Construction project delays are extremely common. In a Project Management Institute survey, 72% of certified project management professionals in the construction industry said they experience project delays often or always. When a project is completed later than planned, it can cause incremental costs and undue hardships for property owners and contractors. As such, delays are a major cause of construction litigation.
For a delay claim to be successful, a plaintiff must show that the defendant was responsible for the delay, that the delay resulted in the contract being completed later than planned, and that the plaintiff suffered damages as a result of the delay.
Common Causes of Delays
Construction delays happen for many reasons. Common culprits include weather, labor or materials shortages, budget errors, design changes, equipment issues, permitting and regulatory issues, miscommunication, and errors in plans or specifications.
Excusable vs. Non-excusable Delays
A thorough construction contract will outline which types of delays are considered excusable or non-excusable, and who is responsible for various types of delays. Some delays are out of the control of either of the parties and are therefore deemed excusable. These generally include delays caused by severe weather, natural disasters, terrorist attacks and government shutdowns.
For certain other types of delays, either the owner or contractor may be liable. For instance, if delays occur because the contractor underestimated the amount of time and labor needed to complete the project or the contractor’s workers failed to show up at the job site consistently, this is the responsibility of the contractor and is considered non-excusable. Property owners are responsible for delays caused by their own actions or inactions, such as late design changes or defective plans. When one party causes a non-excusable delay that harms the other party, the injured party may have a claim against the responsible party.
Compensable vs. Non-compensable Delays
Some delays are considered compensable, which means the impacted party is entitled to monetary compensation in addition to an extension of time. For instance, when contractors incur extra costs because of an owner’s actions or inactions, the contractor may have a claim for incremental compensation in addition to a time extension to complete the project. Unforeseeable delays such as natural disasters that are not the fault of either party are generally not compensable; however, a time extension may be warranted.
Critical vs. Non-critical Delays
Whether the delay is critical or non-critical will also impact the validity of a delay claim. A critical delay is one that jeopardizes the completion date of the overall project. By contrast, a non-critical delay affects only a specific activity or activities and does not hinder the completion of the project or an important milestone of the project. The determining factor is whether the delay affects the project’s critical path, which is the sequence of events that must be completed by a specific time and in a particular order to prevent delays to the master schedule. For instance, a delay in pouring the foundation is considered critical because it would cause all subsequent events to be pushed back.
Concurrent delays refer to project delays that occur for two or more independent reasons at about the same stage in the project. For instance, separate errors by both a contractor and a property owner may contribute to a critical task being performed late in a project. When concurrent delays occur, often neither side is entitled to recoup damages from the other.
Project owners and contractors can help protect their interests with a thorough construction contract and a well-thought-out system for fully documenting all delays that occur over the course of a project.
Sheehy, Ware, Pappas & Grubbs represents owners, developers, design professionals, contractors, subcontractors, product suppliers, and their insurers in litigation arising out of construction projects. Contact us to arrange a consultation with a construction litigation attorney.