Delay and Disruption in Construction Contracts

First Supplement

Andrew Burr, Andrew Burr

• Publisher: Informa Law from Routledge
• Year: 2017
• ISBN:
  9781351595964
• Edition: 1
• Topic: Law
• Subtopic: Construction Law
• Index: Law

Delay and disruption in the course of construction impacts upon building projects of any scale. Now in its 5th edition Delay and Disruption in Construction Contracts continues to be the pre-eminent guide to these often complex and potentially costly issues and has been cited by the judiciary as a leading textbook in court decisions worldwide, see, for example, Mirant v Ove Arup [2007] EWHC 918 (TCC) at [122] to [135] per the late His Honour Judge Toulmin CMG QC.

Whilst covering the manner in which delay and disruption should be considered at each stage of a construction project, from inception to completion and beyond, this book includes:

• An international team of specialist advisory editors, namely Francis Barber (insurance), Steve Briggs (time), Wolfgang Breyer (civil law), Joe Castellano (North America), David-John Gibbs (BIM), Wendy MacLaughlin (Pacific Rim), Chris Miers (dispute boards), Rob Palles-Clark (money), and Keith Pickavance
• Comparative analysis of the law in this field in Australia, Canada, England and Wales, Hong Kong, Ireland, New Zealand, the United States and in civil law jurisdictions
• Commentary upon, and comparison of, standard forms from Australia, Ireland, New Zealand, the United Kingdom, USA and elsewhere, including two major new forms
• New chapters on adjudication, dispute boards and the civil law dynamic
• Extensive coverage of Building Information Modelling
• New appendices on the SCL Protocol (Julian Bailey) and the choice of delay analysis methodologies (Nuhu Braimah)
• Updated case law (to December 2014), linked directly to the principles explained in the text, with over 100 helpful "Illustrations"
• Bespoke diagrams, which are available for digital download and aid explanation of multi-faceted issues This book addresses delay and disruption in a manner which is practical, useful and academically rigorous. As such, it remains an essential reference for any lawyer, dispute resolver, project manager, architect, engineer, contractor, or academic involved in the construction industry.

Chapter 1
Introduction and terminology

Introduction

Terminology

The contractor

The developer

■ The contract administrator

The works

Programme and schedule

Critical path

Delay

Disruption

Introduction

“Construction changes, delays and claims are a major problem for public work agencies, developers and facility managers – and for contractors and designers building their projects. Delays and claims siphon off a significant portion of the available funds for construction, often cost contractors and designers a significant portion of their anticipated profit, and sometimes create a loss, or even destroy a contractor and the owner’s lifetime savings.”¹

1–012 Add a new footnote 8A at the end of the phrase in round brackets:

See Valedictory speeches on the retirement of His Honour Judge Toulmin CMG QC, (2011) 27 Const LJ 399.

1–014 Add at the end of footnote 10:

See J Winter, John Doyle v Laing Management: Is it good English law? Is it good English practice? (2007) 23 Const LJ 89.

1–023 Add at the end of footnote 37:

The Association for Consultancy and Engineering (ACE) has recently published an amendment sheet for its suite of professional appointments for engineers, namely the ACE Agreements, 2009 edition (ACE Agreements 2009), in order to incorporate CDM 2015; that amendment sheet is freely available to download online.

1–030 Add at the end of footnote 51:

See also I Wishart, “Delay and disruption – a separable duo” (2012) 28 Const LJ 570.

1–032 Add the following Illustration:

Facts: The City of Hamilton (D) sought bids for the installation of a leachate drainage system at a live landfill site owned by D. The project involved trenching through land filled refuse up to 16m in depth with maximum trench depths reaching 30m in order to install the drainage pipework. The tender package issued to prospective bidders included a requirement for a description of the proposed site investigation and construction methodologies for approval by the Employer. No work could commence without the requisite approval. Also included in the tender specification were a number of further requirements, which included a clear statement that “time was of the essence” and that work was to proceed immediately following the award of the contract. The tender also called for an irrevocability period of 60 days from lodging the tender.

Bre-ex Limited (C), a groundwork contractor, responded to the tender on 6 November 2001; this therefore resulted in the irrevocability period expiring on 6 January 2002. C was one of seven bidders and, on 11 December 2001, D accepted C’s tender and authorised the award of the resulting construction contract to C. C’s successful tender was based upon an ingenious construction method and the tender detailed the methodology as required.

By early 2002, after no further contact from D, C contacted D regarding the contract. C was subsequently called in for what turned out be a pre-construction meeting on 24 January 2002, at which a letter communicating the contractual award was issued. This was some 18 days after the expiry of the irrevocability period. What followed were a number of discussions between C and D, together with D’s advisers. A number of technical issues were discussed both at the meeting and in subsequent discussions. One issue concerned odour control, in response to which, C stated it would conduct the majority of the work during cold winter months.

A second issue arose surrounding the wording of the contract and C’s insistence upon the inclusion of the approved construction methodology. Discussions between the parties continued. On 19 March 2002, a letter of understanding [LoU] was agreed by the parties and was to be inserted into the contract to be executed. D did not issue the agreed contract and, after a period, C himself drafted a contract incorporating the LoU. This was executed by C on 12 April 2002, with D executing on 12 June 2002. The work was originally planned to be carried out in the winter months and it was, therefore, agreed to split the contract period, with site investigation commencing on 21 May 2002 and the balance of work being completed over the 2002 / 2003 winter period. The work was successfully completed with no further issues.

