AN INTRODUCTION TO INTRODUCTION
establish a new contract completion
THE DELAY AND In October 2002, the Society of
Construction Law in the United
DISRUPTION PROTOCOL
Kingdom published its Delay and
Michael Rochester Disruption Protocol.
Senior Associate This Protocol is designed to provide
McCullough Robertson guidance on howto deal with claims
for delay and disruption this being
one of the most common areas of
claim and dispute in construction
contracts. The Protocol is not
intended to be a contractual
document nor is it to take
precedence over the terms of a
contract, although it is the Society's
aim that in time construction
contracts will adopt the Protocol as
a means for dealing with delay and
disruption issues.
The Protocol is divided into the
following sections:
Section 1-Core principles in delay
and disruption.
Section 2-Guidance on, the
preparation, of programmes and
records and their subsequent use
forthe management of extensions
of time.
Section 3-Gu ida nce with how to
deal with extension of time
applications during the course of a
project.
Section 4-Guidance on howto
analyse causes of and responsibility
for delay where a project has been
delayed, and the analysis is
conducted afer the project is
completed.
This paper provides an overview of
some of the key features of the
Protocol.
CORE PRINCIPALS IN
DELAY AND DISRUPTION
The Purpose of the
Extension of Time
The purpose of an extension of time
('EOT') is to relieve the contractor of
liability for damages for delay. An
EOT [depending upon the wording
of the contract} does not
automatically bring with it an
entitlement to compensation. For
18 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #89 MARCH/APRIL 2003
the employer the purpose is to
date and prevent time for
completion of the works becoming
'at large'.
An application for an EOT should be
made and dealt with as close in
time as possible to the delaying
event which gives rise to the
application. An assessment of the
contractor's entitlement should be
made no later than one month after
the application has been received
by the contract administrator
[called CA in the Protocol)'
The CAshould assess the
contractor's claim by reference to
the contractor's contractual
entitlement. The CA should not 'wait
and see' what the full effect of an
Employer Risk Event [defined in the
Protocol to be a delaying event at
the employer's risk} has on the
works before dealing with the
contractor's application.
Where the full effect of an
Employer Risk Event cannot be
predicted with certainty at the time
of the initial assessment they CA
should grant an EOT for that part
which be or she can predict. The
EOT should then be considered
when its actual impact can be
determined.
FLoat
The Protocol also offers guidance
on the often controversial question
of who owns float and how it should
be treated in assessing an EOT.
Contractors often claim that they
own float alleging that in planning
how they propose to carry out the
works, they have allowed some
additional time to give themselves
some flexibility in the event that
they are unable to carry out the
works as quickly as planned.
Therefore, it is said that any delay
will erode this additional time and
therefore the contractor should be
entitled to an EOT despite the delay
not resulting in the date for
completion not being met.
The opposing view is that the
contractor shou ld not be entitled to
an EDT, unless the delay will result
in the contract completion date
being missed and therefore the
'project' owns the benefit of any
float.
Float and compensation
Where as with respect to an EDT the
Protocol takes the view that an EDT
should only be granted if the delay
causes the total float to reduce to
below zero, a different view is taken
with respect to prolongation.
Unless, the contract otherwise
provides, the contractor should be
entitled to compensation as a result
of a delay caused by an employer,
notwithstanding that there is no
delay to the contract completion
date. A qualification is placed on
this, and that is that the employer
must be aware of the contractor's
intention to complete the works
priorto the contract completion
date, and that intention is realistic
and achievable.
Mitigation of loss
Consistent with its obligations at
law, the contractor should do all it
reasonably can to avoid the
financial consequences of delay
caused by the employer.
This duty to mitigate has 2 aspects.
Firstly, the contractor must take
reasonable steps to minimise its
loss, and secondly, the contractor
must not take unreasonable steps
that increase its loss.
Global claims
The use of global claims is
discouraged by the Protocol in the
same way in which they are
discou raged by the cou rts. The
failure to maintain sufficient
records establishing the causal link
between the Employer Risk Event
and the resultant loss and/or
expense suffered is not an excuse
to make a global claim.
Head office overheads
The Protocol divides head office
overheads into 2 categories:
1. Dedicated overheads which can
be attributed to the specific
Employer Delay, and
2. Unabsorbed overheads which
are incurred by a contractor
regardless of its volume of work
(e.g. rent and salaries).
