Apportionment the netting off approach c

Fearnsides & Associates FZE P.O. Box 25647, Dubai, U.A.E.
Specialist Delay Analysts, Claims and Contract Consultants Tel: +971 (0)50 4945873
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Prolongation Cost Claims under FIDIC contracts and Apportionment under UAE code of laws

In summary, if all that has been discussed below had been provided within Contractor’s claims for time
and money, where concurrent delays occur, and given Doyle and City Inn decisions, there should be no
reason why cost could not be apportioned and “time no money” abandoned. However, what is the
experience in other jurisdictions, particularly in the Middle East, Hong Kong and South East Asia?

The title above was made by a member on the FIDIC contracts forum on “linkedin” and was aimed at
trying to find out how concurrency, in terms of cost apportionment, would be applied in the UAE. This
could also apply to other jurisdictions and in the light of the section in Keith Pickavance’s book titled:
“Delay and Disruption in Construction Contacts”, Fourth Edition in Chapter 20 concerning
Apportionment”, page 1127, the subject of the "Net Effect Approach" is brought to the table via "Heller
v Klingensmith, which was an American decision. Effectively, this approach apportions costs by netting
out LD’s and the Contractor’s costs. There has been a significant move away from the modern doctrine
of concurrent delay. However, what do those who work in construction claims fields think of the Net
Effect Approach and how do you think it could be applied practically?

Cost apportionment is something I have an interest in and with John Doyle Construction Ltd v Laing
Management (Scotland) Ltd and City Inn v Shepherd, we seem to be moving away from the doctrine of
concurrent delay.

In the text titled: “Cutting the knot on current delay”, the following was stated:1

“it is evident that the modern doctrine of concurrent delay is premised not on the equitable resolution
of construction delays, but is instead based on past litigants' failure or inability to effectively prove
their cases and the older courts' hostility toward liquidated damages, among other bases. Over time,
these factors merged and evolved into the legal doctrine of “concurrent delay”. After several years, the
later courts stopped delving into the ‘real' analyses of these early courts, and instead rotely applied
these early courts' resolutions of concurrent delay as a 'rule' for resolving all overlapping construction
delays.”

The text further goes on to state2:

“Generally, the hope is that courts and decision makers will apply legal reasoning and analyses to
disputes that reflect and appreciate this complexity. Unfortunately, the legal and industry
understanding of these complex delay scenarios is often mired in the easily-applied 'dogma' of
buzzwords like 'concurrent delay' and other similar concepts. The result of the routine application of

1
J. Bidgood, Jr., S.Reed, and J, Taylor, “Cutting the knot on current delay” (2008) Construction Briefings, 2007-2
2
J. Bidgood, Jr., S.Reed, and J, Taylor, “Cutting the knot on current delay” (2008) Construction Briefings, 2007-2

Page 1 of 8


this dogma, without consideration of its roots, often leads to results different to the reasonable
commercial expectations of the parties and results that are often incomplete or simply inequitable.”

Keith Pickavance in his text titled: “Delay and Disruption in Construction Contracts” 4 th Edition, 18-008
states3:

“Therefore it is, perhaps, unsurprising that, in the twenty-first century, some commentators have
rejected the theory of concurrency in delay-related cases as historically redundant in favour of a more
scientific approach to the proof of causation through schedule analysis.”

He further states in section 18-009:

“The last 15 years or so have seen increasing support for this view from the English courts. Such a
technical approach effectively puts paid to the confusion arising out of sequential, parallel, pacing and
apportionment in relation to "concurrency" of delay, but does not dispose of concurrency entirely. Whilst
the effect of various primary causes on delay to progress, the effect of secondary causation on
completion and the loss and expense flowing therefrom, should thus be a matter of calculation, from the
factual records, rather than inference from some "carefully chosen weasel words"

Concerning apportioning loss and/or expense Keith Pickavance4 had this to say:

“The challenge in the first instance is to provide a justification for recovery of damages by the separation
of delay to progress caused by D from that caused by C5. Separating those costs for which C is entitled to
compensation from those for which it is not is secondary. Whilst admittedly achieving the first without
also achieving the second may be a fruitless exercise, once liability has been separately identified, it
should be well within the capacity of any competent quantum expert to analyse the costs C has actually
incurred as a result of delay to progress, disruption, or prolongation of its overheads and to allocate
these to the different schedule paths which represent the effects of the differing causes. That is the "net
effect" approach which appears to be consistently adopted by courts and tribunals in the United States6”

3
Keith Pickavance in his text titled: “Delay and Disruption in Construction Contracts” 4th Edition , 18-008
4
Keith Pickavance in his text titled: “Delay and Disruption in Construction Contracts” 4th Edition, 20-032
5
See for example Smith v United States (1995) 34 Fed. CI. 313 (Ct. Fed. Cl.) in which C was unable to recover compensation when C was unable
to separate its own delay from delay caused by D.
6
See, for example, Pathman Construction Co v Hi-Way Electric Co (1978) 382 N.E.2d 453 (III. App. Ct.), and Wilner v United States: (1991) 23 Cl.
Ct. 241.

