The Use of A Construction Schedule To Analyze a Delay
By William C. Last, Jr.
Attorney at Law
Construction contracts typically include scheduling requirements. Due, in part, to the availability of increasingly more powerful scheduling software, contract scheduling requirements are becoming increasingly complex.
A well thought out schedule are a valuable tool for organizing and coordinating the project work. The schedule also is used in determining when construction project resources, such as manpower and materials, will be required. Finally, if a project encounters delays, a well designed as-planned schedule will be the basis for analyzing what events impacted the completion of the project.
This article will first review basic scheduling concepts and then review the content of typical public work scheduling requirements. Finally, the article will briefly discuss the use of schedules in analyzing a delay claim. Since CPM based schedules are becoming the standard of the industry, this article will focus on that type of a schedule.
Basic Scheduling Concepts
The nature of the project schedule will normally depend on the cost of the project. A bar chart is are usually used on smaller projects. As the cost of the project increases owner’s start to demand a schedule that is based on a critical path method network.
A bar chart simply indicates when specific activities will start date, their duration and finish date. The activities are plotted on a time scale. Since each specific activity on a bar chart is depicted as a straight line on the schedule, a bar chart is easy to understand. A bar chart does not indicate the interrelationship between different activities nor does indicate that the commencement of one activity is dependent on the completion of a predecessor activity.
It is important to understand the relationship between the commencement and completion of the various activities which comprise a construction project. Critical path method (CPM) network and Program Evaluation Review Technique (PERT) are the two scheduling devices which indicate the dependencies and interrelationships between different activities. Those interrelationships between activities are indicated as a network.
Over the years, the CPM has become the common construction network schedule. A CPM shows the sequence of each activity, the start of each activity, the dependence of that activity on the completion of a preceding activity, and how the completion of that activity will restrict the commencement of subsequent activities.
The CPM is graphical model of a project. The basic components of the network are individual arrows which represent specific activities. The activity can be any aspect of the project that requires either time or resources. The project activities are indicated by a logical flow of the work from the left hand side of the schedule to the right hand side. At each end of the arrow are activity numbers. The numbers are referred to as “i-j” designations. The letter “i” represents the start of the activity and the letter “j” represents the finish of the activity. At some place along the arrow and between the “i-j” designations is a number which represents the number of days that activity will require. The schedule also has a time scale. Finally, the critical path is shown as darker or different colored line that runs through the critical activities.
The basic steps in creating a CPM schedule include: (1) identification of the basic tasks or activities that must be performed to complete the project; (2) estimation of the duration of the specific activities; (3) making a determination of the logical flow of the work, which includes a determination of which activities must be completed before the subsequent ones can commence; and (4) inputting the information into the computer so that it can make the numeric calculations that lead to the formulation of the schedule.
Terms that are used in context of a CPM nework include: (1) an Arrow or line is used to represent one activity; (2) a Node or Event which represents the beginning and ending point of an activity; (3) a Milestone is typically a significant event that the owner or contractor wants to track; (4) a Link which represents the path between two Nodes; (5) a Dependency is the relationship between two different activities as they related to the commencement and completion of those activities; (6) a Predecessor activity is an activity that restrains ( refer to as a restrain) a subsequent depend activity; (7) a the restrained activity that follows a Predecessor activity is a Successor activity; (6) job logic refers to the necessary time and order of specific activities in relationship to the whole project; and (7) Float represents the number of days an activity can be delayed without delaying the project, with a critical activity having no float.
The critical path is computed in two steps. The first step involves a forward pass calculation of the activities; starting with the first activity on day one of the project. During the forward pass calculation the early start and early finish for that activity is calculated. The early start is the earliest time an activity can start and is based on the completion of predecessor activities. The early finish is the earliest time an activity can finish, assuming it starts on time and takes no longer than was planned. The second step is the backward pass calculation. It involves calculating the late start dates and late finish dates for each activity. While the late start date is the latest date an activity can start without delaying the project completion, the late finish date is the latest date an activity can finish without delaying the project. Scheduling software automatically completes these two calculation passes then prepares a report with the dates and a graphic network portrayal of the schedule.
The Critical Path is the longest continuous chain or series of activities through the CPM network. In essence, the critical path is the shortest period of time it will take to complete all the activities that comprise the project. The completion of project is delayed when one of the critical path activities is not started on time, not finished within the allotted time, or not finished on time. If a non-critical activity exceeds its float time, that activity will become critical.
In almost every construction contract time is of the essence. Since timely completion of the project is important, almost every construction contract includes some form of a scheduling requirement. The more sophisticated the project is the more likely the project specifications will include a scheduling section.
Typically, an initial “as-planned” CPM network schedule must be submitted for approval by the owner. The initial schedule is to be submitted both in a time scaled graphic model that uses arrows to indicate each activity. The time scale also includes a calendar scale. The CPM must indicate the sequence of each activity, the start of each activity, the dependence of that activity on the completion of a preceding activity, and how the completion of that activity will restrict the commencement of subsequent activities. Once the initial schedule is accepted it is commonly referred to as the baseline schedule. In addition, the specifications may require the contractor to submit the schedule data in an electronic form.
On larger projects, the specifications may require that the schedule be resource loaded. In other words, the schedule must also indicate the costs and resources necessary to perform each activity. The contractor is required to breakout within each activity the separate values assigned to specific resources such as labor, equipment, and materials.
When a contractor prepares initial schedule they should request activity durations from the subcontractors and the long lead time suppliers. That information is not only necessary to accurately prepare the schedule, but can be the basis of binding the subcontractor to the activity durations set forth in the schedule. Thus, subcontracts should include provisions that obligate subcontractors to provide such information.
