Focus On Delay Analysis - Construction Dynamics Solutions

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F R O M T H E I B A I N T E R N A T I O N A L C O N S T R U C T I O N P R O J E C T S C O M M I T T E E OF THEENERGY ENVIRONMENT, NATURAL RESOURCES AND INFRASTRUCTURE LAW SECTION (SEERIL)Vol 13ISSUE 3          ISSN 1819-1371 NOVEMBER 2018Focus on delay analysisWhere are theexpert women?Forensic scheduleanalysis methodsAssessing projectdisruption

CONTENTSA Committee publication from the IBA Energy,Environment, Natural Resources and InfrastructureLaw Section tinyurl.com/IBA-SEERILVol 13 ISSUE 3November 2018FEATURE ARTICLES22322FROM THE EDITORS3FROM THE CO-CHAIRSWhere are the expert women?4FIDIC AROUND THE WORLDSandra Somers discusses the lack of gender diversityin the construction industry as it has been reported bymultiple sources across the globe.4Hungary6Nigeria7Kazakhstan10COUNTRY UPDATES10Good faith: England16Good faith: EgyptForensic schedule analysismethods: reconciliation ofmethodologies different resultsJohn Livengood and Patrick Kelly consider whydifferent forensic schedule analysis methodsproduce different results on the same set of facts.46Construction scheduling: issuesfor lawyersDouglas Stuart Oles shares practical experience that mayassist lawyers when trying to promote the proper use ofconstruction schedules.52Delay analysis: a comparison of theUK and US approachesRob D’Onofrio, Shona Frame and Laura McEwencompare some key aspects of the SCL Protocol andthe ASCE Standard, and consider whether the moreestablished SCL Protocol could learn anything from itscross-Atlantic cousin.61Assessing disruption onconstruction projects – ‘measuredmile’ versus ‘system dynamics’:a comparisonAlexander Voigt, Moneer Khalaf, Adam Clementsand Sam Mattar review major challenges confrontingclaimants seeking to recover disruption damages onconstruction projects as a context for comparing twolost productivity quantifying methods: ‘measuredmile’ and ‘system dynamics’.69Continuity in analysing delayThomas C Long considers how using remainingdurations based on the amount of work that hasbeen done, instead of the amount of time thathas expired, can lead to erroneous results whenanalysing delay. The article further demonstrates howconverting this data can resolve this disparity andbring continuity into the results of a delay analysisInternational Bar Association4th Floor, 10 St Bride Street, LondonEC4A 4AD, United KingdomTel: 44 (0)20 7842 0090Fax: 44 (0)20 7842 0091www.ibanet.orgEditorial: editor@int-bar.orgAdvertising: andrew.webster-dunn@int-bar.org International Bar Association 2018Cover: A skyscraper boom in the City of London, which includes the 278 m (912 ft)22 Bishopsgate, the tallest building ever to be constructed in the Square Mile.Credit: Joe Dunckley Shutterstock.CONSTRUCTION LAW INTERNATIONAL Volume 13 Issue 3 November 2018All rights reserved. No part of this publication may bereproduced or transmitted in any form or any means, or storedin any retrieval system of any nature without the prior writtenpermission of the copyright holder. Application for permissionshould be made to the Director of Content at the IBA address.1

FROM THE EDITORSCOUNTRY UPDATESThe third edition of Construction Law International (CLInt) 2018 includes, in addition to Country Updatesand FIDIC Questionnaires, several feature articles analysing issues relating to schedule, delays andacceleration in construction projects.Two articles were presented at the International Construction Projects (ICP) Working Weekend held inMay 2018 in the Netherlands: one by John Livengood and Patrick M Kelly, who compare the use of differentmethodologies in forensic schedule analyses; and one by Douglas Stuart Oles, who comments on the lawyers’point of view of delay analyses.In addition to the above, Rob D’Onofrio, Shona Frame and Laura McEwen examine the laws applicable todelay issues in the United Kingdom and the United States. Alexander Voigt, Moneer Khalaf, Adam Clementsand Sam Mattar compare two of the most reliable lost productivity quantifying methods, which are the‘measured mile’ method and the ‘system dynamics’ method in relation to disruption damages claims. Finally,Thomas Long discusses methods to ensure continuity in analysing delay.Among the feature articles, this edition also includes an article from Sandra Somers highlighting thelimited involvement of expert women in the construction industry.The Country Updates offer an analysis of the application of the principle of good faith under English law,by Shy Jackson, and Egyptian law, by Waleed El Nemr. The different applications of the principle of goodfaith in common law and civil law jurisdictions is highlighted in these articles.This edition also includes answers to CLInt FIDIC Questionnaire according to three jurisdictions:Hungary, Kazakhstan and Nigeria.We hope that our readers will find this edition highly informative and we invite everyone interested incontributing to CLInt to submit a draft article to CLInt.submissions@int-bar.org.We finally must inform our readers that the second part of Evelien Bruggeman’s article titled ‘Legal aspectsof Building Information Modelling (BIM) in The Netherlands: the procurement of a work with a BIMcomponent’ will be published in the next edition of CLInt (Issue 4). The first part of her article was publishedin the July edition.Virginie ColaiutaICP Committee EditorLMS Legal, Londonvirginie.colaiuta@lmslex.com2CONSTRUCTION LAW INTERNATIONAL Volume 13 Issue 3 November 2018

