Concurrent Delays: An Owner’s Sword, Shield… or Land Mine?

Part I

Introduction

Concurrent Delay is otherwise known as the “misery loves company” concept. Ask any forensic scheduling expert across the globe what she considers to be the most inflammatory aspect of delay analysis; they will probably say, “Concurrent delay, of course!”

As an expert in delay analysis myself, I wholeheartedly agree. True forensic scheduling experts really prove their worth by their ability to analyze and articulate the determination of concurrency of delays on a project. The Society of Construction Law (SCL), a well-known and established international organization regarding all things construction law related, stated in its recently updated Delay and Disruption Protocol:^[1]

Concurrency is a contentious issue, both because there are differing views on the correct approach to dealing with concurrent delay when analyzing entitlement to EOT [Extension of Time] and because there are differences about the meaning of concurrent delay itself [10.1, p. 29] … As it is in relation to EOT, concurrency is one of the most contentious issues in the determination of recoverable prolongation compensation. [14.1, p. 39] 

Why does such an innocuous word (concurrency) create such strife in the project parties? It boils down to money. If concurrent delay is proven, a contractor will not be entitled to recover extended overhead costs during the period in which the concurrency exists. But let’s back up a bit and define concurrent delay.

Definition

The SCL protocol simplifies the definition:^[2]

True concurrent delay is the occurrence of two or more delay events at the same time, one an Employer Risk Event, the other a Contractor Risk Event, and the effects of which are felt at the same time. For concurrent delay to exist, each of the Employer Risk Event and the Contractor Risk Event must be an effective cause of Delay to Completion (i.e. the delays must both affect the critical path).

However, if that definition does not clarify the concept, the Association for the Advancement of Cost Engineering International (AACEi) has five other definitions of concurrent delay that you may choose from, with similar but slightly different connotations. For the sake of the length of this paper, I will provide the reader with two others:^[3]

1. Two or more delays that take place or overlap during the same period, either of which occurring alone would have affected the ultimate completion date. In practice, it can be difficult to apportion damages when the concurrent delays are due to the owner and contractor respectively.
2. Concurrent delays occur when there are two or more independent causes of delay during the same time period. The “same” time period from which concurrency is measured, however, is not always literally within the exact period of time. For delays to be considered concurrent, most courts do not require that the period of concurrent delay precisely match. The period of “concurrency” of the delays can be related by circumstances, even though the circumstances may not have occurred during exactly the same time period.

For those more graphically minded, I have illustrated the concept below.

Figure 1: Concurrent Delay Illustrated with Contractor Delay and Owner Delay

The illustration is misleadingly simple but demonstrates the concept nicely. The critical path activity “building erection” is delayed by two separate delay events: one the responsibility of the owner, and the other the responsibility of the contractor. In this example, the delay periods are equal for both impacts, but in reality, that usually never is the case. Thus, one point of contention with the concurrency concept is defining the points in time when the two events become concurrent as well as stop being concurrent.

Part II

Relevance of the Concurrent Delay Concept

Next, it is important for the reader to understand the relevance of the concept as it applies in determining contractual entitlement to cost recovery. The SCL protocol states:^[4]

Where Employer Delay to Completion and Contractor Delay to Completion are concurrent and, as a result of that delay the Contractor incurs additional costs, then the Contractor should only recover compensation if it is able to separate the additional costs caused by the Employer Delay from those caused by the Contractor Delay. If it would have incurred the additional costs in any event as a result of Contractor Delay, the Contractor will not be entitled to recover those additional costs.

The AACEi 29R-03 Recommended Practice further clarifies the issue:^[5]

Typically, when both Contractor and Owner are concurrently responsible for an extended period of performance, the Contractor is granted an extension of contract time without compensation and the Owner forgoes the collection of liquidated/stipulated damages. No time-related compensation flows from either party to the other. Generally, therefore, substantial incentive exists for:

1. The Contractor to demonstrate concurrent excusable delay during a period likely to be considered non-excusable delay; and
2. The Owner to demonstrate concurrent non-excusable delay during a period likely to be considered excusable delay.

Thus, what typically happens in delay claims is that “Owners and Contractors frequently contend that concurrent delays offset each other as a defense to excuse their potential liability to compensate the other party for time related costs.”^[6] So the relevance of concurrent delays is the determination of how much money the owner must pay out in extended overhead costs to the contractor; or, conversely, how many days of liquidated damages (LD) the contractor waived from paying the owner due to concurrency. Like I said, it all revolves around money.

PART III

Key Requirements of Delay to Be Considered “Concurrent”

Before getting into the key requirements, it must be pointed out that the trier of fact, as well as the expert performing the concurrency analysis, must take a step back and look at the situation with a common-sense approach. The SCL protocol points out “that delay analysis is rarely precise down to the day (or even few days). The application of common sense requires that the margin for imprecision should be taken into account in reaching a conclusion on concurrency.”^[7]

As summarized by AACEI’s 29R-03, prerequisite conditions for two or more delays to be categorized as concurrent include:^[8]

1. The delay events are unrelated and independent.
2. The delay events are the contractual responsibility of different parties.
3. The delay events must be involuntary (i.e. no delay event could be a reaction to the other event and therefore contractor is pacing).
4. The delay events must be substantial and not easily curable.
5. The delay events must occur during the same schedule analysis time period (i.e. the same window being analyzed).
6. The delay events must independently delay the critical path(s) or cause a near critical path to become critical (i.e. float erosion).

The Literal vs. Functional Concurrency Theories

The other concept that must be considered when determining if delays are concurrent is the timing of the delay events themselves. “Timing” is then established based on the delay analyst’s chosen theory of either “literal” or “functional” concurrency.

