Construction Delays: Understanding Them Clearly, Analyzing Them Correctly

265 Pages·2009·14.48 MB·English

by  Theodore J. Trauner

Elsevier Butterworth–Heinemann
30 Corporate Drive, Suite 400, Burlington, MA 01803, USA
525 B Street, Suite 1900, San Diego, California 92101-4495, USA
84 Theobald’s Road, London WC1X 8RR, UK
This book is printed on acid-free paper.
Copyright © 2009 Ted Trauner. Published by Elsevier Inc. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means,
electronic or mechanical, including photocopy, recording, or any information storage and retrieval
system, without permission in writing from the publisher.
Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in
Oxford, UK: phone: [phone], fax: [phone], E-mail: permissions@elsevier.
co.uk. You may also complete your request on-line via the Elsevier homepage (http://elsevier.
com), by selecting “Customer Support” and then “Obtaining Permissions.”
Library of Congress Cataloging-in-Publication Data
Trauner, Theodore J.
Construction delays : documenting causes, winning claims, and recovering
costs / Theodore J. Trauner. – 2nd ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-85617-677-4 (hardcover : alk. paper)
1. Construction industry–Management. 2. Production scheduling. I. Title.
TH438.T727 2009
692–dc22 2009008998
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN 13: 978-1-85617-677-4
For all information on all Elsevier Butterworth-Heinemann publications
visit our Web site at www.elsevierdirect.com
Printed in the United States of America
09 10 9 8 7 6 5 4 3 2 1
Dedication
This book is dedicated to the staff of Trauner Consulting Services, Inc. Their
efforts have been an essential part of the research required for this book. Over
the years, the staff of Trauner Consulting Services has invested countless hours
studying construction delays, learning the nuances of scheduling software,
and continuously questioning the approach to a delay analysis with the goal of
providing analytically correct and objective assessment of construction delays.
v
Foreword
This book was first written and published in 1990. Over the past 19 years, we
have received significant positive feedback on the contents of the book. As part of
that feedback process, readers have asked questions and made suggestions con-
cerning the content. For that reason, we decided to prepare this second edition.
We trust that many of those questions will be answered in the new edition and that
we will provide more examples of the proper approach to analyzing delays. Also,
scheduling software has become far more powerful. As a consequence, some of
the scheduling “rules” are no longer sacrosanct. The power of the software has
allowed schedules to expand far beyond the basic “forward and backward pass”
days when Critical Path Method (CPM) scheduling was created. For this second
reason, we decided to update the information to reflect the subtle and significant
changes that one may see when reviewing or analyzing a schedule. We will note
the areas where the software may have an effect on how one assesses a schedule
and determines the critical path. We have also incorporated more examples and
more complex examples. Our first edition kept the information as simple as pos-
sible because we wanted our audience to be as broad as possible and still allow
everyone to gain a clear understanding of delay analysis. But as the software has
grown in power, so, too, has the understanding of our readers. CPM scheduling is
far more commonplace in the industry and much better understood.
When a construction Project is delayed beyond the Contract completion date
or beyond the Contractor’s scheduled completion date, significant additional
costs can be experienced by the Contractor, the Owner, or both. Because Contract
schedules are so important and delays can be so costly, more and more projects
end up in arbitration, litigation, or some form of dispute concerning time-related
questions. A judge, jurors, or arbitrators are then faced with the task of sorting
out who is to blame from a complex collection of facts and dates. Oftentimes,
experts are required both to perform an analysis of the delays that occurred and
to provide testimony to explain the analysis. One of the most difficult tasks of the
expert is to educate the parties involved so that an understanding can be reached
concerning the delays that occurred and who is responsible for them.
This book provides the background information necessary to understand
delays. This understanding is not geared solely to the context of disputes but
rather provides a framework to help prevent disputes from occurring and to
resolve questions of time as they arise during the Project.
Chapter 1, “Project Scheduling,” provides an overview and definitions of
basic scheduling concepts and terms that will be referred to throughout the book.
It is not intended as a CPM scheduling primer. Rather, it addresses important
xi
xii Foreword
basic concepts required for using Project schedules. Key elements include float,
reviewing and approving schedules, the critical path, and early completion
schedules.
