ConstructionPro Week, Volume: 6 - Issue: 4 - 01/27/2017

Construction Schedule Delays - The Leading Cause of Disputes

While the root cause of delays may vary, disputes invariably arise as to the excusability, compensability and duration of the resulting time impact.  If a delay is due to contractor-caused problems, it may result in costly liquidated damages. If the owner is responsible, the contractor may be entitled to a mix of direct, overhead and impact costs.  On larger projects, thousands, if not tens of thousands, of dollars per day may be at stake.  

 

Traditionally, concurrent delays by the owner and contractor result in non-compensable time extensions.  A recent dialogue on an AACE forum presented a situation where a time extension was granted for an owner-caused delay but an act of God subsequently occurred during the period.  This brought up several points of discussion.

 

One person insisted that the order of precedence was a determining factor.  If the owner-caused delay came first, then the contractor would be entitled to a compensable delay for the full duration of the delay, regardless of the later force majeure.  In addition, this commentator pointed out that the force majeure could even possibly result in additional delay, entitling the contractor to further compensable time.  Concurrent delays is an ongoing topic of discussion, some claiming the delays have to occur chronologically at the same time, while others claim they merely need to occur in the same time period.

 

More recently, the dialogue has extended to the topic of pacing delays, where, typically in the face of an owner delay, a contractor (or owner), purposely slows down or delays certain work in order to conserve resources or reduce costs. This is the "why hurry up and wait" scenario.  A post-delay analysis of the schedule may make this appear like concurrent delays, thus depriving the contractor of a compensable delay.

 

Of course, all delays and time extensions must be evaluated in terms of impact on the project's critical path.  Delays to activities not on the critical path will not delay the contract completion date.  However, delays to non-critical activities can still be costly to a contractor in numerous ways.  For example, exterior work could be pushed into the winter where it can be more expensive due to shorter work days and the need for temperature protection.

 

Finally, to sort out the various delays, it is necessary to perform a critical path method (CPM) analysis of the project baseline schedule and subsequent monthly updates. This presumes that CPM schedules, such as those created by Oracle Primavera or Microsoft Project, were created and maintained on the project.  Either way, key to performing such analyses and reaching negotiated agreements is the ability to identify the various types of delays and understand their treatment in the context of both the contract documents and existing construction law.

 

These topics and more, including time extension request checklists, ghost schedules, discretionary logic and best practices to document, prove and support delays will all be covered in WPL Publishing Co.'s upcoming "It's All About the Schedule" webinar series starting Thursday, February 9.  For more information, visit www.constructiondelayclaim.com.  

 

COMMENTS

One should be careful with basing a schedule analysis utilizing only the schedule updates. Contractors frequently don't accurately record ongoing delays in the updates and the project appears to be on schedule when it has been delayed by critical issues. Its always critical to check the accuracy of the updates with daily reports and other project records prior to utilizing them as a source for an analysis.
Posted by: Christopher Molloy - Tuesday, January 31, 2017 10:07 AM


 









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