T

his paper proposes contractual language intended to

specify and predetermine rules for applying the pacing
concept to delays that would otherwise be determined
as concurrent delays.
WHAT IS PACING?
Pacing delays and concurrent delays share an uneasy
coexistence. They complicate the resolution of delay claims,
despite the involvement of sophisticated analysis techniques and
experienced forensic practitioners. Although the concept of
pacing is as old as the concept of work, the concept of pacing
delay was likely introduced as the contractors response to the
owners concurrent delay defense against the contractors
compensable delay claim
1
.
Concurrent delay occurs where another activity independent
of the subject delay is also delaying the ultimate completion of the
chain of activities. Pacing delay occurs when the delay in the
independent activity is the result of a conscious and
contemporaneous decision to pace progress against the subject
delay. The quality that distinguishes pacing from concurrent delay
is the fact that while the former is a result of conscious choice by
the performing party to pace the work, in the latter case, the work
is involuntarily delayed by factors independent of any problems
arising from the subject delay. One commentator, James G. Zack,
defines pacing delay as follows:
Deceleration of the project work, by one of the parties to the
contract, due to a delay to the end date of the project caused by the
other party, so as to maintain steady progress with the revised over-
all project schedule. [1]
While I do not disagree with Zack, I define pacing delay more
generally as:
A delay resulting from a conscious and contemporaneous
decision to pace progress of an activity against another activity
experiencing delay due to an independent cause.
Pacing delay is a real-life manifestation of the principle that
work durations expand to fill the time available to perform them.
It can take many forms. Work can be slowed down, resulting
in extended work durations, or temporarily suspended, or
performed on an intermittent basis. Whatever form it takes, the
key is that it results from the performing partys reasoned decision
to keep pace with another activity, which I call the parent delay,
which is experiencing a delay. By pacing the work, the performing
party is exercising its option to reallocate its resources in a more
cost effective manner in response to the changes in the schedule
caused by the parent delay and thereby mitigating or avoiding the
cost associated with the resource demands if one were to hurry up
and wait. In other words it is consumption of float created
2
by the
occurrence of the parent delay.
There are two distinct circumstances to which the term,
pacing delay, is often applied. The first circumstance, often
referred to as direct pacing occurs where the duration of an
activity is extended due to a delay in a predecessor activity on
which the progress of the subject activity is directly dependent. An
example would be the pacing of electrical conduit rough-in when
the duration of metal stud installation is extended by delays. In
such a case, because there is not enough work to sustain the
continuous utilization of a full crew, the electrical subcontractor
may order a crew size reduction, by temporarily reassigning some
workers to other areas, slowing the progress. In either case it
extends the overall duration of electrical rough-in
3
. Although this
is definitely pacing, it is not considered a pacing delay for the
purpose of the proposed contract language.
What I focus on as pacing delay is the second type where the
paced activity has no direct dependency on the parent delay
activity. If refer to this as indirect pacing. The fact that it shares the
same time frame is a function of schedule timing as opposed to
construction logic. An example of this type of pacing would be the
landscaping subcontractor who demobilizes its crew and returns
at a later time because critical-path work in the building has been
delayed.
In this type of pacing, the sole relationship of the paced
activity to the parent delay is the fact that the parent delay creates
additional relative total float available for consumption by the
paced activity. The deceleration is achieved typically by
reassignment or reduction of resources or entirely foregoing to
procurement of resources that would have been otherwise
necessary.
CDR.14.1
2006 AACE International Transactions
CDR.14
Proposed Specification Language Regarding Pacing
Mr. Kenji P. Hoshino PSP
U.S. CASE LAW: KEY ISSUE UNRESOLVED
In the United States, the case most often quoted for the
subject of pacing is John Driggs Company, Inc., [ENGBCA Nos.
4926, 5061 & 5081, 87-2 BCA 19,833 (1987)].
