In a relatively recent case, Metcalf Construction Co. v. U.S., 107 Fed. Cl. 786 (2012), the U.S. Court of Federal Claims once again looked to the critical path method (CPM) in determining the allocation of damages in a somewhat complicated delay claim. There is nothing remarkable about this ruling, perhaps, except that it underscores once again the utility and necessity of presenting a court or a board with an understandable, practical method of showing what went wrong with a project schedule and who was responsible for the deviations.
First, interested parties must review the contract, including the scheduling provisions and the definitions of excusable and unexcusable delay. In addition, a workable analytical framework or narrative line on the day-to-day activities of a construction project is obviously necessary to bring some sense of order to the day-to-day scheduling difficulties on any construction project. Achieving the best possible results in resolution of construction delay claims requires being able to explain (and understand) the claim and its equities in a simple, understandable form.
A basic framework for the analysis of delay construction claims exists: set out the original plan and show that it was (or was not) reasonable, compare that original plan to what actually happened on the project, identify the differences between the two, assign cause for the differences and then demonstrate the impact and cost to the project. The classic statement of that framework, which involves CPM scheduling, comes from Messrs. Wickwire, Driscoll and Hurlbut in CONSTRUCTION SCHEDULING: PREPARATION, LIABILITY AND CLAIMS, § 9.1 at 202:
The basic technique used in evaluating contract claims with CPM is to compare the as-planned CPM schedule with the as-built CPM schedule. The technique can be summarized in the following five questions:
- How was it planned that the project would be constructed?
- How did construction actually occur?
- What are the variances, or differences, between the plan for performance and the actual performance with respect to activities, sequences, durations, manpower and other resources?
- What are the causes of the differences or variances between the plan and actual performance?
- What are the effects of the variances in sequence, duration, manpower and so on as they relate to the cost experience both by the contractor and the owner for the project?
An older Tenth Circuit case demonstrates just how important it can be to use CPM methodology. In Morrison Knudsen Corp. v. Fireman's Fund Insurance Co., 175 F.3rd 1221 (10th Cir. 1999), the Tenth Circuit ruled that in order to be excusable, any delay complained of must extend the project's overall completion; that is, the delay must be on the critical path. In that case the Tenth Circuit stated:
A critical delay is one which may delay not just a particular activity at issue, but the overall completion date of the Work. Many activities may be performed on a project at any time without any effect on the completion of the project. A delay in such non-critical activities will not delay the project overall and cannot constitute an excusable delay. Only delays to activities on the critical path - activities with no leeway in the schedule - may give rise to excusable delay.
The Tenth Circuit then went on to state:
Courts often use CPM scheduling to resolve disputes over excusable delay claims. CPM provides a useful, well-developed nomenclature and analytical framework for expert testimony. While CPM has generated technical terminology, the legal requirement that is used to analyze is general and commonsensical: contractors must prove that a delay affected not just an isolated part of the project, but its overall completion. Courts often do not use formal CPM terminology, but simply an informal, CPM-like analysis to determine whether a contractor has met its burden of proof on that general requirement.
The Tenth Circuit expressly required the subcontractor to examine each specific delay claim, determine whether the contractor caused each delay in a manner authorized by the contract, and then determine whether each delay caused the subcontractor to incur reasonable costs which were properly allocable to the contract. The lesson from that case is that a critical path analysis is often essential to a clear, effective claims presentation and can be an absolute legal requirement.
Case law shows clearly that not just juries, but courts, boards and other fact finders, want to hear from those lawyers and witnesses who are objective and base their opinions on (and also understand) what actually happened day to day on the project. See ABA Section of Litigation, Jury Comprehension in Complex Cases 41 (1990); Neal & Company, Inc. v. U.S., 36 Cl. Ct. 600 (1996); Williams Enterprises, Inc. v. Straight Manufacturing & Welding, Inc., 728 F. Supp. 12 (D.C. Cir. 1990). Next, one of the best, if not the best, method of doing so can be through the use of the CPM technique described above.
In that regard, no matter what the measure of damages, no matter what the style of the lawyers; whether the playing field is mediation, arbitration, negotiation, bench trial, board hearing, summary proceeding or jury trial, the same factors which ultimately persuade fact finders are stated repeatedly. Courts and mediators want to hear in the simplest possible terms what are the key contract scheduling provisions and what actually happened day to day on the project (in the form set out above) from objective, credible persons who have first-hand knowledge of the project or the project documentation, who back their testimony with relevant project data, facts and records. Again, one of the best ways of doing so can be a CPM analysis.