Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Christopher Carson, PSP Shannon Campbell, PSP

Shannon Campbell, PSP

Degree:
B.S. Civil Engineering M.S. Engineering Management

University:
B.S United States Military Academy M.S. University of Missouri-Rolla

Years of Experience:
10 years

Professional Field:
Engineering Claims Consultant

Something you do not know about me:

Served 6.5 years in the military as an army engineer travelling to 14 different countries across 5 continents many of these visits were to view construction projects throughout the world.

Chris Carson, PSP, CCM, PMP

Corporate Director of Project Controls, Alpha Corporation
Responsible for standards, processes, and procedures for a team of schedulers, analysts, and project managers in multiple office locations, as well as analysis, work product, and testimony Developed and manages the in-house project controls training program at Alpha PSP (Planning & Scheduling Professional AACEi) CCM (Certified Construction Manager - CMAA) PMP (Project Management Professional PMI)

Certifications:

University: University of Virginia, Mechanical Engineering, 1972 Professional Field: 38 years of experience in Construction Management Services specializing in
Scheduling, Schedule Analysis, Estimating, Claims

Active in AACEi (Association for the Advancement of Cost Estimating International)

Author of Recommended Practices in Scheduling & Forensic Schedule Analysis RP Vice President of Scheduling Excellence Managing Director for SEI (Scheduling Excellence Initiative) writing Best Practices and Guidelines for Scheduling and Schedule Impact Analysis Serving on team writing Best Practices for Scheduling for GAO Served on committee revising Time Management Chapter of CMAAs CM Standards of Practice Chief Editor for US, writing Planner Users Guide, developing accreditation Guild for planners 3 3

Active in PMI (Project Management Institute) College of Scheduling

Active in CMAA (Construction Management Association of America)

Active in Planning Planet (global planning association) Something you dont know about me: Im a glider co-pilot, see picture

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Introduction
Entitlement to Delay Damages only when there is Critical Path Delay to Project Completion What happens when an owner impact extends the time a subcontractor is on the job but the impact does NOT extend the Project Completion? What, if any, entitlement does the Subcontractor have to recover delay-related costs?

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

AsPlanned Schedule - Office Building

Months

10 11 12 13 14 15 16 17 18

Foundations
4

Structural Steel
4

Roof
1 4

NTP
Coord. Dwgs.
3

Curtainwall

Interior Finishes

Punch List 4
1

Fab/Deliver
3

MEP Rough In
4

MEP Finishes
3

AsPlanned v. AsBuilt Schedule

Months

4
4

10 11 12 13 14 15 16 17 18

Foundations Structural Steel

4

Roof
1 4

NTP
Coord. Dwgs.
3

Curtainwall

Interior Finishes

Punch List 4
1

Fab/Deliver
3 4

MEP Rough In
4

MEP Finishes
3

Foundations

Structural Steel
4

Roof
1 4 Interior Finishes

NTP
Coord. Dwgs.
3

Curtainwall

Punch List 4
1

Fab/Deliver
3

MEP Rough In
4 3 Wks

MEP Finishes
3

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Pass-Through Claims
Privity of Contract Recovery of Damages through a Pass Through Claim Definition:

A pass-through claim is a claim: 1) by a Subcontractor who has incurred damages due to the actions of the Owner/Government with whom it has no contract; and 2) submitted by the GC who has a contractual relationship with both the Subcontractor and the Owner/Government.

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Severin Doctrine
a prime contractor may sue the Government on behalf of its Subcontractor, in the nature of a pass-through suit, for costs incurred by the Subcontractor [due to the Governments conduct] . . . [i]f the prime contractor proves its liability to the Subcontractor for the damages sustained by the latter . . . a showing [which] overcomes the objection to the lack of privity between the Government and the Subcontractor.

