Kandace Zimmerman and Julia Villalobos | Forum on Construction Law
Construction scheduling specifications regularly include provisions for dealing with time extension requests, often referencing use of a Time Impact Analysis (TIA) methodology. According to guidance provided by an industry recommended practice, AACE International Recommended Practice No. 29R-03, a TIA is a modeled technique used for proving entitlement for time extensions. While TIAs are well known in our industry and commonly used, the scheduling specifications sometimes fail to prescribe the timing of when a TIA must be submitted. This lack of information can further exacerbate a time extension dispute between the owner and contractor.
TIAs can be employed either prospectively (real time, before or at the same time as a delay event) or retrospectively (after the delay event has occurred). These two different applications of TIAs are not equally useful to the owner in evaluating delay entitlement. Nor do they present a contractor with the same opportunity to receive early relief (and potentially compensation) from excusable project delays. Because the timing of the TIA can lead to different outcomes, it is important to understand the differences in employing a prospective or retrospective analysis to allow parties to make better decisions when project delays are encountered.
We will review two case examples (below) to show some of the differences between a prospective and retrospective TIA analysis. To aid in understanding these examples, it is helpful to have the following working knowledge of the TIA methodology. A TIA creates a new set of activities to detail the added or changed work being evaluated. These new activities are inserted into the contemporaneous CPM schedule, creating an ‘impacted’ schedule. After this impacted schedule is re-calculated, using the schedule software, the completion date of the impacted schedule is compared to the unimpacted schedule. If the impacted completion date is later than the unimpacted schedule, a time extension for the increased time may be warranted. If the impacted completion date remains the same as the unimpacted schedule, then the changed or added work being evaluated can be performed within the original contract time and no time extension is warranted. This is a very simplified explanation of TIAs to aid the reader’s understanding of the two case examples that follow. The evaluation of real-world TIAs often deals with more complex situations and schedule models that complicate decision making about warranted time extensions.
Case Study 1:
The first case study presents a prospective TIA analysis for a bridge project. During pile installation the contractor encountered two differing site conditions. Figure 1 shows the bridge project’s contemporaneous CPM schedule update immediately prior to encountering the differing site conditions (“impact events”). At that time, the project was 29 days late (reference Activity ID A1130 with -29 days of total float).
Figure 1 – Bridge project schedule before impacts
The contractor submitted its TIA analysis to request a time extension after discovering the differing site condition issues. In its TIA analysis (Figure 2), the contractor inserted activities (TIA001 and TIA002) representing each differing site condition impact event into the Figure 1 schedule. The contractor also re-sequenced its remaining contract work activities and rescheduled the project. [Note: Rescheduling the project means using the schedule software to re-calculate the schedule, including the inserted impact activities, to determine the revised activity dates and project completion date.
Figure 2 – Bridge project TIA schedule with inserted delay activities
The Figure 2 impacted schedule shows that the project completion activity (A1130) is now forecast to be 115-days late. This is 86 days later than the unimpacted schedule (115 days less 29 days). The contractor’s prospective TIA analysis demonstrated that the differing site conditions impacted the project’s critical path and extended project completion by 86 days. And, because its narrative included a thorough explanation of the contractor’s re-sequencing and mitigation efforts, the contractor was able to successfully negotiate an appropriate time extension before starting the remedial work.
Case Study 2:
The second case study presents a contractor’s retrospective TIA analysis for a luxury condominium project. This project experienced delay impacts due to the owner’s design changes and added city holidays. In the months after the impacts, the contractor submitted 5 separate TIAs, requesting a total of 43 days of time extension. In the owner’s review of the TIAs, it was determined that the contractor did not accurately represent the work performed on the project in its TIA submissions. Further, three of the five separately submitted TIAs had overlapping time periods. In response to the owner’s initial review, the contractor revised its TIA submissions and reduced its time extension request to 27 days.
Figure 3 shows the project’s contemporaneous CPM schedule update at the time the design changes occurred. The project was 2 days early (reference Activity ID A1150 showing 2 days of float) just prior to the impact events.
Figure 3 – Condo project schedule before impacts
Once the design change impacts occurred, the contractor chose to hold off submitting a TIA analysis until late in the project, rather than promptly submitting it. In its retrospective TIA analysis, the contractor inserted schedule impact activities shown in Figure 3 for each design change and new city holiday. Figure 4 shows the contractor’s recalculated TIA schedule, including these impacts and holiday changes.
Figure 4 – Condo Project TIA schedule with inserted delay activities
In its time extension request, the contractor submitted the impacted schedule in Figure 4 showing the updated project completion forecast as 27 days late. In its TIA review, the owner evaluated the accuracy of the contractor’s impacted TIA schedule (Figure 4) by updating the submitted schedule with as-built dates and recalculating the schedule. Figure 5 shows the results of the owner’s analysis of the impacted schedule with as-built dates.
Figure 5 – Condo Project TIA schedule updated with as-built dates
Figure 5 shows that once the submitted TIA schedule was updated with as-built dates, project completion was actually forecast to be 5 days late, not 27. In this example, the contractor only received 5 days of time extension of the 27 requested days. Because the contractor’s TIAs were submitted after the delay events, the contractor and owner had the benefit of hindsight, so the use of as-built dates was both possible and appropriate. The contractor did not consider extended durations of other contract work or mitigation efforts it was able to achieve as part of its TIA analysis. The retrospective TIA analysis in this case example required that the contractor evaluate more aspects of the project work than in the prospective analysis in Case Study 1.
What is the Takeaway?
While the cases presented in this blog post were simplified, the discussions offer appropriate conclusions in comparing TIA retrospective analysis with prospective analysis. A TIA that is done prospectively has the benefit of being simpler. Impact activities are typically inserted into update schedules already accepted by the owner. A prospective analysis is a forecast. It represents the contractor’s best estimate at that time as to impacts on the affected work, while assuming other downstream activities happen as planned. Performing retrospective TIA analyses often require more evaluation by the contractor of other project conditions and delays. The benefit of hindsight can cut both ways being a positive or a negative in these situations, depending on the specifics of a project.
When creating or reviewing contracts, counsel should always carefully review the TIA clauses. Consider the timing of when TIAs need to be submitted relative to the triggering events. Paying attention to this seemingly small detail at the start of the project can help owners and contractors eliminate unnecessary aggravation in addressing time extension issues during a project. It may also save both parties time and money in negotiating time extensions by eliminating unnecessary timeliness disputes associated with the TIA analysis.