For the contractor to recover
unabsorbed overheads, it must
demonstrate that:
1. It has failed to recover the
overheads it could reasonably have
expected during the period of
prolongation, and
2. It has been unable to recover
such overheads because its
resources had been tied up by
Employer Risk Events.
If the unabsorbed overheads
cannot be quantified, then a
formula may be used. The Protocol
does however express the use of
such formulae with caution noting
that they are a tool for the
quantification of loss and do not
relieve the contractor from the
burden of proving its loss. The
Protocol does not support the use
of the Hudson formula, claiming
that it results in double counting as
it is derived from a numberwhich
itself contains an element of head
office overheads and profit. The
Eichlay or Emden formulae are
preferred.
Acceleration
Compensation for acceleration is
assessed in accordance with the
contract or if the contract does not
provide for acceleration, as agreed
between the parties. In both
instances, the contractor is not
entitled to claim prolongation
compensation forthe period of
Employer Delay avoided by the
acceleration measures.
Claims for so called 'Constructive
Acceleration', where a contractor
makes a claim that it had to
undertake accelerative measures
due to not receiving an EDT, are not
recommended. There is no clear
acceptance of such a claim in, both
AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #89 MARCH/APRIL 2003 19
The approach adopted by the
Protocol is that float is not
for the exclusive use or
benefit of the either the
employer orthe contractor
and that an EOT should only
be granted if the Employer
Delay is critical to meeting
the contract completion date.
20 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #89 MARCH/APRIL 2003
English and Australian law. The
Protocol recommends that priorto
undertaking any accelerative
measures, the parties resolve the
disputed EOT in accordance with the
procedure laid out in the contract.
This suggestion is likely to be
unrealistic given the time it may
take to resolve a dispute and the
often urgent need to overcome the
effect of delays.
Disruption
The Protocol defines disruption as
the loss of productivity, disturbance,
hindrance or interruption to
progress and distinguishes it from
delaywhich is lateness.
Disruption to construction work may
lead to late completion of the work,
but this is not necessarily so. It is
possible forwork to be disrupted
and for the contract still to finish by
the contract completion date. The
contractor will not have a claim for
an EOT due to disruption, but may
have a claim for the cost of the
reduced efficiency of its workforce if
the employer has caused the
disruption.
It is claimed that there is unfairness
in both views. The approach
adopted by the Protocol is that float
is not forthe exclusive use or
benefit of the either the employer
or the contractor and that an EOT
should only be granted if the
Employer Delay is critical to
meeting the contract completion
date. Therefore a contractor has no
entitlement to an EOT merely
because an Employer Risk Event
prevents the contractor from
completing the works earlierthan
the contract completion date or it
delays the contractor's progress.
This aspect of the Protocol has
been the most criticised.' Critics
have suggested that this view is
unlikely to be welcomed by
contractors especially where they
have built the float into the program
fortheirown use when required.
Concurrency
The view adopted by the Protocol is
that where delays caused by the
contractor occur concurrentlywith
delays caused by the employer, the
contractor's concurrent delay
should not reduce any EOT due.
This view is contrary as to how
AS2124-1992 (clause 35.5) deals
with this issue.
The Protocol adopts the same view
where Employer Risk Events and
Contractor Risk Events occur
sequentially but have concurrent
effects.
The Protocol's view is said to be
consistent with its approach of
assessing the entitlement to an EOT
at the time each delay event occurs.
By assessing each delay event
separately, the Protocol claims that
it avoids arguments aboutwhether
the 'prevention principle' applies.
This principle will prevent an
employerfrom levying liquidated
damages against a contractor, if the
employer bas been the cause of the
contractor's delay. The Protocol
claims that this avoids the
argument of whether an Employer
Delay that acts concu rrently with a
Contractor Delay actually hinders
the progress of a contractor in any
way.
Mitigation
The contractor is required under the
Protocol, to mitigate the effect on
its works of any Employer Risk
Events, but that duty does not
extend to requiring the Contractor
to take acceleration measures such
as adding extra resources orto
work outside its planned working
hours.
Compensation for delay
The recoverability of compensation
for prolongation depends upon the
terms of the contract and the cause
of the prolongation.
