Introduction

Construction industry is considered as a high risk industry. One of the main risks is project delay.
Construction projects are delayed by numerous causes, such as bad weather, employers late decisions,
delays caused by contractor and its subcontractors, or maybe due to the change of government policy. Now,
what is actually a delay?
The term delay is used when we would like to express that the works are not progressing as quickly as
intended and as a result, the completion of the project may not be achieved by the completion date as
specified in the contract document. Delay in construction is a complex matter. It will surely affect all parties
to contract, whether the employer, the contractor, the consultant and others. Because of delays, the
employer receives their project later than what has been agreed and as a result, he will suffer losses from
any benefits of what the project would be generated if the project completed within the agreed time.
Therefore, it is understandable if the employer would like to apply liquidated damages whenever the
contractor makes a late delivery. On the other hand, the contractor is also affected by delays. He may suffer
from the increasing of construction costs such as overhead, labour salary, and also overall project
productivity. As a result of this delay, if the delay caused by the employer, of course the contractor may
The Overview of Concurrent Delay, Global Claim and
Liquidated and Ascertain Damages
Seng Hansen
Master Student of Construction Contract Management UTM
Email: hansen_zinck@yahoo.co.id
productivity. As a result of this delay, if the delay caused by the employer, of course the contractor may
claim their losses and expenses. Whenever a delay occurs which is not caused by the contractor, he may
make a claim for a time extension, a monetary settlement, or both. Delays due to bad weather normally
result in extension of time only, while delays caused by the subcontractors probably result in compensation.
And if the delays caused by the employer such as change orders issuance, both monetary compensation
and time extension may be given.
The case of Wells v Army & Navy Co-operative Society Ltd (1902) 86 LT 764 has showed us that the
contractor may claim extension of time due to the employer-responsible delay and the employer may not
deduct the payment for contractor. In this case, a building contract provided that certain matters causing
delay and other causes beyond the contractors control were to be submitted to the decision of the
directors of the employer. There was one year delay. It was also established that the employer failed to give
possession of site and provided plans and drawings in due time.
This paper is specifically talking about the concurrent delays, global claims and LAD (liquidated and
ascertained damages) in construction industry.
Concurrent Delay in a Nutshell
There are so many types of delay in construction industry. One of them is concurrent delay. Concurrent
delay refers to delay situations when two or more delays occur at the same time or overlap to some degree,
which would have affected the project completion date. It is very difficult to treat this kind of delay since
there are so many parties involved in the delay. It seems that the more complex the project, the more likely
that this delay will arise.
1
Duncan Wallace in Hudsons Building and Engineering Contracts 10
th
Edition said that First, different causes
of delay may overlap, and this will be intellectually troublesome if one is an event justifying an extension
and one not; e.g. information or access may not be available, but due to culpable delay or an event not
justifying an extension, the contractor would not have been able to take advantage of them if they had
been.
1
In analyzing concurrent delays, each delay should be assessed separately and its impact on other activities
and the project date for completion calculated. Much will turn on the quality of planning and programming,
and record keeping.
2
Now, the next question is how can it become a concurrent delay? It is surely not easy to determine whether
two or more delays are considered as concurrent delay or not. Therefore, the understanding of project
critical path will be necessary. Generally, there are three situations where the concurrent delays can
happen:
1. Only one party causes two or more delays which then effect to the completion date
2. Both two parties cause two or more delays which then effect to the completion date
3. Either one or both party accompanied by uncontrollable events which then effect the completion date
Moreover, there are two possible scenarios to be considered in relation to concurrency:
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1. Two causes actually operating at the same time causing the same delay to progress which is likely to have
the same effect on completion
2. Two causes operating sequentially and which are likely to have the same effect on completion
For more understanding, figure 1 up to 3 will tell us how to differentiate a delay and a concurrent delay.
No Name Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
1 Project Duration 21
2
1. Page 639.
2. Roger Gibson. 2008. Construction Delays: Extensions of Time and Prolongation Claims. pg. 133
3. Pickavance, K. 2005. Delay and Disruption in Construction Contracts 3
rd
Edition. London: LLP. pg. 620.
