SCL

DELAY
PROTOCO
L
- 2 EDITION - ND
BY SOCIETY OF CONTRACT LAW

Sensitivity: LNT Construction General Business

 Introduction

Delays

Disruptions
CONTENT
Core Principles

Other Financial Heads

Of Claims

Conclusion

Sensitivity: LNT Construction General Business

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INTRODUCTION
• This protocol provide a guidance on common delays
and disruptions of a construction project where one
party tries to recover it by,
• an Extension of Time (EOT) and / or
• a Compensation.
• Most of the delay and disruption cases become
disputes involving 3rd parties for dispute resolution.
• This number can be reduced via implementing a
transparent and unified approach by understanding
programmed works, records and responsibility
allocation for the consequences for delay and
disruption events.

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DELAYS
• Both Delays and Disruptions are effects of events, the impacts on the
works are different.

• ‘Delay’ - concerned with time – work activities taking longer than

planned.

• The focus is on delay to the completion of the works – in other words,

critical delay. Hence, ‘Delay’ is concerned with an
analysis of time. This type of analysis is necessary to support an EOT
claim by the Contractor.

• Typical monetary claims by a Contractor that are dependent upon an

analysis of time (i.e. a delay analysis)

a) Relief from LDs (with the inverse claim by an Employer for LDs);

b) Compensation for time-related costs; and

c) If the Contractor has taken acceleration steps in an attempt to

mitigate the delay, compensation for those steps
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DELAYS CONTD.

TYPES OF
Em
DELAYS
Con
plo trac
yer tor
Ris Ris
k k
Del Del
ay
Delays caused by the employer or
ay
Delays that arise from Contractor's
client outside the contractor's control. own actions or inactions.
Examples: Examples:
•Changes in project scope • Poor project management or
initiated by the employer. scheduling.
•Delays in providing necessary • Failure to mobilize resources or
approvals or permits. labor as planned.
•Failure to make timely decisions • Delays caused by subcontractors
or provide information. or suppliers.
•Delays in funding or payment • Inadequate work quality leading
issues. to rework.
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DISRUPTIONS
• ‘Disruption’ - disturbance, hindrance or interruption to a
Contractor’s normal working methods, resulting in lower
productivity or efficiency in the execution of particular work
activities.

• It will lead to

a) Activity delay

b) Need for acceleration - increasing resources, work

forces or working hours to avoid activity delay

c) Combination of both – and therefore, in each case, loss

and expense.

‘Disruption’ is concerned with an analysis of the

productivity of work activities, irrespective of whether
those activities are on the critical path to completion of the
works.
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22 CORE PRINCIPLES OF THE
PROTOCOL
1. PROGRAMME AND RECORDS 12. LINK BETWEEN EOT AND COMPENSATION
2. PURPOSE OF EOT 13. EARLY COMPLETION AS IT RELATES TO
3. CONTRACTUAL PROCEDURAL REQUIREMENTS COMPENSATION
4. DO NOT ‘WAIT AND SEE’ REGARDING IMPACT OF 14. CONCURRENT DELAY – EFFECT ON ENTITLEMENT
DELAY EVENTS (CONTEMPORANEOUS ANALYSIS) TO COMPENSATION FOR PROLONGATION
5. PROCEDURE FOR GRANTING EOT 15. MITIGATION OF DELAY AND MITIGATION OF LOSS
6. EFFECT OF DELAY 16. ACCELERATION
7. INCREMENTAL REVIEW OF EOT 17. GLOBAL CLAIMS
8. FLOAT AS IT RELATES TO TIME 18. DISRUPTION CLAIMS
9. IDENTIFICATION OF FLOAT 19. VALUATION OF VARIATIONS
10. CONCURRENT DELAY – EFFECT ON 20. BASIS OF CALCULATION OF COMPENSATION FOR
ENTITLEMENT TO EOT PROLONGATION
11. ANALYSIS TIME-DISTANT FROM THE DELAY 21. RELEVANCE OF TENDER ALLOWANCES
EVENT 22. PERIOD FOR EVALUATION OF COMPENSATION

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1.PROGRAMME AND RECORDS

• Parties should clearly agree on the type of records to be kept and allocate
the necessary resources for it.
• Contractor should properly prepare a programme showing the manner and
sequence in which he plans to carry out the works and the Contract
Administrator should accept it.
• The programme should be updated to record actual progress, variations,
changes of logic, methods and sequences, mitigations or
accelerations measures and any EOTs granted.
• Then the programme becomes a tool which is easy for managing change
and determining EOTs and periods of time for which compensation may be
due.

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Program
Progress me
Records Records

RECORDS Resourc
e
Costs
Records
TYPES Records

Correspond
ence Contrac
& t&
Administrati Tender
on Docume
Records nts

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2.PURPOSE OF EOT
• Benefit to the Contractor • Benefit to the Employer
To relieve him of liability for damages It establishes a new contract
for delay (i.e.:- LDs) for any period completion date, prevents time for
prior to the extended contract completion of the works becoming ‘at
completion date and allows for large’ and allows for coordination /
reprogramming of the works to planning of its own activities.
completion.

