To pace or not to pace? That is the question…

What is the contractual position?

Most standard forms will require a contractor to take certain steps when there is a delay or likely delay to the project. Taking the JCT D&B as an example, if it is reasonably apparent that the project is being delayed or likely to be delayed, the contractor must forthwith notify the Employer.

The difficulty is that the contractor has to give notification, assess the likely extent of delay and provide the relevant backup. Almost inevitably, the true assessment of delay is unlikely to be known at that stage and therefore the relevant back up unable to be provided.

If any assessment has been done, which is rare, it will of course be prospective. Whilst perfectly well established, prospective delay analysis is also widely recognised as having the tendency to be over generous in its estimation of delay and more favourable to the contractor. So even if the contractor has gone to the effort of doing the assessment at that stage, it will require a bit of a health warning or safety margin.

In addition, rarely is any award for time given at that stage.

Accordingly, if pacing is to be done, the decision has to be made against a backdrop of uncertainty about any extension of time award and the contractor must proceed at its own risk.

Is the contractor actually prevented from pacing?

Many contracts will include wording placing an obligation on the contractor to use “best endeavours to prevent delay in the progress of the Works”.

This appears to sit at odds with taking a decision to decelerate the works. Much will depend on what drives the motivation to pace. The contractor has a duty to mitigate losses and to that end, the contractor should take steps to mitigate any delay and losses arising therefrom.

Accordingly, if there is deceleration of activities necessary as a result of that primary delay in order to mitigate losses, that would be compliant and indeed required.

This is distinct from where the contractor elects to decelerate activities as a result of a primary delay where they are not mitigating a loss but actually making a potential saving, or a gain.

The practical approach

Pacing can be quite a precarious position for the contractor, even though it could hold commercial gain. In terms of prudent and practical steps the contractor should take when in this position is as suggested by the SCL protocol:

“A Contractor may consider pacing activities that are not on the critical path (i.e. slowing down non-critical activities so that they proceed at the same relative pace as the delayed activities on the critical path). The Protocol recommends that if the Contractor intends to pace non-critical activities, then it should notify the Employer and the CA of its intention in this regard, along with its reasons for doing so”.

If considering whether to pace, the contractor should:

1. Send notification to the employer. It should preferably be a separate notification from the original notification of delay.
2. If the contractor has the benefit of a thorough programme which has been regularly updated, use that in discussion with the employer to demonstrate that what is driving delay is separate from the activity intended to be slowed down. Using the programme, demonstrate to the employer that the work planned to be decelerated is, at that point, progressing as planned.
3. Start a dialogue with the project team about a possible pacing plan. The golden rule would be to seek agreement with the pacing plan; once agreed, ensure that when being implemented, activities’ progress is being tracked.

Conclusion

Whilst it is unlikely that the UK will see a sudden spike in pacing on projects, industry pressures could drive more parties to consider how best to sequence and manage projects in order to achieve the best margins. As is always the case with construction projects, having optimum records and solid contemporaneous evidence will facilitate the process and minimise risk. If managed well, pacing could well start to gain momentum.