The occurrence of a significant delay generally will affect
related work, as the contractors attention turns to overcoming the
delay rather than slavishly following its now meaningless schedule.
[4]
There are other cases addressing concurrent delays that
indirectly address the subject of pacing delays. But Driggs is one
of the few cases that directly address the issue of pacing delays. It
is not the scope of this paper to explore the legal interpretation of
these cases. Suffice to say that commentators [1,2] agree that this
case along with others, seems to have established the fact that the
contractors have the right to pace. That is, contractors will not be
penalized for pacing their work. This is consistent with the
majority view that float, a shared commodity, is available for
consumption on a first come first served basis.
What has not been settled by case law is the issue of
compensability. The courts recognition of the contractors right
to pace failed to directly address the question of whether that
recognition should lead to the compensability of the parent delay.
DERIVED CONVENTIONAL WISDOM
The assertion that the contractors right to pace would
essentially remove the owners defense of concurrent delay, and
thereby make an otherwise non-compensable parent delay a
compensable one, is a conclusion logically derived from case law,
not one that is explicit in the legal opinions. On the contractual
front, the author is unaware of any construction contract
provisions that directly address the issue of pacing delays.
In the absence of clear legal precedence and contractual
language, the community of attorneys and other forensic
professionals developed some common-sense guidelines for
determining the legitimacy of pacing delays where compensable
delays are at issue in a claim.
The first requirement is the existence of the parent delay. By
definition pacing delay cannot exist by itself. It exists only in
reaction to another delay which is more critical or is determined
to become more critical than the paced activity. This need to
compare the criticality or the relative total float between the
parent delay and the pacing delay often creates a fertile ground for
technical disputes between scheduling experts during claim
resolution. Also, in cases where many different activities are being
performed at the same time, it is unclear who is pacing whom
4
.
Second, there must be some showing that the pacing was a
conscious and deliberate decision that was made at the time of
pacing. Without a notice signifying contemporaneous intent to
pace, it is exceedingly easy to use pacing as a hindsight excuse to
concurrent delay by offering after-the-fact testimony. Currently
contemporaneous notices are rare in any form, let alone specific,
written notices.
Third, even with the contemporaneous intent, pacing is not
realistic unless the contractor can show that it had the ability to
resume progress at a normal, un-paced rate. Implicit in the
contractors ability to show that it could have completed the
activity on-time if necessary is the fact that the contractor was able
to reasonably determine or reliably approximate when the parent
delay would end. Considering the typical realities of the types of
projects in which delay issues arise, such determination or even
approximation is difficult.
Despite these obstacles to proof, anybody with some field
experience would agree that pacing occurs frequently. In fact,
many contractors would assert that pacing is an integral part of the
detailed implementation of their means and methods whose
practice is second nature to any competent project manager,
barely worth explicit deliberation let alone formal notice.
The relevant question is why is it done? The answer, like the
ultimate answer to most things contractual, is money. Pacing is
done because it is believed that it will result in savings of money
or effort to the pacing party without any penalty of net loss of
time
5
. Herein lays the key to effective contractual solution to the
issue.
PROPOSED FRAMEWORK FOR NEW SPECIFICATIONS
APPROACH
Any attempt to introduce new contract provisions must seek
to avoid any inconsistencies with existing provisions and find the
path of least resistance. In this case, such a path can be found as
an extension of an existing principle of joint ownership of float
6
.
If pacing is the consumption of float for the purpose of saving
money or effort, those savings should accrue to the joint owners of
float. As suggested earlier in a footnote, while the overall effect of
the parent delay is to decrease project float, it increases float on
the path of the paced activity relative to the float on the path
carrying the parent delay. Therefore, given that the overall critical
path has been impacted with potential cost impacts, any reactive
measures, including pacing, would have to result in mitigation of
damages or at the very least be cost-neutral. As long as those cost
savings are shared by the parties, pacing is mutually beneficial.
