Assessing Extension of Time delays on major projects

Assessing Extension of Time delays on major projects

Terry Williams*

Department of Management Science, Strathclyde University, 40 George Street, Glasgow G1 1QE, UK

Received 8 August 2001; accepted 22 August 2001

Abstract

This paper describes the standard methods currently available for assessing Extension of Time delays on major projects, andissues around such assessment. Network-based techniques have been much developed, and are powerful and credible tools forassessing the effect of a small number of discrete impacts on a project, where major reactive management actions have not been

needed. The paper points out the problems inherent in such methods in other, more complex situations, and describes the con-tribution that other methods using cause mapping and System Dynamics can make. These, however, are also not universally useful,and the paper describes how the two methodologies can be used together to produce useful analyses of the impact of delays on a

project. # 2002 Elsevier Science Ltd and IPMA. All rights reserved.

Keywords: Network analysis; Complex projects; CPM; System dynamics

1. Extension of time claims

Projects are classically defined by the need to com-plete a task on time, to budget, and with appropriatetechnical performance/quality. In recent decades, pro-jects have tended to become more time-constrained [1],and the ability to deliver a project quickly is becomingan increasingly important element in winning a bid.There is an increasing emphasis on tight contracts, usingprime contractorship to pass time-risk onto the con-tractor, frequently with heavy liquidated damages (LDs)for lateness. Thus, it is becoming all the more importantfor a contractor, when faced with delays caused by theclient, to ensure (s)he claims for a suitable ‘‘Extension ofTime’’ (EOT) to his contractual finish-date, otherwisehe will find himself subject to LDs for reasons withinthe client’s control, not within his own control. Cush-man et al. [2] says that (referring to US case law) ‘‘it iswell established that in a construction contract, time isnot generally of the essence unless it is specifically unlessit is expressly provided, and a contractor’s failure tocomplete its work in accordance with the time require-ments of the contract does not entitle the owner to ter-minate the contract or excuse nonpayment, but it may

expose the contractor to liability for delay damages’’(our emphasis).Now good contractors will try to avoid getting into

claim situations where possible. Jergeas and Hartman[3], for example, give a paper on how to avoid con-struction claims. They suggest as general guide-lines:good record-keeping in case of a claim [although in thecomplex situations of interacting effect discussed below,we do not always know in advance what records tokeep], knowledge of contract (often contractors do notknow what’s in it), preservation of rights by filing noticeof potential claims (for anything different from antici-pated, congestion, owner-supplied equipment late,requirement to stop or accelerate etc); qualify changeorders (i.e. don’t waive rights by signing-off changeorders, especially when indirect/D&D costs might besignificant); effective scheduling; proactive actions (e.g.requesting EOT, stating up-front who is responsible foracceleration, recording disagreements, etc, etc.) (Sempleet al. [4] gives the results of a pilot study of 24 con-struction companies in Canada, describing the amountsof claims and delays, and the main causes claimed).But EOT claims do happen, and they are often very

difficult to prepare, both conceptually and practically.Scott [5] describes a (UK) survey, and says that ‘‘Claimsfor EOT appear on the majority of major civil-engi-neering contracts, although acceleration claims occurmuch less frequently’’. Arditi and Patel [6] say that ‘‘any

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International Journal of Project Management 21 (2003) 19–26

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time-related claim situation needs to be resolved withregard to three basic elements of time impact: causation,liability and damages’’. Cushman et al. [2], quotedabove, go on to say (still referring to US case law) thatthe ‘‘proof of delay has evolved dramatically in the lastdecade as a results of sophisticated owner requirements,evidential case law as described [earlier], and advancesin computer technology. . .The contractor bears theburden of proving the extent of the delays for which itseeks compensation and, in addition, the burden ofproving the damages it incurred as a result of suchdelays’’. They assume that there is a fixed unambiguousentity known as ‘‘Time Impact Analysis’’ which can beused on each occasion an EOT claim arises—but as weshall see in this paper, this is over-optimistic, and thereare a number of issues in even quite simply cases, andcritical problems in complex projects. Alkass et al. [7],who have a lot of experience in such delay claims, talkabout the effort involved: for example, they say that70% of the effort in a claim is spent on searching andorganizing information, and they identify three problemissues: the proper classification of delay types (so thatthe right party is credited), concurrent delays (which canhave an effect on the overstatement of compensation),and real-time CPM analysis (so you use the CPM ineffect at the correct time).CPM, or the Critical Path Method, is overwhelmingly

the standard approach for considering the effects ofdelays on a project [8], and forms the basis for discussionof EOT claims (a standard text for example being Rubin[9]). There is a great deal of work done in CPM analy-sis—let’s divide into the four different questions asked

