‘Are Dynamic Planning Models attractive?…’
The UK’s Society of Construction Law has published a Protocol that it recommends be adopted on live projects to assist the parties in agreeing extensions of time on an on-going basis. The Protocol offers a way forward in a difficult area and the basis of assessment is a baseline programme developed to “accurately predict the effects” of change.
In the following article, Roger Smith considers some of the practical issues.
TO start with, the requirement for accurate prediction means that the programme needs to be a dynamic model of the project that allows determination of any entitlement to EOT.
The question might arise as to how the make up of such a dynamic model aligns with the observations of Judge Hicks in Ascon -v- McAlpine, who felt that the effect of a delay diminishes with the passage of time. Taking this approach, the impact of an early (critical) delay of the same duration as a later delay will have less impact upon completion. Therefore, the dynamic model requires a degree of flexibility in its make up to allow this approach to be analysed. Or is the flexibility required in the approach to the analysis?
The SCL Protocol sets out that the programme should identify all relevant activities and the relationship between activities.
These relationships are physical connections between activities that are not flexible; they should really be considered as ‘hard’ links. Therefore, if a delay is added to the programme, the effects will flow through the ‘hard’ links in the programme, in essence giving a prediction of the project overrun and any entitlement to an EOT.
The very nature of the programme required by the SCL Protocol appears at odds with the position of Judge Hicks. A diminishing effect of an early delay can be accommodated within a computerised programming tool, by using some form of mathe- matical modelling. This could apply some form of percentage reduction to the effect of early delays. However, does this fit with the principles of the SCL Protocol? Such flexibility (i.e. working around problems such as delays), is inherent in the approach adopted by contractors when planning the remaining part of the works, particularly if faced with what is perceived to be an inadequate award of additional time (or the recovery of culpable delay).
The point is that the construction process is inherently flexile, with activity durations and logic relationships being varied to suit actual requirements. The modelling of this situation in a programme is invariably extremely difficult in a single programme.
So how is this flexibility reflected in the planning process? Initial programmes, such as a tender programme, will often be at a high level, with this high level being reflected in long duration activities. This should perhaps not be criticised as bad practice, but could be viewed as a practical representation of the factual information available. How else would a major element of the works be represented at time of tender (such as the mechanical services installation) if that part is not at the time designed or let to a sub-contractor?
It is at this early stage in the overall planning process that contingency may well be built into the activity durations. It will only be when such overall activities are broken down that the contingency (or perhaps the lack of it) will unfold.
The process of breaking down the high level planning generally occurs when the project is ‘live’ and detailed programmes are poduced. This detailing then occurs in stages, with initially developed ideas also incorporating sub-contractor programmes.
The key point is that it is not possible or practical to include detailed information too early in the planning process. Providing the wrong information, based upon assumptions, may cause far more problems to a contractor than providing too little detail. Practical assessment of
entitlement throws up further problems. The SCL Protocol offers contractors the benefit of improved analysis of their entitlement to EOT. The ‘hard’ links in the programme may well determine an acceptable conclusion as to the effects of a delay event at the time. However, from the viewpoint of the Contract
Administrator/Engineers, the preferred approach may be to rely upon a ‘flexible’ link approach particularly in the early part of a project.
In addition, an award in the early part of a project may well be in advance of any built-in contingency becoming apparent. The Contract Administrator may wish to wait until this detail is revealed before issuing the award that appears due to the contractor. He may also wish to consider other alternatives that may reduce any possible delay. This is a difficult time for both the Contract Administrator and contractor.
If the contractor considers an award to be insufficient, he is faced with two decisions:
Proceed in line with the original plan and address the issue again later; or Introduce changes to the programme to recover any shortfall in the EOT awarded.
The first option requires some degree of confidence and nerve. It is often said that faced with a recoverable delay for which inadequate compensation has been given, a contractor should stand its ground. This is more easily said than done when faced with the commercial pressures of construction.
The second option is more easily accommodated, particularly in the early part of the project. Minor reductions in a number of activity durations can overcome the shortfall. However, is a contractor obliged in any case to do this? The SCL Protocol requires the contractor to do all it can to avoid financial consequences of delays for which the employers takes the risk, but it expressly states that this does not extend o a requirement for extra resources or work outside its planned working hours.
It therefore appears that the original activity durations (the same resources and same working calendar) will remain, and the only option will be to re-sequence the programme to recover the required time. There may be financial consequences of re-sequencing caused possibly by trade stacking, and any action will not extend to increasing any loss suffered.
There are therefore practical problems to be resolved in applying the SCL Protocol to resolving EOT problems. However, there may be a solution to these problems in the SCL Protocol itself.
The Protocol requires clear agreement of the programme. If there is such an agreement, then uncertainty regarding future effects can be removed, as both parties know or should know the possible impact of a change. There would be a “transparent and unified approach to the understanding of the programmed works”. This may resolve the position put forward by Judge Hicks, of a diminishing effect of an early delay.
So, can a time-impact analysis, the delay analysis method preferred by the Protocol, work as a dynamic model? In the situation where a programme is a contract document, and in this sense each activity detail is a term of the contract, it would be necessary to modify the programme to model changes to the contract (be it in terms of excusable or culpable delays). This process would be a major undertaking unless the works progressed as planned; but construction hardly ever follows such a path. Some industries approach project execution based upon major up-front exercises with respect to planning. Such a project plan is created to the same level of detail as the working programmes referred to above. Such an undertaking may leave an inflexible programme, but the level of planning input will have reduced risk associated with particular activities rendering the project plan more certain.
A high level of planning input is also required in monitoring such a plan during the life of the project, but because of the level of planning knowledge, the impact of any delay or change and be considered and the project plan adjusted accordingly. The key is a high level of planning input into the project at initial tender stage through to contract and management of the project to completion. Such a level of planning expertise is often beyond the reach of many parties to construction projects.
So where does the SCL Protocol take us in regard to resolution of EOT related problems? It may be said that the Protocol requires a level of attention to planning matters that is beyond the capabilities of many construction organisations. In addition, the majority of projects do not actually ‘go wrong’. Having a team of planners could therefore be an overhead cost that would not be reflected in improved recovery from contract works. The size, complexity, cost and risk of the project needs to be balanced, and the extent of planning input has to be proportional.
In any view, adoption of the SCL Protocol will inevitably lead to an enhancing of the planning practices within construction organisations. If such an approach is adopted, each party will better understand the position of the other and financial certainly may result in projects where now we see problems. This has to be of benefit to construction generally.
However, it appears that the SCL Protocol will only work when both parties adopt a unified approach to the planning of a project. This is utilisation of a flexible dynamic model of the project. If there is not such an approach, then the dynamic model appears to offer more attractions to a Contractor.
The SCL Protocol sets out how greater input in the planning process can result in benefits to both parties to a construction project. Whether these benefits will tip the scales towards greater input in the planning processes remains to be seen.
Roger Smith is an Associate Director and is based at Trett Consulting’s Manchester office