Society of Construction Law Protocol for Determining Extensions of Time & Compensation for Delay & Disruption

The aim of this Protocol (drafted by the SCL and issued November 2001) is to tackle confusion over how to work out entitlements to extensions of time (EOTs) and compensation for other time-related delays. The Protocol takes the form of a 70-page guidance note, which can be downloaded from www.eotprotocol.com. The website also contains a brief summary of the terms. The document is still in draft, the consultation period being extended until 28 February 2002.

It is an extremely helpful paper which is likely to have far-reaching effects. Its raison d’etre is that it will assist all parties to the construction process when dealing with time/delay matters, by establishing "best practice" guidelines which can be referred to, pre-contract, during the lifetime of the contract, and in the event that a dispute arises. A key aspect of the Protocol is its recognition that "transparency of information and methodology is central to both dispute prevention and dispute resolution" and will avoid "unnecessary disputes". It is hoped that the Protocol will bridge the gulf in performance between projects that do run to budget and programme and those that do not, the idea being that even small contractors can improve performance through careful management.

The main management tool used to achieve this is the programme, and much of the Protocol is devoted to this. Time-related problems can be exacerbated by overly-flexible programmes for sub-contract works, which can for example fail to establish precise dates for fundamentals such as commencement and completion. The best way to avoid misuse of the programme is through "real time programming", so that it is comprehensive as well as sufficiently detailed in areas where programming is often skimped, such as design and procurement. This will allow it to function as it should, to track both progress on site and the effect of changes. The Protocol particularly advocates regular and "transparent" programme updates. It also recommends adding a sub-network of "Employer Risk Events" to cover employer delay. Rather ambitiously, the Protocol further recommends that the agreed programme should be accompanied by a method statement "describing in detail how the Contractor intends to construct the works, and the resources it intends to use to do so". As to the technology, whilst the expectations are fairly low (envisaging basic critical path software), this should make the Protocol user-friendly for those small contracts where the parties simply do not need (and cannot afford) complex management.

The second management tool advocated by the Protocol is good record keeping: again, if this is done properly, it minimises the need for highly skilled technical analysis of time-related matters, either by the parties or in the event that an adjudicator is appointed. This is a useful reminder and should have broad appeal, as it will assist in the presentation of claims.

One matter is not entirely clear: the recommended contractual status of the Protocol. Clearly, it cannot constitute a contract document in its current draft form. However it is envisaged that if the parties agree that the Protocol may be used as an aid, then it will prevail over the common law (although not over a conflicting contract term). A further complication is that it is intended for use as a whole only, as it is a "balanced" document which reflects equally the interests of all parties. The authors fear that adoption of part only, or any amendment or deletion of the Protocol, would upset this balance. This is probably unrealistic; but that is not to detract from the intention that the Protocol, as refined and finalised, should become an industry bible. In particular, the glossary section is extremely helpful. The other appendices are also useful and include a model specification clause for the programme, model records clauses (depending on the complexity of the project), illustrative graphics such as programme spreadsheets, and discussion of the merits of different model time impact analysis methods.

The Protocol attempts to grapple with the main issues relating to "time", and goes into considerable detail in its proposals on EOTs, liquidated damages, disruption and global claims, concurrent delays. It also sets out clearly certain elementary principles, such as:

• delay and disruption are to be dealt with as a part of daily management
• the compensation element of an EOT is entirely separate from the entitlement to time (avoiding the common misconception that the two go hand-in-hand)
• where contractor delay to completion occurs concurrently with employer delay to completion, the contractor's concurrent delay should not reduce any EOT due
• an EOT for concurrent delay does not automatically result in a prolongation claim.

• EOT applications should be assessed within one month of receipt

• the cost consequences of delays should be agreed when the contract is first negotiated, rather than being dealt as and when they arise.

As to time impact assessment, the Protocol recommends that it should be agreed between the parties at a level "appropriate to the level of detail included in the Approved Programme and appropriate taking into account the size and complexity of the works and the delays being analysed".

In some instances the Protocol takes a stance which the parties may wish to consider carefully before adopting, for example, in relation to the "float". This is the time that contractors add to the programme to allow for unforeseen delay, built into the planning by the contractor. This has led to a "who owns the float?" debate, with contractors claiming EOTs where the float is reduced by delay, even if the contract itself is not delayed. The Protocol rejects this view, stating that the project owns the float. If the parties disagree, they may adapt their contract accordingly.

In conclusion, as the proverb says, "times change and we change with them": the Protocol recognises the importance of managing time/delay in construction projects and provides helpful guidance as to how this can best be done. However, it remains to be seen whether the construction industry will adopt the Protocol as its "bible". We shall of course keep a close eye on this.

"© Herbert Smith 2002

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