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The move away from the legal doctrine of “concurrent delay” and effectively “time no money” approach
has been driven by the Scottish courts in John Doyle Construction Ltd v Laing Management (Scotland)
Ltd and City Inn v Shepherd and Keith Pickavance7 further stated:

“However, the Scottish courts have recently been taking a more relaxed view and found ways to
compensate C for its loss by apportionment of a global claim where competent project control and
effective record keeping would have rendered such an inferential approach unnecessary. In John Doyle8
for example, Lord Macfadyen explained:

“Failure to prove that a particular event for which [D] was liable played a part in causing the global
loss will not have any adverse effect on the claim, provided the remaining events for which [D] was
liable are proved to have caused the global loss. On the other hand, proof that an event played a
material part in causing the global loss, combined with failure to prove that that event was one for
which [D] was responsible, will undermine the logic of the global claim. Moreover, [D] may set out to
prove that, in addition to the factors for which he is liable founded on by [C], a material contribution to
the causation of the global loss has been made by another factor or other factors for which he has no
liability. If he succeeds in proving that, again the global claim will be undermined.

The rigour of that analysis is in my view mitigated by two considerations. The first of these is that
while, in the circumstances outlined, the global claim as such will fail, it does not follow that no claim
will succeed. The fact that [C] has been driven (or chosen) to advance a global claim because of the
difficulty of relating each causative event to an individual sum of loss or expense does not mean that
after evidence has been led it will remain impossible to attribute individual sums of loss or expense to
individual causative events. The point is illustrated in certain of the American cases. The global claim
may fail, but there may be in the evidence a sufficient basis to find causal connections between
individual losses and individual events, or to make a rational apportionment of part of the global loss
to the causative events for which [D] has been held responsible. "

So in Doyle, despite earlier statements concerning competent progress updating and delay analysis, less
than detailed and persuasive global claims can find sympathy if they go to dispute, but obviously it
would be preferable that clauses in contracts concerning arbitration lean towards Scottish jurisdictions.

My personal view is that whilst nothing in the demonstration of cause and effect is perfect, if a
Contractor failed to properly update and record progress correctly, then an Employer should be able to
find not much difficulty to prove one of the fundamental causes of delay was the Contractor’s failure to
manage the works competently.

7
Keith Pickavance in his text titled: “Delay and Disruption in Construction Contracts” 4th Edition, 20-033
8
John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2002] 110, per Lord Macfadyen.

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In City Inn v Shepherd9 Lord Drummond Young further dismissed the doctrine of concurrent delay and
stated:

“It will be apparent that I have rejected [D's] argument that, if prolongation costs are caused both by
[D's] delay and by a concurrent [C's] delay, [C] will not be entitled to recover such costs if he would
have incurred them as a result of the [C's] delay. That approach seems to be based on a rigidly logical
application of the principles of causation as they apply in the general law of contract and delict. Under
clause 26, however, as with clause 25, I am of opinion that such an approach is not appropriate;
instead, the direct loss and expense sustained by [C] should be apportioned between the events for
which [D] is responsible and the events for which [C] is responsible.”

So following on from the two cases referred to, in terms of apportionment, my answer to the question
posed “Prolongation Cost Claims under FIDIC contracts and Apportionment under UAE code of laws”,
was as follows:

“What is important in terms of parallel concurrent delays is the efficacy of the competing causes. Whilst
not an expert on the UAE civil code. If costs are capable of being split then I can see no reason why in the
UAE a Contractor should be kept out of the money. As Andy said, FIDIC is silent and as such, if it is
capable of being proved then recovery is possible.

On a further point, associated with "time no money" and parallel concurrent delays. Again this goes back
to efficacy, but also "unjust enrichment" so if money can be split and the "loss does not lie where it falls",
then recovery should be possible and because of the issues related to "unjust enrichment", i.e. an
employer cannot claim “time no money.” However, this would bring us back to what would be some form
of equitable solution because the Employer cannot claim liquidated damages. But what if damages and
costs could be net off and the Employer gets his LD’s and the Contractor gets his costs and time.