1. What is the effect of client-induced delays on aproject?

2. Which CPM should be used?3. What is the effect of many non-concurrent delays

excusable and non-excusable on a project?4. What is the effect of many delays excusable and

non-excusable some of which are concurrent on aproject?

Then we’ll see when and whether the methods work,and what additional methods are needed.Before we start that, we should mention the different

categories of delay and entitlement. Various referencesdefine very similar categories, again mostly referring toUS cases. Reams [10] defines

excusable/compensable

the client’s fault, so the contractorgets extension of time and delaydamages

excusable/noncompensable

not the client’s or the contractor’sfault, so the contractor gets anextension of time but no delaydamages

non-excusable/noncompensable

the contractor’s fault, so noextension of time, and indeedthe client can claim damages

King and Brooks [11] define (with US legal cases toillustrate each case):

delays that are not excusable, when the contractormay be liable in damages to the owner, computedeither based on actual damages suffered, or as con-tractually deliniated liquidated damages.excusable delays, not the fault of the contractor andmay extend the time for contract performance; thesecan be compenable or noncompensable (note that‘‘when each party has contributed to a delay, eachparty then bears its own costs of the delay’’).

Note also that Cushman et al. [2] in defining excu-sable delay, in J.D. Hedin Construction Co. v. UnitedStates the Court of Claims said that the contractor wasnot required to ‘‘have prophetic insight and take extra-ordinary preventative action which is simply not rea-sonable to ask of the normal contractor’’.

2. What is the effect of client-induced delays on a

project?

If there is just one delaying event at issue, how is theliability calculated—that is, how much (if any) time-extension should be allowed?McCullough [12] gives the obvious answer to this

question but points out the difficulties involved: ‘‘Thebasis of most construction claims is a delay. CPM sche-dules are used to evaluate the delay caused by specificimpacts. This process is quite simple in theory but extre-mely difficult in practice. In theory, a baseline schedule isdeveloped based upon the best estimates of achievableproduction and sequence of activities at the time. As jobconditions change, this baseline will be updated. Todetermine if a delay has occurred, the baseline at thetime of the impact is used, and the actual impact isinserted into the schedule as a new activity or as achange to the existing one. The schedule is then recal-culated, and the change to the end date of the scheduleis the delay attributable to the impact being evaluated.’’He then goes on to identify some of the problems withthis—for example, schedules are not in practice upda-ted, so you have to recreate the as-built schedule at thetime of the impact from current diaries; quantifying theeffect of the impact is not obvious, and so on. (Reams[10] makes similar comments.). But these are practicalproblems—the essential technique of inserting an activ-ity into the CPM seems fairly clear theoretically.There is a generally accepted rule that delays to non-

critical activities do not matter (unless the delay makes

20 T. Williams / International Journal of Project Management 21 (2003) 19–26

them critical). For example, Kraiem and Diekmann [13]state that ‘‘concurrent delays on non-critical paths arenot considered, because a delay that occurred on a non-critical activity does not participate in delaying thecompletion of the project’’. Yogeswaran et al. [14] looksat claims for extension of time under excusable delays,analysing 67 civil engineering projects in Hong Kong;looking at non-critical activities, they say that ‘‘anexcusable delay to a non-critical activity does not giverise to an extension of time to the date for completionunless the delayed period exceeds the float available tothe non-critical activity’’. Cushman et al. [2] similarlysay that ‘‘For purposes of determining whether theproject has been delayed and for purposes of appor-tioning delays, only delays on the critical path of theproject figure in the analysis because, by definition,delays not on the critical path will not delay the com-pletion of the project [reference to G.M. Shupe Inc. v.United States]’’. However, we will go on to discussbelow that this is a simplistic and over-discrete under-standing of CPM. Indeed, it is worth noting here thatthe latter authors (Cushman et al) go on to say ‘‘thereare many possible critical path schedules for any parti-cular project, depending on variables such as projectedor actual material, labor and equipment resources, anddepending on the sequence of construction preferred bythe superintendent in charge. In addition, the as-plan-ned schedule almost always differs from the as-builtschedule, because as the project moves forward, con-tingencies arise that delay some activities and accelerateothers so that the critical path changes.’’

