Dealing With Delays During Construction

Before construction begins, everyone involved attempts to do one thing: predict the future in order to minimize the risk of unforeseen events that might delay the project's completion. Owners, developers, contractors, subcontractors, architects, engineers, sureties, financial institutions, insurers, and vendors all want the project to be done well, and done on time. Why? Because one or more of them will have to eat the costs of substandard work or a delayed result, and that can be very expensive. Construction delays are extremely dangerous: they can slow the project, or even bring it to a halt. Every construction project, from the smallest home addition to the tallest skyscraper, shares the same basic life cycle: (1) planning; (2) design; (3) construction; and (4) finalization. Construction delays seriously impact each of these phases, and additional articles provide information regarding pre-construction and post-construction issues. Here, dealing with delays during construction is addressed. What Delays Construction? It is inevitable that delays will occur during the construction of a project. No matter how detailed the advanced planning or how intricate the contract documents, it is impossible to totally remove the reality of construction delay. Materials and Labor Handoffs It is understood among construction professionals that materials will be needed that haven't arrived, or materials will arrive early and need to be stored on-site. Deliveries cannot be scheduled to arrive exactly on the day they are needed. Plus, no subcontractor can be exactly sure when another sub's crew will be ready to turn over an area to his group, so he can have the exact number of men he needs on-site to immediately take over the area. There will be an understandable delay with each transition, or "handoff" of the work areas, as carpenters and plumbers and electricians and HVAC specialists each take their turns in various project locations. During the building of a custom home, there may be between 100 and 200 handoffs, each adding in a small time lag or delay. Weather Weather will be a factor. Historical weather records can be obtained for the area from reputable sources such as the National Oceanographic & Atmospheric Association's weather service website (www.nws.noaa.gov). Depending upon the geographical area, and the project's time allotment, additional days can be calculated as "rain days" or "snow days" based upon historical precedent. Waiting for materials is simply a part of the process, as is work waiting for workers to arrive. So is changing weather. Rain stops construction. Droughts delay landscaping. Weather conditions also impact suppliers, and may even damage the site. The Unexpected Crisis These are understood, predictable construction delays that are more easily identified and addressed in contract documents and project timetables. An experienced contractor can estimate how much time handoffs will take, as well as time lags in material deliveries, along with rain days, and time can be added into the schedule to accommodate these events before they happen. However, the trickier aspect of predicting the time a project will need for completion comes with the unexpected issues, such as unforeseen ground conditions; owner interference, through design changes or financing concerns; and errors in the plans or specifications. Usually, these unexpected issues are serious and complex problems that can throw a project into crisis. Minimizing the Delays Once construction has begun, the window of opportunity to address delay issues in the planning and contracting phases has shut. However, there are still strategies to be implemented to minimize delay, such as: 1. Insure proper permits are in place before each phase of the construction. 2. Insure proper site access. 3. Insure proper on-site security to minimize theft of materials and equipment. 4. Have safety training programs as well as plans in place for emergencies (medical and otherwise). On-the-job injuries cause delay. 5. Hire only the most experienced personnel for every position. 6. Owners should minimize their change requests, and in response to any requested changes, change directives and change orders should immediately follow. 7. Insure daily communication between contractor, subcontractors, and suppliers to streamline the work/labor scheduling process. 8. Insure healthy communication between owner, architect, and contractor on progress and attempt prompt resolution of any problems that arise. 9. Monitor all cost and time schedule impacts due to turnover and production changes. 10. Remember to consider the impact of union labor (minimum hourly wages, requisite hours per day, likelihood of union work stoppages) into labor needs. The Law Recognizes the Impact of Time Delays The law addresses the time component in construction, and both legislation and court cases abound that attempt to deal justly with the issues of construction delays, since someone must bear the burden of their cost in both time and money. Over time, general contractors have been held financially responsible for construction delays unless certain criteria are met. If the parties wish to allocate risk in a different manner than the manner provided in the applicable state law, they can do so within the contract via a variety of "delay damages" clauses. In essence, the law instructs the contractor to document the delay in great detail, and thereafter, the burden for that