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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

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?