Chapter 2, “Types of Construction Delays,” explains the basic categories of
excusable and nonexcusable delays and the subcategories of compensable and
noncompensable delays. It addresses the concept of concurrency and also non-
critical delays. This primer in delays prepares the reader for the specific issues
covered in succeeding chapters.
Chapter 3, “Measuring Delays—the Basics,” explains how to approach the
analysis, including the starting points of as-planned schedules and as-built dia-
grams and how one must compare the two in order to quantify the delays that
have occurred. The question of liability is addressed separately, since this deter-
mination is made most expeditiously after the specific delays have been identi-
fied. Chapter 4, 5 and 6 travel through the actual process of analyzing delays
with bar charts, CPMs, and no schedule.
Recognizing that there are numerous approaches used in analyzing delays,
Chapter 7 comments on some of the more common approaches used and the
strengths and weaknesses associated with them.
Damages to the Owner and Contractor are addressed in Chapters 8 through 13.
Since inefficiency and acceleration costs are often time-related issues associated
with delay, they have been addressed separately in the hopes that some of the myth
and magic that surrounds them may be cleared away. Similarly, the topic of costs
associated with noncritical delays has been given special attention, since many proj-
ects experience these with little or no recognition of the problem.
Chapter 14, “Determining Responsibility for Delay,” explains the process
used to assess the party who caused the delay. The responsibility for delays is
addressed separately from the delay analysis because we believe that this is the
proper approach to use: first determine the activities that are delayed and the
magnitude of the delay and then address responsibility or liability.
Chapter 15, “Risk Management,” could also be called “Prevention of Time-
Related Problems,” since it focuses on the delay-related risks of the various par-
ties in a construction Project. By maintaining this focus, each of the parties has a
tendency to better control time and resolve delay problems as they occur.
This book has been written with the hope that a better understanding of
delays, time extensions, and delay costs will help to prevent problems rather
than foster and fuel the already litigious atmosphere that exists in construction.
Bear in mind that the methodology described herein can be applied to any
type of Project that (1) has a time constraint and (2) is amenable to schedul-
ing and the monitoring and control of time. This category could include sup-
ply contracts, manufacturing projects, and research and development projects,
as well as traditional construction projects. The approach will be the same for
all situations, given a logical and reasoned application within the context of the
existing facts.
Acknowledgments
The authors wish to acknowledge the following individuals whose writing
efforts are reflected throughout this book and whose research and dedication
brought this revised edition to fruition: John Crane, Sid Scott, Rocco Vespe,
Linda Konrath, Anthony Ardito, and Geoff Page. Special recognition goes to
Janet Montgomery for creating the graphics and coordinating this book.
xiii
Introduction to
Second Edition
Construction is risky business. And while today’s construction projects may be
safer than they were in the past, the financial risks continue to be great. Today’s
construction projects are bid under fierce competition with little margin and
require the coordination of many trades under demanding conditions and chal-
lenging time frames. Often, everything does not go according to plan, and the
parties to the construction Contract find themselves at odds.
Many of the risks that Owners and Contractors face can affect construction
time. And the cost of a lost day on a construction Project may be staggering.
Unfortunately, the effects on construction time can be difficult to isolate, iden-
tify, and quantify. This is true despite the fact that the construction process has
employed “modern” scheduling techniques for nearly half a century. More sur-
prisingly, even though the power and capabilities of scheduling software have
increased considerably in recent years, identifying and accurately quantifying
construction delays continues to challenge even the best Project Managers.
While the parties’ management teams are able to analyze and assess most
factors related to a change, the effect on construction time remains difficult to
understand and accurately measure. And so, even though the parties can often
reach compromises related to most aspects of a change, it is the delay compo-
nent that often prevents settlement. As a result, most construction claims include
a component related to delays. Because the expertise required to reliably and
convincingly assess delays and delay damages often goes beyond that of the par-
ticipants, experts are hired to analyze delays for mediation and trial.
This book addresses the topic of construction delays, the resulting effects,
and damages. This is a timely subject, since the failure to meet schedules can
result in serious consequences with unprecedented cost implications. The finan-
cial significance of delays demands that the Project Owner, General Contractor,
Construction Manager, Designer, and Subcontractors educate themselves regard-
ing delays and the associated added costs. This book is designed to serve as a
primer for that education process. Too many texts on this subject focus on the
legal perspective, using legal language. This book is intended as a practical,
hands-on guide to an area of construction that is not well understood.
