| Date | 5 June 2002 |
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| Judgment | Balfour Beatty Construction Limited -v- The London Borough of Lambeth, TCC, 12 April 2002 |
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| The Issue | Use of delay analysis and the role of an adjudicator. |
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| Implication |
The principles of natural justice require that an adjudicator should invite the parties to comment upon all material that the adjudicator intends to use in determining the issues. In certain cases a critical path analysis is essential for the proper determination of delay entitlement. |
printThe recent case of Balfour Beatty Construction v The London Borough of Lambeth considered the enforcement of an adjudicator's decision, where the adjudicator had been asked to determine the appropriate amount of extension of time due to Balfour Beatty and, in consequence, the amount payable by way of liquidated and ascertained damages. The adjudicator was faced with a particularly difficult job. Balfour Beatty had failed to put forward a comprehensive and coherent presentation of its entitlement to time. Accordingly, the adjudicator, relying on his powers under the HGCRA to take the initiative in ascertaining the facts and the law, set about constructing his own delay analysis. The first the parties had any real indication of the nature of that analysis was when the adjudicator's decision was issued. His Honour Judge Humphrey Lloyd QC recognised that adjudication under the HGCRA is necessarily crude in its resolution of disputes. However, he noted, some basic procedural principles have to be applied in order that each party is treated fairly. The adjudicator has the power to set his own procedure, but he cannot do so without first informing the parties of the procedure which he is going to adopt. In Judge Lloyd's view, the adjudicator ought properly to have informed each party of the methodology that he intended to adopt and to have sought observations from them as to the manner in which that methodology might reasonably and properly be used in the circumstances to establish or to test Balfour Beatty's case. In his judgment, an adjudicator constructing or reconstructing a party's case for it without confronting the other party, was committing such a potentially serious breach of the requirement of impartiality or fairness, that the decision would be invalid. It was not a decision which the adjudicator was authorised to make. Where it was not possible within the time scale of the adjudication for the adjudicator to carry out an appropriate investigation, giving both parties a proper opportunity to present their position in respect of the methodology adopted, then an adjudicator acting impartially and in accordance with the principles of natural justice ought to have informed the parties that a decision could not properly, reasonably and fairly be arrived at within the time. If the parties were not able to agree that more time should be given, then an adjudicator ought not to make a decision at all and should resign. In the circumstances of this case, the adjudicator had failed to meet three criteria for fairness, and accordingly Balfour Beatty was refused an order for enforcement of the adjudicator's decision. It is however interesting to note the various methods by which delay analysis was canvassed during this case and the views expressed by Judge Humphrey Lloyd. In criticising the case put forward by Balfour Beatty, Lambeth had suggested that there were essentially five delay analysis methods which were most widely recognised and used. (1) Time impact analysis: This method is used to map out the impact of particular delays at the point in time at which they occur, permitting the discrete effects of individual events to be determined. (2) Window analysis: For this method, the programme is divided into consecutive time windows where the delay occurring in each window is analysed and attributed to the events occurring in that window. (3) Collapsed as built: This method is used so as to permit the effect of events to be "subtracted" from the as-built programme to determine what would have occurred but for those events. (4) Impacted plan: Where the original programme is taken as the basis of the delay calculation, and delay defaults are added into the programme to determine when the work should have finished as a result of those delays. (5) Global assessment: Lambeth contended that this is not an acceptable method to analyse delay. Lambeth argued that Balfour Beatty had failed to follow any one of these recognised approaches and that the dates and durations of the delays claimed by it were nothing less than speculation. All that Balfour Beatty had provided was an analysis of all the planned time and compared this with all the actual time on a trade-by-trade basis. No attempt had been made by Balfour Beatty to demonstrate any link between the trades. Judge Lloyd recognised that the adjudicator was unable to make use, and possibly sense, of the material submitted on behalf of Balfour Beatty. In his view, in order to attack, on the facts, a certificate for non-completion or an extension of time, the foundation must be the original programme, providing this is capable of justification to show its validity and reliability. A valid critical path (or paths) has then to be established, both initially and at every later material point, since it will almost certainly change. Judge Lloyd commented that some means has also to be established for demonstrating the effect of concurrent or parallel delays or other matters for which the employer will not be responsible under the contract. According to Judge Lloyd, the lack of a critical path and the method of analysis adopted for demonstrating criticality or otherwise of the relevant events, were fundamental deficiencies in Balfour Beatty's case.
CJ-0222
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