3. Which CPM should be used?

Which version of the CPM network should be used?Reams [10] says that classical methods (e.g. Rubin [9])use the as-planned schedule. He discusses all the workinvolved in preparing an as-planned schedule for court,either when an as-planned schedule already exists(drawing on the then standard book, Hohns [15]—whosays that the schedule must be complete, and also error-free, and also points to cases where the use of the sche-dule for a claim was rejected because it did not reflectthe sequence of work as actually intended and per-formed) or where it must be developed as a good guessof what should have happened. But then he points outthat the schedule will have changed before the delay(due to errors, contractor’s changes, client’s scope-changes, etc. etc.), so it is not correct as it stands butmust be modified—‘‘a contractor may be held to havenot acted prudently if it fails to reflect this new knowl-edge in subsequent project plans’’.Scott [5] says that in the USA, the general approach is

from Wickwire and Smith [8], using an as-built scheduleand then removing all of the delays due to the owner,

whereas under the UK Institution of Civil EngineersConditions of Contract [16], the supervising engineeruses his best judgement to decide EOT claims (‘‘theestablished procedure in the USA [of using as-built CPMschedules for claims] is almost unheard of in the UK’’).He uses some extremely simplistic examples (based ontwo-activity networks), but even for these there was noagreement between practitioners where liability lay orwhat should be claimed—so clearly the issues are non-tri-vial. (There was not also agreement about critical-pathissues, so clearly the difficulties here are recognised.)In fact, to explain the complete course of events in a

project, a number of CPMs are required. Arditi andPatel [6] use five:

the as-planned schedule;the as-built schedule;the ‘‘Owner-accountable schedule’’, which is essen-tially the as-planned schedule plus delays that can beattributed to the client;‘‘adjusted schedules’’—a series of schedules to explainhow the as-planned turned into the as-built—so, firstas-planned, then as-planned plus the first delay, usedto quantify the effect of the second delay, then as-planned plus the first two delays and so on; andas-projected schedule—used mid-project, which is as-built up to now and as-projected for the remainder ofthe project.

4. What is the effect of many non-concurrent delays

excusable and non-excusable on a project?

Where there are many delays to a project, some ofwhich can be blamed on the client and some the fault ofthe contractor, it is necessary to identify the effect of whatcan be blamed on the client. To simplify things initially,let us assume that these delays are non-concurrent.Bordoli and Baldwin [17] summarise methods to look

into this situation, starting at the level of bar-charts andscatter-diagrams, which although simple can still have ahigh visual impact. They look at:

1. the ‘‘as built’’ network, showing the story of whathappened;

2. then the ‘‘as built subtracting impacts’’ networksubtracts the impacts to give a ‘non-disrupted’programme;

3. then the ‘‘baseline adding impacts’’ adds theimpacts to a baseline;

4. and finally a ‘‘window analysis’’, referring to Gal-loway and Nielsen [18]—since the as-planned net-work is updated throughout the project (and thusthe critical path), the delay-impact assessment isonly carried out within each window betweenmajor updates.

T. Williams / International Journal of Project Management 21 (2003) 19–26 21

But there are clear flaws with these so that theydeveloped a multi-step methodology for assessing theevents in all their implications. Based on the as-plannednetwork, for each event the methodology:

1. identifies progress at event date and updates thenetwork using the progress data;

2. simulates the event in the updated network3. considers mitigating actions (which we will later

discuss further);

then the analysis in the end shows the extension of timeincreasing event-by-event, and these extensions can besummed for excusable and non-excusable events.This is clearly a good method which seems to get

around a lot of problems. However, it does not copewith concurrent delays, and also (and crucially, as weshall see later), mitigation actions are not as simple asthose modelled in the Bordoli and Baldwin paper, andindeed can often have quite non-intuitive effects. Let uslook at the first problem, then move onto the latter.

