Best Practices for Handling Construction Delays
By: Eric B. Coleman, Esq.
Delays are a common occurrence on construction projects and they can turn an otherwise profitable contract into a nightmare of cost overruns and liability. Not only are they common, construction delays are typically complicated. Usually, the contract terms deal broadly with who carries the risk for delays and the extent of damages that may be available, but rarely is it as simple as one trade failing to complete its scope on time. Often there are independent, concurrent delays, weather delays, sequencing issues, change orders, escalation costs, acceleration, liquidated damages, and a multitude of other factors that come into play. How to analyze responsibility for such complex delays falls upon an experienced construction lawyer, often in consultation with construction-delay experts and analysts. But that analysis is only as good as the records maintained by the construction professional. This article is about how the construction professional can implement record-keeping standards and other best practices so that when the inevitable delays occur, their additional costs can be substantiated, requests for additional time can be justified, and exposure to liability can be reduced.
1. Understand the allocation of risk for delay and bid projects accordingly. A no-damage-for-delay contract may justify a higher bid than a contract that provides for a mechanism to seek additional compensation for delays that occur through no fault of the contractor/subcontractor. Estimators should understand the different ways that delay risks are allocated and take that risk into consideration when preparing bids.
2. Monitor and track compliance with the schedule and forecast potential delays. Project managers must maintain close attention to the project schedule and should attempt to forecast and mitigate delays before a dispute arises. While many delays are unavoidable, others can be easily mitigated if identified early, before the parties begin incurring expenses. Project managers should maintain weekly records to track their compliance with the schedule.
3. Provide proper notice in timely manner. Project managers must fully understand the contractual requirements for providing notice of a delay. Often, the contract will specify the form, substance, method of delivery, and deadline for providing notice. When providing notice, the construction professional must understand these requirements and carefully follow them.
4. Document the facts contemporaneously from the field. After delay claims have been made and the finger–pointing begins is no time to ask your project manager and superintendents to recall exactly what was happening on specific days, sometimes many months ago. Construction professionals should implement record-keeping practices from the executive level down to superintendents, specific to each project, that document the daily activities on site, discussions that were had, scheduling issues that were discussed in meetings, and similar facts. This level of detail from contemporaneous observations is invaluable in prosecuting or defending against delay claims.
5. Involve counsel to prepare a delay claim or as soon as delay claim is received. Construction delay claims are complex and expensive. Involve counsel early to ensure compliance with the applicable contract terms and to help your team prepare the best support possible to prove or defend against a delay claim.
6. Ask for time if appropriate. Many construction professionals fail to recognize the value in utilizing the contract terms available to them to request additional time when a delay occurs through no fault of their own—often referred to as “excusable delays.” Most contracts allow for a request for additional time to compensate for excusable delays. Even if the request is denied, the request itself and the justification therefore is excellent evidence to defend against a future delay claim.
Construction delays are so common that construction companies would be well advised to implement corporate-wide standard operating procedures aimed at documenting the inevitable delay claim from the outset. Construction professionals can improve their chances of recovering on their own delay claims or defending against delay claims asserted against them by providing their lawyers and experts with an arsenal of contemporaneous and detailed records. The more detail the construction professionals can provide, the more evidence their lawyers will have to support their advocacy of the company’s position.