What I do find interesting, however, can be found in Keith Pickavance book titled: “Delay and Disruption
in Construction Contacts” , Fourth Edition in Chapter 20 concerning Apportionment”, and on page 1127
he discusses the "Net Effect Approach" and brings to the table "Heller v Klingensmith, which was an
American decision. I wonder because of the statement in his book: "when both parties to a contract
breach their contractual obligations by delaying performance, a court must assess the losses attributable
to each party's delay and apportion damages accordingly." In other words, if both were delayed by
competing events, both critical or at least obviously dominant in the scheme of what could be termed
competing critical events, then if both caused one day's delay then the Contractor would get his EOT and
DLE and the Employer his LD's (and this would be netted out). I am not sure how this would work legally
in the UK, because practically the Employer would never have suffered a loss because of the Contractor's
breach (because of the Employer’s concurrent delay). Therefore, the damages would be netting out dollar
for dollar delay LD damages. Obviously this could work very neatly with penalties.

9
City Inn Ltd (2007) CSOH 190; [2008] B.L.R. 269, (2008) 24 Const. L.J. 590, affirmed [2010] CSIH 68.

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As such, pursuing the approach, referred to, may bring results, as it is equitable, and "under the Heller
framework, the parties are getting actual benefit of their bargains and no party who is at fault is relieved
from liability simply because neither party was concurrently at fault. While concurrent delay doctrine has
myriad cases supporting its application over the years, it simply cannot compete with the elegant and
sensible result of the Heller scheme for apportioning delay damages.”

There are plenty of Law Partnerships in Dubai with construction departments who should be up to speed
with this and I would be interested to know what experiences people have had concerning concurrency
and “time no money”. I know of a major developer in town who specifically looks for concurrent issues
and then automatically goes for "time no money".

Practically, and to avoid to dispute, Doyle10 should be considered as an exception rather persuasive legal
precedence. As such the key to pursuing a successful claim for cost apportionment would be the quality of
the progress updating first and foremost, i.e. the vehicle to demonstrate cause and effect. Without this, big
boy developers will win hands down, unless the concurrent issues are very simple and very obvious and
as such Doyle11could be considered as persuasive. To be able to apportion costs a competent delay
analyst will have to work in tandem with an equally competent QS who handles the quantum, but the lead
must be the delay forensic analyst. Not in leading the claim as a whole, but in the fundamental of
demonstrating cause and effect and then highlighting where concurrent delays really are so that the
quantum prepared by the quantum consultant can be applied correctly. Without the aforementioned
(quality progress updating), discussing apportionment is, unless it is very simple, pointless. As such,
Contractors will soon realise the folly of not paying the attention they need to progress reporting
procedures.”

So at the is juncture, the question is what should be the approach to take in terms of progress reporting,
well obviously a robust method of updating and revising programmes and cost reporting is required and
secondly a detailed and robust approach to forensic delay analysis is also required to prove ones case.

The following threads were also posted as a suggested way forward to enable cost apportionment to be
successful:

“Basically to be able to prove concurrency and parallel delays, it will come down to the quality of the
updated and revised progressed programmes submitted to the Engineer. If each progressed update was a
genuine statement of the contractors' progress and a genuine statement of the Contractors future as-
planned for intent post data date of the order and sequence of the Contractors' works then concurrent and
parallel delay arguments for apportionment of contractors’ costs can be made.

10

11

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Whilst an as-built float map to the day showing the criticality through an as-built programme can be
established. This in reality is not the real critical path, as the real critical path is the criticality at each
and every updated progressed programme "at that moment in time" which is dictated by the order and
sequence of the as-planned for future intent of the contractors works post any given data date.

As such, an as-built critical path of the whole of the works (float map) will not be the real critical path as
it fails to explain at each and every update, why, from reference to the previous update, the logic may
have changed, acceleration measures introduced, mitigation, work around solutions were used etc...all
issues that in fact were changes to the order and logical sequence of the as planned for works and
therefore were the reasons why the Contractor did not follow his as-planned for order and sequence of
work. Hence, critical paths move and change. Obviously, the best way to capture this would be to update
programmes every day and change programmes every day as the works progress. Clearly, that is not
reasonable, what is reasonable, however, is to do this every month. Therefore, due to programming
inaccuracies (% complete, pre-estimates of activity durations being wrong, trade rates etc…) the absolute
real critical path will never be really established (it must be remembered any as-planned for programme,
is a pre-estimate of what someone believes that something can be done, that uses past knowledge to
estimate the durations shown, via resources employed, methods, productivity rates etc... but it is a
contractor's bargain and his baseline to calculate any compensation he may be entitled to, if for reasons
beyond his control, and for events that are compensable, to demonstrate delay and disruption to pursue
cost and time claims).

Hence, the better quality the progress updating the better the chance of demonstrating “on the balance of
probabilities” that concurrent and parallel delays were indeed happening, which was dominant and
which was not dominant etc…. and for dominant I would not try to use absolute criticality as the arbiter
of what came first and what did not because of programme inaccuracies. However, there are degrees of
criticality and the application of common sense and as such if the progress programming has been
performed reasonably well, the programme should capable of demonstrating where causes concurrently
effect and exist and apportion costs accordingly.

