February 27, 2023
Overview of Delays
One of the primary objectives shared by owners and contractors alike is the completion of projects on schedule and within budget.
To achieve this result in today’s market, construction contracts commonly include detailed schedules and required completion dates. These schedules are particularly important in complex, private industrial contracts or contracts with federal, state, or local governments.
Requiring a contractor to follow a specified schedule within a specific time period helps the owner and contractor track job progress, control expenditures of funds, and—presumably by working together—ensure timely completion of the work. An event or action by a party may increase the time and cost of performing one activity without impacting the project completion date. However, events that delay an activity on the critical path will delay the project completion date.
Many factors can prevent a contractor from completing an engineering, procurement, and construction project by a contractually specified date. Differing site conditions, changes in scope or design specifications, unusually severe weather, the unavailability of qualified labor, materials and/or installed equipment, subcontractor problems, as well as numerous other factors often disrupt the planned sequence and duration of work activities. These problems may result in substantial delay to affected schedule activities, leading to late engineering and late issuance of approved for construction design documents, significant negative impacts to construction progress and project completion, and reduced equipment and construction labor efficiency.
Delays can be extremely costly to both owners and contractors. They can deprive the owner of the anticipated use of and revenue from a completed project and burden the contractor with increased time-related costs, extended equipment utilization costs, and the possibility of escalating labor and material costs. Finally, both parties face the additional and overriding concern that they will be held responsible for the delay and will, therefore, be required to pay damages to the other party.
Closely associated with delays is acceleration, which is often required of a contractor to make up for time lost to delay. Acceleration, whether directed or constructive, is extremely expensive and almost always results in the contractor submitting a claim if the contractor concludes that it was not responsible for the delay.
The legal obligations and rights associated with delay arise from the implied obligation in every contract that one party will not delay, hinder, or interfere with the performance of the other party.1 Thus, a party to a contract who hinders or prevents performance by the other party or renders timely performance impossible may not benefit from this wrong. This rule of law prevents one party from taking advantage of its own contract breaches.2 The same rule also entitles one party’s recovery of costs resulting from delays that are the fault or responsibility of the other contracting party. When deciding who should bear the responsibility and cost of an engineering, procurement, or construction delay, courts or arbitration panels look both to the causes of the delay and to the express and implied obligations and assumptions of risk in each particular contract.
Delay is a common yet complex type of claim. It is complex because the cause and duration of the delay, the work activities that were delayed, the effect of concurrent delays, and the ripple impact of the delay are usually difficult to quantify. Rarely is there one massive delay that is the sole reason for project delay.
Key terms associated with delay include but are not limited to: withholding notice to proceed, late approvals, late engineering, late deliveries, lack of access, licensing and permit problems, excessive RFIs, owner interference, disruption, labor disputes, material shortages, late inspections, loss of productivity, inefficient operations, defective plans and specifications, multiple change orders, owner inaction, subcontractor problems, inadequate resources, equipment problems, adverse weather, shortage of qualified labor, late temporary services, demobilization and remobilization, reassignment of personnel, stop work order, impacts, and ripple effect.
Determining the cause and effect of delays through analysis can be extraordinarily time consuming and expensive. Scheduling and other experts are often required to identify the delayed engineering, procurement, and construction activities that delayed the critical path and completion date and identify the causes/events that delayed those activities.
Previous blog posts have addressed issues related to delay, including acceleration, concurrent delay, and no damages for delay. Future posts will address the following delay-related topics:
- Types of delay
- Excusable delays
- Excusable noncompensable delays
- Excusable compensable delays
- Nonexcusable noncompensable delays
- Critical and noncritical delays
- Ownership of float
- Delay to mechanical/substantial completion
- Contractor’s right to finish early
1 See, e.g., United States v. Engineering & Contracting Co., 234 U.S. 236 (1914); Housing Auth. of Texarkana v. E.W. Johnson Constr. Co., 264 Ark. 523, 573 S.W.2d 316 (1978); Farrell Heating, Plumbing, Air Conditioning Contractors, Inc. v. Facilities Dev. & Improvements Corp., 68 A.D.2d 958, 414 N.Y.S.2d 767 (1979); Hanberry v. State Bldg. Comm’n, 390 So. 2d 277 (Miss. 1980); J&B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 162 Ill. 2d 265, 280, 642 N.E.2d 1215 (1994); R.A. Weaver & Assocs., Inc. v. Haas & Haynie Corp., 663 F.2d 168 (D.C. Cir. 1980); Citizens Nat’l Bank v. Vitt, 367 F.2d 541 (5th Cir. 1966); Glassman Constr. v. Maryland City Plaza, Inc., 371 F. Supp. 1154 (D. Md. 1974), aff’d, 530 F.2d 968 (4th Cir. 1975); Lichter v. Mellon-Stuart Co., 193 F. Supp. 216 (W.D. Pa. 1961), aff’d, 305 F.2d 216 (3d Cir. 1962); Petrofsky v. United States, 222 Ct. Cl. 450, 616 F.2d 494 (1980), cert. denied, 450 U.S. 968 (1981); Delia Ratta, Inc. v. American Better Cmty. Developers, Inc., 38 Md. 119, 380 A.2d 627 (1977).
2 See, e.g., MW Builders, Inc. v. United States, 134 Fed. Cl. 469 (2017); Bat Masonry v. Pike-Paschen Joint Venture III, 842 F. Supp. 174 (D. Md. 1993); S. Leo Harmonay Inc. v. Binks Manufacturing Company, 597 F. Supp. 1014 (S. D. N.Y. 1984) aff’d. 762 F.2d. 990 (2d Cir. 1984); E.C. Ernst v. Koppers Co., 476 F. Supp. 729 (W.D. Pa. 1979); W. E. Garrison Grading Co. v. Piracci Constr. Co., 27 N.C. App.725, 221 S.E.2d 512 (1976); McCall Co. v. Hobbs-Henderson Co., 136 S.E. 762 (S.C. 1927); Shannon v. Freeman, 109 S.E. 406 (S.C. 1921).
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Analysis of Concurrent Delay on Construction Claims
This article addresses treatment of concurrent delay in various legal jurisdictions, allocation of delay responsibility when concurrent delay occurs, and more.
Analysis of Concurrent and Pacing Delays
This article explores pacing relative to owner-caused delays and the steps to demonstrate that pacing is not a concurrent contractor-caused delay.
Acceleration Claims on Engineering and Construction Projects
This article covers types of acceleration, acceleration claims outside the U.S., notice requirements, contract provisions associated with acceleration, and more.