Credit: WHYFRAME/ShutterstockAlexander VoigtConstructionDynamics Solutions,BarcelonaMoneer KhalafRegional QuantumGlobal Solutions,AmmanAssessing disruption onconstruction projects‘measured mile’ versus ‘systemdynamics’: a comparisonAdam ClementsInnovare ConsultantsSRL, BresciaSam MattarConstructionDynamics Solutions,BeirutThe second edition of the Society of Construction Law ‘Delay andDisruption Protocol’ (2017) (the ‘SCL Protocol’), which is already receivingsome judicial approval,1 continues to hold the ‘measured mile’ as the mostaccepted method for calculating disruption2 – but, for the first time, theSCL Protocol now also refers to the newer method of ‘system dynamics’.This article reviews the major challenges confronting claimants seeking torecover disruption damages on construction projects, including establishingcausation, correctly quantifying damages, ensuring applicability to claimand acceptance in courts or arbitrations, as a context for comparing andcontrasting two of the most reliable lost productivity quantifying methods3– ‘measured mile’ and ‘system dynamics’.Based on this comparison, it is evident that ‘system dynamics’ addressesfundamental issues of causation and quantification established in legalprecedents and authoritative texts on construction law.Claiming for disruption: a long andwinding roadDisruption is defined by the SCL Protocolas:‘[ ] disturbance, hindrance or interruptionto a Contractor’s normal working methods,resulting in lower productivity or efficiencyin the execution of particular work activities.[ ] Work that is carried out with a lowerthan reasonably anticipated productivityrate (i.e. which is disrupted) will leadto: (a) activity delay; or (b) the need foracceleration, such as increasing resources,work faces or working hours, to avoid activitydelay; or (c) a combination of both – andtherefore, in each case, loss and expense.Hence, ‘disruption’ is concerned with ananalysis of the productivity of work activities,irrespective of whether those activities areon the critical path to completion of theworks.’4CONSTRUCTION LAW INTERNATIONAL Volume 13 Issue 3 November 2018Disruption is caused by changes to the project,that is, by unplanned events and conditions thatcould not reasonably have been anticipatedat the time of entering into the contract anddirectly or indirectly affect productivity andquality. The SCL Protocol description alsocaptures, succinctly, difficulties associated withdisruption and its analysis: loss of productivity;overlapping events and conditions; the impactof managerial measures; out-of-sequence work;ripple effects; quality issues; rework and so on.To be entitled to resultant damages, a contractormust address the complex nature of disruptionalong with the requirements stipulated in thecontract, authorities on construction law 5,6 andratified in legal precedents 7,8 namely: Liability: which party bears the contractual/legal responsibility for the disruptive eventsand conditions? Causation: what was the causal linkconnecting the change to the damagesbeing claimed?61

