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 world-wide construction and engineering industry to share and give something back to the industry that is practical and of real use and value. The aim is to identify what is generally considered to be the most robust and 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 DD Quantum Expert 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. For full details please go to article 020 on the blog page.

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 March 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 project.


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 Blog page of the DD Quantum Expert site]

  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 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 article 021 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 below, 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.


Some of the key reasons given by the survey respondents for using each approach, or hybrid approach, in order of most to least popular use, are:

  • Delay-rate per-day approach (38%):

    • The delay-rate per-day approach calculates only the costs incurred during the compensable delay period(s) as identified by the delay analyst; that is, when the recoverable delay costs were actually incurred.

    • When properly adjusted for non time-related costs, the delay-rate per-day approach is more easily explained and understood and, unlike the planned versus actual approaches, does not rely on a contractor’s original estimate which is often imprecise. The delay-rate per-day approach sits with the delay analysis results more closely than the weighted average delay-rate approach and is certainly less time consuming and expensive to conduct than the resource-by-resource ‘but-for’ approach.  

    • The delay-rate per-day approach requires the delay analyst to separately identify the compensable delays from those delays which give an entitlement to an extension of time only. However, the delay analyst may have conducted an analysis to establish the contractor’s entitlement to an extension of time only.


  • Resource-by-resource ‘but-for’ approach (34%):

    • The resource-by-resource ‘but-for’ approach is the most forensic and accurate/precise approach but can be very time consuming and expensive to carry out which prevents me from using this approach as often as I would like to.

    • The resource-by-resource ‘but-for’ analysis is more easily understood and therefore has a greater chance of the recipient of the claim/report understanding the analysis.

    • The cause-and-effect analysis is clearer and more accurate as the analysis is in relation to each resource, or group of resources if certain resources can be grouped together which is often the case.


  • Weighted average delay-rate approach (23%):

    • The weighted average delay-rate approach can reasonably reflect the delay costs during the period(s) in which the delay occurred.

    • Time related costs usually vary at different times in the project ‘life-cycle’, and the delays do not just stop and start at specific times, and the weighted average delay-rate approach takes all this into account, unlike the delay-rate per-day approach.


  • Modified planned versus actual approach (19%):

    • I use the modified planned versus actual approach when I know the full extent of the delay assessment, and I can then make the necessary modifications to refine my analysis as further materials are provided to me.

    • If I take out the contractor’s own delay(s) and other non-compensable delay(s), then what remains is the employer’s compensable delay. I then quantify the contractor’s financial entitlement due to that compensable delay using an approach like the delay-rate per-day or weighted average delay-rate. This is ‘fairly’ straight-forward compared to other approaches and often leads to settlement, but I would not use the modified planned versus actual approach on its own in legal proceedings as the way the approach is conducted lacks the necessary causation / cause-and-effect analysis.

    • I understand that the modified planned versus actual approach is a ‘global’ approach that does not readily demonstrate causation / cause-and-effect. However, as long as the dispute does not progress to a formal dispute resolution process, it does identify roughly what a contractor is entitled to and often results in a settlement of the parties’ differences if those negotiating the settlement have good project knowledge and genuinely want a settlement.


  • Planned versus actual approach (7%):

    • The planned versus actual approach is the approach that the client understands most in this jurisdiction.

    • The planned versus actual approach is simple and easy to conduct, but not very accurate or successful in outcome outside of a negotiated settlement.


  • Global pro-rata approach (0%):

    • None of the survey respondents said they would use the global pro-rata 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’.

Some of the key reasons given by the survey respondents in relation to the use of each approach, in the order of approaches that are always used to those that are never used, are:

  • Always:

    • The 7% of the survey respondents who always use the delay-rate per-day approach:

      • As a rule, I use the delay-rate per-day approach all the time and then amend / adapt the approach if necessary according to the time, budget and records available for the analysis.


  • The 5% of the survey respondents who always use the planned versus actual approach:

    • I use the planned versus actual approach all the time as an initial analysis before progressing to a more forensic approach.

    • The planned versus actual approach is always built into my assessment regardless of my final approach.


  • Often (used >50% of the time):

    • The 53% of the survey respondents who often use the delay-rate per-day approach:

      • I use the delay-rate per-day approach as often as I can which is about 80% to 90% of the time, but I do require specific detail from the delay analyst as to when compensable delays on site start and finish. This is not always possible due to delays not starting and finishing at specific times and/or the delay analyst does not provide me with the specific dates I need in relation to the durations specifically for the compensable delay. When this happens, my analysis becomes more like the weighted average delay-rate approach.

      • I would use the delay-rate per-day approach all the time if I could. However, due to delay(s) not starting and finishing at precise times, plus not all resources, and/or some delayed resources, falling outside the actual delay period(s), adjustments are often made to the delay-rate per-day approach to make the analysis more precise. Most of the time this would be incorporating some of the approaches like the resource-by-resource ‘but-for’ approach as a sub-analysis to identify those resources.


  • The 40% of the survey respondents who often use the modified planned versus actual approach:

    • I often use the modified planned versus actual approach on lower value disputes or when the records do not readily permit another approach to be used.


