| Date | 30 May 2007 |
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| Judgment | Mirant Asia-Pacific Construction (Hong Kong) Ltd v Ove Arup & Partners International Ltd, TCC 20 April 2007 |
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| The Issue | The importance of critical path analysis to the delay claims. |
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| Implication |
A claim for damages based on delay to construction works may require a comprehensive analysis of the critical path of the works, carefully considered alongside all other evidence, to establish that the loss is causatively connected to the proven breaches. |
printIn May of last year I reported the case of Ove Arup & Partners v Mirant Asia-Pacific Construction in which the Court of Appeal confirmed that Arup was liable for design failures in connection with foundations for the boiler house of a power station constructed in the Philippines. The site for the power station was a seaside promontory from which some 20 metres of ground had to be removed by blasting and excavations. The eventual ground level for the formation of the foundations for the boiler house was thus well below the original ground level. Arup’s design for the foundations depended on assumptions regarding the bearing capacity of the finished ground level and it had recommended that a full ground investigation report be carried out in order to verify those assumptions. In the event, insufficient additional site investigation work was carried out and construction works were allowed to proceed on the basis of the assumptions which later proved erroneous. The appeal court concluded that Arup were under an obligation to exercise due care and skill in designing the structures on ground that could bear their weight without movement beyond the permitted maximum. By failing to ensure that their design assumptions were verified, Arup had failed to exercise that due care and skill. Whilst it was perfectly common practice to have worked initially upon assumptions with regard to the ground conditions, Arup remained under an obligation to see to it that the requisite additional information was obtained. In the absence of an exclusive warning and disclaimer, it was not sufficient for Arup to have progressed the design upon an unverified assumption and to have left it to the client alone to obtain and evaluate the necessary additional information. The appeal court also added that the fact that Arup had explicitly qualified their design by notes on design drawings was not sufficient to perform or otherwise to avoid Arup’s obligation as to the verification of their initial design assumptions. The upshot of all of this was that Arup was held to have failed in its duty in contract and tort not to cause economic loss to its client and accordingly it faced a potential liability in excess of 80 million US$ excluding legal costs and interest. These monetary claims came before the Technology and Construction Court in December of last year and a judgment was handed down last month. In examining the claims Judge Toulmin indicated that it would be necessary to investigate whether the remedial works to the boiler foundations were on the critical path for the completion of the project as a whole. After carefully examining the history of the project and considering the evidence put forward by programming experts engaged by each party, Judge Toulmin concluded that it was more likely that other civil works were further delayed so that they remained on the critical path. The remedial works to the boiler foundations had been accommodated within the revised and accelerated programmes such that they were not a dominant or operative cause of the overall delay in completion of the project. In carrying out this analysis, Judge Toulmin provided a number of comments about the use of critical path analysis on construction projects. His comments indicate that in the UK the courts are becoming more adept at dealing with this type of evidence. He acknowledged that the critical path was defined as “the sequence of activities through a project network from start to finish, the sum of whose durations determine the overall project duration”. Judge Toulmin clearly understood that working with critical path analyses on complex projects is not an exact science and that the question of whether an event has delayed the project is always a question of fact. However, without such analysis undertaken by suitably experienced experts, he commented that the parties may be mistaken as to what is on the critical path. Moreover the judge emphasised that the analysis will only be valid if it is comprehensive and takes account of all activities through to the completion of the project. Judge Toulmin also described ‘windows’ analysis, where a series of snapshots of progress and potential causes of delay on the project at periodic points in the programme is analysed. Windows analysis is usually undertaken on a monthly basis. A variant of windows analysis may be described as the ‘watershed’ analysis where the snapshots are taken at critical milestones instead of regular periodic points. Judge Toulmin recognised that this latter method will be less reliable, particularly if the gaps between the watersheds are lengthy, as the analysis may fail to show the pattern of events between the watersheds. Having reviewed all the evidence, Judge Toulmin dismissed all of Mirant’s damages claims against Arup. Despite that Arup had breached its contract in respect of the design of the foundations for the boiler house, a careful analysis of the facts and of the programming data concerning the project had revealed that these failures had not caused Mirant to suffer a loss.
CJ-0721
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