5. What is the effect of many delays excusable & non-

excusable some of which are concurrent on a project?

When both client and contractor delay the projectconcurrently, the legal position, at least in the USA, isessentially that the client is not eligible for extension oftime or damages.Cushman et al. [2], for example, say that ‘‘If the con-

tractor would have been delayed in any event by causeswithin its control, that is, if there was a concurrentnonexcusable delay, the general rule is that it would beinequitable to grant the contractor either an extensionof time or additional compensation’’ (with rule stated inKlingensmith Inc. v. United States). . . . On the otherhand, when the owner and contractor concurrentlydelay the work, and responsibility for the delay cannotbe apportioned, the contractor is generally not liable forliquidated damages.’’Curiously, Bartholemew [19], discussing Kraiem and

Diekmann [13] says that ‘‘The writer totally disagreeswith the authors’ premise that concurrency is relevant tothe contractual significance of delays. Contractual sig-nificance can only be judged by the effect delays haveon: (1) Extending overall project completion; (2)extending interim ‘‘milestone’’ dates; or (3) by renderingcertain following activities more costly (in the case ofcertain compensable delays). CPM network analysispermits this judgement to be made.’’ However, he doesgo on to say ‘‘When a number of such delays areinvolved the cumulative effect is usually the importantissue’’, then goes on to discuss his usual way of working:‘‘An as-planned schedule seldom constitutes the criter-ion for measuring actual fulfillment of the work as theauthors claim. . .the usual situation is the retrospective

analysis case depicted by the authors’’; so his methodfor analysing the effect of delays is to draw the networkas actually happened, then remove the delays to see theeffect of all of them (or look at removing them one byone in some order). Logcher [20] points to a court casedoing exactly that. Kraim and Diekmann [21] end upthe discussion with the equation:

New contract duration ¼ as-planned duration

þ excusable delaysþ compensable delays

þ concurrent delays

So how are the delays combined? A well-known paperhere is by Alkass et al. [22], who define the combinationof delays (quoting Rubin [9]) thus:

if excusable and nonexcusable delays occur con-currently only an EOT is grantedif excusable compensable and excusable non-compensable delays occur concurrently only an EOTis granted, no damages if two excusable compensabledelays occur concurrently an EOT and damages isgranted

They then describe the use of four types of schedule:

as-plannedadjusted (as-planned adjusted for change orders,construction changes, delays, acceleration)as-builtentitlement schedules show the original constructioncompletion dates, how these dates have been impac-ted by excusable delays, and the projected completiondates given the remaining work. Final entitlementschedules reflect the original, adjusted and actualcompletion dates used to establish the total timethat the contractor or the owner is entitled to forcompensation.

And they describe six methods—all tested on a com-mon simple test case (consisting of 10 activities, adaptedfrom Kraiem and Diekmann [13]):

1. the global impact technique—adds together alldelays; this clearly over-estimates the total delay;

2. the net impact technique—just puts all the delaysonto a bar-chart, then calculates the net delay (i.e.taking into account concurrency); this does nottake into account delay-types.

3. the adjusted as-built CPM technique—this takesthe as-planned and puts into it the delays as activ-ities to end up with the as-built. Alkass et al. dis-cuss problems again by not taking into accountdelay-types (and a discussion of the problem ofclaimants tying their delays to non-critical parts ofthe network).

4. the ‘‘but for’’ or collapsing technique, which takesthe as-planned CPM and adds the delays that one


party is willing to accept, to give an acceptabletotal delay. However, this does not take intoaccount changes in CPM during the course of theproject—so a delay might be on the as-plannedcritical path, but not on the as-built critical path.

5. the snapshot technique looks at the periodbetween two ‘‘snapshots’’—from a snapshot time,it takes actuality (durations and relationships) upto a second snapshot-times and applies that to theas-planned, then compares the two end-dates; butthis does not consider delays prior to the firstsnapshot.

6. the time impact technique, similar to the snapshottechnique but looks at just one delay, or delayingevent.