In other words, pacing is a benefit, the taking of which is
opportunistic and purely voluntary on the contractors part. It
benefits the contractor by allowing the reallocation of resources to
one that is more efficient than if the contractor executed the
original plan for the parallel path. To be fair, pacing must also be
considered the contractors satisfaction of its duty to mitigate
damages by minimizing costs during an alleged period of the
parent delay. As such, all savings realized by pacing should be
credited against any monies that may become contractually due
the contractor as a result of the parent delay.
Thus, the path of least resistance is for the owner to fully
recognize pacing and assure that it receives an equitable share of
the benefits. However, note that unlike value engineering, the
savings here are not real gains but rather savings against the
CDR.14.2
2006 AACE International Transactions
potential added and unmitigated cost of the delay. Therefore the
contractual provision should offset the entire savings against any
amount that may later become due for payment of delay
compensation to the contractor.
DEFINITIONS CLAUSE
7
Because of the relative obscurity of the terminology pacing
delay should be clearly and narrowly defined in the contract by
stating what it isnt as well as what it is.
Pacing delay: the consumption of float created by an alleged
owner-caused delay in performing work on an activity not
directly dependent on the progress of the work experiencing the
alleged owner-caused delay.
In the above definition, the use of the phrase alleged owner-
caused delay is intended to mitigate the risk that the acceptance
of a notice of pacing delay by the owner may constitute an
admission of liability for the parent delay prior to a full
determination of the merits.
The next definition paragraph is designed to prevent the
contractor from claiming pacing on a total time basis.
For the purpose of this section, pacing delay shall refer only to
specific events or to the slowed or delayed performance of
specific schedule activities. While cumulative pacing may
cause the overall project to be concurrently delayed, this
resulting aggregate effect, per se, is not considered a pacing
delay in this contract.
In addressing the owners burden of proof in asserting the
defense of concurrent delay, the Boards opinion in the Driggs
case states, Merely, speculative or theoretical contractor-caused
delays are not adequate to establish a concurrent delay defense.
The above provision symmetrically extends a similar burden of
specificity to the contractor in establishing pacing delays. The
focus is on determining the concurrence of the causal events to
the delay rather than the concurrence of the effect of the delay
8
.
Although it is not absolutely necessary, the adoption and
definition of the terms parent delay and relative total float is
recommended.
Parent delay: the alleged owner-caused delay that created or
increased the relative total float consumed by the pacing delay.
The parent delay must start or exist prior to the pacing delay.
Also the parent delay must be on the critical path
9
or have a
lower float value than the pacing delay.
Relative total float: the difference in total float values between
two activities or logic paths.
OPERATIVE PROVISIONS
10
The primary operative provision requires specific written
notice of each pacing delay.
The contractor shall notify the owner in writing within 14
calendar days of commencing pacing an activity. The notice
shall contain the following information:
Activity(ies) being paced
Alleged parent delay(s)
Estimated duration of pacing
How pacing will be achieved
Additional resources necessary if pacing was not
implemented
How those resources would be procured if pacing was not
implemented
Amount of cost saving sought by pacing
The requirement that the savings be disclosed or declared
11
is the key operative provision. Recall that in the absence of other
provisions, the owner does not have any leverage over the con-
tractors decision to pace or not to pace. But with the notice and
the pricing, the owner has the foothold to buy the right to pace
from the contractor.
The owner may, at its option, purchase the contractors right to
pace the work for the declared amount of cost savings sought by
pacing, or apply the greater of the entire amount of costs
saving sought or that actually realized by pacing as a credit
against any compensation that may become properly due the
contractor for additional costs resulting from the alleged owner-
caused delay.
The choice allowed the owner is designed to elicit a
reasonable estimate from the contractor. In theory, the pricing
would follow the middle ground since the contractor does not
know whether it is quoting a selling price or bidding a buying
price in the form of a credit.
Undoubtedly the most significant practical issue is that of
reliably pricing the savings within the notice period. While
difficult, this is no more burdensome than reliably quantifying the
delay impact within the notice period of existing contract
provisions requiring notices of delay.
