Concurrent Delay: A search for clarity and a way forward
by Thayananthan Baskaran, Partner, Baskaran Law & Dheenish Thevandran, Associate, Baskaran Law
Introduction
Delays are common in construction projects. Where the delay is caused by the contractor, the contractor is usually liable for liquidated damages under the contract. On the other hand, where the delay is caused by the employer or a neutral event (an example of a neutral event being bad weather) then the contractor will be entitled to an extension of time under the contract.
However, where the delay is caused by both the contractor and the employer, there is an uncertainty about the consequences of such delay.
This uncertainty is partly due to parties in the construction industry understanding concurrent delay differently.
Meaning
True concurrent delay occurs when there is a delay caused by two events of delay, one of which the contractor is responsible, and the other for which the employer is responsible for, or a neutral event. These two events occur simultaneously. These two events can both be shown to cause delay. For convenience, we will call this the ‘first scenario’. See Delay and Disruption Protocol (2nd edn, Society of Construction Law 2017) at paragraph 10.3.
In such a situation, a contractor should generally be entitled to an extension of time, as it can be shown that there is delay caused by an event for which the employer is responsible, or which is a neutral event, regardless of the fact that there is a simultaneous event for which the contractor is responsible that can be shown to have caused delay. See Delay and Disruption Protocol supra at paragraph 10.
True concurrent delay is rare in practice. There is unlikely to be two events that occur simultaneously, which both cause delay. This unlikely scenario may arise at the start of a project, where there is delay in providing access, for which the employer is responsible, and insufficient labour, for which the contractor is responsible. In this rare circumstance, the contractor is entitled to an extension of time due to the delay in granting access for which the employer is responsible, regardless of the contractor having insufficient labour. See Chengaljati Sdn Bhd v. Turnpike Synergy Sdn Bhd & Anor [2019] MLJU 345 at paragraphs 53 to 55, HC; and Delay and Disruption Protocol supra at paragraph 10.3.
There are two other scenarios that occur in practice which are often referred to as concurrent delay but are not truly concurrent delay in the strict sense mentioned above.
The second scenario is where there is a delay caused by an event for which the contractor is responsible. In the middle of this period of delay for which the contractor is responsible there is an event of delay for which the employer is responsible. Here, the contractor is unlikely to be entitled to an extension of time for the event of delay for which the employer is responsible, as such an event would not in fact have caused delay. See Pembinaan Limbongan Setia Berhad v. Josu Engineering Construction Sdn Bhd [2020] MLJU 192 at paragraphs 71, 72 and 100, HC; and Gasing Heights Sdn Bhd v. Pilecon Building Construction Sdn Bhd [2000] 1 MLJ 621 at pages 629 and 630, HC.
For example, the completion date under the contract is 15 January 2021. The contractor has delayed completion between 15 January 2021 and 28 March 2021 due to insufficient labour. The employer then instructs a variation on 23 January 2021 that requires until 12 February 2021 to complete. In this scenario, the contractor would not be entitled to an extension of time for the variation, as the variation has not caused any delay, as the contractor was already in delay. See Delay and Disruption Protocol supra at paragraphs 10.7 to 10.10.
The third scenario is where there is a delay caused by an event for which the contractor is responsible. After the delay caused by this event for which the contractor is responsible, there is an event for which the employer is responsible. Here, the contractor is likely to be entitled to an extension of time for the subsequent event of delay caused by the employer.
For example, there is delay caused by insufficient labour for which the contractor is responsible between 15 January 2021, the completion date, and 12 February 2021. After this, there is a variation instructed by the employer on 15 February 2021, an event of delay for which the employer is responsible, which causes delay up to 5 March 2021. Here, the contractor would be entitled to an extension for the delay caused by the employer, as the employer has in fact caused delay. See Pembinaan Limbongan supra at paragraph 100.
Ways Forward
As can be seen from the discussion above, there is uncertainty caused by the use of the word concurrent delay to describe the second and third scenarios that are not truly situations of concurrent delay. It would help if more precise language was used, and the second and third scenarios were referred to by other terms. Perhaps, overlapping delay for the second scenario, and, sequential delay for the third scenario.
Much uncertainty may also be avoided if it is accepted that the key consideration is whether a particular event has in fact caused delay to the completion of the works. If such an event for which the employer is responsible or a neutral event has in fact caused delay to the completion of the works, then the contractor should be entitled to an extension of time. This is having in mind that an event for which the employer is responsible or a neutral event are unlikely as a fact to cause delay to completion, if there is already delay for which the contractor is responsible.
To avoid this uncertainty, perhaps standard forms of construction contracts should expressly deal with the issue of concurrent delay. However, due to the variety of scenarios that may arise, the institutions that publish standard forms have been reluctant to do so. A notable exception is the Australian Standard General Conditions of Contract, which provides:
Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a cause referred to in the preceding paragraph, then to the extent that the delays are concurrent, the Contractor shall not be entitled to an extension of time for Practical Completion.
See Australian Standard General Conditions of Contract (AS2124-1992) at clause 35.5.
Conclusion
In conclusion, there is uncertainty as to whether a contractor is entitled to an extension of time where there are multiple events that cause delay due to parties understanding the term concurrent delay differently.
The term should accordingly be used more precisely. It is also important to bear in mind that the key consideration is whether any particular event has in fact caused delay to completion. This is a question that should be considered practically. There is also room for the issue of concurrent delay to be expressly addressed in standard forms of construction contracts to avoid unnecessary uncertainty.