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Construction Claims: Delay

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At the conclusion of this course, you will:

Understand the different types of delays, including concurrent delays Understand the use of Critical Path Method (CPM) Schedules in proving delays Know how to determine delay using four different schedule methodologies Know what damages resulting from delay may be recovered and how to calculate those damages Understand how courts and boards actually determine delay claims

Introduction Rare is the construction project that does not encounter some sort of delay since, by its very nature, a construction project necessitates that various entities interface with one another. Any one or more of these entities can cause a delay, whether it be the owner, the designer, the contractor, the subcontractor, the supplier, or nature, among others. The most common causes of delays are defective plans and specifications, design changes, differing site conditions, adverse weather, unavailability of labor, materials or equipment, and owner interference. Although delays are common occurrences on construction projects, it is important to distinguish between those delays that are critical and those that are not. A critical delay is one that delays the overall completion of the project because it has extended the time for completing the project beyond that which was originally planned. A noncritical delay is one that affects the performance of a particular activity without impacting the completion of the overall project. However, it is possible for a delay to increase the cost of performing work on the project without extending the completion date, as in the case of acceleration, out-of-sequence work, or suspensions of work. Delay Claims Types of Delay Depending on the type of impact, delays are categorized as either non-prejudicial delays or prejudicial delays. 1. Non-prejudicial delays impact a portion of the work within the available float time but still allow the project to be completed within the time period specified by the contract. Therefore, although a portion of the work is delayed, the project is not delayed by a nonprejudicial delay. 2. Prejudicial delays impact a portion of the work and exceed the total float available, thereby delaying the project. Prejudicial Delays There are two types of prejudicial delays:

Construction Claims: Delay 1. Excusable delay 2. Nonexcusable delay

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1. Excusable Delay An excusable delay is any delay that is beyond the control and fault of the contractor. An excusable delay is caused by an event or circumstance such as, but not limited to, weather, fire, flood, acts of God or the public enemy, acts of interveners, or acts of government. In addition, delays which are caused by the owner are excusable. In the case of an excusable delay, the contractor is entitled to a time extension. Excusable delays may be: a. Compensable b. Noncompensable. 1.a. Compensable Delay A compensable delay is not the contractors fault nor has the contractor been in any way negligent. Rather, a compensable delay is the owners fault. In cases of compensable delay, the contractor is granted a time extension and is paid for that extended period of time. Typical causes of compensable delay may be changes to the work, additional work, suspension of work, and owner interference. 1.b. Noncompensable Delay According to contract provisions, weather delays, strikes, and acts of God are generally noncompensable. Therefore, for an excusable/noncompensable delay, the contractor is entitled to a time extension, but not to delay damages. 2. Nonexcusable Delay A nonexcusable delay is caused by events or circumstances that are within the control of the contractor and might have been avoided by the contractors exercise of care, prudence, foresight, or diligence. Therefore, a nonexcusable delay is the contractors fault. Because it is the contractors fault, the contractor is not entitled to a time extension and the owner may assess liquidated damages, or actual damages if the contract does not contain a provision for liquidated damages. Figure 1, Classification of Delays, illustrates how delays are classified in terms of type of impact and responsibility.

Construction Claims: Delay

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Concurrent Delay Excusable and nonexcusable delays are fairly straightforward. However, the issues become more complicated when elements of these two types of delay overlap, resulting in what is termed concurrent delay. Determining fault and assigning responsibility can be very difficult when there is concurrent delay. However, there are general rules that have been developed throughout the industry by the Courts and Boards of Contract Appeal in determining what is recoverable when there is concurrent delay. 1. Excusable/noncompensable + Excusable/compensable The excusable/noncompensable delay controls in situations where there are concurrent excusable/compensable and excusable/noncompensable delays. The contractor is entitled to a time extension, but no monetary compensation, for the delay since the contractor would still have been delayed regardless of the excusable/compensable delay. Therefore, the contractor is not entitled to recover its damages. Consider the following scenario. A forest fire spreads to a road project, suspending work on the project. The forest fire constitutes an excusable delay since it is not the fault of either the contractor or the owner. Meanwhile, the owner has not yet returned the shop drawings for the project, preventing the contractor from moving forward on the project. This constitutes a compensable delay for the contractor since it is the owners fault. But, because the excusable/compensable delay (no shop drawings) overlaps with an excusable/noncompensable delay (forest fire), the result is an excusable/noncompensable delay. The contractor is granted a time extension but is not

Construction Claims: Delay

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allowed to recover the cost for that time, even though a compensable delay was involved. 2. Excusable + Nonexcusable Generally, courts and boards have ruled that when delays exist that are excusable and nonexcusable, neither the contractor nor the owner may recover its damages. Unless the contractor is able to apportion the delays that are concurrent, the courts would deny a time extension. Let us return to the previous scenario. If a forest fire shuts down a road project (excusable delay), but the contractor failed to have the proper equipment at the project site (nonexcusable delay), the contractor cannot recover damages. However, if the contractor can apportion that part of the delay that is excusable, the contractor can be granted a time extension. In McDevitt & Street Co. v. Marriott Corp., 713 F. Supp. 906 (1989), the Court denied the contractors request for a time extension because the contractor, McDevitt & Street, could not prove that the delays caused by the owner extended the project completion beyond the date attributable to its own delays. In Appeal of Gulf Construction Group, Inc., ENG BCA No. 5961 (October 13, 1993), the Corps of Engineers Board of Contract Appeal denied recovery for both the contractor and the owner because a nonexcusable delay overlapped with an excusable/compensable delay. In this case, the contractor, Gulf Construction Group, was delayed on a floodgate rehabilitation project when the owner provided the contractor with faulty equipment, thereby causing a compensable delay. However, during the final months of the project, the contractor fell behind in its electrical work. Since the electrical work was on the project schedules critical path, meaning that a delay in the electrical work would cause a delay in the completion of the overall project, falling behind on that work constitutes a nonexcusable delay since it was the contractors fault that the work was behind. Therefore, the concurrency of the nonexcusable delay with the excusable/compensable delay resulted in an excusable, though noncompensable, delay and the Board ruled that neither party could recover damages. Since each delayed the other, and the delays were thus intertwined, the Board stated that it leaves the parties where it found them. 3. Excusable/nonprejudicial + Excusable/compensable Generally, when nonprejudicial delays are intertwined with excusable/compensable delays, the contractor may recover time and damages. In Wilner vs. United States, 23 CL Ct. 241 (1991), the United States Claims Court ruled that the overlap of a nonprejudicial delay with an excusable/compensable delay resulted in an excusable/compensable delay. A construction project finished seven months behind schedule. The contractor, Wilner, submitted a delay claim. However, the contractor suffered delays that were not on the project schedules critical path, which results in a nonprejudicial delay since the delays did not impact the timely completion of the project. Nevertheless, the project incurred other delays that were on the critical path, meaning that they delayed the completion of the project. The owner argued that the contractors claim should be denied because the delay claimed by the contractor was caused by issues that were not critical to the completion of the project. However, the Board ruled that the existence of concurrent delay on the project does not in itself preclude the contractor from recovering damages. The Board further ruled that the nonprejudicial delay, which did not impact the projects completion date, did not preclude the contractor from recovering damages. The contractor was therefore allowed to recover damages for those delays that were caused by the owner.

Construction Claims: Delay Apportionment of Delay

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The remaining problem is how to apportion responsibility for the different delays involved in a concurrent delay. To establish the individual delays for which