All construction industry professionals should know the basic types of
delays and understand the situations that give rise to entitlement to additional
compensation. Most important, they should understand how a Project schedule
xv
xvi Introduction to Second Edition
and Project documentation can be used to determine whether a delay occurred,
quantify the delay, and assess the cause of the delay. Furthermore, construc-
tion professionals should be able to assess the delay’s effects on the Project and
quantify any costs or damages.
Many techniques are used to analyze delays. Some of these methods have
inherent weaknesses and should be avoided. This book points out the shortcom-
ings of these faulty methods and explains how a delay analysis should be per-
formed. It then describes—specifically—how the analysis is done with CPM
schedules. The discussion will cover the subtleties of the process, such as shifts
in the critical path and noncritical delays.
The subject of damages is covered in detail, including the major catego-
ries of extended field overhead and unabsorbed home office overhead costs.
Likewise, the damages suffered by the Owner, either actual or liquidated, are
also explained.
Finally, a chapter is devoted to managing the risk of delays and time exten-
sions from the viewpoints of the various parties to a construction Project.
A discussion of early completion schedules and constructive acceleration is also
included.
The authors’ substantial experience analyzing delays and quantifying dam-
ages provides the readers with numerous benefits, including the following:
●●A clear, concise definition of the major types of delays
●●A simple, practical explanation of how delays must be analyzed
●●A detailed explanation of how delays are defined and quantified for
projects with CPM schedules, bar charts, or no schedule at all
●●A glimpse of some of the less obvious problems associated with delays,
such as delays to noncritical activities
●●An understanding of the shortcomings of some delay analysis methods
that may not provide reliable results
●●A detailed understanding of the various areas where costs can increase
and how to calculate these costs
●●An understanding of the risks that delays present to various parties to the
Project, and how each of those parties can manage those risks
An explanation of delays and delay damages, presented in a straightforward,
accessible manner, should be useful to public and private Owners, Construction
Managers, General Contractors, Subcontractors, Designers, suppliers, and
attorneys whose work involves them in the construction industry.
Chapter | one
Project Scheduling
The ProjeCT SChedule
If we were to ask a Contractor, a construction Owner, or an Architect if they
plan their construction projects, undoubtedly they would respond affirmatively.
At the inception of a Project, everyone has some form of a plan as to how the
work will be executed. That plan will incorporate many different elements such
as the number of workers, the types of trades and Subcontractors, the physical
aspects of the Project that affect the sequence of the work, the availability of
materials, and the time required to perform the different tasks. While this list of
factors that should be incorporated into a plan can be expanded, the concept is
pretty straightforward: All elements that relate to the execution of a construction
Project should be considered during the planning stage.
A Project schedule is a written or graphical representation of the Contractor’s
plan for completing a construction Project that emphasizes the elements of time
and sequence. The plan will typically identify the major work items (activities)
and depict the sequence (logic) in which these work items will be constructed
to complete the Project. At its most basic level, a Project schedule will visually
illustrate the intended timing of the major work items necessary to demonstrate
how and when the Contractor will construct the Project.
The Project schedule should include every element of the Project sequenced
in a logical order from the beginning of the Project through completion. In addi-
tion, the schedule should define specific time periods for each activity in the
schedule. The sequencing and summation of the individual time elements will
define the overall Project duration. The level of detail shown in a construction
schedule will vary, depending on a number of different factors. Those factors
include, but are not limited to, the type of schedule used, the Contract require-
ments, the nature of the work, the Contractor’s practices, and so on.
Overall, the Project schedule should portray in a clear fashion the con-
struction tasks that must be performed, the time allocated to each task, and the
sequence of the tasks.
© 2009 Ted Trauner.
Published by Elsevier Inc. All rights reserved.
1
2 Project Scheduling
The PurPoSe of a ProjeCT SChedule
Just as a bid is an estimate of the costs required to construct a Project, the
Project schedule is an estimate of the time required to construct the Project.
