Our Construction Design, Delay and Damages Claims blog and our blog on Construction Schedule Delay Claim Overview here at disputesinconstruction.com covers some of the basic concepts associated with schedule, delay and damage analyses.
This post covers schedule delay concepts that most construction scheduling experts industry professionals deal with at one time or another, including causal events, schedule delays, concurrent delays, lost labor productivity and comparative analysis.
SCHEDULE DELAY CONCEPTS
CONCURRENT AND CAUSAL EVENTS
Construction professionals would agree that time-related disputes often involve a single delay, as measured by the difference between the contractual substantial completion date and the actual substantial completion date. When that delay has multiple, indivisible causes, it may not be attributable to either party, but to several parties. For that reason, it may be more accurate to speak not of concurrent delays, but of a single delay with concurrent causes.
Concurrency can occur in a number of different circumstances. For example:
1. When two or more causal events coincide in time,
2. When the impact of two or more causal events coincide in time,
3. When two or more causal events occur during the same period of time.
Concurrent events or delays can be classified as follows:
1. Excusable delay – which may form the basis of a time extension,
2. Non-Excusable – where the party assumes the risk for time and costs,
3. Compensable delay – which may entitle the party to additional time and/or money,
4. Non-Compensable delay – where the party is not entitled to additional time or money.
To add additional complications, concurrent events or delays can occur in almost inexhaustible combinations. For example:
1. An excusable delay might be concurrent with a non-excusable delay,
2. A compensable delay might be concurrent with a non-compensable delay,
3. A compensable delay might be concurrent with a non-excusable delay,
4. An excusable delay might be concurrent with a non-compensable delay.
Finally, entitlement and damages resulting from the above depends in large part on whether the events or delays occur on critical work activities or activities with “float”. (Schedule activity float will be addressed in detail in a future article).
SCHEDULE DELAY APPORTIONMENT
Triers-of-fact often prefer to apportion delay responsibility between the parties, but the interacting nature of events and delays and/or insufficient documentation of delays sometimes makes apportionment difficult. Where delay is caused by concurrent, critical path, compensable causal events, and depending on the dispute forum, neither party may be able to recover damages1. Even if the delay can be apportioned, a party may not be allowed to recover all of its delay costs unless it can also allocate the damages to the specific causal event(s)2.
If the owner cannot separate or distinguish its delay from that of the contractor, the owner may be unable to collect liquidated damages. Thus, a contractor may avoid the assessment of liquidated damages when its own critical path delays are concurrent with owner-caused critical path delays and when the owner cannot apportion responsibility3. A common deciding factor is whether one or more concurrent delaying events affect the critical path to substantial completion.
When owner-caused events delay the critical path, the contractor may chose to relax its performance of non-critical work, so long as the relaxation does not adversely impact project completion. However, the contractor should carefully
weigh the risks associated with a voluntary relaxation of work activities and not get caught in a “hurry-up and wait?” trap.
SCHEDULE DELAY DAMAGES
Events such as contract changes, errors and omissions, contractor performance problems, acts of God and delays or suspensions of parts of the work, can delay and otherwise adversely impact the project schedule and increase the cost of construction. The impact of these problems can include:
1. Direct and consequential costs due to extension of the project completion, and
2. Additional labor costs due to the loss of labor productivity.
When a contractor’s work is delayed, the following categories of additional costs may be incurred: extended general conditions, equipment inefficiency costs, increased direct labor costs due to lost productivity, unabsorbed home office overhead, actual interest or financing costs, labor, material and subcontractor escalation, and lost profits.
Owners can also experience increased costs when delay occurs. Examples of these costs include the reasonable return or interest on the completed asset, lost profits, extended home office overhead, extended job site overhead, interest and financing expenses, asset depreciation, costs of retaining architects, engineers and consultants for the delay period, and compensable delay damages incurred by other prime contractors.
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