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11/15/2017

Editor’s Notes

A construction project experiences “excusable delay” when the delay is caused not by the project owner and not by the contractor, but by factors beyond the control and without the fault of either party. The most common examples are extreme weather and problems caused by third parties. Generally, construction contacts call for an extension of the performance period, but no additional compensation, for excusable delay.

 

When excusable delay is concurrent with owner-caused compensable delay, it effectively cancels the contractor’s entitlement to additional compensation. The rationale is that the contractor would have been unable to work anyway due to the excusable delay, so the contractor incurred no increased costs as a result of the owner-caused delay. There is an exception to this rule, however.

 

On a recent federal project, the government argued that any delay it had caused was concurrent with excusable delay resulting from problems with a third-party utility. It was found, however, that the government had failed to obtain necessary easements prior to construction and had intentionally misled the utility during discussions. The government had acted unreasonably and in bad faith. This entitled the contractor to delay compensation notwithstanding any concurrent excusable delay the contractor may have experienced.

 

The other case in this issue involved a state construction trust statute which protects subcontractor payment rights. On private projects, an unpaid sub could reach the principals of the prime contractor only if the sub could show it possessed mechanic’s lien rights under state law.

 

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