2 Design 10
3 Excavate 3
4 Order Rebar 2
5 Order Formwork 2
6 Order Concrete 2
7 Reinforcement 3
8 Shuttering 2
9 Concreting 2
10 Curing 3
Figure 1. Sample of a project original schedule
Figure 1 shows a very simple sequence of project activities with a critical path (red color).
No Name Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
1 Project Duration 22
2 Design 10
3 Excavate 3
4 Order Rebar 2
5 Order Formwork 2
6 Order Concrete 3
7 Reinforcement 3
8 Shuttering 2
9 Concreting 2
10 Curing 3
delay
delay but not considered
Figure 2. Sample of a project schedule with non-concurrent delays
Figure 2 identifies two periods of delay. First is a one-day delay to the excavation activity. Let us say it is a
non-excusable delay due to the low contractors labour productivity. The second delay is also a one-day
delay to order concrete. It is an excusable delay due to the late of concrete order approval by the employer
or SO. The one-day excusable delay in ordering concrete caused a one-day delay completion and therefore
the contractor is entitled to one-day extension of time. However, although there are two delays appear in
this project, there is no concurrent delay takes place.
No Name Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1 Project Duration 23
2 Design 10
3 Excavate 3
4 Order Rebar 2
5 Order Formwork 2
6 Order Concrete 4
7 Reinforcement 3
8 Shuttering 4
9 Concreting 2
10 Curing 3
delay
delay
Figure 3. Sample of a project schedule with concurrent delay
Figure 3 also identifies two periods of delay. The first delay is a two-day excusable delay to the ordering
concrete, and the second is a two-day non-excusable delay due to contractors late formwork installation.
There is now concurrent delay with a two-day critical delay effect on completion.
From the above explanation, it is clear that concurrent delays must have elements of: two or more delays
occur during the same time period, both delays impact the critical path which then of course affects to the
completion date, and delays may be caused by either or both party or unforeseen events. In order to give a
3
2. Haniz Zuraiha bt Zaharullil. 2009. Enforcement and Challenging of Arbitration Award. M.Sc. Johor Bahru: UTM. Page 56.
3. Oxford Law Dictionary. Seventh Edition. See page 229, 502 and 593.
completion date, and delays may be caused by either or both party or unforeseen events. In order to give a
more understanding, below are some situations in determining concurrent delays.
1. Concurrent delay by both employer and contractor.
It is excusable but not compensable.
Contractor delay: 7 days lost in fabrication
Employer delay: 7 days lost in reviewing the drawings
Critical Path Activity
This will result in 7 excusable days to contractor (non compensable).
2. Concurrent delay by contractor and uncontrollable events.
It is excusable but not compensable.
Contractor delay: 7 days lost in fabrication
5 days of heavy rain
Critical Path Activity
This will result in 5 excusable days to contractor (non compensable), while the other 2 days are non-
excusable.
3. Concurrent delay by employer and uncontrollable events.
It is excusable.
Employer delay: 7 days lost in resolving a design issue
5 days of heavy rain
Critical Path Activity
This will result in 5 excusable days to contractor (non compensable), and 2 excusable compensable days.
There are so many methods in concurrent delays assessment. Furst et al (2006) in Keating on Building
Contracts gives three approaches to concurrent delay, i.e. the Devlin Approach, the Burden of Proof
Approach and the Dominant Cause Approach.
The Devlin Approach
The approach itself was set out by Mr. Justice Devlin (where the name of the approach comes from) in
Heskell v Continental Express [1950] W.N. 210. He said that if a breach of contract is one of two causes of
a loss, both causes co-operating and both of approximately equal efficacy, the breach is sufficient to carry
judgement for the loss.. Williamson condemns this approach referring to its obvious logical flaws that
could result in an absurd position where both a contractors claim for loss and expense and an employers
claim for liquidated damages succeeded in view of the same period of delay. This is also identified by Furst
et al as the observe problem. Neither Eggleston (1997) nor Marrin (2002) provide comment on this
approach, whilst Chappell (1998) and Knowles (2000) accept the Furst et al view but do not provide further
4
4. Paul David Baines. 2007. Would a common law right to apportion liability in contract facilitate justice in concurrent delay
disputes?. M.Sc. Leeds Metropolitan University. pg. 6.