In the absence of specific declaration of the amount of cost
savings sought by pacing, the undefined benefit accrued to the
contractor by such pacing is deemed to completely offset any
and all costs resulting from the delay, including but not
limited to extended field overhead, unabsorbed home office
overhead, equipment standby costs, cost escalation, financing,
loss of productivity, that the contractor may incur during the
delay period defined by the duration of the parent delay.
The above provision is not as draconian as you may think on
first impression. Although estimating the savings is difficult, if the
pacing of a particular activity is valuable to the contractor, such as
for example using one tower crane instead of two, it is likely that
the savings can be quantified. On the other hand, if pacing has
marginal or intangible returns such as reduced supervisory effort
12
,
the provision will discourage casual or trivial pacing.
CDR.14.3
2006 AACE International Transactions
In order to minimize burdening project management with
more paperwork than necessary the notice requirement should be
limited to pacing delays on chains of activity that are near-critical.
The following provision is one suggestion at such limitation
13
.
The specific notice requirement does not apply to activities with
total float value greater than 30 calendar days
14
over the float
carried by the most critical activity path on the network.
This would typically apply to activities carrying large float
values in the baseline, or whose work content is relatively trivial or
unimportant for timely progress. Note that competent and regular
updating of the schedule along with constant vigilance to the float
values is essential since an activity with adequate float in one
update may fall under the notice provision in a later update.
Ideally, every notice requirement needs teeth. The
consequences of non-compliance suggested here bars the
contractor from using pacing as a reason for claiming
compensation later in the project.
Failure to meet these notice requirements will result in the
characterization of the delay as a concurrent delay which will
bar any compensation for the alleged owner-caused delay for
the period equivalent to the duration of such concurrent delay.
IMPLICATIONS, COMPLICATIONS & OTHER CAVEATS
There are always technical countermeasures, legitimate or
not, that emerge sooner or later in reaction to schedule-related
contract provisions. Because these proposed provisions hinge on
the sharing of float, any float sequestering measures would subvert
the proper working of these provisions. Of particular note is the
use of resource leveling and smoothing as a continuous, ongoing
project management tool. Some would maintain that resource
leveling is the technical embodiment of pacing. While there are
many instances of contracts requiring the resource loading of
schedules, I have not seen any contract provisions addressing
resource leveling.
Who is pacing whom? So the race is on to shed the parent
delay status. In a close call, the first to notice may establish herself
as the pacing party. Of course this imaginary race assumes that the
owner has the same obligation or, in this case, opportunity to
provide notice. Without such formal opportunity it is important
for owners to respond to any inaccuracies in notices from
contractors.
The practice of pacing is not the sole province of contractors.
owner tasks can be paced just as effectively and beneficially as
contractor tasks. This raises the intriguing concept of discounted
assessment of liquidated damages where owner-activities were
paced against a critical contractor-caused delay acting as the
parent delay. That subject will be left for another day, another
paper.
I
n the US, the contractors right to pace its work in reaction to
a critical path delay is a generally accepted concept.
However, the issue of compensability has not been clearly
decided by the courts. Contractual language currently in use does
not adequately address this issue. One way to contractually
address pacing delays is to treat it as the joint use of float to
mitigate delay damages whereby the benefits accrue towards the
mitigation of potential delay damages. By focusing directly on cost
offsets as opposed to prescribing complex formulas for
apportioning float, this approach gains the advantage of bringing
the parties one step closer to the resolution of this thorny issue.
REFERENCES
Papers
1. Pacing Delays The Practical Effect by James G. Zack, Jr.,
1999 AACE International Transactions.
2. Pacing: An Excuse for Concurrent Delay? by Ronald J.
Rider; Thomas E. Finnegan, 2005 AACE International
Transactions.
