City Inn v Shepherd Construction concerns the construction of a hotel in Bristol and the dispute was about entitlement to extension of time.  Shepherd (the Defenders) had been granted an extension of time of 4 weeks by the architect but, in the litigation, contended that they were in fact entitled to an extension of time of 11 weeks.  The claim comprised three separate periods being 3½ weeks for a late architect’s instruction; 5 weeks for another late architect’s instruction (3½ weeks of which were concurrent with the first period); and 6 weeks for the late issue of variations, additional work and late confirmation of details in the work.

City Inn (the Pursuers) sought a declarator that, among other things, Shepherd was not entitled to any extension of time (not even the 4 weeks granted by the architect).  City Inn also sought liquidated damages in respect of the entire period from contract completion to practical completion.  The case was heard by Lord Drummond Young in the Outer House of the Court of Session in Scotland, and opinion was handed down on 30 November 2007.

Both parties instructed programming experts who, in the opinion of Lord Drummond Young, were ‘…clearly well qualified to speak about the issues that arose in the case…’ and, despite criticisms raised by counsel on both sides regarding the other’s impartiality, were ‘…doing their best to present their evidence in a fair and impartial manner…’.

Shepherd’s expert did not carry out a critical path analysis, although he did state that he had considered doing so.  The reason he gave for not doing so was that he did not have access to an electronic version of the original programme and therefore that it was impossible to determine the planned critical path (in fact, neither expert had access to the original electronic programme data).  Although he had attempted to replicate the programme, using his experience, he could not be confident that his version of the programme was correct, and neither could he be sure of the evidence he would give to the court on the basis of that programme.  Instead, he relied upon a comparison between the planned programme and the actual (i.e. an as-planned versus as-built analysis) from which he concluded that the delays complained of by Shepherd were critical and that a fair and reasonable measure of the entitlement to extension of time was 11 weeks.

The expert’s failure to carry out a critical path analysis was criticized by City Inn.  It was submitted by them that ‘…an expert could only give a meaningful opinion as to which activities in a project are critical on the basis of an as-built critical path analysis…’.  Lord Drummond Young did not agree and gave his opinion that ‘...such an approach has serious dangers of its own.’  He went on to suggest that any errors in the programme information would invalidate the use of as-built critical path analysis.  Further, the judge suggested that it was necessary to revert to other (older) methods where computer-based techniques cannot be used accurately.

The expert for City Inn did carry out a computerized critical path analysis, but of the as-built programme rather than the original programme.  This expert’s conclusion, based upon his analysis, was that none of the delays complained of by Shepherd were on the critical path and that no entitlement to extension of time resulted.

A significant number of errors were identified by Shepherd’s expert in the as-built programme and these were largely accepted by City Inn’s expert.  Lord Drummond Young opined that the as-built critical path analysis was therefore of doubtful value and that reliable conclusions could not be based upon it.  The approach of Shepherd’s expert was preferred since it appeared to be based upon factual evidence, sound practical experience and common sense.

For each of the three delays complained of by Shepherd the judge preferred the ‘common-sense’ evidence of its expert rather than the analytical approach taken by City Inn’s expert.  In preferring those conclusions Lord Drummond Young appears, so far as the English courts are concerned, to have flown in the face of Mr Recorder Toulson’s judgment in John Barker Construction v London Portman Hotels in which it was said that an architect would not have acted fairly and lawfully and his decision would be fundamentally flawed if he had not carried out a logical analysis in a methodical way of the impact of the relevant events on the contractor's programme and made only ‘…an impressionistic, rather than a calculated, assessment’.

At first reading then, this case appears to be a condemnation of the use of computer-based critical path analysis in determining criticality and the effects of delaying events.  It is, however, an unusual case in that nowadays referees are normally asked to choose between two competing critical path analyses both of which are computer-based but relying upon different methodologies.  In this case the choice was between no critical path analysis at all, and a patently inaccurate one.

In deciding upon the criticality of the alleged delaying events, and therefore the entitlement to extension of time, the judge considered that the application of practicality and common-sense was more reliable than a flawed as-built critical path analysis.  That must of course be right and the message that Lord Drummond Young appears to be sending out is not that critical path analysis is inappropriate but that, if it is to be relied upon, it has to be done accurately, and with due recognition of practicality and pragmatism.

- Steve Briggs