approach, whilst Chappell (1998) and Knowles (2000) accept the Furst et al view but do not provide further
comment in favour or aganst this approach. Eggleston and Marrins ignorance of this approach is suggestive
of the lack of support that it has received in construction context. Furst et al also refer to the possibility that
application of the Devlin approach may result in the same outcome as the dominant cause approach (which
is set out below), as in Fairfield-Mabey v Shell U.K [1989] 1 All E.R. 576 where it was found that, on the
facts, a concurrent cause was the dominant cause.
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In other words, this method is used when there are two causes operating together and one is a breach of
contract, then the party responsible for the breach will be held liable for the loss.
But there is a weakness in this approach. The difficulty is that it must be applied to both the claim of the
contractor for damages and the counterclaim of the employer for liquidated damages. In those
circumstances, one could have the absurd position that the contractors claim for direct loss and expense
succeeded in relation to a period of delay and the employers claim for liquidated damages succeeded in
respect of exactly the same period of delay. In the end, there may be no affirmative recovery. Referring to
the case of J.A. Jones Construction Co v Greenbriar Shopping Center, when a project was concurrently
delayed by both a compensable and non-excusable delay, neither party was allowed any affirmative
recovery from the other. In this case, the main contractor caused delay through the failure of its
subcontractor and workers to timely perform, and the employer caused delay by changes to the design and
late issuance of drawings. The court held that neither party was entitled to any affirmative recovery. Both
the employer and the contractor bore their own costs.
The Burden of Proof Approach
The second approach identified by Keating (2006) is the Burden of Proof approach, which is said to be as
follows:
If part of the damage is shown to be due to a breach of contract by the Claimant, the Claimant must show
how much of the damage is caused otherwise than by his breach of contract, failing which he can recover
nominal damages only.
Williamson again identifies that this approach has the reverse logical consequence of the Devlin position,
that on this test neither the contractor nor employer would be able to succeed with their respective claims,
i.e. the obverse problem identified by Furst et al in reverse. Eggleston (1997) and Chappell (1998) both
express reservations regarding this approach, adding that it does not appear to have much support in the
construction context.
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In other words, this method is used when there are two causes and the claimant is in breach of contract,
it is for the claimant to show that the loss was caused otherwise than by his breach.
The Dominant Cause Approach
The third, and the one to which the most weight is given by Furst et al, is the Dominant Cause Approach,
which is said to be as follows:
If there are two causes, one the contractual responsibility of the Defendants and the other the contractual
responsibility of the Claimant, the Claimant succeeds if he establishes that the cause for which the
Defendant is responsible is the dominant cause.
This position has the obvious advantage of being applicable to both claim and counterclaim, thus avoiding
the obverse problem. Williamson sets out that if the dominant cause is demonstrated as being the
contractual responsibility of the employer, then the contractor would recover loss and expense, as well as
immunity from liquidated damages for the period of delay. Conversely, if the dominant cause was found to
be the contractual responsibility of the contractor, then his claim for extension of time would fail, allowing
the employer to recover liquidated damages. The decision as to which cause I dominant is a question of
fact, which is not necessarily resolved by the chronological order in time, but is to be decided by applying
common sense standards, as applied in Leyland Shipping v Norwich Union Fire Insurance Society [1918]
A.C. 350.
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This method is used when there are two causes, the dominant cause is to be considered as the deciding
factor. This is best to be used where the delays are unequal, or where an employer-responsible delay is
followed by a contractor-responsible delay (or vice versa) on the same or parallel critical paths, and it is
unclear as to whether the second was triggered by the first.
Besides the above Keating approaches, there are some other approaches that we can use in assessing
concurrent delays, such as First Past the Post, Apportionment and Malmaison Decision. But here I just
explain one more approach which I think it will be beneficial for us to know, i.e. the Malmaison Approach.
5
5. Ibid. pg. 6-7.
6. Ibid. pg. 7.
The Malmaison Approach
Finally, there is one more method that can be used in assessing concurrent delay, i.e. Malmaison Approach.