A Project schedule is a valuable Project control tool that is used by success-
ful Project Managers to effectively manage construction projects. As noted
earlier, the Project schedule should include every element of the construction
Project. As such, it is the primary document in the Project record that can
provide a detailed picture of the Project’s planned construction sequence. If
a Project schedule is properly developed and updated throughout the dura-
tion of the Project, then it will provide periodic snapshots of the plan to com-
plete the Project, as it may change over time. If this Project control tool is
used properly, it will depict the construction plan to the Project participants,
allow management to control and measure the pace of the work, and provide
the participants with the information to make timely decisions.
effectively depicting and Communicating
the Construction Plan
Successful Contractors use Project schedules to depict and communicate the
construction plan among the Subcontractors and other Project participants.
The development of the construction plan should be a collaborative pro-
cess that includes the General Contractor and its Subcontractors. Involving
the Subcontractors in the development of the construction plan/schedule, will
significantly facilitate acceptance by the Subcontractors of the overall approach
to build the Project. Additionally, incorporation of the Subcontractors’ means
and methods will strengthen the validity of the Project schedule as a tool that
accurately depicts the planned construction sequence.
Once the General Contractor has a Project schedule that it believes is
an accurate representation of the construction plan, the General Contractor
should share the schedule with the Owner to demonstrate its plan and
to inform the Owner when it will need to perform its obligations, which
may include the review and approval of shop drawings and submittals and
inspection of the work. Effectively communicating the work plan to all par-
ties involved is not only a sound Project management practice, but it also
promotes a culture of cooperation and partnering.
Additionally, a properly updated Project schedule will also docu-
ment changes in the Contractor’s plan to complete the Project. Successful
Contractors and Owners know that, as a Project progresses, they may encoun-
ter unexpected problems or issues. In response to these, the Contractor may
need to alter portions of its construction plan, such as its work sequence, crew
sizes, and operating hours. Project schedules should be periodically updated
to reflect the Contractor’s then current construction plan. These updates will
provide snapshots of the Contractor’s plan as it changes during the course of
the Project.
Types of Project Schedules 3
Control and Measure the Work
A Project schedule that is properly and periodically updated throughout the life
of the Project will enable the General Contractor and Owner to accurately track
and measure the Project’s progress. Controlling and measuring the work hap-
pen at different levels. If the General Contractor has included its Subcontractors
in the planning process, then it will be in a better position to track and enforce
the agreed upon sequencing and work durations depicted in the schedule. In
the same vein, the Owner should also use the schedule to track the Contractor’s
progress and keep the stakeholders informed of the Project’s status.
Timely decisions
In addition to tracking and measuring the Project’s progress, a properly main-
tained Project schedule will also enable the parties to identify and deal with
unexpected issues as they arise. When a problem is encountered that may delay
some element of the Project, the Project participants can use the Project sched-
ule as a tool to predict the effect of the delay on the completion of the over-
all Project. In addition to predicting the effect of the problem, they can also
decide on an appropriate course of action to deal with the problem, which may
include accelerating the work, relaxing Contract restrictions to more quickly
advance the Project, or deleting work items. This ability to predict and deal
with a problem that may delay the Project before it actually does so is perhaps a
Project schedule’s most valuable attribute. Most Project Managers can see and
deal with problems as they occur. However, good Project Managers can also
predict how problems today will affect the Project in a month, in six months,
and even farther in the future. Relying on the Project schedule as a planning,
scheduling, and management tool will enable Project Managers to more com-
petently and reliably control and manage their projects.
TyPeS of ProjeCT SCheduleS
A Contractor can use many different types of schedules to depict its construction
plan. Selection of the most appropriate scheduling technique depends on the size
and complexity of the construction Project, the preferences of the entity preparing
the schedule, and the scheduling requirements of the Contract. The most common
scheduling techniques used for construction projects are narrative schedules, Gantt
Charts or bar charts, linear schedules, and Critical Path Method (CPM) schedules.
Narrative Schedules
Narrative schedules are typically used on very small construction projects that
have very few activities. A narrative schedule consists of a narrative descrip-
tion of the Contractor’s planned construction sequence and is typically submitted
prior to the start of work. For example, a narrative schedule may tell the Owner
that the Contractor plans to work across the Project site in an east to west fash-
ion. In addition, in the narrative the Contractor should also identify the number