Delay Recovery Programmes and EOT - Not Such a Bad Fit?

A common issue for Contractor's during the later stages of a project which is running late, is whether or not to prepare a Delay Recovery Programme without instruction from the Employer. Part of this stems from concern that by squeezing the time for remaining works, the Contractor may negatively impact its otherwise valid entitlement to EOT. But is that actually the case?

This issue was considered in the English case of Brompton Hospital v Hammond [2000] and provides an insight into how the Courts might address entitlement to EOT where the Contractor, having been responsible for substantial delay, re-programmes its works to recover some of the lost time, but is then delayed by the Employer. Whilst the case was principally concerned with whether the Architect had acted negligently by being overly generous in assessing EOT, it has much to say about delay recovery programmes and mitigation. The figure below helps summarise just what happened.

The basic chronology

The project involved construction of a 6 storey hospital in London under the standard JCT (1980) form of Contract. The original construction period was 28 months (see Step-1). However, by Month-23 the project was reported to be 41 weeks behind schedule primarily due to a series of Contractor Delays (see Step-2). At this time the Contractor prepared a Delay Recovery Programme showing that it could complete the works only 30 weeks late. This was a potential saving of 11 weeks (see Step-3). However the project continued to suffer as a result of various Employer Delays and the project was eventually complete 43 weeks late (see Step-4).

The Architect ultimately awarded 43 weeks EOT for Employer Delays, of which about 85% occurred after the Delay Recovery Programme was produced, and after the Contractor was already reporting progress to be 41 weeks behind the original schedule.

The Employers' contention

The Employer, attempting to show that the Architect had been over generous awarding EOT, pointed out some obvious facts.

The first of these was that by Month-23 the project was already 41 weeks late as a result of Contractor Delays. Secondly, when compared to the Delay Recovery Programme, the project only finished 13 weeks late. In other words the Contractor's entitlement to EOT was somewhere between 0 and 13 weeks (as a maximum!). In the Employer's view it was therefore completely illogical for the Contractor to get a full EOT of 43 weeks, or indeed anything more than 13 weeks.

The Courts' findings

The Court however rejected such arguments and stated that:-

"The validity of the point depends....upon the assumption that it was either not open to [the Contractor] to seek to improve upon the [Delay Recovery Programme], or that, as a practical matter, it was impossible for [the Contractor] to do so. For reasons which I have given above I do not consider that assumption to be a proper one to make".

It went on to say that:-

"....an extension of time could be justified if a contractor was prevented from recovering lost time by the occurrence of a Relevant Event".

Ultimately the Court held that the Architect acted fairly and reasonably in granting 38 weeks EOT, out of the total overrun of 43 weeks.

On the face of it this might appear to be a surprising result. Indeed the Employer's arguments seem to be pretty powerful. But this is only before one investigates the 'nitty gritty' contained within the underlying facts and reasoning of the Court with respect to each delaying event, relative to the actual progress on-site. When this is done it becomes clear that the Court essentially undertook a time-impact approach to analyse the impact of delaying events at the time they actually occurred. This approach bore out that the Contractor was in reality progressing its works faster than necessary to meet the Delay Recovery Programme. As such it could have completed the project a lot earlier than forecast in the Delay Recovery Programme but-for the Employer's interference.

Conclusion

So what can we take out of this case?

Firstly it would seem that if a Contractor is in delay up to a certain point, revises its programme to mitigate this delay and the Employer then causes further delays, the EOT for these Employer Delays should be measured by reference to the delay recovery programme. The governing principle being that an EOT could be justified if the Contractor was 'prevented from recovering lost time' by the occurrence of an Employer Delay Event.

Secondly, if the Contractor in such a scenario can show that its actual rate of progress is better than required under the delay recovery programme, then this may lead to an uplift in its entitlement to EOT for an Employer Delay Event affecting the works at that time. Thus the concept of lost opportunity appears to extend well beyond the limits of the Contractor's own best estimate set out in its delay recovery programme. In other words EOT claims may not be limited to measuring actual delay against the original programme, or indeed the delay recovery programme.

Thirdly, delays should be analysed in detail relative to the progress of the works at the time they occur, e.g. via the time-impact or windows methods. In contrast, alternative techniques where as-built data is simply compared to the original plan may not demonstrate the full extent of 'likely' delay to critical path activities and ultimately the date for completion.

Lastly, there is considerable value in Contractors preparing delay recovery programmes in the situation where they are culpable for significant delays during the early stages of a project.