3.CONTRACTUAL PROCEDURAL REQUIREMENTS

In Delay events, parties and the CA should comply with the contractual
procedural requirements relating to notices, particulars, substantiation
and assessment.

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4.No‘Wait and See‘regarding
impact of delay events
(Contemporaneous Analysis)
Contemporaneous Analysis:
Addressing delay impacts as they arise is crucial.
"Wait and see" approaches are discouraged, as they hinder
timely resolution and accurate cost assessments.
• Parties should attempt to deal with the time impact of
Employer Risk Events as the work proceeds.
• Applications for an EOT should be made and dealt with as
close in time as possible to the delay event.
• EOT entitlement should be assessed by the CA within a
reasonable time after submission of an EOT application.
• Contractor will be entitled to an EOT only for events or causes
of delay which the Employer has assumed risk and
responsibility (called in the Protocol Employer Risk Events)
that impact the critical path.
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5.Procedure for granting EOT
• EOT should be granted to the extent that the Employer Risk Event is
reasonably predicted to prevent the works being completed by the then
prevailing contract completion date.

• Employer Risk Event impacts the critical path of the works and
thus extends the contract completion date.

• This assessment should be based upon an appropriate delay analysis,

the conclusions derived from a commonsense perspective.

• The goal of this procedure is to ascertain the appropriate

contractual entitlement to an EOT; the analysis should not start
from a position of considering whether the Contractor needs an
EOT in order not to be liable for liquidated damages.

6.Effect of Delay
To grant an EOT, it is not necessary for the Employer Risk Event
already to have begun to affect the Contractor’s progress with the
works, or for the effect of the Employer Risk Event to have ended.

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7.INCREMENTAL REVIEW OF EOT
Where the full effect of an Employer Risk Event cannot be predicted with
certainty at the time of initial assessment by the CA, he should grant an
EOT for the then predictable effect.

The EOT should be considered by the CA at intervals as the actual impact

of the Employer Risk Event unfolds and the EOT increased (but not
decreased, unless there are express contract terms permitting this) if
appropriate
8.FLOAT AS IT RELATES TO TIME
Float values in a programme are an indication of the relative criticality of activities and,
when float is exhausted, the completion date will be impacted.

Unless there is express provision to the contrary in the contract, where there is
remaining total float in the programme at the time of an Employer Risk Event, an
EOT should only be granted to the extent that the Employer Delay is predicted to reduce to
below zero the total float on the critical path affected by the Employer Delay to Completion

(i.e. if the Employer Delay is predicted to extend the critical path to completion).

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9.IDENTIFICATION OF FLOAT

Identification of float is greatly assisted by a proper and regularly updated

and Accepted/Updated Programmes.

10.CONCURRENT DELAY-EFFECT ON EOT

• True concurrent delay is the occurrence of two or more delay events at the same time, one an
Employer Risk Event, the other a Contractor Risk Event, and the effects of which are felt at the same
time.
• For concurrent delay to exist, each Employer Risk Event and Contractor Risk Event must be an
effective cause of Delay to Completion (i.e. the both delays must affect the critical path).
• Where Contractor Delay to Completion occurs or has an effect concurrently with Employer
Delay to Completion, the Contractor’s concurrent delay should not reduce any EOT due.

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11.ANALYSIS TIME-DISTANT FROM DELAY EVENT
Where an EOT application is assessed after completion of the works, or significantly after
the effect of an Employer Risk Event, then the prospective analysis of delay referred to in
the guidance to Core Principle 4 (Contemporaneous Analysis) may no longer be appropriate.

12.LINK BETWEEN EOT AND COMPENSATION

Entitlement to an EOT does not automatically lead to entitlement to compensation.

13.EARLY COMPLETION - RELATES TO COMPENSATION

If as a result of an Employer Delay, the Contractor is prevented from completing the works by the
Contractor’s planned completion date (being a date earlier than the contract completion date), the
Contractor should be entitled to be paid the costs directly caused by the Employer Delay, even when
there is no delay to the contract completion date (therefore no entitlement to an EOT).

This result will occur only if at the time entering into the contract, the Employer is aware of
the Contractor’s intention to complete the works prior to the contract completion date,
and that intention is realistic and achievable

Sensitivity: LNT Construction General Business

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SUMMARY
OF DELAY
ANALYSIS
METHODS

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5 14.Concurrent delay – effect
on entitlement to compensation
for prolongation
Where Employer & Contractor Delay to Completion are concurrent and, as a
result of that delay the Contractor incurs additional costs, then the Contractor
should only recover compensation if it is able to separate the additional costs
caused by the Employer Delay from those caused by the Contractor Delay.

