Construction projects are no stranger to delays and the inevitable resulting disputes. To allocate such risks, parties frequently include no damage for delay causes in their contracts. These provisions commonly provide that in the event of a delay the contractor’s remedy is limited to an extension of time. Given that there are often multiple causes of delays and a variety of types of delay damages it is critical that at the onset of a construction project the parties consider and properly allocate the risk of such delays and the potential resulting costs in the contract documents.

A recent Massachusetts Superior Court decision offers further insight into the importance of the contract in allocating the risk of delay damages. In Cumberland Farms, Inc. v. Tenacity Constr., Inc. (Mass.Super, 2016), the court held that the terms of the contract precluded the contractor from recovering lost productivity and costs associated with work inefficiencies incurred while performing Winter work. The case arose from two distinct construction projects involving the plaintiff Cumberland Farms, Inc. (“CFI”) as the owner and Tenacity Construction, Inc.(“Tenacity”) as the contractor. Both projects suffered severe delays. As a result CFI granted Tenacity an extension of time and agreed to pay Tenacity time and materials for costs incurred while performing work during the Winter months. Prior to performing the work Tenacity claimed that reimbursement for time and materials would likely not fully compensate Tenacity for any lost productivity or inefficiency costs incurred during the Winter and that Tenacity may seek such costs at a later date. Although CFI did not deny this request it also did not agree to the request. A couple months after completing the Winter work, Tenacity sent CFI a letter claiming that it was entitled to an equitable adjustment of the contract price for lost productivity and inefficiency costs attributable to Winter conditions. In response CFI requested back-up information in support of Tenacity’s claim but ultimately denied the request.

After the completion of the project, CFI commenced an action against Tenacity seeking additional costs incurred as a result of having to directly pay some of Tenacity’s subcontractors. Tenacity counterclaimed seeking recovery of its lost productivity and inefficiency costs. CFI moved for summary judgment to dismiss Tenacity’s counterclaim. CFI argued that the contract precluded Tenacity’s recovery of lost productivity and inefficiency costs. The court agreed.

In reaching its decision, the court distinguished from a Massachusetts appellate court decision which allowed for a subcontractor to recover certain delay damages despite the existence of a no damages for delay clause because the court held that the no damage for delay clause only pertained to the cost of an idle workforce and not the damages which the subcontractor sought to recover. In this case, the court noted that the contract not only provided that the contractor is only entitled to an extension of time for delay damages but it also expressly provided that the contractor would only be entitled to time and material costs for Winter condition work.

Thus, because the contract in this case clearly and unambiguously detailed how the contractor would be paid in the event it performed Winter condition work, the contractor could not recover additional damages for that work. This case highlights the importance of considering the possible delay damages the parties may encounter during the project and clearly allocating the risk of such damages in the contract.