This method is often considered to be the leading modern decision on concurrent delay. In Henry Booth
Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (2000) CILL 1572, Mr Justice Dyson stated,
Secondly, it is agreed that if there are two concurrent causes of delay, one of which is a relevant event,
and the other 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 event. Thus, to take a simple
example, if no work is possible on site for a week not only because of exceptionally inclement weather (a
relevant event), but also because the contractor has a shortage of labour (not a relevant event), and if the
failure to work during that week is likely to delay the works beyond the completion date by one week, then
if he considers it fair and reasonable to do so, the architects is required to grant an extension of time of one
week. He cannot refuse to do so on the grounds that the delay would have occurred in any event by reason
of the shortage of labour.
Conclusion
Finally, we may conclude that concurrent delay in construction industry cannot be avoided, especially for
large and complex projects. If the delay caused by the employer, then the contractor is entitled to claim for
loss and expense or damages. If the delay caused by the contractor, then the employer is entitled to claim
for liquidated and ascertained damages (LAD).
There are so many methods to assess the concurrent delay. However, we must remember that whatever
the methods to be used, we should assess concurrent delays based on fairness, consistency and certainty.
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Liquidated and Ascertain Damages in a Nutshell
Before we move on to talk about LAD in construction industry deeper, it is better if we know the differences
between damages, liquidated (and ascertained damages), and unliquidated damages. According to Oxford
Dictionary of Law, damages are a sum of money awarded by a court as compensation for a tort or a breach
of contract. Liquidated Damages are a sum fixed in advance by the parties to a contract as the amount to
be paid in the event of a breach. They are recoverable provided that the sum fixed was a fair pre-estimate
of the likely consequences of a breach, but not if they were imposed as a penalty. While unliquidated
damages are damages the amount of which is fixed by the court.
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In other words, they are actually
remedies, defined as methods available at law for the recovery of rights.
The rule as to what is recoverable as damages in contract is established in Hadley v Baxendale (1854) 9 Ex.
341, which said: Where two parties have made a contract, which one of them has broken, the damages
which the other party ought to receive in respect of such breach of contract should be such as may fairly
and reasonably be considered either arising naturally, i.e., according to the usual course of things from such
breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both
parties at the time they made the contract, as the probable result of the breach of it.
7
7. Oxford Dictionary of Law, Seventh Edition, pg. 151.
8. Robinson, N. et al. 1996. Construction Law in Singapore and Malaysia 2
nd
Edition. Singapore: Butterworths Asia. pg. 242.
The term liquidated has a meaning that the sum is agreed to in advance of the event by both parties, while
the term unliquidated means that there is no sum agreed before by both parties and therefore they need
the court to assess the damages after the event of a breach. Lord Mansfield said: Where the precise sum is
not the essence of the agreement, the quantum of the damages may be assessed by the jury, but, where
the precise sum is fixed and agreed upon between the parties, that very sum is the ascertained damage and
the jury are confined to it.
And now, the term ascertained in the phrase Liquidated and Ascertained Damages only emphasis that the
sum stated has been properly computed as a genuine pre-estimate of the consequence of the delay. This
has made it less challengeable rather than a penalty. Any stipulated sum payable in the event of a breach of
contract that is not a genuine pre-estimate of the loss may be challenged as being a penalty and this may be
made the remedy become unenforceable. For example, a sum per day to become due on delayed
completion of 50 apartments may be enforceable, but the same sum could not also be imposed for delay to
the first half of the scheme only, as in that case, it could not consistently be a genuine pre-estimate. The
fact that a clause is described as a penalty clause, however, does not prevent it from being enforceable as
LD if the sum has in fact been properly ascertained.
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The Nature of Liquidated and Ascertained Damages
Under a construction contract, a contractor is obliged to complete the works within the specified time and
if he fails to do so, he is liable to the employer for breach of contract. This breach entitles the employer to
get remedy from the contractor and is normally known as liquidated and ascertained damages (LAD). It is
important to have this clause in a contract so that both parties will know where they stand and can do some
mitigation to avoid the breach of contract.
It is also important to highlight that the LAD must be of a genuine pre-estimate of loss to be enforceable.
