Delays and inefficiencies

This is the third post in the four-part series “Limitations of Liability—The Elephant in the Room.”

Owners often attempt to limit their liability to contractors through what is commonly known in the construction industry as a “no damages for delays” clause.  Much like waivers of consequential damages, a “no damages for delays” clause, which limits damages for construction delays, accelerations and other inefficiencies, can serve a fair purpose, despite the perceived severity to a contractor who falls behind schedule for reasons beyond its control.  These delay-related costs (especially indirect costs such as extended home office overhead or lost bonding capacity) tend to be speculative and difficult to prove.  Proving and defending delay claims is also a very expensive proposition, both as to entitlement and quantum.  Finally, project owners presume that contractors are better prepared to confront project delays, and to carry costs for such a contingency in their pricing.

In many jurisdictions these clauses are fully enforceable, albeit with limited exceptions that courts have restricted in recent years.  Contractors that choose to ignore these clauses do so at their peril.

Nonetheless, no contractor can anticipate every delay or impact, and a protracted delay in a project can have a devastating financial impact on the construction team.  There should be a means by which contracting parties can fairly allocate the cost issues that come with unexpected delays, without leaving the door open for speculative claims.
Continue Reading Limitations of Liability— Scenario Two: No Damages for Delay Clauses

In a recent decision, Elec. Contractors, Inc. v. Fid. & Deposit Co. of Maryland, No. 3:13-CV-00514 MPS, 2015 WL 1444481 (D. Conn. Mar. 30, 2015), the United States District Court for the District of Connecticut dismissed on summary judgment a subcontractor’s claims for delay damages against the general contractor on a construction project (“Project”)

On February 26, 2015, Roy Cooper of Arcadis and I reprised our popular Workshop for the University of Hartford’s Construction Institute, “Managing Legal Exposures.”  One of the slides in our presentation  quotes a wise jurist on the subject of construction project scheduling:

Except in the middle of a battlefield, nowhere must men coordinate the movement of other men and all materials in the midst of such chaos and with such limited certainty of present facts and future occurrences as in a huge construction project…Even the most painstaking planning frequently turns out to be mere conjecture, and accommodation to changes must necessarily be of the rough, quick and hoc sort, analogous to ever changing commands on the battlefield.

Blake Constr.Co. v. C.J. Coakley Co., 431 A.2d 569 (D.C. App. 1981).

Of course, the stakes on even the largest construction projects are not nearly as significant as those on the battlefield. That said, nothing creates as much exposure to a construction project team as the failure to manage and promptly address scheduling changes.  Similar to the battlefield, the one thing that can be anticipated is the unanticipated.  Those who are successful are those prepared for the unexpected.

Risk mitigation for project delays can and should be addressed as early as the selection of the project team, and in the preparation of the contract documents.  The following should be considered long before the “chaos” of construction:

Continue Reading War (and Construction Scheduling) is Hell?

This is article explores the complex nature of allocating the risks associated with project delays. It was originally published in Schimenti Construction Company’s newsletter and is reprinted with permission.

Retail construction is no stranger to the inherent costs associated with project delays.  Retailers, like all owners, rely upon construction professionals to estimate the duration of a project so that associated hard and soft costs can be quantified and properly budgeted.  The majority of retail construction projects today consist of renovations to an existing store or space.  It is very difficult for designers on such projects to account for and incorporate all existing conditions into their drawings and specifications.  Also, as with any project, it is very difficult at the onset to predict weather, labor conditions, the availability of raw materials and other factors that might have an impact on a project’s duration.  These unknowns often result in unanticipated project delays, acceleration or other impacts.  One District of Columbia judge said that “except in the middle of a battlefield, nowhere must men coordinate the movement of other men and all materials in the midst of such chaos and with such limited certainty of present facts and future consequences as in a huge construction project…”  Blake Cosntr. Co. v. C.J. Coakley Co., 431 A.2d 569, 575 (D.C. Cir. 1981).  But, when the duration of a project extends beyond what was originally contemplated, all of the parties in the construction pyramid suffer unanticipated costs; which can and should have been addressed and allocated within the construction contracts.

There are many different ways to allocate and transfer the risks associated with project delays within a construction contract.  Two of the most common provisions for doing so are “No Damages for Delay” clauses and “Liquidated Damages” provisions.
Continue Reading Allocating The Risks Associated With Project Delays