Delay Analysis

We put forward the following scenario to Jason Farnell, Adjudicator and CEDR Accredited Mediator:

“We’re a Property Developer who typically acts as a Main Contractor on projects. During a recent project we experienced programme issues relating to the design team and suffered delays that extended the overall programme.

At the outset of the project we formulated a master programme with the Architect, which included a 16-week construction design programme. The actual design took 30-weeks for the Architect to complete owing to some external matters with Network Rail, but also poor coordination and under-resourcing by the Architect in our opinion.”

We asked Jason the following questions:

• There was a 14-week design delay. We accept some of the matters were 3rd party (Network Rail) related, however the Design Team was under resourced throughout. What is the best way to analyse and evidence this delay to clarify the breakdown of responsibility?
• The master programme was included within the Architect’s order but there was no provision for delay damages. We suffered extra costs due to the delays, are we entitled to recover these? If so, how do we best do this?
• For future projects, what is your best advice for drafting contracts with the Design Team? What should be included in terms of a programme and key dates? Also, how should we manage costs related to delays?
• Despite the Architect being the lead consultant, we often found ourselves having to lead coordination between the Architect and the various consultants (Services and Structural Engineers). In the future, how can we best manage this commercially and contractually?
• When drafting a contractual agreement with a Design Professional, is there any one standout bit of advice you would offer?

1. There was a 14-week design delay. We accept some of the matters were 3rd party (Network Rail) related, however the Design Team was under resourced throughout. What is the best way to analyse and evidence this delay to clarify the breakdown of responsibility?

This is in essence a design management issue. The key to successful design management is to ensure that you give sufficient attention to the Architect’s appointment at the outset, followed by periodic reviews to monitor progress and identify any shortfalls or deviations from anticipated progress at a given time, then implement and record the actions to address them. This is no different to managing the performance of any other supplier.

The appointment document should include a section on programme and deliverables. How many drawings are going to be produced? When are these going to be completed, in what sequence, and when will they be issued? It would also be prudent to ask and record how many designers will be working on the project and what their respective functions and responsibilities would be.

At the point of placing the order for the design, the developer should have satisfied itself that the design could be delivered in the time that is available using the resources that the designer intends to allocate to the commission. You achieve this by seeking fee quotations for the design in an intelligent manner, interviewing the potential providers to establish the size of their team and their understanding of how they will deliver the designs in the allotted time.

Once the developer has appointed the designer, you should hold regular review meetings with minutes to monitor progress against the design deliverables programme. In doing so, you ensure that any deviations do not come as a surprise and corrective actions can be implemented early enough to mitigate the impact of any avoidable delays.

The team should also give consideration to how the design is to be completed to enable progressive release of information to facilitate procurement and perhaps even construction.

2. The master programme was included within the Architect’s order but there was no provision for delay damages. We suffered extra costs due to the delays, are we entitled to recover these? If so, how do we best do this?

In the absence of a clear contractual remedy, the only possible route to recovery is to establish whether the Architect has been negligent in carrying out his professional duties under his appointment. This will usually involve a claim against the Architect’s PI insurance and will necessitate, by reference to expert evidence, proving that the Architect failed to carry out his duties to the standard of a reasonably competent professional qualified to carry out the work for which he was appointed. This may not be easy to establish, particularly where the appointment document is vague in its requirements or where there are excusable causes of delay.

If the consequences of delay are significant, all the more reason to establish at the outset that the design can be delivered by the appointed Architect within the period available. Better to get it right than try to recover the situation afterwards.

In practice, the designer’s fees and profit margin included are unlikely to be of a magnitude that would be able to respond to deductions for delay damages at the full rate set out in the appendix to a Main Contract.

3. For future projects, what is your best advice for drafting contracts with the Design Team? What should be included in terms of a programme and key dates? Also, how should we manage costs related to delays?

The appointment should incorporate a detailed design programme with a schedule of deliverables (e.g. how many drawings; what scale; elevations; plans; details; etc); including when packages of drawings will be issued.

If there are any approval processes to be incorporated, appropriate allowances should be made in the programme.

The appointment should set out the regime for meetings during the design period including frequency, attendance, who will chair them, what reports will be required to be produced for them, and who will minute them. For a design period of only 14 weeks, I would expect these meetings to be held weekly or fortnightly.

There is no reason why you shouldn’t introduce a liquidated damages provision for inexcusable failure to meet the design programme, but this would need to be proportionate to the level of the Architect’s fees and the impact that deductions may have on his ability to perform. It may be worth considering incentivising performance rather than penalising lateness. This whole area is complex and needs to be handled properly.

The biggest issue is ensuring that you pay full consideration on the basis of the appointment in the first place. It’s essential that you know what is going to be delivered, by when, for how much, and that you have the confidence that it is achievable.

4. Despite the Architect being the lead consultant, we often found ourselves having to lead coordination between the Architect and the various consultants (Services and Structural Engineers). In the future, how can we best manage this commercially and contractually?

This sounds like a design management failure.

The Architect’s appointment should be drafted to ensure that the role of lead designer is carefully set out identifying what is involved in this role and what will be expected of the Architect. If the appointment document is properly considered and detailed then the Architect’s performance should be managed against this. It would be helpful to incorporate an organisation chart for the design team, identifying the members of the team by name and setting out their respective roles and responsibilities.

At the design management meetings the Architect should report on his role as architectural designer separately from his role as lead designer. The lead designer’s report should identify any failings on the part of the other designers and the corrective actions that are to be implemented to bring them back on to programme.

The designers’ appointment documents should be suited, that is they should each contain the same level of information (i.e. programme; deliverables schedule etc.). There should be a section in each of the other consultant’s appointments identifying the Architect as being the lead designer and setting out what this means in terms of reporting and incorporation of their designs into the overall.

Difficulties can arise because the lead designer, in this case the Architect, has no direct contractual relationship with the other designers. This can be used as an excuse, which I am sure we have all heard: “they won’t listen to me because they work for you …”. I have seen instances where the Architect employs the other consultants as sub-consultants, which in theory gives a single point of responsibility, but I do not believe that this is necessary provided the consultant appointment documents are all properly drafted and are complementary and most importantly the lead designer manages the design process effectively.

5. When drafting a contractual agreement with a Design Professional, is there any one standout bit of advice you would offer?

At the risk of repeating myself, I would say that there is no substitution for establishing with certainty what the design deliverables will be and when they will be delivered against the design programme and more importantly whether, by reference to resourced outputs whether this is realistic and achievable or merely an aspiration.

About Paul Heming

Paul was a Quantity Surveyor who gained 10 years experience of managing £200 million worth of flagship UK projects, including 20 Fenchurch Street and Battersea Power Station. In 2015, Paul founded C-Link with the intention of sharing his expertise of managing major projects with the SME market.