The authors concludes that (1–3) are very simplistic; (4)is better but is only done once; (5–6) are good but do notclassify delays by fault implying that more analysis is nee-ded. They then go on to describe a new, seventh, method

. the ‘‘isolated delay’’ type—the authors say thatthis tries to combine the approach of (5–6) withthe scrutinising approach of (6). The method looksat time periods, then applies only relevant portionsof delays—so looking at project completion datesbefore or after shows change, and the discrepancyis attributed to the delays that were incorporated.

6. Problems with current CPM methods

However, work in which the author has beeninvolved, in particular his work with Eden, Ackermannand Howick on post-project litigation claims (sum-marised in Eden et al. [23]) has shown a number ofproblems with current CPM methods when dealing withcertain projects. These seem to be particularly relevantfor complex projects [Williams [24] defined a complexproject in terms of structural complexity, the numberand interdependence of elements (following Baccarini[25]) and uncertainty in goals and means (followingTurner and Cochrane [26].]. They are perhaps also morerelevant to more volatile phases of projects (e.g. more soin an engineering phase than a construction phase).There are three critical issues, with two additional

problems also to note

1. The first, and perhaps most obvious, issue is thatmany delays or disruptive effects impact manyactivities simultaneously—a problem both inmodelling projects post-hoc and in pre-project riskanalysis [27]. For example, a Change Order mightaffect many design activities simultaneously—andmight bring additional inter-relationships betweenthe activities. Or to take Bowers’ [28] example,

when developing an aircraft, the loss of a test air-craft would cause disruption to each of the air-frame development, avionics development andengine development simultaneously (and differenteffects to each one). To evaluate the impact of onesuch effect can be carried out in a CPM by con-sidering all of the impacts on each activity in thenetwork; however, when a number of effects occurand they overlap in time, then more sophisticatedanalyses or simulations are required.

2. Where there is a significant number of delays—rather than simply assessing the effect of a singleevent—methods like Bordoli and Baldwin [17]become impractical. But more than this, the delayswill usually lead to effects which would not beobvious from simply looking at the network. Inparticular, they lead to the ‘‘softer’’ (human-origi-nated) type of effects. For example, [23] disrup-tions might cause de-motivation or loss of morale,which will affect productivity and hence cause fur-ther delay. Or, there might be schedule pressure(what happens to productivity when there is parti-cular pressure to achieve a very tight deadline?), orstress, or effects on team-work etc. These areclearly very important effects to recognise whenmanaging projects (the importance of recognis-ing—and then modelling—these effects were dis-cussed in a recent NATO Workshop [29].

3. Thirdly, most of the methods outlined aboveessentially assume an inactive management. Thatis, the effect of events are modelled but it isassumed that the network stays the same andmanagement take no actions in response, which isclearly wrong [30,31]. This alone can bring theresults from such methods into question. (Thesame criticism can be levelled against standardtime-risk-analysis models, which again essentiallymodel a helpless management watching to see theout-turn of their project without intervening tobring late-running projects under control [32]).

Some authors in these areas do allow some manage-ment reaction. For example, King and Brooks [11]define excusable delays, as earlier, and say that they canlead to constructive acceleration, when a contractor isforced to increase the pace of work to meet a projectschedule that has not been extended because of excu-sable delays; they also list typical cost categories (e.g.jobsite support, escalation labour etc; unabsorbed homeoffice delay). Arditi and Patel [6] assume simple accel-eration rules, such as Unit Acceleration Cost and so on.And these ideas can go straightforwardly into Bordolitypes of simulation. But even individual actions are notthis simple—and combinations of actions have con-sequences that these methods cannot model. If accel-eration is attempted by taking on more personnel, then


often the effect is less than expected. Or it may haveramifications that are costly—for example, having hiredextra labour, it is rarely easy to hire and fire at will; somanagement might need to keep workers idle, or work ontasks in a non-optimal sequence to keep the workforceoccupied, or even work on tasks before being given clientapproval. Indeed, such an action might even be counter-productive (the well-known ‘‘$2,000 hour effect’’ [33]).This last point leads on to a difficult issue when

claiming. If management have taken some action inresponse to the claim, was the action optimum—or evenreasonable? Indeed if management action in accelerat-ing projects is often counter-productive [33,34], is itreasonable for management to take it at all!?There are two additional problems.

