Delay Claims in Construction Cases: Common Pitfalls

Some of the most common disputes in construction cases relate to delay. However, delay claims tend to be some of the least understood and frequently confusing claims in the construction field. A clear understanding of the basic elements necessary to prove delay claims is invaluable in the processing of complex construction claims.

Much as it sounds, a delay claim on a construction project relates to a period of time for which the project has been extended or work has not been performed due to circumstances which were not anticipated when the parties entered into the construction contract. The most common causes of delay on a project include: differing site conditions; changes in requirements or design; weather; unavailability of labor, material or equipment; defective plans and specifications; and interference by the owner. Such delays will often force a contractor to extend its schedule to complete the work required under the contract, as well as to incur additional costs in the performance of said work. Generally, these costs may include: the costs of maintaining an idle workforce and equipment; unabsorbed office overhead; lost efficiencies; and general conditions. However, in order to receive an extension of time for project completion, or to recover additional costs, the contractor must meet a number of prerequisites.

A delay must be excusable in order to be the basis for an extension of time or additional compensation. Categories of excusable delay are often determined in the contract and typically involve matters beyond the control of the contractor. Examples of excusable delay include design errors and omissions, owner initiated changes, unanticipated weather, and acts of God. A non-excusable delay is a delay for which the contractor has assumed the risk under the contract. Oftimes, even if a delay appears to be excusable, it will be the responsibility of the contractor if it was foreseeable, it could have been prevented but for the acts of the contractor, or it was caused by the negligence of the contractor.

Delays may be further classified into compensable and non-compensable delays. If a delay is compensable, the contractor is entitled to recover compensation for the costs of the delay in addition to time extensions to complete the project. Most contracts will include classes of delay which are compensable. The general rule, however, is that if the delay could have been avoided by due care of one of the parties, the party which did not exercise such care is responsible for the additional costs. The contractor may also be liable for the negligent acts of its subcontractors. If the negligent subcontractor is in the chain of privity with the contractor, the contractor cannot recover delay damages from the owner as those delays are the responsibility of the contractor. However, if the subcontractor has a direct contractual relationship with the owner of the project, the contractor most likely will be able to recover damages as it was not in a position to prevent the delay. Additionally, in order to recover damages, a contractor must show a link between the delay and the resultant damage. Simply stating that there was a delay is not sufficient without showing a nexus between the delay and the damages.

Even if it is able to meet the foregoing criteria, a contractor will not be entitled to recovery if there is a concurrent delay effecting completion of the project. A concurrent delay may be defined as a second, independent delay occurring during the same time period as the delay for which recovery is sought. If the party seeking increased compensation is ultimately responsible for the concurrent delay, he may not be able to recover any compensation for the initial delay. Some courts, will allow the aggrieved party to attempt to apportion the responsibility for delay, thusly allowing compensation to the contractor for the period of delay which was not its responsibility. See, e.g., Raymond Constructors v. United States, 411 F.2d 1227 (Ct. Cl. 1969). However, apportionment of delay is often difficult due to inadequate project documentation of the various delays. The best time in which a contractor can apportion delay is while the project is ongoing. Courts tend to find analyses made concurrent with the delays to be more reliable than after the fact analyses.

A contractor can do a number of things to make it easier for it to recover delay damages incurred on a project. The contractor should make sure the construction contract clearly defines items which the contractor will be able to recover. Additionally, each and every delay incurred should be well documented during the course of the project. Notice that the delay is impacting the contractor should be given to the party with which it is in privity. Finally, if there is any portion of delay for which the contractor is responsible, it should seek to apportion the overall delay between the items it is responsible for and those for which it has no responsibility.