3. Collapsed As-Built CPM Analysis by Kenji P. Hoshino,
1995 PMI Annual Symposium Transactions.
U. S. Cases
4. John Driggs Company, Inc., ENGBCA Nos. 4926, 5061 &
5081, 87-2 BCA 19,833 (1987).
5. Essex Electro Engineers, Inc. v. Danzig, 224 F.3d 1283 (Fed.
Cir. 2000).
6. George Sollitt Construction Co. v. United States, 64 Fed. Cl.
229 (U.S. Claims 2005).
ENDNOTES
1. The authors first use of the concept and the terminology was
in 1989 in a delay claim by a contractor on a public works
contract. The delay analysis involved the use of the collapsed
as-built method to argue but-for entitlement to compensable
delay.
2. The term creation should not be interpreted to mean that
total float is increased. In fact, the opposite is true. The
parent delay adversely impacts the overall critical path of the
project, thereby decreasing total float. What it creates
(increases) is relative total float on the path of the paced
activity relative to the total float on the path carrying the
parent delay.
3. For those who are technically inclined for a hands-on
demonstration, direct pacing can be simulated and
automated by using the interruptible duration mode in
Primavera in conjunction with the replacement of a
conventional FS tie with a pair of SS and FF logic ties where
the SS lag value is equivalent to the duration of the
predecessor and the FF lag value is equivalent to the duration
of the successor.
4. For example, during the final finishes phase of a high-rise
building project.
5. See the recent AACE paper by Rider and Finnegan [3] for
similar observations regarding the contractors primary
motivation for pacing.
CDR.14.4
2006 AACE International Transactions
6. In theory, one way to negate the contractors right to pace is
to contractually bestow ownership of all float to the owner.
But this will be met by extreme resistance by contractors.
This author has never seen such a one-sided and unrealistic
contract provision.
7. Although I offer definitions only for the terms specific to this
paper, I urge the would-be implementer to examine whether
it would be prudent to also provide definitions for
Concurrent Delay and Float. Should the specifications
already contain definitions for those terms, they need to be
closely examined for logical consistency with the system
proposed in this paper.
8. In apparent contradiction, the Essex Electro case the court
opined (as paraphrased in, Sollitt, a later case) that the
approach of comparing one partys overall delays with the
other partys overall delays is more reliable than checking
each delay from one party against a possible concurrent delay
from the other party for a series of subtotal period of
entitlement. However, I believe the Essex Electro language
actually refers to the determination of the total delay impact
to be apportioned between the parties. In essence it is stating
that it would better to try to apportion the total critical path
delay than to attempt the apportionment by adding up the
delay incidents without regard to criticality.
9. Based on the longest path criterion for project completion or
for contractual milestones.
10. Assumes that the contract contains competent specifications
for a baseline schedule and monthly updates.
11. Rider & Finnegan [3] recommends an open and immediate
discussion of the benefits of pacing by the contractor.
12. Allowing the project manager more time for family, golf and
other civilian indulgences falling under the category of
extra-contractual floral stimulation of olfactory neural
receptors.
13. Note that the applicability of this provision in its current
wording depends on which float philosophy the parties
subscribe to. Briefly, there are two major schools of thinking:
the Longest Stick School which determines criticality
based on the longest logical path controlling the overall
duration of the network, and the Negative Float School
which determines criticality based on the total float value, in
particular, asserting that any activity with float less than one
duration-unit is critical. The current wording rests on the
concept of relative total float which is a concept of the
Longest Path School. Once the projected completion date
has slipped past the contractual completion date and the
network is in negative float territory, relative total float is
irrelevant in the thinking of the Negative Float School.
14. Assumed to be the duration of each update/reporting period.
This allows for the 14-day notice period plus another half-
month of reaction time by the owner.
Mr. Kenji P. Hoshino PSP
Project Controls & Forensics
448 South E Street
Santa Rosa, CA 95404-5162
E-mail: khoshino@pcfconsultants.com
CDR.14.5
2006 AACE International Transactions