If it would have incurred as a result of Contractor Delay, the

Contractor will not be entitled to recover those additional costs.
15. Mitigation of delay and
mitigation of loss
Contractor has a general duty to mitigate the effect on its works of
Employer Risk Events.

Duty to mitigate does not extend to requiring the Contractor to add

extra resources or to work outside its planned working hours.
The Contractor’s duty to mitigate its loss has two aspects: the Contractor
1. must take reasonable steps to minimise its loss;
2. must not take unreasonable steps that increase its loss.
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16.Acceleration
• Where the contract provides for acceleration, payment for the acceleration
should be based on the terms of the contract.
• Where the contract does not provide for acceleration but the Contractor and
the Employer agree that accelerative measures should be undertaken, the
basis of payment should be agreed before the acceleration is commenced.
• Contracting parties should seek to agree on the records to be kept when
acceleration measures are employed
• Where the Contractor is considering implementing acceleration measures to
avoid the risk of LDs as a result of not receiving an EOT that it considers is
due, and then pursuing a constructive acceleration claim, the Contractor
should first take steps to have the dispute or difference about entitlement to
an EOT resolved in accordance with the contract dispute resolution
provisions.

17.Gloabal Claims
The not uncommon practice of contractors making composite or global claims
without attempting to substantiate cause and effect is discouraged by the Protocol.

A global claim is where a contractor makes a claim for a single amount of money by reference to multiple
underlying causes or events.

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18.DISRUPTION CLAIMS
Compensation may be recovered for disruption
only to the extent that the contract permits or
there is an available cause of action at law.

The objective of a disruption analysis is to

demonstrate the loss of productivity and hence
additional loss and expense over and above that
which would have been incurred were it not for
the disruption events for which the Employer is
responsible. Disruption Analysis Methods

19.VALUATION OF VARIATIONS
Total likely effect of variations should be pre-agreed between the Employer/CA and the
Contractor to arrive at, if possible, a fixed price of a variation, to include not only the
direct costs (labour, plant and materials) but also the time-related and disruption costs,
an agreed EOT and the necessary revisions to the programme.

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20.BASIS OF CALCULATION OF
COMPENSATION FOR PROLONGATION
• Compensation for prolongation should not be paid except for work actually done,
time actually taken up or loss and/or expense actually suffered.

• The objective is to put the Contractor in the same financial position it would have
been if the Employer Risk Event had not occurred.

21.RELEVANCE OF TENDER ALLOWANCES

The tender allowances have limited relevance to the

• evaluation of the cost of prolongation and

• disruption caused by breach of contract or

• any other cause that requires the evaluation of additional costs

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22.PERIOD FOR EVALUATION OF

COMPENSATION
The evaluation of the sum due is made by reference to the
period,

when the effect of the Employer Risk Event was felt, not by
reference to the extended period at the end of the contract.

OTHER FINANCIAL HEADS OF

CLAIMS
- CLAIMS FOR PAYMENT OF
These are some other financial heads of claim that
INTEREST
often arise in the context of delay and disruption;

- HEAD OFFICE OVERHEADS AND

PROFIT
- CLAIM PREPARATION COSTS
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9 CLAIMS FOR PAYMENT OF
• Some standard INTEREST
forms of contract provisions way interest, as a component of delay and disruption
compensation, is payable.

• Interest may also be a component of damages if it can be shown that the loss was actually suffered as a
result of a breach of the contract, and the loss was in the contemplation of the parties at the time of
contracting.

• HEAD
There are also statutory OFFICE
rights OVERHEADS
to interest. AND
Considering claims for prolongation costs (& other monetary
claims) parties should be aware of statutory rights to interest available to an adjudicator, judge or arbitrator
should they not resolve their dispute.
PROFIT
• In an Employer Delay to Completion, a Contractor will include a claim for the lost contribution to head
office overheads and the lost opportunity to earn profit.

• To recover unabsorbed overheads and lost profit, the Contractor must demonstrate it has:

(a) failed to recover the overheads and earn the profit it could reasonably have expected during the
period of prolongation; and
(b) CLAIM
been unable to recover such PREPARATION
overheads and earn such profit because its resources were tied up by
Employer Risk Events.
COSTS
• In case, if the Contractor can show that it has been put to additional cost as a result of the unreasonable
actions or inactions of the CA in dealing with the Contractor’s claim.

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• The SCL Delay and Disruption Protocol

provides valuable guidance for managing
and resolving delay and disruption issues.
CONCLUSION • By adhering to the Protocol's principles,
• Stakeholders can minimize disputes
• Achieve fair outcomes
• Foster a collaborative project environment

Sensitivity: LNT Construction General Business

 THANK
YOU!
Demika Premasiri
GET - Contracts
L & T KSA

Sensitivity: LNT Construction General Business