Delay is one of the most common root cause of construction lawsuits for non-private, residential projects. Delays may descend from one specialist or company to another, creating a domino effect that can result in a very pricey conclusion. Besides, time is money, and delays on industrial tasks can mean expenses of thousands and even millions dollars to the property owner.
When the size of a few tiny, apparently unimportant delays are determined throughout an entire project, they can become really significant, as could their final cost to the project. Unfortunately, there is little that could be done to stop the actual delays from occurring. Even an iron clad contract could not prevent the delay, only try to change the damage brought on by the delay to an party more capable of stopping that delay.
In order to justify a claim for damages caused by a construction delay, one requires more than mere original plans and as-built drawings. Expertise and also experience are needed in areas such as accounting, job monitoring, scheduling, estimating, approaches, and performance evaluation, and usually you need to hire a specialist to help with all the analysis. This implies working with an attorney before job has actually begun who will certainly be able to help you minimize the damage brought on by any type of delays as well as to manage any type of prospective risks of delay by moving concerns as explained above.
It is also essential that you stay alert and hyper-aware of potential delay reasons. Occasionally, the delay can be as an outcome of poor weather condition, however many are the outcome or poor planning. Lots of possible delays could be foreseen early via the use of well-planned, detailed schedules. Failing to resolve scheduling issues at the very start is a major mistake, because unreasonable red- and deadlines will certainly not work themselves out throughout construction. Undoubtedly, risk management and preparation for possible delays and audit for them in any schedule might be the most effective method to mitigate any type of possible damage. Moreover, if the project finishes without delay, you will get everything done ahead of schedule, and it’s very encouraging.
If you suspect a delay after the start of a project, keep the records of all activities that might be affected and continue to update the schedule. In addition, collect detailed information of the impact of the delays on other project stages, labor costs and efficiencies. Usually, the party that maintains more detailed records will additionally be the party to prevail in a construction delay claim.
You need to additionally be aware of the typical types of damages you could deal with as an outcome of construction delays. Construction contracts progressively utilize liquidated damages provisions. These are used when real damages will be challenging or impossible to establish and, thus, a particular amount of money is listed in the agreement for each day the project is prolonged past the promised completion date. Liquidated damages are not considered a penalty, which is prohibited in many states, though many try to use them as such.
Other kinds of damages are a lot more complicated as well as require different techniques of analysis, such as critical path method (CPM). Real, compensatory damages are utilized when liquidated damages are either not provided for in the contract or available for some reason. Actual damages for owner delay claims can include:
(1) The owner’s project management and supervisory expenses
(3) Loss of use
(4) Lost rents
(5) Lost profits
(6) Insurance costs
(7) Construction loan interest.
Actual damages claims for contractor delay cases may include:
(1) Supervision costs
(2) Extended general conditions
(3) Jobsite trailer rental
(4) Temporary facilities such as toilets, fencing telephone, site power and water
(5) Liability insurance
(6) Equipment rental costs
(7) Equipment maintenance
(8) Field labor if the scope of work is increased by the delay
(9) Increased material costs
(10) Lost productivity caused by the delay due to disruption and inefficient task sequencing
(11) Hourly labor rate increases due to longer duration of project
(12) Demobilization and re-mobilization expenses for extended delays
Unfortunately, in most situations delays are unavoidable. The very best protection to a delay claim is to be prepared for a potential issue, record its effect, as well as be able to adjust the schedule to find time for fixing if the delay is on the critical path. To create the claim, on the other hand, the best is to prepare for it in advance, record the source of the delay, and also aim to change the burden for any resulting costs or loss of earnings to the other party by very carefully composing your contract. In either case, you must contact an experienced attorney proficient in construction delay cases as well as agreement prep work to help you with these matters. A little financial investment in legal services now will likely save you a big investment dealing with delay insurance claims later on.
The Construction Law Practice at McKoon, Williams, Atchley & Stanley, PLLC has significant expertise in all aspects of construction, from contract negotiation through litigation. We work closely with experts in the construction field to assist clients in understanding and evaluating their contracts, claims and litigation strategy. Don’t hesitate to contact us for everything involving Chattanooga commercial, residential and public works construction.