Compensation for prolongation
should not be paid for anything
otherthan work actually done, time
taken up or loss and/or expense
actual actually suffered. The when the effect of the Employer
damage must therefore be 'actual'. Risk Event was 'felt' by the
contractor and not be reference to
The Protocol recommends that the
the extended period at the end of
contract should contain an agreed
the contract. Therefore if a
amount that can be applied to each
contractor was delayed by 3 days
day of prolongation. It
during the contract; the
acknowledges that there should be
prolongation is assessed when that
a different agreed amount to be
delay is incured during the contract,
applied, depending on the stage of
not by assessing what is the cost of
the project where the delay occurs.
3 additional days to the end of the
This overcomes the criticism of
contract.
agreed amounts which are often
calculated by reference to a daily Disruption claims are brought
overhead cost. This overhead cost pursuant to either:
often fluctuates at different times in
1. a specific clause in the contract
the project meaning either a
(a lthoug h it is ra re to see such a
windfall or a loss to the contractor.
clause); or
If the prolongation is caused by a
2. breach of the implied term that
variation then the Protocol
the employer will not prevent or
recommends that the
hinder the contractor in the
compensation for prolongation is
execution of its work.
valued as part of valuing a
variation. Contractor's often claim Like delay, disruption has to be
that such costs should form part of established in the normal cause
the variation by relying on for and effect manner and is not just
example, clause 40.5[f) of AS2124- the difference between what
1992, despite the express valuation actually happened and what the
clause for delay costs in clause 36 contractor planned to happen.
of that contract. The Protocol claims that the most
Concurrency and appropriate way to establish
disruption is to apply the 'Measured
prolongation
Mile' technique. This technique
Unlike the assessment of an EOT if
compares the productivity achieved
there are concurrent delays, the'
on an unimpacted part of the
Protocol states that if the contractor
contract, with that achieved on the
incur additional costs for delays
impacted part. The comparison is
caused by both the employer and
often used byway of man hours
the contractor, then the contractor
expended orthe units of work
should only recover compensation
performed. The Protocol cautions
if it is able to separate the
that care must be taken so that the
additional costs caused by the
2 periods which are compared are
employer from those caused by the
like periods. It cites the example
contractor. If the contractor would
that it would not be correct to
have incurred the additional costs in
compare work carried out in the
any event as a result of the
learning curve part of an operation
contractor delays, the contractor
with work executed after that
will not be entitled to recover those
period.
additional costs. This approach is
sensible and consistent with the If the Measure Mile approach is
usual principles of assessing unsuitable, then the Protocol
damages. suggests:

When are prolongation 1. a comparison of productivity on

costs to be assessed? other contracts undertaken by the
The Protocol recommends that contractor, provided that sufficient
prolongation costs be assessed records from the other contracts

AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #89 MARCH/APRIL 2003 21

 are available so as to ensure that
the comparison is on a like for like
basis; and
2. model productivity curves and
factors, such as those prepared by
the US Army Corp of Engineers,
Chartered Institute of Building, etc.
Both methods in the writer's view
will need to be used with some
caution, given the necessity to prove
cause and effect.
The contractor must keep good
records so that the CA can assess
disruption and also so that matters
which can affect productivity, but
are unrelated to the employer's
liability are isolated, such as
weather, plant breakdowns, dilution
of supervision, contractor
management and acceleration.
GUIDELINES ON
PREPARING AND
MAINTAINING PROGRAMS
AND RECORDS
The Protocol states, what is
submitted is a correct proposition,
that many EOT disputes would be
avoided if the parties properly
monitored and recorded progress
of the works during the course of
construction.
The most important tool for doing
this is the program. The Protocol
recommends that an agreement be
reached between the parties as
early as possible concerning:
1. the form the prog ra m shou ld
take;
2. how the program interacts with
any method statement describing in
detail how the contractor intends to
construct the works and the
resou rces it intends to use to do so;
3. the time within which the
Contractor should submit a draft
program for acceptance (called the
Accepted Program) and the
mechanism bywhich that program,
is to be accepted;
4. requirements for updating and
saving the Accepted Program
22 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #89 MARCH/APRIL 2003
(consequently referred to as the
Updated Program).
The Accepted Program, should be
updated with actual progress at
intervals of no longerthan 1 month.
Actual progress should be
recorded by means of actual start
and actual finish date for activities,
together with a percentage
completion of currently
uncompleted activities and/or the
extent of remaining activity
durations. Each monthly Updated
Prog ra m shou ld be saved so as to
provide contemporaneous evidence
of what happened on the project in
case of dispute.
