In Holloway Consulting’s experience as a construction expert witness, few problems have a more financially adverse affect on a construction contractor than schedule delays. Delays often result not only in increased costs to the specific items of work directly affected, but also have subsequent disruptive effects on the contractor’s schedule causing protracted project completion. At the heart of the factual evidence needed to prove the actual impact of delays is linking cause and effect.
CONSTRUCTION SCHEDULE DELAYS – CAUSE/EFFECT
Whether a contractor is submitting a construction claim, or defending against a claim, the element of proof is the same: what was the cause of the problem (in this instance, the delay) and what was the effect (the subsequent impact on construction activities within the schedule network due to the delay)? More often than not, the process of linking cause/effect via a construction schedule delay analysis is time consuming and challenging.
Schedule delays on construction projects can be caused by either the actions and/or inactions of the parties (i.e., owner, contractor, subcontractor, vendor, etc.) or circumstances (i.e., weather, strikes, etc.) beyond their control. Broadly stated, there are three forms of delay:
1. Compensable,
2. Excusable, and
3. Non-compensable/non-excusable
TYPES OF CONSTRUCTION SCHEDULE DELAYS
COMPENSABLE DELAYS
It is reasonably established that when a construction schedule delay occurs through no fault of the contractor, because of the actions and/or inactions of the other party to the contract (absent an enforceable no-damage-for-delay clause), the contractor will be entitled to recover damages and be granted a time extension. Compensable delay can be the result of a variety of occurrences such as:
a) Denied access to the site,
b) Design changes,
c) Differing site conditions,
d) Interference from other trades, and
e) Non-timely delivery of owner-furnished materials.
Another form of compensable delay can be caused by another contractor on the project. Although the delayed contractor is only in contract with the owner, he will likely look to the owner for damages caused by other contractors whether or not contractually the coordination/scheduling duties were delegated elsewhere. Cases in this area have resulted, however, in mixed decisions.
EXCUSABLE DELAY
This type of delay results from conditions beyond the control of the parties. Because of this “lack of individual responsibility”, financial recovery for the delay is denied the contractor. The sole relief for the excusable delay is a time extension. Common delays in this category are unusually severe weather, acts of God, labor strikes, etc. Although damages are not recoverable, the extension of time is important to a contractor confronted with the prospect of liquidated damages or termination for default.
NON-COMPENSABLE/NON-EXCUSABLE
In this last type of delay, the contractor’s own actions and/or inactions have been the cause of the delay. In this event, the contractor will not be entitled to recover either damages or time extensions from the owner. Furthermore, the owner will likely be able to recover delay damages from the contractor. In the absence of a liquidated damages clause, the contractor may be exposed to actual damages, which in particular instances could be financially catastrophic.
While some delays might stand alone in establishing the net effects (such as an injunction which halts the work on a project in total), the overwhelming form of delay solely affects individual construction activities. Because of this, reliance on a construction schedule which sets forth the relationships between and among the various activities is important. The widespread use of the simple bar chart or Gantt Chart has given way to the use of more detailed and modern network analysis scheduling techniques, such as critical path method arrow diagramming and precedence diagramming methods. Utilizing these scheduling techniques makes it possible to assess the effects of delays on individual activities and the overall construction schedule network.
Part 2 of this post will be issued in a few days.