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Liquidating Agreements
Acknowledgement of liability to the Subcontractor
Satisfies the Severin doctrine requirement that the GC is technically and legally liable to the subcontractor for the claim before submitting to Government

Limits liability to the amount that a prime is able to recover from the owner
Protects the prime

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

E.R. Mitchell Constr. Co. v. Danzig

Basics of the case Players Facts No dispute of Federal Government liability Government approved schedule Government put on notice of damages to both GC and subcontractor Owner responsible delays not of project schedule critical path Results Subcontractor satisfied all requirements for entitlement to Eichleay damages
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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Pass Through Claims General Information

J.L. Simmons v. United States provides the definition of the requirements of a liquidating agreement Case law varies among State courts Benefits of the Pass Through Claim

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

15

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

The Miller Act

Basic Purpose means for a subcontractor to receive payment for labor and materials furnished Players Successful recovery of delay damages through the Miller Act

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

The Miller Act Recovering Delay Damages

Generally recoverable if characterized as increased cost of labor and materials other costs have been successfully recovered Not relevant whether fault lies with the Owner of the Prime Seen as the only alternative in many cases for a subcontractor to recover increased costs

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

The Miller Act Considerations & Recommendations

Is a payment bond required? Was the payment bond actually attained? Timely initiation of a payment bond Limited liability by surety multiple claimants may require each to take a pro rata share of the penal sum

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

No Damage for Delay (NDFD)

Basic Purpose protects an owner or GC from paying monetary damages when a project is delayed Sample Clause No payment or compensation of any kind shall be made to the contractor for damages because of hindrance or delay from any cause in the progress of the work, whether such hindrances or delays be avoidable or unavoidable.

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

No Damage for Delay - Enforceability

Unenforceable in many states Established exceptions otherwise (1) not contemplated by the parties; (2) so unreasonable in length as to amount to an abandonment of the project by the Owner; (3) caused by acts of bad faith or fraud by the Owner; or (4) caused by active interference by the Owner. A fifth exception is also sometimes cited - delays caused by gross negligence.

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

No Damage for Delay Considerations

Sometimes incorporated by reference or in a Flow-Down Provision May be defense for an owner when presented with a pass through claim Has been circumvented by use of a liquidating agreement as already discussed

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Review and Negotiation of the Contract Timely Notice Waiver of Rights Good Documentation Involvement in the Baseline Schedule and Subsequent Updates

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Review and Negotiation of the Contract Subcontractor should Carefully review contract, especially from a legal perspective Assume any NDFD will be enforced Attempt to remove or reduce general assumption of delay risk Reduce to specific risks that are under subs control Watch for verbiage that limits recovery to active interference only by Owner Attempt to include language that provides a Grace Period that delays must exceed to allow an adjustment for delays Allows a contingency for that period to be carried Seek language related to specific events, proof required or price
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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Timely Notice Assume that notice requirements will be enforced and meet them Keep the GC informed so he can inform the Owner Owner then has opportunity to participate in mitigation Owner must be made aware of delays contemporaneously

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Waiver of Rights Watch for waiver language Could be part of a payment application or certification Could be part of a change order indicating all past claims are waived as of change order date Provide reservation of rights language to any document if contemplating submitting a delay claim

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Good Documentation Key to proving damages Accurate and contemporaneous All documents including bid documentation, daily reports, pay requisitions, invoices, correspondence, all input into baseline and update scheduling process, minutes, resources both planned and actual

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Involvement in the Baseline Schedule and Subsequent Updates Ensure input into all schedules Review any updates provided by GC to ensure no acceleration or stacking of crews are planned Ensure adequate time and sequencing Note subcontractors expectations for period of performance Includes planned resources in crews and composition Stockpiling and materials distribution needs Watch for reduction in durations or overlapping of work Watch for shifts in start dates, access dates, or completion dates Document any problems with schedules
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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Strategies for Proving a Subcontractors Delay Claim

Involvement in the Baseline Schedule and Subsequent Updates Review total float for subcontractors work to identify criticality at project schedule Attempt to have the impacts to the subcontractor shown on the schedule If failed, document the delay or disruption Recognize that the Measured Mile is the most effective analysis for loss of efficiency Requires good resource information Related to the schedule to prove impacted & unimpacted times Includes participation in any REAs submitted by GC subcontractors can lose their rights against the Owner if not involved with REAs
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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Topics to be Covered
Example Pass-Through Claims The Miller Act Combating the No Damage For Delay Clause Strategies for Proving a Subcontractors Delay Claim From the Owners Standpoint

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

From the Owners Standpoint

Provide fair allocation of risk Assign risk to the party most able to control it This will reduce claims efforts Provide timely and fair review and approval of legitimate time extension requests Follow the same general rules as outlined in the strategies for the Subcontractor Should an Owner be able recover equivalent damages from a Subcontractor due to Subcontractor impacts?

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Conclusion
Negotiate the Contract Know the Contract Be involved in the schedule from start to finish Maintain accurate documentation Seek legal advice

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Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Questions?
Shannon Campbell, PSP Chris Carson, PSP