  • The 33% of the survey respondents who often use the weighted average delay-rate approach:

    • The weighted average delay-rate approach more closely reflects the way contractors incur compensable delay costs most of the time. Delays to program on site do not just stop and start, often delays start with a gradual, incremental impact to progress on certain activities with work slowing down for periods of time but not necessarily stopping, which makes other approaches less refective of how delays occur on site.


  • The 20% of the survey respondents who often use the planned versus actual approach:

    • I often start with the planned versus actual approach, especially when I am constrained by limited records, budget, time and/or working on a low value dispute.


  • The 13% of the survey respondents who often use the resource-by-resource ‘but-for’ approach:

    • I often try to use the resource-by-resource ‘but-for’ approach because it is a very forensic and accurate approach. However, records and budget do not always allow me to use this approach, and if I cannot, I tend to drop onto a hybrid of delay-rate per-day and weighted average delay-rate approaches.

    • I would like to use resource-by-resource ‘but-for’ approach more often but time, budget and records often do not permit this.


  • The 7% of the survey respondents who often use the global pro-rata approach:

    • I often use the global pro-rata approach to get a quick idea/feel for the ‘very’ approximate amount of the claim. If time and budget permit, I will follow this analysis up by using a more forensic approach like the delay-rate per-day.


  • 0% of the respondents often use any other approach(es).


  • Sometimes (used <50% of the time):


  • The 55% of the survey respondents who sometimes use the resource-by-resource ‘but-for’ approach:

    • I would prefer to use the resource-by-resource ‘but-for’ approach more often but records, budget, and details of the compensable delay periods for each activity/resource are difficult and expensive to obtain from a delay analyst and/or the contractor.


  • The 51% of the survey respondents who sometimes use the global pro-rata approach:

    • I sometimes use the global pro-rata approach when time, budget and/or resources are limited, and preliminaries expenditure is also linear, then, on those occasions, I use the global pro-rata approach – but this is not often.


  • The 35% of the survey respondents who sometimes use the delay-rate per-day approach:

    • I use the delay-rate per-day approach when I know precisely when the compensable delay period(s) start and finish. If I do not know when the compensable delay periods start and finish with sufficient accuracy (which has to be to the day), then I generally transition into the weighted average delay-rate approach.


  • The 33% of the survey respondents who sometimes use the weighted average delay-rate approach:

    • If precise details of the start and finish dates for the compensable delay period(s) are not available, but I know roughly when compensable delay(s) may have started and finished, I use the weighted average delay-rate approach.


  • The 31% of the survey respondents who sometimes use the planned versus actual approach:

    • The planned versus actual approach is easy and cheap to use for lower value disputes and also where time, budget and/or records are limited.


  • The 27% of the survey respondents who sometimes use the modified planned versus actual approach:

    • On occasions where there is limited time, budget and/or records to use an approach like the delay-rate per-day approach, then I use the modified planned versus actual approach.


  • 0% of the survey respondents sometimes use any other approach(es).


  • Never:

    • The 40% of the survey respondents who never use the global pro-rata approach:

      • I would never use the global pro-rata approach as a basis of a formal claim submission because it is far too inaccurate and does not reflect how delayed preliminaires costs are incurred.

      • I might use the global pro-rata approach as a rough estimate, but that is it; I would never use the global pro-rata approach as a basis of a formal claim submission.


  • The 27% of the survey respondents who never use the planned versus actual approach:

    • I would never use the planned versus actual approach because there is no cause-and-effect analysis.


  • The 25% of the survey respondents who never use the weighted average delay-rate approach:

    • I have always used the delay-rate per-day approach and have never needed to use the weighted average delay-rate approach. I employ a very good delay analyst who can advise me quite accurately the periods of compensable delay so there is no need for me to use the weighted average delay-rate approach.


  • The 27% of the survey respondents who never use the resource-by-resource ‘but-for’ approach:

    • I would like to use the resource-by-resource ‘but-for’ approach, but it is far too expensive and time consuming compared to alternative methods that are sufficiently accurate, such as the delay-rate per-day approach.


  • The 20% of the survey respondents who never use the modified planned versus actual approach:

    • Again, the general feedback is that there is no cause-and-effect analysis in relation to the modified planned versus actual approach.


  • 0% of the survey respondents said that they never used the delay-rate per-day approach.


  • 0% of the survey respondents said that they never used any other approach(es).


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?

General ‘over-arching’ observations in the order of ‘always’, ‘often’, sometimes’ and ‘never’:

  • Always:

    • The survey respondents identified two approaches that are always being used; the two approaches being the planned versus actual approach and the delay-rate per-day approach.

    • The category 1 ‘less forensic’ approach (planned versus actual) is being identified by assessors more often (17% on average) than the category 2 ‘more forensic’ delay-rate per-day approach (8% on average) as always being used. 


  • Often (used >50% of the time):

    • The survey respondents said that they are often experiencing the three least forensic approaches being used (28% on average) more often than the three more forensic approaches (22% on average).


  • Sometimes (used <50% of the time):

    • However, the survey respondents are sometimes experiencing the three least forensic approaches less often (30% on average) than the three more forensic approaches (39% on average).


  • Never:

    • On average, a higher percentage of assessors say they never experience the less forensic approaches being used (28% on average) than the three more forensic approaches (22% on average).


It therefore appears that the 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 March 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’, 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.


Queries

If you have any queries, please do not hesitate to contact me on robert.gemmell@ddquantumexpert.com