A. INTRODUCTION

B. 3 TYPES OF DELAYS & TIME EXTENSIONS

C. DELAY ON A PROJECT'S "CRITICAL PATH"

D. ACCELERATION: WHO'S RESPONSIBLE FOR THE COSTS?

  E. DISCLAIMER

Delays on construction projects are as vexing as they are misunderstood. A delay claim can be the riskiest, most difficult, and most expensive of any claim on a construction project. Both owners and contractors fear delays so when one arises, the owner and contractor immediately start the blame game and forsake any effort to understand and properly manage the delay.

A proper understanding of delays starts with two key words: cause and effect. The cause of the event will determine who is responsible for any resulting delay, and the effect of the event will determine whether it actually causes a delay for which contract relief is available. The owner and contractor seem to forget that an event is necessary to cause a delay and that the event must actually cause the delay. The event can be active or passive, act or omission, but something must happen or not happen to cause a delay.

The types of delay fit into 3 broad categories:

(1) Inexcusable or contractor-caused delays (the contractor is responsible for the delay),

(2) "Compensable" or owner-caused delays (the owner is responsible for the delay), and

(3) Excusable delays ( for which neither the contractor nor the owner are responsible).

The type of delay, and the party contractually responsible for the delay, determine whether a time extension is available and which party, if either, is liable to the other for the cost of the delay.

(1) Inexcusable delay: contractor is not entitled to a time extension and is liable for the owner's delay costs. Those costs can be either the owner's actual delay damages or liquidated damages, as specified by contract.

(2) Compensable delay: contractor is entitled to a time extension and the owner is liable for the contractor's delay costs.

(3) Excusable delay: the contractor is entitled to a time extension but neither the owner nor the contractor is liable to the other for delay costs, and each party must absorb its own costs of the delay.

Responsibility for delays is determined by the type of delay and by the contract. The contract can shift the risk, usually to the contractor, for delays that otherwise would not factually or logically be that particular party's responsibility. Typical contract clauses such as the changes clause, Force Majeure/excusable delay clause, termination clause, suspension of work clause, differing site condition clause, no-pay-for-delay clause, or a clause specifying scheduling requirements can allocate risk of delays of different types to a particular party.

To actually delay the project, the delay must occur to an activity on the project's "critical path," which is a series of activities that cannot be compressed between now and the end of the project.

If the delay occurs to an activity not on the critical path, that activity is delayed but the project is not. However, the critical path routinely shifts from one sequence of activities to another during the course of a project. That shift is the product of the inherently fluid nature of a construction project and the adjustment of the original schedule to reflect the reality of the project as it is being built.

An activity that was delayed but was not on the critical path at the time of the delay may become critical when the critical path shifts to the sequence of activities of which the delayed activity is a part. Sophisticated critical path scheduling techniques are capable of identifying and tracking the critical path as it shifts from one sequence of activities to another, but few if any construction contracts provide an explicit procedure for retroactively recognizing a delay to an activity that was not on the critical path at the time of the delay but later becomes critical when the critical path shifts to its sequence of activities.

Acceleration is the flip side of delay. Acceleration is increasing the pace of the contractor's work by adding extra labor to compensate for a delay, to accommodate additional work, or to finish the project earlier than originally scheduled. The party liable for the cost of acceleration is the party responsible for the underlying delay and/or the party deciding to accelerate.

For example, if the contractor voluntarily accelerates to overcome its own delay, a delay for which the contractor is contractually responsible, or an excusable delay, or to finish the project early, the contractor is liable for its acceleration costs. If the owner directs the contractor to accelerate to overcome the contractor's delay, or a delay for which the contractor is contractually responsible, the terms of the contract will determine which party is liable for the contractor's acceleration costs. If the owner directs the contractor to accelerate to overcome the owner's delay, or a delay for which the owner is contractually responsible, the owner is liable for the contractor's acceleration costs. If the owner directs the contractor to accelerate to compensate for an excusable delay or to finish the project early, the owner is liable for the contractor's acceleration costs.

Constructive acceleration occurs when:

(1) an excusable delay exists,

(2) the contractor requests a time extension,

(3) either the owner denies the time extension or the owner impliedly directs, without a specific order, that the contractor should accelerate (such as by the owner's failure to act on the contractor's request for a time extension within a reasonable time), and

(4) the contractor accelerates in response to the owner's implied direction.

YADDA, YADDA, YADDA

1. For more information go to http://www.legalelite.com/index.htm

2. If you need help or have a comment, please E-mail us at
questions@legalelite.com.

3. To STOP receiving the practice pointers, insights, forms and
clauses from the Legal Elite, please go to the UNSUBCRIBE page.

* MCLE * MCLE * MCLE *

*PROVIDER: Legal Elite Online, LLC
Provider has been approved by the State Bar of California as a continuing legal education provider.

*SPONSOR: Legal Elite Online, LLC

MCLE INFO: click here.