Forensics Cost & Time Analysis for Arbitration.

Time, money is linked in building a construction project. Construction projects schedules are a budget or estimate for the way a contractor expects to spend time to build a project. Since the 1960’s, critical path analysis (CPA) has grown in use in the construction industry as a tool contractor employ to plan and budget the time available to construct a project.

Construction isn’t a time and cost fixed industry and like budget or plan, there is always risk that unexpected events will disrupt the plan and result in an overrun—a construction schedule delay in the context of construction scheduling.

Construction schedule delays in turn can lead to disputes and claims. Disagreements about the causes of delays, their impact on the construction process, and which contracting party must bear the consequences can become contentious. However, by working with and analysing CPA construction schedules, often it is possible to quantify and determine with reasonable certainty the cause of and responsibility for delays occurring on a project. Courts, boards, and agencies in many jurisdictions favour the use of CPA construction schedule analysis in deciding legal claims for construction delays.

Forensic Construction Schedule Delay Methods

The growth in CPA construction scheduling for the past fifty years has brought with it several different methodologies for analysing construction delays. It also has given rise to a specialized discipline—forensic construction schedule delay analysis. Forensic schedule delay analysis is the study and investigation of events using CPA scheduling methods to establish the cause and extent of delays and to resolve construction delay claims through negotiations or legal proceedings. It is a field for experts trained and experienced in CPA scheduling.

Various approaches to analysing construction schedule delays have evolved over the years, but no standard method has emerged.  AACE International (formerly the Association for the Advancement of Cost Engineering) in its Recommended Practice 29R-03 Forensic Schedule Analysis (2011), sets out basic technical principles and guidelines for CPA scheduling in forensic schedule analysis.  It offers nine “method implementation protocols” for analysing delays. 

Although there isn’t a consensus, it has been suggested that methods of forensic schedule delay analysis can be grouped into four major families in terms of measuring days of delay.

 

As-planned vs. as-built – measures delays that occur on the days they occur and delays that have accrued at a specific point compared to the plan.

Contemporary period analysis (Windows) – measures a combination of accrued delay to the start of an evaluation period and projected delays through the end of the project.

Retrospective time impact analysis – measures projected delays at the start of an evaluation period as reflected in CPA schedule updates and calculates additional delay at the end of the project by inserting a fragnet (a network fragment, or a portion of the project schedule that relates to the specific delay) into the evaluation period, and

Collapsed as-built – compares actual dates and events with after-the-fact assumptions about what hypothetically should have been planned.

Selecting the method of evaluating a delay is important because various methods of forensic schedule delay analysis will produce different results even when applied to the same set of facts. Moreover, each method has its own strengths and weaknesses.  Further, practical considerations may render an analytical method useless or infeasible in each situation.  For instance, contractual constraints, such as a contract clause requiring the use of a particular method to analyse project delays,  the project records and source schedules available, the cost and time to prepare a forensic schedule delay analysis, or the forum in which the delay analysis will be presented can make one method more suitable than another.

Pros and Cons of General Methods of Forensic Schedule Delay Analysis

Because no consensus exists regarding a single method of analysing schedule delays to be followed in every situation, selecting the analytical method most appropriate for a given situation is vital. The general strengths and weaknesses of the basic methods of analysing schedule delays always should be weighed.  Using the four general methods of delay analysis as a framework, some basic pros and cons for each analytical approach can be identified.

As-planned vs. as-built – comparison of an as-built schedule to an as-planned schedule

 Pros

Cons

Relatively easy to perform

Susceptible to manipulation through selection of as-built data

Simple to present and easy to understand

Not generally accepted by many courts

Can be persuasive if performed correctly

Causation is based on experts’ opinions

Useful when data is limited

Does not measure concurrent delays

     

Not suitable for complicated projects or projects built significantly different than planned

 

Contemporaneous period analysis (Windows) – measures accrued delay at start of evaluation period and projected delays to end of project

     Pros

      Cons

Accurate when there are regular CPA schedule updates

Can be difficult to present and expensive and time consuming to perform

Measures each delay and documents causation

CPA updates may not be accurate

Can be performed on an ongoing project

May not adequately consider concurrent delays

Difficult to manipulate and accepted by many courts and agencies.

 

 

Retrospective time impact analysis – measures projected delay as reflected in CPA schedule updates and inserts fragnet into evaluation period to calculate delay at end of project

     Pros

      Cons

Useful for analysing complicated CPA schedules

Can be difficult to present and expensive and time consuming to perform

Measures each delay and documents causation

Can be subject to excessive decision making by analyst

Can be performed on an ongoing project and measure evolving delay

Can be susceptible to manipulation

Can determine concurrent delays

 

Accepted by many courts and agencies

 

 

 

 

 

 

 

Collapsed as-built – compares actual dates and events with after-the-fact assumptions about what should have been planned or could have been done

    

Pros

   Cons

Easy to present and understand “but for” analysis

Reconstructing as-built schedule is costly and time consuming and may be after-the-fact analysis

Theoretically measures concurrent delays by separate “collapse runs” for contractor delays and owner delays

Limited acceptance by many courts or agencies

Offers documented evidence of causation

Susceptible to manipulation

   Cons

Requires substantial decision making by analyst

 

Conclusion

Deciding which method of CPA schedule delay analysis is the most suitable for evaluating a construction delay is a crucial step in evaluating the cause and impact of a given delay.  While no consensus exists regarding a standard analytical method that is appropriate for every situation, the pros and cons of various methods should be kept in mind.  When an unexpected event disrupts and delays a construction project, using a sound analytical method to identify the cause and quantify the extent of the delay will be important for negotiating a fair result or for obtaining a fair outcome in arbitration or litigation

Mediat performs a whole range of forensic cost and time analysis for arbitration, adjudication and mediation, including

  • audit of construction costs,
  • analysis of historic costs,
  • development of cost models for alternatives.
  • examination of disallowed cost
  • Cost loaded schedules
  • Production rate analysis
  • Cost to completion analysis
  • Trend forecasting
  • Cross examination of entitlement against all common contract forms#
  • Filtering out duplicated or miss allocated costs,
  • analysis and identification of disallowed costs.
  • Examination of unit costs and production rates for various construction activities
  • Tracing and validation of time and expense claims over above contracted sums