However, from the cases regarding this matter, if the employer cannot claim his losses under LAD, he still
can claim under unliquidated damages, but of course the sum will normally not be larger than the sum of
the LAD claim.
Most standard form of construction contract will include a provision for deduction of damages at a certain
rate if the contract completion date is not meet. The rate is usually in an amount per day or per week,
depends on the agreement of both parties when the contract is being made. The rate is intended to be an
estimate of loss that the employer suffered in the event that the completion date is delayed. This has raised
a problem: how to ensure that a proper estimate of the likely loss has been made. This is a problem
normally occurs during the negotiation of contract construction by both parties.
Whatever the circumstances, the amount of the LAD must not exceed the maximum amount that could
flow from the delay to completion of the works, or the damages will be regarded as a penalty rather than
genuine damages, and will be unenforceable. The House of Lords set out the criteria for judging if a sum
were to be regarded as a penalty in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co [1915] AC
79. The rules were summarized as:
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1. If the sum is extravagant and unconscionable in amount in comparison with the greatest loss that could
possibly flow from the breach then it will be regarded as a penalty
2. If the obligation is to pay a sum of money, and failure to do so results in a larger sum being payable, then
the larger sum will be regarded as a penalty
3. Subject to the above two rules, if there is only one event upon which the sum is to be paid then the sum
is liquidated damages
4. If a single lump sum is to be payable on the occurrence of one or more events, some of which are serious
and others minor, then there is a presumption that the sum is a penalty
We should also remember that the contract must clearly define the date of completion, and from which the
damage are to be calculated. If the contract uses partial or sectional completion, then the amount of LAD
must be calculated from the date of partial or sectional completion. must be calculated from the date of partial or sectional completion.
Calculating Liquidated and Ascertained Damages
In principle, we can calculate foreseeable loss resulting from delayed completion in three stages.
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Stage 1. The employer should estimate what would be its likely outgoings at the end of the contract period
if the work was continuing on site. These costs may include, on a daily or weekly basis: unproductive staff
costs, storage costs, extended head office overheads, extended preliminaries, reimbursable delay damages
payable to other contractors, interest and financing expenses, and costs of retaining architects, engineers
and other consultants for the delay period.
Stage 2. The employer should estimate what would be its likely consequential losses at the end of the
contract period if the project could not be put into use. These costs are likely to be fixed costs which may
have to be depreciated over time: rent of alternative premises, lost investment value of rents, cost
escalations, asset depreciation, and lost profits.
Stage 3. This comprises depreciating the total of the figure produced by stage 2 over the notional period it
would take to overcome any default (for example, half the original contract period) and adding this to the
figure which is arrived at by calculating stage 1.
8
9. Mullen, P. 2009. Evaluating Contract Claims 2
nd
Edition. Cornwall: Wiley-Blackwell. pg. 187.
10. Pickavance, K. Delay and Disruption in Construction Contracts 3
rd
Edition. 2005. London: LLP. pg. 755.
Conclusion
In construction contract, LAD is a lawful method used by the employer to remedy his losses due to the
breach of contract by the contractor. Normally, the breach is the late of work completion. There are two
ways that the employer can get the amount of LAD, i.e. by deducting the progress amount in interim
payment certificate, or by direct payment from the contractor to the employer. It is often the case that
before the employer can impose LAD to contractor, the pre-conditions in LAD clause must be satisfied. This
may be by way of the issuance of certificate of non completion by the SO.
We should also remember that LAD clause is not a compulsory in a construction contract. If the employer
has decided that he does not need LAD clause in the contract, he is under no compulsion to have it.
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Global Claim in a Nutshell
As what I have been said earlier, if the contract was breached by the employer, the contractor is entitled to
claim for loss and expense. This claim sometime is not an easy part to do for contractor. There are many
forms of claim that can be imposed by the contractor; one of these is global claim.
Global claim is also known as composite claim, rolled-up claim, total-loss claim, and total cost claim.