delay will be assessed based upon its character. In most states, a contractor assumes the delay cost unless it is shown to be: (1) excusable; (2) compensable; (3) critical; and (4) non-concurrent. Excusable If the delay resulted from an issue that no one could have reasonably foreseen, then it is deemed "excusable" under the law. Likewise, if the delay could have been prevented, but wasn't, and it was caused by someone other than the contractor, then it is also considered "excusable" as to the contractor. The contract documents usually define "excusable" delays. Examples include acts of God, severe weather delays, labor union strikes, and design changes requested by the owner. Conversely, "unexcusable" delays are those that the general contractor could have kept from happening. Examples include late deliveries by a supplier, and cash-flow problems. Compensable Again, the contract documents generally define what delay damages will be compensable. "No damages for delay" clauses are commonplace, and yet, are dealt with differently from state to state. Whether or not the contract, and/or state law, will allow the contractor to be compensated for a specific delay cost will depend upon the specific circumstance. Critical If the event did not impact the timely completion of the project, then it was not critical to its timing and technically, it is not a delay cost for which the contractor can get reimbursement. Non-Concurrent Two delays that happen at the same time are "concurrent delays" and whether or not the contractor can be reimbursed for a concurrent delay depends upon many factors: the contract language, the relationship between the delays, the state law on concurrent delay damages, etc. Usually, non-concurrent delays are the only delay costs that a general contractor can claim. Documenting Delays During Construction Even in the most harmonious of relationships, fully documenting the delays as they occur is recommended: a genial owner, understanding and willing to undertake the cost of a delay today, may reconsider that position by the time that the project is finished. Written documentation is in everyone's best interests. Owners and Architects Owners should inspect the construction as it progresses, asking questions and making notes in a chronological fashion. Architects should, likewise, keep detailed records of the building progress especially since they are likely to be approving construction as well as approving payments. Both should keep detailed records, including dates and times for all communications; details of all conversations dealing with delay, including references made to any specific event, along with the pages of the design documents that are involved; and both should feel free to record their field inspections with photographs or videotape. Contractors Contractors, however, should include specific documentation within their records when unexpected construction delays occur pursuant to the requirements of both applicable law and the individual contract. Contractors not wanting to bear the cost of a delay should: 1. Give Written Notice of the Event This should be done according to the terms of the contract, which may have detailed requirements on what the notice should say, who should receive it, and how long the contractor has to give the notice, or risk forfeiting the claim. 2. Document The Event The event itself should be documented in the contractor's records, with information including the date of the event; who saw the event and their contact information; who received notice and when it was sent; how the event impacts construction, both long-term and short-term (including references to pages in the plans and specifications); how it increases the cost of the project; and all communications dealing with the event, including proposed change orders and RFIs. Photographs or videotapes should be taken, and kept in the documentation. 3. Create a Separate Delay File for Each Event Original documents should remain in the ongoing record-keeping system, and copies kept here, to document the event. This separate file is easier to use if any disputes arise at a later date: it is much easier to pull these separate files and attend a meeting, mediation, or meeting with counsel than to bring the larger project files. 4. Change the Time Schedule Calculate how the event has changed the timeline, and keep copies of both schedules (pre-event and post-event).
Scott Wolfe
About the Author: Scott Wolfe
Scott Wolfe, Jr. obtained his J.D. degree from Loyola University of New Orleans, and his B.A. from Southern Methodist University in Dallas, TX. In 2006, 2007, 2008 and 2009, Scott was recognized as a Leader in Law by CityBusiness Magazine. The son and grandson of general contractors, Scott is a construction litigator in the Pacific Northwest, and the founding member of the bi-coastal law firm, Wolfe Law Group. Scott is also the founder and CEO of Express Lien, Inc., a legal document preparation service for contractors. In 2008, City Business Magazine recognized Scott as one of its Innovators of the Year for the Express Lien concept. As an entrepreneur himself, Scott has a strong background in business and commercial transactions and laws. He focuses his practice on the legal issues facing the construction industry, and has represented clients in multi-million dollar construction disputes in litigation and alternative dispute resolution proceedings. Scott is a LEED AP.

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