C subsequently sought damages from D by reason of delay in approving the commencement of work following the award of the contract. Prior to trial, both parties agreed that a binding contract came into being on 11 December 2001, which was the date of tender acceptance.

Held: That there were two delay periods, namely that of the delay in communicating the award of the contract to C and, secondly, the issues surrounding the wording of the contract. Due to the express provision for time to be of the essence, the court held that the resulting delay period ran from 6 January 2002 (crucially, prior to the execution of the contract); this was the date at which the irrevocability period expired and C was to have started work.

On the second issue, the court stated that C was correct to insist that the contract included its methodology, with the contract not being executed until 12 April 2002. Therefore, it was held that the damages were to be calculated on the period of delay from 6 January 2002, until 12 April 2002. The court went on to make a further award of damages in favour of C: Bre-ex Limited v The Corporation of the City of Hamilton (2012).²

Notes

This is the Supplement One to the Fifth Edition of Delay and Disruption in Construction Contracts, and follows the structure of the main work. Each chapter of this supplement begins with the mini table of contents from its corresponding chapter in the main work. If the content under a heading has been amended in any way, that heading is marked in the mini table of contents with a symbol.

1 S S Pinnell, “Survey of scheduling practices and results”. Risk assessment and best practices in scheduling, an occasional paper given to the PMI College of Scheduling (May 2005), p. 2.

2 [2012] ONSC 147.

Chapter 2
The risk of development

Introduction

Standard form provisions

■ Allocation of risk

Project planning and programming risk

■ Legal risk

■ Dispute risk

Design risk

Buildability risk

Biddability risk

Construction risk

■ Financial risk

Political risk

Insurable risk

Consumer Insurance (Disclosure and Representations) Act 2012

■ Tortious and statutory duties

Introduction

The importance of the statutory framework

Private nuisance

Utilities and statutory undertakers

Building control

Development control

Introduction

“No construction project is free of risk. Risk can be managed, minimised, shared, transferred or accepted. It cannot be ignored.”¹

2–040 Add at the end of footnote 49:

See also P Mead, “Current trends in risk allocation in construction projects and their implications for industry participants” (2007) 23 Const LJ 23 and F P Phillips, “Drafting dispute management clauses: principles of risk management for commercial contracts” (2009) 25 Const LJ 199.

Add the following Illustrations

• (1) Facts: C commenced adjudication proceedings against D, in relation to its application for payment. No pay less notice had been served by D. D raised various challenges to the adjudicator’s jurisdiction, but the latter rejected them, eventually ordering D to pay C the sum claimed. During the adjudication, D had put before the adjudicator some of the email exchanges between the parties during settlement negotiations. C contended that it should not have done so, as these documents were all “without prejudice”, being evidence of negotiations to resolve a dispute. Since the dispute was not resolved, C submitted none of the documents should have been put before the adjudicator. D argued that the adjudicator had exceeded his jurisdiction by awarding a sum in excess of the “cap” referred to in paragraph 2(4) of Part II of the Scheme, which seeks to provide a cap on the amount of any stage payments. Held: that (1) the exchanges between the parties had not been referred to in either the notice of adjudication, or the referral notice; some of them were set out for the first time in the response. C had therefore not waived the “without prejudice” protection. Further, some of the emails upon which D relied were not referred to even in its response. (2) The cap was described as the difference between the contract price and the aggregate of the instalment stage payments. The challenge failed on the “very simple” ground that D had not shown what the contract price was. H had submitted that it was the original contract sum, notwithstanding the fact that it had certified a far greater amount as being the value of the work undertaken so far: RMC Building & Civil Engineering Limited v UK Construction Limited (Rev 1) (2016).²
• (2) Facts: Rob Purton (C) carried out some works on site for Kilker (D) at the Dorchester Hotel between 22 September and the last week of October 2014. Preparatory steps were taken before and during the week of 9 June 2014, there being a specified list of itemised work, with reference to a price of £350,000. A dispute arose and C, in the name of his company, brought the case to adjudication. D disputed that any contract had been made with C and the adjudicator, accepting that submission, resigned. C issued a second adjudication in his sole name, on the basis that, on 9 June 2014, an oral contract had been agreed. The adjudication decision dated 12 May 2015 ordered D to pay C £147,223 within seven days and ordered D to pay his fees and expenses of £4,184. C brought proceedings for summary judgment. C resisted enforcement on the same previous basis that there was no contract concluded between the parties and therefore the adjudicator did not have jurisdiction to give his decision. Held, by Stuart-Smith J: that beyond argument, there was a contract between the parties, since: (1) there was substantial “performance” on both sides, with C doing the works and D making payments to the tune of £654,000; and (2) an original scope of works was agreed (regardless of the price being agreed) in the knowledge that further works may be added later through a formal process or variation orders and concluded that C was entitled to summary judgment in the sum of £151,407, plus interest at the rate of 8% from 19 May 2015 to date and continuing at the judgment rate until payment, or further order, and to its costs of the action to be assessed on the standard basis if not agreed: Purton v Kilker Projects Limited (2015).³
• (3) Facts: This case concerned the terms of a sub-contract, under which RBL was to provide vibro compaction at the site on which D was contracted to build a warehouse for C. The contentious clause was one of RBL’s standard terms, which required the ...