According to Duncan Wallace (1995), global claims are defined as those where a global or composite sum,
however computed, is put forward as the measure of damages or of contractual compensation where there
are two or more separate matters of claim or complaint, and where it is said to be impractical or impossible
to provide a breakdown or sub-division of the sum claimed between those matters. While according to
Harban Singh (2007), a global claim is a form of claim where no nexus or linkage is established between the
cause of the alleged compliant and its effect i.e. the redress sought.
Global claim may take into two forms: claim of money and claim of time. Due to its characteristic to lump all
the amount of the claims, this kind of claim is difficult to be accepted by the employer. Even the Society of
Construction Law Protocol on Delay and Disruption has stated that such claims are discouraged by the
Protocol and rarely accepted by the courts. Despites this, global claims are common and in some
circumstances, gained recognition. It is therefore very important to anyone considering the quantification of
such claims.
In the case of London Borough of Merton v Stanley Hugh Leach (1985) 32 BLR 51, Mr Justice Vinelott laid
down the main conditions for a composite or global award as being:
1. The contractor should not have delayed unreasonably in making the claim
2. The loss or expense attributable to each head of claim cannot in reality be separated
3. Apart from the practical impossibility of separating costs between causes, the conditions that have to be
satisfied in relation to each head of claim before an award can be made, include: satisfied in relation to each head of claim before an award can be made, include:
a. It must be clear that only the events under consideration caused the global loss, and
b. It must be clear that the employer is responsible for all these events
In the case of J. Crosby & Sons Ltd v Portland Urban District Council (1967) 5 BLR 121, there had been
some forty six weeks delay to completion due to various causes of which thirty one weeks had been held
by the arbitrator as the compensable for the contractor. The arbitrator proposed to award a lump sum to
compensate for the delay of this thirty one weeks delay and the employer appealed claiming that the
arbitrator should arrive at his award by determining the amounts due under each individual head of claim.
It was held that, provided the arbitrator did not include an element of profit in the amount awarded, and
that there was no duplication, then if the claim depends on an extremely complex interaction in the
consequences of various denials, suspensions and variations, it may well be difficult or even impossible to
make an accurate apportionment of the total extra cost between the several causative events, the
arbitrator was entitled to make a lump sum award for the delay and disruption.
In another case, Wharf Properties Ltd and Anor v Eric Cumine Assoc and Ors (1988) 45 BLR 72, (1991) 52
BLR 1 PC, this type of claim is criticized. In this case, the employer pursued a rolled-up or global claim
against his architect. The Court of Appeal of Hong Kong did not accept the claim. On the face of it, there
appears to be an anomaly which places doubt on the validity of this type of claim.
But in the case between Mid-Glamorgan County Council v Devonald Williams & Partners [1992] 29 ConLR
129, held that provided the circumstances were appropriate, such a claim could succeed.
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Mr Recorder Tackaberry QC said that Where, however, a claim is made for extra costs incurred through
delay as a result of various events whose consequences have a complex interaction which renders specific
relation between the event and time/money consequence impossible and impractical, it is possible to
maintain a composite claim.
Loss and Expense
It is a common practice for the contractor to claim for his losses and expenses. In the case where the
employer caused delay in a construction project, the contractor is entitled to loss and expense, but he must
show that he would have made a profit or reduced his loss.
The term loss and expense can be determined using common law principles for assessment of damages
for breach of contract. According to the general principles stated in Hadley v Baxendale, damages for
breach of contract may be recovered if:
1. They arise naturally from the breach, according to the usual course of thing (direct damages), or
2. They may reasonably be supposed to have been in the contemplation of both parties at the time they
made the contract as the probable result of breach (indirect/consequential damages).
Conclusion
As a conclusion, global claim is still a common practice in construction industry. Due to the characteristics of
construction industry itself large, complex, high risk, fast; we cannot avoid global claims that the
contractor submits to his employer. However, looking at different cases of global claims and their
judgments, I think we should consider global claim as the last effort, not just because it is very difficult to be
accepted by the employer, but also by some jurisdictions. Again, we must also understand that the accepted by the employer, but also by some jurisdictions. Again, we must also understand that the
contractor may find difficulties to particularize a number of claims and may be such particularization is
impossible due to complex entanglement with numerous overlapping or concurrent matters.
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