So what is it?
The protocol provides guidance on some of the common delay and disruption issues that arise on a construction project, where one party wants to recover from the other an extension of time (‘EoT’) and, as a result of the additional time spent on a project, the loss and expense incurred for the extra resources during that period.
The Second Protocol was published in February 2017, following various developments in the law and technology, construction industry practices, feedback on the protocol and industry reviews. The Second Protocol supersedes the 1st edition (the “First Protocol”) and it reflects changes in thinking in respect of record keeping, delay analysis, concurrent delay and disruption in the 15 years which passed between the two publications.
So what’s new?
The Second Protocol sets out some of interesting changes, which include:
- development of guidance on record-keeping: guidance on all projects, be they large or small, with a focus on ensuring there are good records for managing changes, determining an EoT and periods of time for which compensation may be due;
- a new core principle relating to the contemporaneous submission and assessment of EoT claims, rejecting a “wait and see” approach. This means parties are encouraged to deal with the impact of events as the works proceed (both in terms of time and any compensation);
- there is no longer a preferred delay analysis methodology – instead there are a number of factors which ought to be taken into account when choosing from the ‘menu’ of various delay methodologies;
- updated guidance following trends from the court toward global claims;
- removal of the model contract clauses, consistent with the approach that the protocol should not be incorporated as a contract document;
- more developed guidance on disruption and the types of analyses which could be used in such a claim; and
- updated guidance on the approach to concurrent delay.
One of the aims of the Second Protocol was to ensure that it was in line with current case law. A key area of change is the approach to concurrent delay, which is acknowledged as a “contentious issue”. Why contentious? Because there are different views as to the meaning of concurrent delay itself on the correct approach for dealing with such delay when analysing an entitlement to an EOT.
The Second Protocol says that “true” concurrent delay is the occurrence of two or more delay events at the same time (one event where the employer has assumed risk and responsibility and the other where the contractor has accepted that risk), and “the effects of which are felt at the same time”. The Second Protocol differentiates this from “a more common usage of the term” where two or more delay events arise at different times, but the effects are felt at the same time.
The Second Protocol recommends that where an employer delay event will not result in the works being completed later than would otherwise have been the case “because the works were already going to be delayed by a greater period” because of a contractor delay event, the only “effective cause” of delay is the contractor risk event. Therefore, where an employer delay event commences after, and ends prior to, a contractor delay event, the employer event should not be seen as causing a delay to completion (i.e. there is no concurrency).
Concurrent delay - general position under English law
The starting point under English law for deciding what should happen if concurrent delay is the “Malmaison” approach as set out in Henry Boot Construction UK Ltd v Malmaison Hotel (Manchester) Ltd. 1 Here it was agreed that if there are two concurrent causes of delay, one of which is a relevant event, and one of which is not, “then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other delay”. The contractor would not be entitled to additional money.
However, the Malmaison approach focuses on what happens once concurrent delay has been established. As mentioned in the Second Protocol, the question of whether causes of delay are truly concurrent is another issue, and one which has been explored in various judgments. Adyard Abu Dhabi v Sd Marine Services2 provided some guidance on this, focusing on the prevention principle. Under this principle, a contractor could only rely on the prevention principle if the contractor was in fact prevented from completing by the relevant date in any event. Hamblen J (as he was then) held that “[t]he rationale of the principle is that it is unfair for a party to insist on performance of an obligation which he has prevented the other party from performing. That necessarily means prevention in fact; not prevention on some notional or hypothetical basis.” As applied to concurrency, there is only concurrency if both events in fact cause delay to the progress of the works and the delaying effect of the two events is felt at the same time.
Saga Cruises BDF Ltd v Fincantieri SpA3
The judgment in the recent case of Saga Cruises is in line with Adyard and the Second Protocol. In this case, the parties agreed to postpone the original completion date from 17 February 2012 to 2 March 2012. However, completion did not actually take place until 16 March 2012. There were contractor delay events occurring until 16 March 2012. There were a number of other employer delay events taking place from 2 – 11 March 2012 which may have caused delay on their own.
The court pointed out that Adyard had highlighted the importance of distinguishing between a delay which, had the contractor not been delayed would have caused delay, but because of an existing delay made no difference and those where further delay is actually caused by the event relied on. After considering the authorities, the court concluded that “unless there is a concurrency actually affecting the completion date as then scheduled the contractor cannot claim the benefit of it. Causation in fact must be proved based on the situation at the time as regards delay.” As such, because the employer delay event in this case did not cause delay beyond that which would have been caused by the contractor delay event, there was no concurrent delay and the contractor could not claim the benefit of it.
It is worth noting that both Adyard and Saga Cruises were decisions of the Commercial Court; it will be interesting to see how the Technology and Construction Court approaches this issue in the future.