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Budgeting, planning and executing a successful construction project is a complex affair. Accurate scheduling of construction project activities in their appropriate sequence ordinarily requires applying a mathematical problem-solving method called critical path method (CPM). The sequential order of tasks that consumes the most time determines the critical path for any complex activity. Delay of any task on the critical path delays all of the tasks that follow. Other tasks that are necessary to the construction project but susceptible to performance within a range of other concurrent tasks ordinarily can be delayed without affecting the critical path, although such tasks can become critical if delayed too much.
Events, actions or failures to act that delay completion of a construction project cost the owner, contractor and subcontractors. The owner loses the use or rent of the completed project for the length of the delay, along with extended supervisory and financing costs. Subcontractors may exceed their cost estimates due to extended labor costs, wage escalation, materials price escalation, extended equipment use (including wear and tear), extended supervision, unabsorbed home office overhead and lost profit interest on excess costs.

 Excusable and Compensable Causes of Delay


Determining a cause, or multiple causes, for a delay is crucial for any subcontractor seeking an extension of time to complete its work. Only delays resulting from “excusable” causes will justify an extension of time, which are delays caused by another party and could have been avoided, or when they were due to environmental factors beyond anyone’s control or foresight. Unexcused delays may include weather conditions, labor problems or late materials delivery that could have been anticipated, as well as failure to provide adequate staff or tools, inexperience or cash-flow problems.

Where a delay results from multiple causes, some excusable and some not, a party seeking monetary damages (whether an owner seeking liquidated or delay damages, or a contractor or subcontractor seeking delay damages) must prove the extent that each delay should be properly apportioned among the various causes, or else no damages will be awarded. To avoid liquidated or other delay damages, subcontractors should promptly assert claims for additional time when delays result, in whole or in part, from causes that they do not themselves control.  For a subcontractor to recover money for delay, the delay must not only be excusable and result from a compensable cause.

No-damage-for-delay terms, which limit the seller’s remedy for delays to an extension of time, render many types of delays non-compensable. There are exceptions for delays caused by the active interference of the party relying on a no-damage-for-delay clause, or by that party’s bad faith, fraud or concealment of foreseen conditions likely to cause delay. Failure to grant properly requested time extensions in a reasonable manner that interfere with a contractor’s or subcontractor’s performance may result in a “constructive acceleration” claim by a contractor or subcontractor who is forced to compress its completion schedule. Absent a timely, written request for a time extension, however, no claim for failure to grant that time extension is generally possible.

 Subcontractor Rights and Responsibilities


While accurate scheduling of construction project activities is generally the responsibility of the general contractor or a construction manager, subcontractors  have a right to the use of well-maintained, accurate, scheduling information, and also a right to reasonable extensions of time. Subcontractors should closely monitor adherence and changes to the project schedule, as well as differences between actual and projected costs, work sequence, and activity durations. In turn, the subcontractor should give written notice of potential schedule impacts to its upper-tier contractor.

Some of the records needed to support a claim include job meeting minutes; progress charts and reports and updates; daily and weekly reports of work performed, instructions received, equipment used or idled, weather conditions, field checks of dimensions, field checks of delivered materials and equipment, safety meeting attendance, safety violations and actions, visitors to the site, and other kinds of information pertinent to the performance and control of construction activities; photographs of each phase of construction; superintendent job diaries of all discussions and disagreements; procurement records; test reports and records; change orders and proposals; requests for information and responses; shop drawings and submittals; correspondence; memoranda for the file recording significant events not captured in other records; contract drawings and specifications including all updates; and cost records.

 No-Damage-For-Delay


No-damage-for-delay terms ordinarily provide that the sole remedy for delays (for the seller) is a time extension, and bar any payment of damages. These clauses are frequently written in an effort to bar price adjustments not only for delay claims, but also for disruption and inefficiency claims resulting from a compression of the schedule. Model form subcontracts specifically allow the subcontractor to recover for delays caused by the prime contractor or the owner, although the subcontractor must make its claim in sufficient time for the prime contractor to assert a similar claim against the owner in accordance with the general contract. No-damage-for-delay terms are regularly found in construction contracts and subcontracts throughout the country.

Even where strict no-damage-for-delay terms are present, subcontractors may still be able to recover damages for delays or for acceleration of their work where the cause is active interference by the upper-tier contractor or by other parties to upper-tier contracts, including failure to act upon a subcontractor’s reasonable requests for time extensions. Moreover, proper requests for extensions of time can insulate a subcontractor from later assessments for delay damages claimed by upper tiers.

 Time for Asserting Claims


Contract provisions that require contractors and subcontractors to provide early notice to their customers of claims for any kinds of adjustments are universal in construction. These terms ordinarily include a time limit to make a claim with regard to any particular event, and set a time when the limit begins to run. A contract’s generic description of the beginning of a time period for asserting a possible, future claim will, necessarily, be somewhat subjective and, as a result, might lead reasonable people to different conclusions about whether a claim is timely or late in some instances. Consequently, subcontractors are well advised to always assert claims as soon as possible after a potential claim is discovered.

Subcontract claims provisions typically make explicit reference to the claims provisions of the prime contract documents, and also require the subcontractor to make its claims in sufficient time for the contractor to submit an identical claim to the owner under the prime contract. It is important to note that a simple flow-down clause, which purports to bind the subcontractor to the contractor in the same manner as the contractor is bound to the owner under the prime contract documents, can require the subcontractor to comply with any claims provisions in the prime contract documents, even without any explicit mention of claims.

A party to a contract has a legal duty to avoid interfering with the efforts of other parties to fulfill their contract obligations. That duty, commonly called the implied duty of good faith and fair dealing, is implied in every contract, and, unlike most other implied contract terms, in rare circumstances can even override express contract terms.

On a typical construction project, a general contractor’s failure to adequately monitor and update the project schedule always has the potential to materially interfere with a subcontractor’s performance, as do project schedule changes that fail to take a subcontractor’s input into proper account. Consequently, subcontractors who diligently provide scheduling input, and who make prompt requests for time extensions as the likely need is recognized, have a case for enforcing a general contractor’s scheduling and coordination responsibilities, regardless of particular contract language.
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