Once the schedule is approved, copies should be sent to the subcontractors. Most specifications require monthly updated reports that indicate the status of each activity. The status each activity is usually found by reviewing a status line that runs from the top to the bottom of the schedule. By reviewing each item that line passes through and those which preceded the status line, the completion status of each activity on that date can be determined.
The project general conditions may require the use of the updated CPM to prove that an owner-caused delay impacted one or a series of critical activities. Until such evidence is submitted the owner may deny an extension of time to complete the project or obtain additional delay related compensation.
Some specifications require the preparation of a recovery schedule when the critical activities are not being completed on the dates set forth in the schedule. Such a schedule must indicate how the contractor intends to complete the project within the allotted time and what resources will be used to accelerate the work so that it can be completed on time.
A Brief Overview of the Use of CPM Schedules to Prove Delay Claims
Over the years, the courts have rendered a number of decisions that clearly indicate that CPM based scheduling delay analysis is the preferred method to analyze delay claims and assign each parties responsibility for the delay. The California courts have held that a bar chart can be used, but it must include some form of critical path analysis. (see Howard Contracting v. MacDonald Contracting (1998) 71 Cal. App. 4th 38) In addition, the better drafted construction contracts dictate that a CPM based schedule is the only evidence that will be accepted to establish a delay.
As earlier article have stated, four tests must be satisfied before recovery for delay costs will be allowed— a contractor must prove that the delay was (1) excusable, (2) compensable, (3) critical, and (4) non-concurrent. The third and fourth tests require some form of CPM based schedule analysis.
In Wilner v. United States (23 Cl. Ct. 241, 245 (1991)) the U.S. Court of Claims discussed in detail the necessity for, and value of, critical path analysis in order for plaintiff to prove a delay claim. The Court stated:
Each subproject is identified and classified as to the duration and precedence of the work. (E.g., one could not carpet an area until the flooring is down and the flooring cannot be completed until the underlying electrical and telephone conduits are installed.) The data is then analyzed, usually by computer, to determine the most efficient schedule for the entire project. Many subprojects may be performed at any time within a given period without any effect on the completion of the entire project. However, some items of work are given no leeway and must be performed on schedule; otherwise, the entire project will be delayed. These latter items of work are on the "critical path." A delay, or acceleration, of work along the critical path will affect the entire project.
In the another U.S. Court of Claims case, (G.M. Shupe, Inc. v. United States, 5 Cl. Ct. 662, 728-30 (1984)) the Court stated:
A requisite for government liability for the consequences of a critical path delay is fault on the part of the Government. Courts will deny recovery where the delays [of the Government and the contractor] are concurrent and the contractor has not established its delay apart from that attributable to the government.
There are four primary methods of analyzing a delay claim using a CPM schedule. All four methods rely on some comparison of the as-planned schedule to the actual as-built schedule or events. Two methods are primarily used after the project is completed and two methods are used during the course of construction.
The first approach requires a determination of which events the other party is responsible for and then removing them from the as-built schedule by manipulating the scheduling software. In essence, delays caused by the owner are remove from the schedule then a comparison is made to the as-planned schedules completion date. This method is used after the project is completed. If the collapsed as-built completion indicates that the collapsed project completion date is equal or less than the as-planned schedule the owner is responsible for the delays. This method is referred to as the “collapsed” as-built schedule method.
The second method involves a selection of specific time periods when major delays occurred for an “as-planned” versus “as-built” comparison. Rather simply collapsing out the owner caused delays, this approach involves a more in depth analysis of how each delay period impacted the critical path activities. Once an analysis of the first major delay is made, then those conclusions become the baseline for determining how the subsequent delays impacted the project. This approach is used after the project is completed.
The third method involves modifying the “as-planned” schedule. The method involves either modifying the as-planned schedule by modifying the schedule to reflect the critical delays for which the owner is responsible or alternatively by modifying the schedule to reflect the critical delays for which the contractor is responsible. A comparison of the original “as-planned” schedule to the modified schedule should indicate the number of additional days that are attributable to the owner. This method is typically used before a project is completed. It should be noted that the courts have questioned the validity of such an approach since it fails to accurately measure the impact of the delays on the critical path.
The fourth method involves the use of fragnets, which are fragments of a CPM network. In essence, new partial CPM networks are created for the periods or events that are being evaluated. Once the fragmented portion of the schedule is completed, it is then added into the current “as-built” schedule. At which point, an evaluation of the delay can be made in relationship to the ongoing activities. The fragnet approach is typically used during the course of construction.
Delay analysis is not limited to the four methods. There are a number of variations on the four methods. Before a court will accept whatever method is chosen, the proponent of the analysis method must be able to establish that the approach identifies how the delay impacted the actual completion of the project. By definition, only those delays which delay the actual completion of the project are on the critical path.
Only a rare number of contractors fail to use some form of a scheduling device to determine the sequence of construction activities and events. A properly though out schedule allows a contractor and owner to properly coordinate the work and resources that are needed to timely complete the project.
The cost of scheduling software is decreasing and at the same time the level of intricacy of the finished schedule is increasing. However, the proper use of such software requires a basic understanding of construction scheduling concepts.
Finally, a properly prepared and updated CPM based schedule can be the key method for proving the other parties responsibility for delays.
This article, ©2002, was written by William C. Last, Jr. Mr. Last is an attorney who has been specializing in Construction Law for over 20 years.. In addition to belonging to a number of construction trade associations, Mr. Last holds a California “A” and “B” license. He can be contacted at 415-764-1990 or 650-425-7679 or by e-mail at firstname.lastname@example.org. A number of his past articles can be found on his website (lhfconstructlaw.com). This bulletin is published periodically to provide general information about current legal issues. The articles are not intended to be a substitute for the advice of an attorney as to a specific problem. If you have a specific legal question or need legal advice, you should contact an attorney.