Construction delay claims pop up more frequently than not when working with general contractors or trade contractors. Since one of the key benchmarks for the success of a construction project is timely completion, then addressing how any construction delay will be handled in advance is to an owner’s benefit. Incorporating into a construction agreement what constitutes a delay may mean saving costly construction delay claims during the course of the project.
A construction contract should describe what events or occurrences constitute an impact to timely performance. It should also include language to describe the process for evaluating the impact as well as how the cost of the delay will be determined.
There are basically two types of construction project delays – excusable and non-excusable. An excusable delay will generally relieve a contractor of their obligation for timely performance and may be compensable depending on an owner’s relationship with the contractor and the circumstances surrounding the delay.
Excusable Construction Delays
Excusable delays would be any circumstances outside the control of both the owner and the contractor like extreme weather, previously unknown site conditions or fire. Another example of an excusable delay would be if an owner elected to change any specification of the project during the design phase or after work has started.
It may be difficult for some owners to visualize on plans what an actual installation will look like and many will make changes when they see aspects of the work in place. Because this is in the owner’s immediate control, it would be classified as a compensable delay. In this instance the contractor may be compensated and get additional schedule time for any proven impacts like securing substitute materials and their subsequent installation.
Other excusable delays would include failure by an owner to make timely design decisions or to provide timely access to the project site. Let’s say an owner restricts work hours or work days in a home remodel project. If this information is not provided in advance to a contractor, who may base his schedule on a five day, 40 hour work week, it’s easy to see a potential impact to final completion.
Non-excusable Construction Delays
Non-excusable delays would be those that are foreseeable or are within the immediate control of the contractor. Examples of non-excusable delays would be failure by the contractor to provide sufficient labor for construction. Defective workmanship that needs correction and late deliveries by suppliers under the contractor’s control, would also constitute a non-excusable delay.
In a non-excusable delay, it is beneficial to an owner to incorporate agreement language that deals with the contractor’s obligation for accelerating work to maintain schedule.
It should be noted, however, decisions that the contractor may make on how to accelerate the work, may impact other aspects of the project that could involve an owner. For example, if a contractor decides to resequence any of his work activities, owner-furnished equipment might be needed earlier than originally planned.
Key to Evaluating Construction Delay Claims
The starting point in evaluating the impact of any delays is the construction schedule. Whether the work schedule consists of simple milestone dates or the more detailed, complicated critical path network of activities logically interlinked – identifying the schedule format in the construction agreement can minimize any potential construction delay claims.
An original construction schedule will change during the course of the project as work is completed and the contractor will likely change work sequences in that schedule. This is a by-product of labor issues, field conditions or contingencies that is the contractor’s right to sequence as part of his legal obligation to complete the work in a timely manner. The contractor is responsible for the means and methods to complete the work on an agreed date.
While resequencing work activities is part of the normal construction process, the agreement should stipulate that the resequencing not involve owner furnished items or the services of any consultants under the owner’s control. In this instance, some contractors may try to initiate a delay claim based on untimely delivery of the owner furnished materials or slow response of owner contracted consultants.
Should a contractor need to accelerate work, an owner should approve the acceleration where it impacts any of an owner’s direct contracts or purchases. This should be addressed in an agreement prior to start of work.
Discussing, during contract negotiations and drafting contract language on how both excusable and compensable delays are to be measured and priced will go a long way to mitigating construction delay claims. Understanding the types of claims and proposed methods for resolution can be found in print here.
At the very least, the language will provide the baseline for defining, pricing and dealing with any impacts.
Filed under: Contracts