Most of the authors earlier distinguish betweendelays to activities on the critical path (which aredeemed to be important) and delays to other activ-ities (which are deemed to be unimportant [2,13,14]).However, with resource-constrained networks, eventheoretically the idea of ‘‘criticality’’ is undefined [35].And practically, even where specific resource-typesare not defined, often there will be implicit resourceconstraints (e.g. a senior engineering can only lookafter so many tasks at one time). This means that thestandard analyses can become meaningless as soon asthere are significant resource-constraints—which isthe case for many (if not most) large projects.

Finally, the effect of delays is not a simple function oftheir duration. We should remember that sometimesan apparently small and unimportant delay can causesignificant costs. For example, a 3-month delay in aNorth sea project which causes a weather-window tobe missed, could lead to a 1-year delay to the overallproject as the project has to wait, idle, for the nextsummer. In the case of Murphey vs. US Fidelity,reported by Arditi and Patel [6], a contractor sued asupplier for losses due to a delay in delivery; here,despite efforts to expedite, the work ran into thewinter and hence costs overran; the court found infavour of the contractor.

The problems and issues have given rise to the use ofcausal-mapping (to answer the question ‘‘why?’’) com-bined with System Dynamics (SD; to answer the ques-tion ‘‘how much?’’) to answer questions such as theeffect of a delay, or a set of delays, upon a project, asdescribed in papers such as Ackermann et al. [36] andWilliams [37]. Such a process starts by using interviewsand workshops to develop cause maps of the perceivedcauses of effects in the project and their causal links [inthese papers, specialist software (‘‘Decision Explorer’’)is used to help develop, structure, share and analyse theextensive maps]. Following the development of thecause map model, analysis shows the nature of the

feedback dynamics and other endogenous effects,enabling an Influence Diagram and thus the skeleton ofa System Dynamics (SD) model to be developed. SD isa quantitative analysis technique that could be arguedto naturally follow on from the use of cause mappingand feedback; it has a track record since 1964 forexplaining and modelling the systemic effects in projects(see a discussion in Rodrigues and Bowers [38]).Because of its explanatory power (from the endogenousview it takes of a system), it has had particular applica-tion in the post-mortem analysis of projects; an earlysuccess was the Ingalls Shipbuilding case [39], and themethod has been used on a number of such litigations[37]. The cause-map and SD model are developed inparallel during the process of analysis [36]. Such a pro-cess can (as described in [40]):

1. show causality: the systemic inter-relationshipswhich caused the various ramifications of thedelays to build up

2. show responsibility: show the party causing theinitial causes of the delays (as opposed to theimmediate causes, which might simply be reactionsto previous effects)

3. calculate the quantum of the effects—in otherwords, show the size of cost- and time-overrunresulting from a particular delay or set of delays.

One of the key aims of developments in this area is toprovide transparency in the claims process. Zack [41]says that while clients and contractors used to do thingsin partnership, they now play out ‘‘claimsmanship’’. Helists 11 ‘‘claims games’’ commonly played by con-tractors on public projects (note that some of these arenot relevant to private projects), some of which could bevalidated (or not) or quantified by the types of techni-ques described in the previous paragraph. These include

1. Loss of productivity claims; Zack questions thebasis of numbers used to calculated productivitylosses claimed—this forms an important part ofSD models, which seek to explicate the chains ofcausality and explicitly quantify the different ele-ments of productivity losses.

2. Cardinal changes; this is a US concept, in which achange to a public contract which substantiallychanges the nature of the agreement is called a‘‘cardinal change’’ and should have a separateprocurement activity: but contractors can say theaccumulation of many small changes eventuallyled to a cardinal change, effectively giving a cost-plus situation; again, in Eden et al. [23] the cumu-lating effect of many small Change Orders is sin-gled out as one of the effects for the modelling ofwhich SD models are particularly appropriate.

3. Project float claims; [9] includes the principle thatfloat belongs to the contractor—so you can claim


a compensable delay even when the project is notdelayed; Zack disgrees with this. SD models allowa transparent analysis of the effect of using upfloat (which of course is not a zero effect asassumed in simple network models).

