DD QUANTUM EXPERT

Research

This page will be continually updated as and when DD Quantum Expert carries out and publishes its research. 

 

Survey Questionnaire 001: Quantifying delay costs – preliminaries – approaches to assess a contractor’s financial entitlement due to compensable delay – the survey & results as of 31st March 2021

Research

DD Quantum Expert is currently conducting an extensive ongoing world-wide survey into the quantification of loss caused by delay and disruption to the progress of construction and engineering projects.


I know how I personally would carry out the quantification of delay and disruption costs, and the approaches I use have been tested and accepted by third party tribunals. However, in my capacity as author and researcher, I am gathering information and opinions from across the industry world-wide on how delay and disruption costs are being quantified by others and sharing this data with the industry to share something that is (I hope) practical and of real use and value. The aim is to identify what is generally considered to be the most robust, common and preferred approaches to quantify delay and disruption costs being used by practitioners generally, and why. To achieve this, my survey questionnaires are being sent out to recognised industry experts (for example, many of the quantum experts recognised by Who’s Who Legal), advisors and consultants to contractor and employer organisations and construction lawyers, and followed-up by telephone interviews with willing survey respondents.


The survey is being conducted in tranches so just a small number of focussed questions are being asked at any one time. The survey results are continuously updated and can always be viewed on this research page of the www.ddquantumexpert.com website. 


The first tranche of the survey comprises eight questions and are in relation to the various approaches that can be used to quantify additional costs incurred due to delayed preliminaries caused by compensable delay. The questions, and the analysis of the responses to each question, in summary, now follows.


Q.1. Have you prepared and/or assessed contractor claims for financial loss caused by delay to the progress of a construction and/or engineering project? [If yes, go to question 2; If no go to question 8]

Of those who responded to date (31st April 2021), 93% said that they have prepared and/or assessed contractor claims for financial loss caused by delay to the progress of a contruction and/or engineering projects.


Q.2. For the matters you were involved with, which of the following approaches have been used to quantify the contractor’s loss caused by delayed preliminaries? [To familiarise yourself with the various approaches please read article DD19 in the DD Blogs page of the www.ddquantumexpert.com website]

  1. Global pro-rata approach

  2. Planned versus actual approach

  3. Modified planned versus actual approach

  4. Weighted average delay-rate approach

  5. Delay-rate per-day approach

  6. Resource-by-resource ‘but-for’ approach

  7. Other approach(es)


Question 2 aims to determine the approaches the respondents to this questionnaire have personally used, and/or have experienced being used, in matters in which they have either prepared, and/or assessed, contractor’s claims for delayed preliminaries costs.

The responses to question 2 to date are:  

  • 82% have used, and/or experienced being used, the delay-rate per-day approach

  • 55% have used, and/or experienced being used, the planned versus actual approach

  • 50% have used, and/or experienced being used, the global pro-rata approach

  • 45% have used, and/or experienced being used, the resource-by-resource ‘but-for’ approach

  • 41% have used, and/or experienced being used, the modified planned versus actual approach

  • 36% have used, and/or experienced being used, the weighted average delay-rate approach

  • 0% have used, and/or experienced being used, any other approach(es)

The respondents who sit as third-party tribunal deciding matters, for example as a judge and/or arbitrator, and expert witnesses, tended to experience a broader selection of the approaches being used, and those who act as claims consultants, in-house counsel for contractor and employer organisations tended to experience the least. However, these are general observations and there are many exceptions.


How forensic is each approach?

The general order of least to most forensic the approach is, is as follows:

‘Less forensic’ approaches:

  • Global pro-rata approach

  • Planned versus actual approach

  • Modified planned versus actual approach

‘More forensic’ approaches:

  • Weighted average delay rate approach

  • Delay-rate per-day approach

  • Resource-by-resource ‘but-for’ approach.


The graphs and tables in the full article (refer to DD20 in the DD Bloggs page) list the above approaches in the above order from top to bottom in a table and from left to right of a chart/graph.


However, the caveat is always how well the approach has been conducted, for example, if a modified planned versus actual has been carried out very carefully and is substantially supported by contemporaneous documentation, then this approach may be more forensic than say a delay-rate per-day approach conducted with very little, if any, cause-and-effect analysis and/or is not supported by contemporaneous records.


Further, it is also arguable whether the delay-rate per-day approach is more forensic than the weighted average delay-rate approach as several ‘expert witness’ practitioners suggest that they are often about the same and that the choice between using one or the other depends upon how the delays occurred on site plus the accuracy of the contemporaneous records.


In general, the ‘less forensic’ approaches often do not incorporate a cause-and-effect analysis due to the way the analysis is conducted. However, it is much easier to incorporate a cause-and-effect analysis as part of the process in the ‘more forensic’ approaches.


Q.3. Do you prepare claims / expert reports to substantiate and / or quantify a contractor’s entitlement to delay costs? [If yes go to question 4; If no go to question 6]

To answer question 4, this question filters out the respondents who do not prepare claims and/or expert reports to substantiate and / or quantify contractor’s entitlement to delay costs.

Of those who responded to this question, 77% said that they prepare either claims and/or expert reports to substantiate and/or quantify a contractor’s entitlement to delay costs.


Q.4. On the basis that sufficient records are available to undertake the analysis, and time, budget, and resources are unlimited, which approach (or hybrid of approaches) would you use and why?

