DSU or BI Claim – it’s all about Cause and Effect!
Ok, so we all know that to prove your Delay in Start Up (“DSU”) or Business Interruption (“BI”) claim you need to prove cause and effect. In other words you need to demonstrate and evidence that the property damage event causes your unfinished construction project (in the case of a DSU claim) or the operational plant (in the case of a BI claim) to suffer a delay to commercial operation.
Easy I hear you say! Well in theory yes but let us not forget delay analysis is an art and not a science, that is to say it is not a factory controlled or scientific process but relies much more on the relevant experience and knowledge of the delay expert in question. Put simply if you approach the delay analysis in a purely academic way, your approach will almost certainly result in the parties being poles apart and becoming entrenched in their own position, delaying a likely commercial settlement. Pragmatic, commercial common sense is what is required when approaching a DSU or BI analysis.
Ok this does not trump the legal requirements of causation, but what I mean is when attempting to evidence or determine cause and effect, don’t forget the actual causation! All too often we come across delay analyses that forget one thing – what actually happened! Typically, we come up against a totally theoretical analysis, overly reliant on the results from the planning software analysis without any understanding of what actually happened on the project.
Put simply, this is where the delay analysis is wholly reliant on the results from the planning software and bears no relation to how the works were actually undertaken or the actual (not theoretical) effect each event had on the project. It may come as shock to a few of you out there, but some programmes or schedules do not necessarily reflect the way the work was actually carried out on site or may be of insufficient detail to accurately understand the effect of certain events.
By way of a simple example, we are working on a project where the engineering is delayed, but in the schedule the construction is not linked to the engineering (yes, I know but it happens!), so we rectified the link to the protests of the other side, which was the right thing to do as it now reflected the way the work was actually carried out. If we did not and relied solely on the schedule as presented, the results of our analysis would be flawed and our advice probably incorrect.
So, take my advice and when assessing any DSU or BI claim learn how the project is actually constructed, tested and commissioned as only by doing this will you truly understand the effect the property damage event had on commercial operation. It’s only by gaining this knowledge that you can check the veracity of the scheduled activities or in fact fully understand what was planned to happen, what changed and what was the effect of the change or damage event.
By the way, if you don’t already possess this knowledge, then read the project documents such as process flow diagrams, test plans, commissioning plans etc. and speak to the other experts in the adjusting team. Don’t just rely on the schedules. After all, it is a good thing to share knowledge and learn!