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Critical Path & Criticality: Why Missteps Undermine Delay Analysis

A fundamental misunderstanding of critical path and criticality continues to drive incorrect entitlement determinations in construction disputes. When delays arise on construction projects, it is essential to evaluate their impact on the Contractual Completion Date and determine whether the Contractor is entitled to an Extension of Time (“EOT”), providing relief to liquidated damages and potentially entitlement to compensation for prolongation.

Yet despite the centrality of these concepts, criticality is frequently misunderstood, selectively applied or misinterpreted. The result is not simply academic disagreement, but can result in outcomes that expose the parties to significant and avoidable financial risk.

What does it mean, in practical and analytical terms, for a delay to be “critical”?
How should criticality be determined when projects are already in delay and negative float is present?
Why does the criterion adopted for criticality directly control entitlement to extensions of time?

Excusability and Compensability of Delay

Before criticality can be examined in detail, the broader framework of excusability and compensability of delay provides important context. These concepts establish why identification of critical delay is not an abstract scheduling exercise, but a decisive step in determining contractual entitlement.

The excusability of a delay in construction consists of determining whether the Contractor was prevented from completing the works by the Contract Completion Date as a result of an Employer’s Delay. Where a delay is excusable or otherwise beyond the Contractor’s control, such as force majeure, an Employer Risk Event, or weather-related events, the Contractor is usually entitled to an EOT. The purpose of the EOT is to extend the project completion date and avoid the Contractor being penalized for a delay for which it is not responsible.

The SCL Protocol¹ sets the procedure for granting an EOT: “where the Employer Risk Event impacts the critical path of the works and thus extends the contract completion date”.²

However, entitlement to an EOT does not necessarily mean that the Contractor is entitled to compensation for the delay.³ Certain types of delay events, while falling under the Employer’s risk in terms of time for completion, do not entitle the Contractor to recover prolongation costs. These delay events are referred to as ‘non-compensable Employer Risk Events’, with adverse weather conditions being a typical example. Similarly, in case of concurrent delays, where both the employer and contractor contribute to the delay, the Contractor is usually not entitled to compensation for additional costs unless it can establish causation between the Employer’s delay and the incurred costs.

Therefore, a proper understanding of criticality is indispensable to any robust delay analysis, particularly where questions of entitlement to time and compensation arise.

The foregoing principles demonstrate that entitlement to an EOT depends upon whether an Employer Risk Event delays completion. That question, in turn, cannot be answered without first identifying the activities that govern completion of the works. This leads directly to the concept of the critical path.

Concept of Critical Path

Criticality is effectively a measure of the relative importance of different activities in driving the Completion Date of a project.

Critical path and Total Float
The Critical Path is “the longest sequence of activities through a project network from start to finish, the sum of whose durations determines the overall project duration”.⁴ There may be more than one critical path depending on the logic of the workflow. Any delay in the critical path will directly impact the project's completion time.

Total float, also known as slack or margin, refers to the amount of time that an activity can be delayed without affecting the project completion date. Activities with the least float are considered critical because any delay in these activities will directly cause a delay in the project completion date. When a critical activity is delayed, it can reduce or eliminate the float of dependent activities, potentially resulting in negative float. Negative float indicates that the programme is forecast to finish later than the contractual completion date.⁵

While the relationship between critical activities and total float is conceptually straightforward, practical difficulties arise once delay has occurred and float values become negative. It is in this context that differing criteria for criticality assume particular importance.

Criterion for criticality where negative float is shown
The identification of the critical path can be influenced by several factors, one of which is the criterion for criticality retained by the Delay Expert, notably when the total float is negative.

The AACE⁶ proposes two “schools of thought” for interpreting the criticality of activity paths with negative float values:⁷

The zero-float school considers all activities with negative float as being critical, effectively treating any activity with less than one unit of float as critical, which may lead to situations in which a lot of activities are deemed critical.
The lowest value school considers only the activity paths that carry the lowest value as being critical. This allows the critical path to be identified as the one driving the current Time for Completion, against which other activities are relatively sub-critical, even when a project is already delayed.

The practical distinction between these approaches is significant. The lowest value maintains a distinction between critical and non-critical activities by distinguishing the most delayed path from other, relatively sub-critical paths. Whereas the zero float would erase the distinction, making every overdue activity critical, thereby obscuring identification of the path actually driving completion.

The AACE considers that the appropriate approach to identify the critical path on a project in which activities are overdue depends on which principles are considered, noting that “if only CPM principles are used to evaluate the theories, the lowest value school is correct.” ⁸

In the absence of any specific contractual provisions to the contrary, the lowest-value school is widely regarded as the most appropriate method for dealing with criticality in a retrospective analysis for the following reasons:

The AACE accepts “the lowest value theory as the valid criterion for criticality where negative float is shown”, highlighting that this delay analysis method will provide intelligible and logical results.⁹
The SCL Protocol supports the lowest value approach, as non-critical delay would not result in EoT, noting that “an Employer Delay should not result in an EOT unless it is predicted to delay the activities on the longest path to completion”.¹⁰
The usage of Critical Path Method (“CPM”) is a standard practice with most, if not all, construction project management software today based on using CPM.
The lowest value is the standard approach adopted to deal with negative float value activities in most cases. This approach complies with the common practices, so as to be able to determine which is the actual driver of the Time for Completion.

Based on the above considerations, the “lowest value” theory is the most appropriate approach as it has been recommended and adopted by both the SCL Protocol and the AACE, and complies with the common practice in the construction industry. It is also the approach which allows a logical analysis to be followed in case of several delays occurring, but with a need to still disentangle the relative responsibility of separate activities and the one actually driving the overall delay.

Conclusion

Criticality lies at the heart of delay analysis. Without a clear and principled method for identifying the critical path, particularly in projects already in delay, entitlement determinations become unstable, subjective, and prone to distortion.

Treating every overdue activity as critical, simply because negative float exists, erases the distinction between what truly drives completion and what merely occurs within a delayed programme. When everything is critical, nothing is meaningfully critical.

The lowest-value approach preserves that essential distinction. It provides a logical, technically sound, and widely accepted framework for identifying the true driver of completion. Consistent with CPM principles, industry practice, and leading guidance, it preserves the essential distinction between critical and non-critical activities even in the presence of negative float.

Missteps in identifying criticality lead directly to incorrect entitlement conclusions and expose parties to substantial financial consequences. For that reason, rigorous and principled identification of the critical path, grounded in the lowest-value approach, remains a gateway requirement for any defensible delay analysis.

Footnotes:

1: The SCL Protocol refers to the Society of Construction Law Delay and Disruption Protocol. It is widely recognized as an industry common sense guideline. It sets out 22 Core Principles as well as guidance on each of the 22 Core Principles of the Protocol, related to Delay analysis and planning good practices.

2: Society Of Construction Law Delay And Disruption Protocol, 2^nd edition (February 2017), principal 5

3: Ibid., at para. §12

4: Ibid., Appendix A

5: This definition is provided for conceptual clarity and does not address the issue of float ownership or contractual interpretations of float.

6: The AACE refers to Association for the Advancement of Cost Engineering International. AACE is widely recognized for its development of recommended practices related to Cost Management, Planning and scheduling, Risk Management and Dispute Resolution.

7: AACE International Recommended practice No. 29r-03, page 114

8: Ibid., page 114.

9: Ibid., page 114.

10: Supra 2, at para. §13