Three types of Delays in a Construction Project

An important preliminary stage of Delay Analysis involves classifying the delays into certain groups, based on their types.

As per common construction contracts in Australia (the AS4000 suite of contracts, GC21 etc.), delays to construction projects can be classified into the following categories:

1. Contractor’s Delays – causes of delays are wholly within the responsibility of the Contractor;

2. Neutral Delays – causes of delays for which the responsibility is ‘shared’ between the Contractor and the Principal; and

3. Principal’s Delays – causes of delays are wholly within the responsibility of the Principal.
   
   

CONSEQUENCES OF DELAYS

*Extension of Time (EOTs) to the Date for Practical Completion are measured in working days.

**Delay Costs or Damages are usually calculated based on a rate per day.

The consequences of neutral delays are shared so that the Contractor suffers as there is no cover for its preliminary costs, however relief from Liquidated damages (LDs) is granted.

The Principal suffers as it is getting the project later, without compensation.

EXAMPLES OF CAUSES OF DELAYS

Contractor Delays:

• Lack of proper planning and programming

• Poor management

• Subcontractors’ performance

• Scope / complexity underestimated

• Shortage / unavailability of resources

• Late supply of materials

Neutral Delays:

• Inclement weather

• Industrial Conditions

Principal Delays:

• Principal’s breach, act, omission etc.

• Principal’s variations

• Principal’s suspension

• Slow decision making / approvals

• Lack or delayed payments

• Design (for construction only contracts)

• Latent Conditions / Hazardous Materials
  
  

COMPLICATING FACTORS

There are some factors that may complicate the ‘first principles’ analysis of delays based on the types listed above, including:

• Amendments to the original contracts. The original contracts were written in a balanced way, taking the interests of both parties (Contractor and Principal) into account. However, these contracts are often being amended by the Principal’s solicitors. Such amendments can substantially influence the classification of delays and their consequences.

• Concurrency of delays. Sometimes, there are concurrent delays i.e. several delays belonging to different groups (or more accurately causes of delays) happening at the same time. Contractor’s delays can be concurrent with Neutral delays, Neutral delays can be concurrent with Principal’s delays and Contractor’s delays can be concurrent with Principal’s delays (or even the three types of delays can all happen at the same time).

• Primary and Secondary causes of delays. Sometimes a delay which belongs to one group of delays causes a secondary delay, which belongs to a different type. For example, I remember a case many years ago whereby the Contractor complained about delays to stormwater design (Principal’s delay). Subsequently, there was a day of heavy rain (Neutral delay), which caused massive damages and exacerbated the delays because the stormwater design was not finalised.

• Criticality / Non-criticality of delays. A certain activity in the programme can be impacted by multiple delays, which belong to more than one group. A programming analysis would be required to establish exactly when the activity became critical to determine whether certain delays effected the activity whilst it was non-critical whether other delays affected the activity whilst it was critical.

• Delay allowances. The parties may agree on certain number of days as a ‘delay allowance’, usually for specified reason. By way of example, the Contract provisions may include a 10 days delay allowance for inclement weather. Such an allowance ‘splits’ the consequences of inclement weather delays, with the first 10 days being a Contractor’s delays and the remaining number of days Neutral delays.

For further advice and delay analysis please contact us