Delay Claims from the Owner and Contractor’s Perspectives

Annual Program of the Claims Avoidance and Resolution Committee of the Construction Institute March 11, 2010 – Los Angeles

Delay Claims from the Owner and Contractor’s Perspectives
Claims Avoidance and Resolution Committee Understanding Claims Subcommittee • • • • Dennis M. Mac Bride, Chair - SEPTA Craig Lindquist – CCS Group, Inc. Patrick Watz – AECOM John (Jack) Chiaverini – Retired, Perini Corporation

AGENDA
• What is a Delay Claim? • Contract Language Related to Delay • Types of Delays • Types of Damages • Requirements for a Successful Claim

AGENDA
• Contractor’s Delay Claim Submission • Owner’s Defense • Owner’s Damages / Counterclaim • Contractor’s Defense • Case Study

What is a Delay Claim? In simple terms: • Contractor: A request for compensation and/or time due to owner-caused delays • Owner: An assessment of liquidated damages or a claim for actual damages due to contractor-caused delays .

Contract Language • “Time is of the essence” • Contract time of completion • Contract milestones / Phasing • Scheduling specifications (CPM or bar chart) • Notice provisions .

Contract Language • Time extension requests (time impact analysis) • Time extensions / change orders • Liquidated damages • “No damage for delay” clause • Delays by other contractors clause • Disputes clause .

Types of Delays Examples of Owner-Caused Delays • • • • • • • • Site access Differing site conditions Shop drawing approval Design errors and omissions Extra work / change orders Failure by owner to timely provide materials Changed conditions.. e.g. working hour restrictions Work suspension .

material.Types of Delays Examples of Contractor-Caused Delays • Procurement/Submittal problems (material & equipment) • Subcontractor delays • Lack of adequate resources (labor. equipment) • Poor work sequencing • Lack of productivity • Rework • Financial difficulties .

Types of Delays Third-Party Delays • Permit acquisition • Utility relocations • Adjacent contractors • Government Actions/Inactions .

Types of Delays .Analysis • Excusable / Non-excusable delays • Compensable / Non-compensable delays • Force majeur (Beyond either party’s control) • Concurrent delays .

. winter work protection • Subcontractor pass through • Labor and material escalation • Acceleration – Directed and constructive acceleration • Idle labor and equipment • Lost productivity (inefficiencies) • Insurance and bonding costs .Examples of Contractor Delay Damages Recoverable • Field office overhead (General conditions) – Trailers.g. • Added cost of work. etc. on-site supervision. utilities. e.

loss of bonding capacity • Legal and consultant fees .Examples of Contractor Delay Damages Not Recoverable (Depends on contract language) • Home office overhead (G & A) – Delay vs. total suspension of work • Lost opportunities – Lost business revenue.

• Construction Manager costs/fees .Owner Damages Liquidated Damages • Described in contract • $ per day for each day substantial completion is beyond the current contract completion date • Must be a reasonable estimate of damages and not a penalty Examples of Owner’s Actual Damages • Owner costs – Lost revenue. etc. • Architect/Engineer costs/fees – Additional shop drawing reviews. etc. rate escalation. inspection. project management. interest on financing.

Requirements for a Successful Claim The burden of proof is on the contractor .

Requirements for a Successful Claim Three elements needed: • Liability (Entitlement) • Causation • Damages (Quantification) .

workmanship Causation • “Cause and effect” • Link between delay and damages Damages • Substantiating documentation for extended costs • Actual costs or daily rates .Requirements for a Successful Claim Liability • Contractual duties and obligations – Notice provisions – Site access. accurate plans and specs – Adequate resources.

Contractor’s Delay Claim Submission • Why the owner is responsible for delays and associated costs • Schedule analysis • Damages • Substantiating documentation • Transparency .

Owner’s Defense Determine Type of Delay: Excusable Owner-caused Force majeur Non-excusable Contractor-caused Compensable Non-compensable Non-compensable .

Owner’s Defense Identify Concurrent Delays: Excusable Caused by Owner and Contractor Non-compensable .

etc. meeting minutes. daily reports.Schedules. • Damage Review – Receipts. shop drawing logs. invoices. – Reasonable estimates ___________________________________________ Owner Costs that Offset Contractor Damages: • Overhead paid as part of change orders during the extended period • Liquidated or actual damages . etc. cost reports.Owner’s Defense • Liability Review .Contract terms • Causation Review .

Owner’s Damages / Counterclaim • Why the contractor is responsible for delays and liquidated or actual damages • Schedule analysis • Damage calculations • Substantiating documentation .

errors & omissions • Change orders.Contractor’s Defense • Contract Terms / Plans & Specs – Ambiguities. conflicts. etc. – Effect on schedule and costs • Schedule Analysis – Owner-caused delays – Concurrent delays . RFI’s.

Delay Claim Case Study .

the contractor incurred extra costs and requested additional compensation from the owner. The following describes the process that was used to resolve this delay claim. stuff happened and it was completed much later.Case Study This is the story of a construction project that was planned to be completed in 24 months. Because of this. . Unfortunately.

The As-Planned Schedule (What was supposed to happen) .

1 A 2 M 3 J 4 J .

The As-Built Schedule (What actually happened) .

1 A 2 M 3 J 4 J 5 A A ccess D elay (1 m o .

The As-built Schedule shows that there were six delays that resulted in an eight month delay to the project. .

1 2 A M 3 J 4 J 5 A .

the contractor submitted the following claim to the owner: .Because the project finished eight months late.

C .

Before analyzing the contractor’s costs. the owner performed a Delay Responsibility Analysis as follows: .

1 A 2 M 3 J 4 J 5 A A ccess D elay (1 m o .

Delay Responsibility Analysis Delay Type Access Delay Differing Site Conditions Re-design Strike Lack of Progress Re-work Responsibility Owner Owner Owner Neither Contractor Contractor .

1 A 2 M 3 J 4 J 5 A A ccess D elay .

the owner apportioned the contractor’s claimed costs and estimated the contractor’s entitlement to additional compensation as follows: .Based on its Delay Responsibility Analysis.

Clai Field O ffice O ver .

. and everyone lived happily ever after. They negotiated a settlement somewhere in between . .The contractor requested more than $700. .000. . . The owner estimated that the contractor was entitled to approximately $260.000 in additional compensation due to project delays. .

THE END .

Delay Claims from the Owner and Contractor’s Perspectives Questions? .

AACE International. Bramble & Michael T. 2000 Recommended Practice No. Hurlbut. 2008 CPM in Construction Management. Wickshire. John M. Forensic Schedule Analysis. and Claims. 2007 . Cushman. Theodore J.Delay Claims from the Owner and Contractor’s Perspectives Additional Information Construction Delay Claims. Seventh Edition. 1999 Construction Delays: Documenting Causes. 29R-03. Thomas J. Barry B. Winning Claims. Third Edition. Robert F. 1990 Construction Scheduling: Preparation. Callahan. Trauner. Fredric Plotnick & James O’Brien. 2009 Proving and Pricing Construction Claims. Recovering Costs. Stephen B. Driscoll. Liability.

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