Financial implications of forensic analysis and quantum delay

Delays and disruptions in construction projects increase costs and lead to numerous arbitrations. All involved in the delay and financial experts must work together to calculate any losses incurred accurately. The contractor’s responsibility under a construction contract is to provide an asset that meets the specifications and at the agreed-upon price. Meeting the completion date is essential for both the business and the contractor to avoid losing money. It’s common knowledge that a longer duration of building results in higher costs and lesser returns.

Delay analysis

A construction contract requires the contractor to deliver quality, cost-effective assets by a certain date. Time for completion is important for both the employer and the contractor since late asset delivery might result in lost profits and higher costs.

The best practice advises contracting parties have agreed from the outset (i.e., within the contractual clauses) on the sort of records to keep and the methods to manage and measure construction progress, including:

the programming software to share native versions of programs, logic-linked to determine the critical path or paths; the critical path-based program-impact methodology to be used for the application for extension of time; and the documents to be used and kept: program records, progress records, resources and costs records, correspondence and administration records which include technical records regarding transmittal and approval of all design documents.

When a delay occurs, delay analysis is undertaken to determine the fundamental cause(s) of the discrepancy between the initial forecast at the contract beginning (the ‘as-planned’) and the actual construction timeframe (the ‘as-built’).

As a matter of good practice, the parties to a contract should establish early on how they will keep track of and report on building progress. When construction takes longer than expected, an analysis of the causes of the delay is conducted. This helps pinpoint what went wrong and how to prevent it from happening again.

Parts of Delay Analysis

In the field of delay analysis, two distinct approaches can be taken:

  • “cause and effect analysis,” in which the delay expert assesses a risk event as a probable cause of the delay before attempting to identify the impact of this discovered event on the work schedule; and
  • Analysis of the relationship between the observed effect (the delay) and the hypothesized cause (the risk events) is known as “effect-and-cause” research.

Your job as a Delay Analyst will be to provide clients with expert claims guidance based on meticulous research and analysis of project data. Accordingly, the delay expert is obligated to report to the financial experts on the nature of the delays and the impact quantification after doing the technical study. This data is subsequently utilized in the valuation and estimation of damages.

The monetary impact of these delays must be understood and analyzed, and that’s where a forensic quantum analyst comes in. Lack of workforce, a halt in project financing, severe weather, and other causes can all create setbacks. In addition, there is the possibility that arbitration fees and other associated costs will rise if the timeline is not met.

A Quantum Analyst will collaborate with a Delay Analyst, an Expert Witness, and a Project Manager.

Quantum analysts can benefit from having access to both the as-built and as-planned software. These tools allow quantum analysts to investigate the root causes of financial missteps. An analogous benefit of backward-compatible software is that it makes the financial computations a quantum forensic analyst performs much simpler.

Ending remarks

Once the delay expert has recognized the delays, technical responsibility has been assigned to the employer, and the delays have been measured in physical or temporal units. The delayed expert’s opinions will need to be translated into monetary units, and the damage will need to be quantified by a financial expert. Money damages are intended to put the plaintiff back in the same financial situation they would have been in had the offending conduct not occurred.