Question 4 aims to determine the approaches that practitioners would use if records, time, budget, and resources to prepare the claim / expert report to substantiate and/or quantify a contractor’s entitlement to delayed preliminaries costs are unlimited; that is, which approach would practitioners use in the ‘ideal world’.


The responses to question 4 to date are:

  • 38% said they would use the delay-rate per-day approach

  • 34% said they would use the resource-by-resource ‘but-for’ approach

  • 23% said they would use the weighted average delay-rate approach

  • 19% said they would use the modified planned versus actual approach

  • 7% said they would use the planned versus actual approach

  • 0% said they would use the global pro-rata approach

  • 0% said they would use another approach

The percentages add up to 121%. This is because several survey respondents identified more than one approach as a hybrid approach. The responses to this question in both the questionnaire and telephone interviews, as set out in article DD020 in the DD Bloggs page of the DD Quantum Expert website, include explanations of the hybrid approaches being used.


I note that 95% of the respondents to this question chose a ‘more forensic’ approach and 26% chose a ‘less forensic’ approach. However, many of the respondents who chose a ‘less forensic’ approach did so saying that the ‘less forensic’ approach would be used in conjunction with with a ‘more forensic’ approach, either as a hybrid approach, or as an initial approach to obtain a rough approximation of the amount of the claim before using a more forensic approach, the most popular being the delay-rate per-day approach.


Please refer to article DD020 in the DD Bloggs page of the DD Quantum Expert website to see a more detailed version of this article that includes the key reasons given by the survey respondents for using each approach.  


Q.5. In line with your experience, and against the natural contraints you encounter (records, time, budget, resources etc) as a claims preparer / quantum expert, which approach(es) do you actually use to quantify delayed preliminaries costs and why?

Unlike question 4, which does not apply the records, time, budget and resource constraints, this question is aimed at reflecting the ‘real world’ position of what approach is being used by practitioners due to ‘real world’ constraints rather than what approach would be used in the question 4 ‘ideal world’.

Please refer to article DD020 in the DD Bloggs page of the DD Quantum Expert website to review the key reasons given by the survey respondents in relation to the use of each approach.  


Q.6. Do you assess claims and/or expert reports which include claims for delayed preliminaries, for example as a judge, arbitrator, expert determiner, dispute board member, adjudicator, or in some other third-party neutral capacity? [If yes go to question 7, if no go to question 8]

To answer question 7, question 6 filters out the survey respondents who do not assess claims and/or expert reports for delayed preliminaries, for example, in the capacity of a judge, arbitrator, expert determiner or other third-party tribunal capacity.


73% of the survey respondents said that they assessed claims/expert reports, which included claims for delayed preliminaries, as judge, arbitrator, expert determiner, adjudicator or in some other third-party neutral capacity.


Q.7. In your experience, as an assessor of delay cost claims and/or expert reports, which approaches do you see are never, sometimes, often, or always being used?

The responses to question 7 are set out in figure 4 of article DD 20 - please refer to article DD020 in the DD Bloggs page of the DD Quantum Expert website to review the general ‘over-arching’ observations in the order of ‘always’, ‘often’, sometimes’ and ‘never’.  


Assessors are experiencing an almost equal split between the ‘less forensic’ and the ‘more forensic’ approaches.

However, a sub-analysis of this data shows that if the assessor regularly acts as a judge, arbitrator or expert determiner in delay cost disputes, then very often the approach used in those proceedings (in excess of 85%) is one of the ‘more forensic’ approaches.


Summary and conclusions

Of those who responded to the survey questions to date (31st April 2021), 93% said that they have prepared and/or assessed contractor claims for financial loss caused by delay to the progress of a construction project. For the matters that those 93% were involved in, on average 46% used/experienced ‘less forensic’ approaches and 57% used and/or experienced the ‘more forensic’ approaches. By far the most common approached used and/or experienced is the delay-rate per-day approach at 83%. No survey respondent identified any other approach than the six approaches listed in the survey questionnaire.


On the basis that records, time, budget and resources are unlimited, the approaches of choice were delay-rate per-day (38%) and resource-by-resource ‘but-for’ (34%) approaches followed by the weighted average delay-rate approach (23%). That is, 95% of the survey respondents identified one of the three ‘more forensic’ approaches as their approach of choice. The 26% of the survey respondents who identified a ‘less forensic’ approach mostly did so as part of a hybrid / initial approach which leads to a final analysis using one of the ‘more forensic’ approaches.


However, this is what the survey respondents said they would choose to do in the ‘ideal world’.

When the survey respondents identified the approaches they actually do use in the ‘real world’ due to the limitations of records, time and/or budget, there is less difference between the ‘less’ and ‘more forensic’ approaches; although on average the ‘more forensic’ approaches are used slightly more often than the ‘less forensic’ approaches. However, a sub-analysis of the survey response data illustrates that almost 100% of those who hold themselves out as an expert witness in delay and disruption cost matters use one of the ‘more forensic’ approaches most of the time and only use a ‘less forensic’ approach sometimes when constrained by records, time and/or budget.   

In relation to what approaches assessors are experiencing being used, it appears that the ‘less forensic’ approaches are experienced more often than the ‘more forensic’ approaches.


If you would like to participate in this survey, please contact me on Robert.gemmell@ddquantumexpert.com and I will email you a survey link.