FEATURE ARTICLE Quantify damages: what additional costswere incurred because of the change?By their nature, disruption claims do notallow precise, contemporaneous productivitymeasurement. As Shea9 put it: ‘One of theironic things about loss of productivity claimsis that often the very factors that produce theloss of productivity can also serve to precludethe accurate and precise ology for quantifying such damages.Different methods (outlined in the SCLProtocol10 and AACEI RP25R-03 11) havebeen used to assess disruption onconstruction projects; the very existence ofsuch a broad variety of estimating methodspoints to the challenges faced in claimingfor disruption costs: disruption is not immediately apparentand not contemporaneously documented;and its indirect effects ripple through theproject, and are often felt well after theevent that caused it ended.The literature on the practical shortcomingsof these methodologies is extensive.Gemmell’s recent sur vey 12 targeted atprofessional groups (experts, judges/arbitrators, lawyers and contractors) foundthat 74 per cent of respondents believedthat ‘measured mile’ had been used‘successfully’ less than 50 per cent of thetime – and only 26 per cent of respondentsreported a success rate higher than 50 percent. Given the shortcomings of disruptionanalysis methodologies, the recent inclusionof ‘system dynamics’ in the SCL Protocol istimely. It would be instructive, therefore, tocompare and contrast ‘measured mile’ and‘system dynamics’ on the basis of criteriaderived from such requirements and thecomplex realities encountered in disruptedprojects and in the course of drafting claims.The ‘measured mile’ method‘Measured mile’ analysis is a method ofestimating loss of productivity by comparingthe productivity during an ‘unimpacted’period with that achieved when the projectwas ‘impacted’. The method is applied on anevent-by-event basis, and relies on: the work activities performed and periodsbeing identical (or significantly similar);and the ‘unimpacted’ period being sufficient asa baseline.62Figure 1: a graphical (original) illustration of the measured mile13If these conditions are met, the productivityfrom the ‘unimpacted’ period is comparedto the ‘impacted’ period, with the variancein productivity (delta) considered as due theimpacting event.Systems dynamicsThe SCL protocol describes ‘system dynamics’as:‘[ ] a computer simulation approachusing specialist software to produce amodel of the disrupted project. Thatmodel replicates the complex networkof relationships and interactions thatinfluence labour productivity and reworkincluding the various stages of the project(design, approvals, procurement ormanufacturing, installation, construction,commissioning and taking over), thedifferent parts of the works, workflows andproject participants, and the direct effectsof the claim events.’14As succinctly described above, ‘systemdynamics’ uses simulation models thatcapture the complex network of causalinteractions that connect project activities,decisions and performance. When ‘systemdynamics’ is used in disruption analysis,a simulation model will first be calibratedto produce an ‘as-built’ simulation thatfaithfully matches the recorded historicalperformance of the project, inclusive ofunplanned events and conditions (seeFigure 2).Once an ‘as-built’ model has been developed,a second (‘but-for’) simulation is run, removingthe direct impacts of the unplanned events andconditions are removed. The differenceCONSTRUCTION LAW INTERNATIONAL Volume 13 Issue 3 November 2018

Figure 2: basic steps in the system dynamics modelling processbetween simulations provides the disruption‘quantum’ caused by the unplanned eventsand conditions being considered.Comparison between ‘measuredmile’ and ‘systems dynamics’This section compares how ‘measured mile’and ‘system dynamics’ perform againstcriteria essential for meeting the legal testsfor quantifying damages and establishingcausation in a disruption claim, and thusessential for establishing entitlement andachieving recovery of disruption costs.For clarity, the comparison will bestructured around issues relating to:1. quantifying disruption;2. establishing causation; and3. overall applicability and acceptance ofthe methodologies.Challenge 1: quantifying disruptionQuantifying disr uption properly andholistically relies on the use of productivitydata, accounting for rework, and makingsure that the entire project is considered.Use of productivity dataQuantifying damages is difficult whensupporting documentation and records areinadequate, which is invariably the casein disruption.Quantifying damages in disruption is difficultwhen supporting documentation and records areinadequate.CONSTRUCTION LAW INTERNATIONAL Volume 13 Issue 3 November 2018‘Measured mile’ compares the progress perhour spent that has been achieved during theperiod impacted by a change to that achievedduring an unimpacted period. It then uses theresulting implied loss in productivity toquantify claimable disruption costs. It is basedon an event-by-event comparison of ‘theproductivity on an unimpacted part of thecontract with that achieved on the impactedpart. Such a comparison factors out issuesconcerning unrealistic schedules andinefficient working.’15‘System dynamics’ is substantively different:it derives unimpacted productivity rates fromactual ‘as-built’ efficiency, and from thenumber, timing and nature of the disruptiveevents suffered by the project.Accounting for reworkDisruption does not just stem from losses inproductivity, it is also caused by increases inrework.16 Rework can amount to a significantproportion of construction costs and thisfraction can grow exponentially in massivelydisrupted projects. The complicating factorwhen dealing with rework is that it is oftenincurred long after the causal event. Withouta way of estimating how rework propagatesthrough time, the full disruptive effect of achange cannot be assessed.‘Measured mile’ does not explicitly addressrework, and thus cannot determine whichdisruptive event or condition (either owneror contractor-responsible) caused whatamount of rework.‘System dynamics’ recognises the challengesposed by having to address rework, and putsthe latter at the heart of the �63