Other ‘‘games’’ include bidding games, taking claimsinto account in the bid, reservation of rights (whenagreeing change orders), delayed early completionclaims, accelerated delay claims (merging the delay andacceleration claims), total cost claims, DBE claims, and‘‘Hail Mary’’ change orders (throwing everything intoone change order at the end of the contract). Zack alsolists 11 ‘‘claims games’’ starting to be played by publicowners (generally new and untested), some of themsimply opposites of the above, including interestingly,time-impact-analysis requirements (e.g. using fragnets)and concurrency of delay (other ‘‘games’’ include claimsaudit, project partnering, escrow of bid documents,waiver-of-claim language, ownership of float clauses,keeper-of-schedule specification, liquidated-damages-plus-actual damages clauses, ADR.However, SD is not a panacea to answer all problems.

SD models will not normally be at the operational levelof a network, and practically will need to consolidateactivities into a smaller number of units. SD alsoassumes continuous flows of homogenous entitiesthrough the models, and some approximation is oftenneeded compared to Discrete Event Simulation modelsboth in modelling discrete units with a continuous flows(e.g. when a short-length production run is involved)and in the assumption of homogeneity (e.g. when asmall number of different types of product is beingmanufactured in a single line). However, it has beenfound to be a very powerful technique for capturing thecounter-intuitive temporal effects which are seen inprojects—and in particular which form an essential partof most EOT claims—where small causes compound togive significant delays, or where management actionshave reduced or even opposite effects to those expected.

7. Proposed procedure and conclusion

So, given that conventional network-based techniqueshave some clear disadvantages, but SD also has someclear disadvantages as well as clearly lacking the court-room credibility of network-based techniques, whatshould we do?The first step is clearly to find out what actually was

the outturn in the project. For this, Gantt charts orsome sort of time-profile showing key dates (plannedand actual) and the dates of key disruptive events isclearly vital to illustrate the overall project time-perfor-mance. This does not explain why the out-turn was as itwas, or whose fault it was, but it does give an overview

of what happened—and, surprisingly, managementwithin projects managed in a distributed way with noclear project manager (e.g. under a co-ordination-matrix management approach) can have only a hazyview of how late key interim dates were.Then, if there are a limited number of delays or dis-

ruptive events (and, if change orders are an issue, thenumber of change orders is not sufficient to consitute a‘‘cardinal change’’), then the standard network-basedmethods described in this paper are applicable and canbe used.Otherwise, if there are many effects on the project, or

the project was so complex that the out-turn cannot beintuitively expected from the effects known to havetriggered the behaviour (see Eden et al. [23] and Wil-liams [24]), it is necessary to seek to understand why theout-turn occurred and to trace the causality from thetriggering effects. For this, causal maps (to understandthe causality) and System Dynamics (to quantify theseeffects) are necessary, as described in the section entitled‘‘problems with current CPM methods’’ above. Net-works can give the answer ‘‘what would have happened. . .’’ (had these effects not compounded together; hadthere not been systemicity within the effects; in parti-cular, had management not acted in response to thetriggering events and (for example) accelerated the pro-ject). But even an analysis that says ‘‘this project wouldhave been 1 year late due to the actions of the client—but in fact was only 3 months late because the con-tractor accelerated’’, while having some usefulness (itcan be at least a defence against a claim for LiquidatedDamages if the contractor is completely blameless andcaused no parallel delays), in general does not help tocredibly explain delays and replicate what actually hap-pened in the project.In practice, a combination of methods for different

parts of the project has been found to be often mostappropriate, as the effects on different phases of theproject may be different. For example, it may be thatdesign and manufacturing were heavily accelerated inthe face of a high level of delay and disruption (whichwould imply a very high level of over-spend); in thiscase, a cause-map/SD analysis would be needed toexplicate the factors and effects and replicate the out-turn, showing why this limited over-run (and high over-spend) occurred; but it may be that the commissioningphase was delayed as discrete events affected discreteactivities (albeit the causes of those events might havearisen from complex interactions of triggers which canbe shown by the causal-map analysis), which can bemodelled using networks.Further work in this area is looking at closer combi-

nation of these methods—bringing the benefits of sys-temic modelling to the operational models provided bynetworks—but this is still under development. For nowwe must use judgement to apply the appropriate method


to the appropriate project phase to provide effectiveunderstanding of the effect of delays and their claim-ability; other further work will formalise and systemisesuch judgements.

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Documents

Assessing Extension of Time delays on major projects