entered into the AS2124-1992 standard form contract, have contracted for the intended regime and are therefore bound by those provisions both in relation to the operation of the prevention principle and the deduction of liquidated damages where there is concurrent delay.

AS4300-1995

AS4300-1995 is the same as AS2124-1992 except that the word “cause” referred to in AS2124-1992 has been amended to “cause of delay” in AS4300-1995 as identified below.

“…

Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a cause of delay listed in Clause 35.5(a) or (b), then to the extent that the delays are concurrent, the Contractor shall not be entitled to an extension of time for Practical Completion.

…” [Author’s emphasis added]

A contractor will therefore be entitled to an extension of time if it is delayed by an event listed in clause 35.5(a) or (b). However, if there is another delay caused by an event not listed in clause 35.5(a) or (b) then the contractor will not be entitled to an extension of time insofar as the delays listed and not listed in 35.5(a) or (b) are concurrent.

The position in relation to whether the prevention principle operates and whether liquidated damages becomes a penalty is, it is submitted, the same as AS2124-1992.

AS4000-1997 and AS4902-2000

Clause 34.4 of both AS4000-1997 and AS4902-2000 states:

“When both non-qualifying and qualifying causes of delay overlap, the Superintendent shall apportion the resulting delay to WUC[4] according to the respective causes’ contribution.” [Author’s emphasis added]

The intention of clause 34.4 is to apportion delay according to the contribution of the non-qualifying and qualifying ‘causes of delay’ which overlap.

Where there is delay caused by a qualifying cause of delay which overlaps with a delay which is not a qualifying cause of delay, the Superintendent must apportion the resultant delay to the WUC according to the delays’ contribution.

In its handbook SAA HB42-1992, Standards Australia offers the following guidance:

    • If a delay is partly caused by the contractor and partly by the employer, the Superintendent may apportion the extension of time to be granted and does not have to grant the whole extension of time because the employer contributed to the delay which prevented the contractor from reaching practical completion.[5]
    • However, if a ‘neutral’ delay or employer-caused delay and a contractor-caused delay overlap and contribute to delay to WUC, the contractor is not wholly deprived of an extension of time by the fact that the contractor has contributed to the delay.[6]
    • If a ‘neutral’ delay and an employer-caused delay concurrently contribute to the delay to WUC, the Superintendent would have to grant the whole of the extension of time to the contractor and the contractor would also be entitled to delay damages for the whole of the period of the employer-caused delay subject to the required notices being given.[7]
Apportioning delay when the effects of delay overlap

There are conceptual problems with an apportionment approach where the qualifying and non-qualifying causes of delay overlap. The difficulty in apportioning “the resulting delay to WUC according to the respective causes’ contribution” is in determining the extent of contribution to be apportioned to each party.

In the very rare case where there is true concurrent delay, the causes’ contribution could be considered equally responsible so that the resulting delay is apportioned 50:50 to each party. On this basis, would the contractor therefore be entitled to an extension of time for half the period of the overlapping delay. Alternatively, either party could be held 100 per-cent responsible on the basis that they both contributed to the entire period of the overlapping delay and the contractor is either entitled to an extension of time for the entire period of overlapping delay or to no extension of time at all (depending on which party is determined 100 per-cent responsible).

Clause 34.4 of AS4000-1997 and AS4902-2000 does not provide any guidance on the correct approach to apportion.

Would therefore a 50:50 apportionment be correct on the basis that each party is arguably equally responsible for the overlapping delay? In fact, neither party is responsible for half the delay, instead each party has contributed to the entire period of the delay. Regardless of the other party’s delay, the project would have been delayed for the whole duration of the overlapping part of the delay in any event.

Conceptually, apportionment should be easiest in principle where there is true concurrent delay. However, what if, for example, the contractor’s delay is 10 weeks, the employer’s delay 3 weeks, and the overlap is 2 weeks? In what proportion should the Superintendent apportion extension of time entitlement?

Prevention and liquidated damages

Again, it is submitted, that the parties, having entered into one of the AS4000-1997 or AS4902-2000 standard form contracts have contracted for the intended regime and are therefore bound by those provisions both in relation to the operation of the prevention principle and the deduction of liquidated damages when there is overlapping delay.

Next article

My next article will move on from concurrent delay and examine how loss caused by delay is quantified.

Finally

If you have any queries on concurrent delay, in relation to any of the previous articles, or any other matter, please do not hesitate to contact us.

Access to articles

This and previously published DD articles are:

DD01: Why is it necessary to distinguish between delay and disruption? What’s the distinction?

DD02: A global claim is doomed to fail, unless…

DD03: Comply with the notice provisions in the contract, or else…

DD04: ‘Prevention’ causing ‘time at large’: what does this all mean?

DD05: Float: what is float, who owns the float and how is float different to contingency?

DD06: Construction project delays 101 – plus concurrency!

DD07: What is concurrent delay? An overview

DDO8: Concurrent delay: It is not parallelism or pacing

DD09: Concurrent delay: Concurrent delay and the prevention principle

DD10: Concurrent delay: Approaches to assess contributory causes of delay and additional cost

To access any of the above articles please click on: Latest News

 

[1] The AS form contracts are developed by Standards Australia which is part of SAI Global.

[2] SAA HB42-1992, General conditions of contract (AS2124-1992) User Guide, Standards Australia, page 29A.

[3] See DD04 ‘Prevention’ causing ‘time at large’ What does all this mean?

[4] WUC = Work Under the Contract.

[5] HB 140-2000: Administration Manual for AS 4000-1997, page 243, note 3.

[6] HB 140-2000: Administration Manual for AS 4000-1997, page 243, note 4.

[7] HB 140-2000: Administration Manual for AS 4000-1997, page 243, note 5.

2020-09-22T06:32:16+00:00 February 25th, 2020|Insights, News|0 Comments