FEATURE ARTICLEsimulation models include mathematicalformulations that capture how (and when)rework is created, discovered and executed.Applicability to the whole projectConsidering the number and temporally/spatially ‘expansive’ nature of disruptive events,nearly all areas of the project will be impacted.For this reason, disruption claims should addressthe totality of the works so as to recover the sumtotal of disruption costs suffered.Given also that the ‘measured mile’requires the baseline be ‘unimpacted’, it isevident that the applicability of the methodwould be limited; and almost certainly rarelyable to address the entire project.‘System dynamics’ is based on the abilityof its simulation models to faithfullyreproduce the actual performance ofentire construction projects. To achievethis, models capture ripple effects of causalevents and project decisions, showing howany change eventually impacts allsubsequent areas/period of the project.In brief then:that connect the occurrence of events totheir intricate outcomes, within a set ofinitial conditions.‘Measured mile’ itself does not deal withcausation,17, 18 it simply compares thedifferencebetweenimpactedandunimpacted productivities. To bridge thisgap, proponents of ‘measured mile’ warnabout the need to offer some indication ofcausation and, sometimes, propose tocombine this method with others; forexample, ‘standards’ for productivity lossescaused by certain types of events.19 This is alimitation of the ‘measured mile’ approach.‘System dynamics’ is based on a causalframework that describes how projectconditions, decisions and changes interact,and how these interactions determineproject performance, causing disruption.As such, ‘system dynamics’ can deliverassessmentsforcausalnarrativesexplaining, step-by-step, how they causedthe losses being claimed and how muchany given unplanned event impactedproject productivity.Differentiating disruptive impact by eventChallenge 2: establishing causationQuantification issuesMeasured mileSystem dynamicsUse of productivity dataProductivity losses based on actualproject dataProductivity rates calculated fromcalibrated as-built modelAccounting for reworkDoes not account for reworkRework dynamics are at the heart of themodels usedApplicability to entire projectAnalysis limited to works comparable tothose performed in the ‘unimpacted mile’Models capture disruption across thewhole projectIn disruption claims, it is essential to establisha causal nexus for productivity losses;retrospective reliance on contemporar yrecords to try to establish causation (causeand effect) is inadequate for evidencinga loss of productivity claim because of thevery nature of disruption, such as the rippleeffects and multiple causes that are not readilydemonstrated by documentation.Providing a causal narrativeIt is necessary for a contractor to prove thatan employer’s actions resulted in disruption,and then to prove the effect and costs of thedisruption. This involves an analysis of thesequence of events and the causal processes64A court will not deny a claim for damageson the ground that it is difficult to establishthe exact amount of the loss. However,a contractor has to establish the causeof the losses event by event. Given thatthe inability to separately account forcontractor inefficiency is one of the keycriticisms of global claims,20 it is essentialthat the methods demonstrate the causallink although calculating damages maybe complicated. The ability to attributedisruptive events individually is a criticalrequirement of a robust claim: thus, thedamages being sought are specificallylinked to the events forming the basis ofthe claim.Moreover, as a practical matter, the abilityCONSTRUCTION LAW INTERNATIONAL Volume 13 Issue 3 November 2018

The ability to attribute disruptive events individuallyis a critical requirement of a robust claim.to attribute and assess disruptive eventsindividually allows for greater flexibility inthe analysis, making it faster and easier toadapt to new data or new circumstances(for example, if liability for the disruptionis in fact the contractor’s and not theemployer’s).‘Measured mile’ compares the ‘as-built’productivity with an ‘unimpacted baseline’– and is thus only able to determine thecombined impact of all disruptive eventsthat occurred in the unimpacted period.‘System dynamics’ models are fed withdata describing each disruptive event, andthe analysis process can separately keeptrack of the disruptive impact of each one.The non-linearity of the equations used in‘System dynamic’ simulation models alsoallowsthemtoeffectively(andconsistently) deal with the cumulativeimpact of any combination of any numberof events.Accounting for contractor disruptionSome amount of disruption will always bea contractor’s own responsibility. Thus,assessment of disruption must be able toaccount for this. As aptly stated by LordMacfadyen: 21 ‘If the causal events includeevents for which the defender bears no liability,the effect of upholding the global claim is toimpose on the defender a liability which, inpart, is not legally his. That is unjustified

methodologies in forensic schedule analyses; and one by Douglas Stuart Oles, who comments on the lawyers’ point of view of delay analyses. In addition to the above, Rob D’Onofrio, Shona Frame and Laura McEwen examine the laws applicable to delay issues in the United Kingdom and the United States. Alexander Voigt, Moneer Khalaf, Adam Clements

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