Whilst the above is true, if events are very clear cut, there is no reason why a simple as-planned versus
as-built form of analysis can prove to be just as persuasive on not so complex situations. That said, it may
often be the case, due to the complexity of a project and the inaccuracy of the progress programmes
submitted, that the only reasonable assessment that can be made is to perform a simple as-planned versus
as-built delay analysis.

Finally, concurrency on single activities, i.e. stop go, stop go situations, will come down to accuracy of
ones records. And, as ever, so will any means of the demonstration cause and effect.

As regards, apportionment, in order to prove cost incurred then the above is obviously a pre-requisite.
But in order to avoid the “time no money” and go for apportionment costs, then those costs will need to
be identifiable. And this will come down to how detailed your cost records are, i.e. who was working
where and when (daily diaries etc…). Keith Pickavance covers this well in his book titled: “Delay and

Page 6 of 8


Disruption in Construction Contacts” , Fourth Edition in Chapters 18 and 20 cover, “concurrency and
parallel delays” and “apportionment”, respectively, very well.

I’ve copied something I wrote on a previous “linkedin” group that will most likely be appropriate, it is
long winded, but worth comprehending. Because, in the absence of anything else, the method proposed is
the best available in the context of what has been discussed above and is a suggested move forward in
your situation.”

And similarly on another thread, and possibly a bit repetitive with respect to aforementioned, the
following methodological approach was suggested in response to question posed concerning float
mapping techniques being used to demonstrate cause and effect, as follows:

“Any approach needs to consider "all factors", including where programmes have changed and revised
as they are updated. That said the "half step" method is often used to examine the unchanged programme
that has been progressed. Personally, I place all the updates on an as-built of the last updated progressed
programme and then reflect on the criticality of the update, the half step and then on an as-built float map
of the actual as-built progrmame. If there is significant change (revisions to logic etc...), the criticality of
each update will be different from the equivalent "time now" point of the final update "as-built" float map
(note this is not the criticality of the update, it is the criticality worked backwards of the as-built activities
– Ron Winter method). The skill then is to use the half step methods to see which programmes have moved
the most, in terms of revised logic. Also it is useful to run predecessor or successor logic programmes
from P3/P6 and then transfer them to Excel and then check the programmes out to see what changes to
logic, durations, % complete has been made (or just use Claim Digger).

Obviously there should be well documented reasons, contractually, why a programme had been revised
while it is progressed on each update. The new revised and updated programme becoming what is termed
in NEC3 contracts as the "accepted programme". Unfortunately, many contractors do not follow proper
procedures and do not properly update and revise their programmes and as such these programmes
cannot be relied upon to give any meaningful analysis of criticality and hence is the reason why "total
float analysis" should be used with care (Note NEC3 contracts are programme driven, and a failure by
the Contractor to not update his programme correctly can, in some instances, cause Contractors to lose
their rights to compensation of delay events).

"The method proposed by P. J. Keane & A. F. Caletka, in their text: “Delay Analysis in Construction
Contracts” contained within Chapters 5 and 6, describes float maps based on updated progressed
programmes. Chapter 5 is titled: “Problematic Issues”, Chapter 5 discusses issues such as float,
concurrent and parallel delays which are pertinent to analysis of the same. And Chapter 6 is titled:
“Effective Presentation of Delay Analysis” and discusses float mapping using monthly updated
progressed programmes along with an atypical example presented by an expert witness to an arbitral
panel. "

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Finally, one of the reasons why there is wide use of more “observational approaches” and for example,
the AACE described the half step as “3.4 Observational/Dynamic/Contemporaneous Split” is because the
updates and revisions cannot be relied upon for their accuracy. Any criticality is driven by the theoretical
as-planned for sequences of work post any data date, and as such if not regularly updated and revised,
will not reflect (if the works are changing and being revised or the work sequences described in the
programme are not the work sequences followed on site).

Float mapping techniques have their uses. However, they are more easily used to prove in a defensive
position that updated progressed programmes submitted as statements of progress and future planned
intent were in fact wrong.

The skill of the forensic delay analyst is to go through all permutations of analytical delay information,
then make observations, draw conclusions (based on the evidence presented and state what was the most
likely (in the absence of any conclusive evidence) the cause of a delay or delays that gave rise to whatever
effect and apportion responsibility) and then make recommendations based on those observations drawn
from the incumbents knowledge and experience.

In conclusion, if all the above has been provided within Contractor’s claims for time and money, where
concurrent delays occur, and given Doyle and City Inn decisions, there should be no reason why cost
could not be apportioned and “time no money” abandoned. However, what is the experience in the in
other jurisdictions, particularly in the Middle East, Hong Kong and South East Asia?

Page 8 of 8

Apportionment the netting off approach c

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