Suspension of the Work is typically an owner’s directive that work be stopped on part or the whole contract. All standard form agreements and most custom agreements allow the owner to do so. The standard for determining owner responsibility can be changed from causation and fault to owner convenience if the contractor suffers from an unusually protracted delay. The duration must be of reasonable length and the suspension must be of valid cause. Fifteen days for analysis of an unexpected and major change to the project satisfied the tests of length and cause; a 30-day family vacation fails both tests and breach of contract will be the likely result. This entitlement is now an essential component for the recovery of unabsorbed home office overhead costs by the contractor under federal contracts.

The Holloway Consulting Group, LLC is a Construction Expert Witness and consulting firm with extensive experience with work suspension claims. The structure of compensation in Construction Claims for Suspension of the Work is reasonably well-defined in the general provisions of federal government construction contracts: actual costs for labor and material (contractor must lower these costs during suspension to a minimum survival level), equipment ownership expense at 50 percent of national AGC rates, and no profit.

Non-federal contracts – governmental and private – frequently cite the owner’s right to suspend the work but often fail to establish compensation guidelines. In this circumstance, the quantum element of a Suspension of the work claim is generally calculated as a fair and reasonable value including profit.

Contractor’s Rights

The right of suspension is unilateral; the contractor cannot initiate a work suspension without facing significant financial risk. However, the contractor can and should follow the provisions of the contract and, if allowed, halt, stop, curtail or alter his operations in the face of massive change on the premise of damage mitigation.

It has been Holloway Consulting’s experience that a contractor’s stoppage of the work is often met with a default notice – notice to cure – and contract termination. Holloway was a member of the general contractor’s staff on the Ritz-Carlton Marina Del Rey, wherein the GC was terminated for stoppage of work due to massive change order volumes. The GC subsequently prevailed in arbitration.

Home Office Overhead Claims

The Government or Owner’s total Suspension of the Work is also one of the prerequisites to recovery under Home Office Overhead Claims.

Phone: (303) 984-1941
J. Steve Holloway, GC
The Holloway Consulting Group, LLC
10885 W. Beloit Pl.
Lakewood, CO 80227

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