As stated by AACEi 29R-03:

… under the Literal Theory, the delays have to be literally concurrent in time, as in ‘happening at the same time.’ In contrast, under the Functional Theory, the delays need to be occurring within the same analysis period. Of the two, the functional theory is more liberal in identifying and quantifying concurrency since the delays need only occur within the same measurement period, while in the literal theory, only delays require same-time occurrence. The assumption made by the functional theory practitioner is that most delays have the potential of becoming critical, once float on the path on which they resides has been consumed.^[9]

… The difference in outcome between the literal and functional theory is significant. Given the same network model, the literal theory practitioner will find less concurrency — many more compensable delays for both parties. The functional theory practitioner will find many of those delays to be concurrent and hence excusable but, depending on the terms of the contract, non-compensable for both parties.^[10]

In figures 2 and 3, we show an example of the difference in outcome using a functional versus a literal approach to concurrency.

Figure 2: Functional Theory of Concurrency Applied over a Three-Day-Window Analysis Period

Figure 3: Literal Theory of Concurrency Applied over a Three-Day-Window Analysis Period

In Figure 3, using the literal theory, there would be no concurrency since the delays happened on different days (day 5 and day 7). Therefore, the critical path delays would be considered separately: one an “excusable compensable delay” and the other a non-excusable delay (which would therefore also be non-compensable).

The functional theory allows for far more occurrences of concurrency than the literal theory. It also allows for float erosion^[11] on near-critical paths to the point they also become critical and thus are considered in the concurrent delay determination. This concept makes sense, since on a complex project, especially nearing the end of work, there can be numerous parallel critical paths due to the substantial amount of delay affecting them. It would then make sense that the delay expert needs to consider parallel critical paths when evaluating concurrency.

Part IV

Net Effect of Concurrent Delay Combinations

Now that the concept of concurrency has been explained, what is the contractual net effect of two concurrent delays? AACEI 29R-03 also did a nice job in providing a matrix that defines the ultimate conclusion of potential concurrent delay combinations. This, of course, is assuming that the contract being used is not defining the individual events in a different way (e.g., force majeure is excusable non-compensable).

Figure 4: Net Effect Matrix of Concurrent Delay Events^[12]

As can be seen in Figure 4, three potential combinations can result in a net effect delay that is excusable but non-compensable. A suggestion would be for all contract drafters to include a similar matrix in their contracts when defining concurrency, and to indicate if the functional or literal definition will be applied. This may help lessen some confusion and arguments around delay entitlement if an extension of time (EOT) request is issued or liquidated damages are potentially assessed.

What Is the Problem with “Proving” Concurrency?

Why then is it so difficult to prove concurrent delay and convince triers of fact of its legitimacy?

This question actually opens up the conversation more broadly in regard to the “quality” issues that plague projects. If the prerequisites that are necessary to prove concurrent delay are not adequately maintained contemporaneously during the life of a project, an expert will have a difficult time convincing an arbitrator or court that it did exist in hindsight.

Here are some issues that I have encountered in my role as a delay expert to defend or dispute a concurrency argument:

• Lack of Consistent Schedule Updates: The schedules have not been updated in a consistent manner during the course of the project, so developing adequate analysis periods may be very difficult.
• Schedules Do Not Have Integrity: The contemporaneous schedule updates have a host of integrity issues, like numerous open ends, the entire scope of the project has not been represented, lack of a valid critical path, constraints, etc. These make determining the critical and near-critical paths suspect at best and, therefore, determining concurrency almost impossible.
• Lack of Adequate Documentation for Causation: The delay events for concurrency proof must be properly documented, including the exact timing of these events as well as which activities they directly affected. Typically, I have observed poor documentation of delay causation recorded in the project archives.
• Lack of Experience of the Project Team: In addition, more and more team members that are responsible for managing large projects have not been trained in proper contract management and claims resolution processes. Because of this lack of training, the team members typically do not understand how to develop an EOT claim, nor how to perform a proper delay analysis, and may not even understand the types of documentation they are required to maintain to win a successful claim in arbitration or court.
• Inadequate Schedule Analysis Methodology: Either a team member or outside expert who tries to undertake a schedule analysis may not be versed in all the schedule analysis methodologies that exist in the field of forensic delay analysis. Because of this lack of knowledge, he or she typically may apply only the methods they are familiar with, not necessarily the best one in proving a concurrency argument. For example, I have seen the Time Impact Analysis overused in proving concurrency when a more appropriate method, the Windows Analysis, is overlooked simply because the analyst is not familiar with the method.

Conclusion

Hopefully this paper has provided the reader with a better understanding of the concept of concurrent delay, how it is applied, and the difficulties in performing the analysis. Concurrent delay will continue to be a contentious topic because it is intrinsically tied to money. Is the owner entitled to assess liquidated damages, or is the contractor entitled to recover extended overhead costs? The answer depends on concurrency.

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[1] Society of Construction Law Delay and Disruption Protocol, p. 7.

[2] AACEI 29R-03, p. 101.

[3] Ibid., p. 101.

[4] Society of Construction Law Delay and Disruption Protocol, 2nd edition (February 2017).

[5] Ibid., p. 29.

[6] AACEi, Recommended Practice No. 29R-03, “Forensic Schedule Analysis,” revised April 25, 2011.

[7] Society of Construction Law Delay and Disruption Protocol, p. 31.

[8] AACEi 29R-03, pp. 102–103.

[9] Ibid., p. 104.

[10] Ibid., p. 105.

[11] Float erosion means that the float on the near-critical path is reduced due to delays on activities on this path. If the float on the near-critical path is reduced enough to equal the float on the critical path, then the near-critical path also becomes critical.

[12] AACEi 29R-03, p. 111.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates. Adapted from text originally published at International Association of Defense Counsel Midyear Meeting, February 10-15, 2018, La Quinta, California.