In addition to the program the
Protocol recommends that the
parties reach a clear agreement on
the records to be kept throughout
the project. Recommended clauses
as to the kind of records to be kept
are contained in the Protocol.
GUIDELINES FOR DEALING
WITH EXTENSIONS OF TIME
DURING THE COURSE OF
THE PROJECT
The Protocol makes a somewhat
obvious statement that all the
requirements of the conditions of
contract relating to the application
for and the granting of extensions of
time should be followed strictly.
In addition to what may be required
under the contract, the Protocol
suggests that a contractor submit a
'sub-network' which can be inserted
into the updated program. A sub-
network shows the actual or
anticipated effect of the Employer
Risk Event and its linkage into the
Updated Program. An example is
given for a variation with the sub-
network comprising the instruction
for the variation, the activities
required to carry out that variation
and its linkage to the updated
Program.
The amount of any EOT should be
assessed by undertaking the
following steps:
1. the program should be brought
fully up to date to the point
immediately before the occurrence
of the Employer Risk Event;
2. the program should then be
modified so as to reflect the
contractor's realistic and achievable
plans to recover any delays that
have occu rred;
3. the sub-network representing
the Employer Risk Event should
then, be entered into the program;
and
4. the impact on the contract
completion date should be noted.
The Protocol notes that although
the program should be primary tool
fordetermination, in orderto
ensure that the EDT is fair and
reasonable it should be used in
conjunction with whatever
contemporary evidence is available.
GUIDELINES ON DEALING
WITH DISPUTED
EXTENSION OF TIMES
AFTER COMPLETION OF
THE PROJECT-
RETROSPECTIVE DELAY
ANALYSIS
If the parties have otherwise
complied with the Protocol, then
any retrospective analysis of the
impact of delaying events should be
relatively simple. If not, then the
extent and success to which a
retrospective analysis can be done
will be dictated by the relevant
conditions of contract, the nature of
the course of events, the value of
the dispute, the time available, the
records available and the program
information available.
The Protocol makes the following
comments about the most
commonly used forms of
retrospective analysis:
1. As-planned versus as-built
analysis. This can be used for
identifying delays to progress, but is
restricted by its inability to identify
concurrency, re-sequencing,
mitigation or acceleration.
2. Impacted as planned is based There has been some comment
on the effect of Employer Risk that adoption of the Protocol will
Events on the planned program of cause an increase in the required
work. The usefulness of this level of record keeping and
technique is restricted due to the administration. It has also been
theoretical nature of the predicted stated that the Protocol requires
delays that are determined by its the constant use (and therefore
use. expense) of programmers. The
costs involved in administration and
3. Collapsed as-built is based on
programming need to be
the effect of Employer Risk Events
considered in determining whether
on the program of work as it was
to adopt the Protoco1. 2 Such
actually built. It suffers from the
comments have some validity but
same problems as the as-planned
the costs incurred in retrospectively
versus the as-built method.
analysing delay or formulating a
4. Time impact analysis is based claim in the absence of good
on the effect of delay events on the records and programs must also be
contractor's intentions for the futu re considered.
conduct of the work in the light of
A copy of the Protocol can be
progress actually achieved at the
obtained at the Society's web site,
time of the delay event. The
www.scl.org.uk.
Protocol claims that this is the best
technique for determining the REFERENCES
amount of EDT, although 1. See Sims 'A Landmark Protocol
acknowledged as the most time but Fundamentally Flawed'
consuming and costlywhen Building Magazine 1 November
performed forensically. 2002.
The Protocol recommends that if a 2. See for example, Russell
retrospective delay analysis is to be 'Valuing Delay and Disruption'
performed, that the parties agree Electrical Times December 2002
upon the method to be used. and Birkby RIBAJournal
December 2002.
In determining an EDT, any
adjudicator, judge or arbitrator
should so far as it is practicable put
him or herself in the position of the
CA at the time the Employer Risk
Event occurred. By doing so, he or
she should then determine what (if
any) EDT entitlement could or
should have been recognised by the
CA at that time. This may result in a
different conclusion than that
shown on the as-built program.
CONCLUSION
Althoug h not without its critics, the
Society of Construction Law should
be commended on providing
guidance on this often troublesome
topic. Some of the concepts in the
Protocol do not automatically
translate into the terms of
Australian contracts (for example
concurrency) but practical advice
and application can be found in the
Protocol.
AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #89 MARCH/APRIL 2003 23