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How Much Are Your Records Worth?

Such were the circumstances in the now much written about case of Mirant Asia-Pacific Construction v Ove Arup[1].  The dispute revolved around which delays were on the critical path – a very common conundrum. In this particular case, delays caused by the defective foundations of a power plant were deemed by all and sundry to be the obvious source of the critical delay. This resulted in a significant eight figure compensation amount being claimed by Mirant from Ove Arup for breach of contract and negligence. Now the foundations may have actually been defective and the consequence of any defects may have caused a delay but Ove Arup said in their defense that any delay to the foundations was not the cause of the 5 month delay to the completion of the project (i.e. it was not the critical delay). Easy to say of course but difficult to prove. Although Mirant did acknowledge that there had been other concurrent delays, they claimed that without the dominant foundation delay the other delays would not in themselves have been critical. So the judge had to decide which delays were dominant.

Faced with an unreliable project schedule it was necessary to dig deeper and examine other project records to decide whether the evidence given by the parties’ respective Expert Witnesses was corroborated by the facts. It would have been too easy to go with the flow of opinion by those involved with the project and to side with the popular view that the foundations were responsible for the critical delay. In his pursuit of the truth, the judge found out a lot about retrospective delay analysis techniques to assist him in reaching his decision. The judge also praised one of the Expert’s who pointed out the inadequacies of the project schedule records and therefore the need to look to other records.

Ultimately, the judge dismissed Mirant’s claim because he was satisfied that sufficient evidence had been presented in support of Ove Arup’s position that the foundations delay was not actually the cause of the delayed completion of the project.

The reason I mention this particular case is that it is typical of so many projects where records are found to be wholly inadequate when a dispute arises and the parties find themselves in a formal dispute resolution forum. How different would things have turned out had Ove Arup been able to demonstrate by reference to the latest detailed project schedule in a contemporaneous way that the foundations delay was not in fact the critical delay?  More importantly, efficient solutions to recover or reduce the effects of all delays, in the most economic manner could have been agreed and implemented there and then. The importance of maintaining accurate, detailed and relevant records can never be understated and the responsibility to achieve this must lie with both the Contractor and the Owner notwithstanding express contractual obligations. This is because either party may have cause to rely on such records in the event of a dispute. When will the time come when maintenance of relevant records throughout the project are policed to the point whereby such practice is the norm and not the exception?

With regard to determining extensions of time and compensation for delay and disruption, the Society of Construction Law’s Delay and Disruption Protocol[2] is available to all. In its own words the Society says the Protocol “…exists to provide guidance to all parties to the construction process when dealing with time/delay matters. It recognizes that transparency of information and methodology is central to both dispute resolution and dispute avoidance.” The Protocol is indeed packed with sensible recommendations and guidance and if adopted by the parties to a construction contract provide readily available methods of dealing with issues such as concurrency and the use of float time as part of the process of analyzing delays. However, although the Protocol has been around since October 2002 it does not appear to have been welcomed by the industry with open arms. A recent survey entitled “Claims, Delay and Disruption and Determining Extensions of Time” by David W Bordoli[3], found that only 52% of all respondents to the survey knew that the Protocol existed but of those that knew about it, 97% generally agreed with the Protocol’s aims. When it came to a dispute, 42% of the respondents to the survey had mentioned it or had it mentioned to them but only 13% of all the respondents to the survey had been involved in projects where the contract had been amended to include the provisions of the Protocol.

In a foot note to his article covering the Mirant v Ove Arup case, Tony Bingham[4]  points out that Ove Arup were awarded its costs amounting to approximately GBP8 million.  Of course such a cost could have been completely avoided together with Mirant’s own costs in pursuing its claim if only adequate records been available on the project at the time. Bingham quite rightly says it was a good argument for Ove Arup to win.

I wonder how much your records are worth to you. The lesson here is the importance of records, records and records! It is vitally important for Contractors to maintain adequate project records to support claims.

 

[1] Mirant Asia-Pacific Construction (Hong Kong) ltd v Ove Arup Partners International Ltd [2007]   EWHC918(TCC)

[2] The SCL Protocol can be downloaded or purchased at www.eotprotocol.com 

[3] Claims, Delay and Disruption and Determining Extensions of Time. Results of a Survey of the UK Construction Industry carried out as part of the research project “The Application of project Management Software for Planning and Scheduling in the Construction Industry. David W Bordoli, Andrew N Baldwin & Simon A Austin. November 2006

[4] “Nothing if not critical”, Tony Bingham, Building Magazine, 22 June 2007

  

About the author
Rodney Martin
Author: Rodney Martin

BSc, LLB(Hons), MSc, MRICS, FCIArb, FMIArb, FSIArb, FMSAdj

Rodney is the Chief Executive of the Charlton Martin Group, having previously been employed as Group Regional Director and Senior Vice President of two major contracts consultancy groups in the Asia Pacific Region. Of his 33 years of experience, 23 have been at senior level in this region. Additionally, Rodney has worked for many clients in Europe, Africa, the Middle East and India. Rodney holds dual qualifications in quantity surveying and law and as a chartered quantity surveyor is a specialist in construction contract consultancy providing professional and technical advice to clients relating to contract documentation, contractual claims, dispute avoidance and resolution. He is an accredited mediator, panel arbitrator and panel adjudicator with the Asian International Arbitration Centre and is an experienced speaker within the region. He is a Fellow of the Chartered Institute of Arbitrators as well as both the Malaysian and Singapore Institute of Arbitrators. Rodney has been appointed as Expert Witness on matters relating to quantum and delay and has acted as lay advocate in arbitration proceedings. Rodney has also been appointed as an arbitrator, mediator, adjudicator and dispute adjudication board member in Malaysia. He has lived and worked in Kuala Lumpur since 1997.


“Logo IconThe Charlton Martin Group provides construction contract consultancy services to the construction, engineering, power, process, petrochemical, oil and gas industries worldwide, dealing specifically with the many disputes and varied problems, which frequently arise.

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