Construction Claims Archive: Sorting out multiple causes of delay
When performance of a construction project is delayed, it is common for the delay to result not from a single, discrete event, but from multiple causes. This makes it difficult to assess or allocate responsibility for the financial consequences of delay.
Delay events are generally categorized as excusable, nonexcusable or compensable. Excusable delay is caused by factors beyond the control and without the fault of either the project owner or the contractor. The contractor is entitled to an extension of time, but not an increase in the contract price. Nonexcusable delay is caused by the fault or performance deficiency of the contractor. The contractor is entitled to neither an extension of time nor an increase in the contract price. Compensable delay is caused by the error or omission of the project owner. The contractor is entitled to both an extension of time and an increase in the contract price.
It is important to note that when one speaks of “delay,” it is delay in the completion of the overall project. In order for project completion to be delayed, a delay event must have an impact on the “critical path” of the schedule. The critical path is that sequence of interdependent tasks that creates the shortest timeline between notice-to-proceed and substantial completion. Other tasks can be delayed or resequenced without affecting overall project completion. Tasks on the schedule’s critical path cannot.
When a contractor claimed that a series of owner acts and omissions delayed project completion by 272 days, the contractor’s bar chart schedule failed to show that any of the affected work was on the schedule’s critical path. The contractor was not entitled to any compensation for the delay. Mega Construction Co., Inc. v. United States, 29 Fed.Cl. 396 (1993); CCM February 1994, p. 8.
Similarly, a contractor sought to reverse a termination for default by showing that it fell behind schedule due to excusable delay. The contractor was unsuccessful, however, because it was unable to establish that the delay was on the critical path of the schedule. Morrison Knudsen Corp. v. Fireman’s Fund Insurance Co., 175 F.3d 1221 (10th Cir. 1999); CCM September 1999, p. 3.
It should be noted that when a project owner grants an extension of time, it creates a presumption that the delay in question was on the critical path of the schedule. Otherwise, why would the project completion deadline be extended? Appeal of Gottfried Corp., ASBCA No. 51041 (September 14, 1998); CCM November 1998, p. 4.
Concurrent delay occurs when the results of two separate delay events overlap. If an excusable or compensable delay occurs concurrently with a nonexcusable delay, the delay is treated as nonexcusable. The contractor would not have been able to work in any event, as a result of its own fault, so it should not receive an extension of time or a price increase. If an excusable delay occurs concurrently with a compensable delay, the delay will be treated as excusable. The contractor would have been unable to work notwithstanding the owner’s fault and should therefore receive only an extension of time, not a price increase.
Project owners frequently assert concurrent delay as an affirmative defense to a contractor claim for more time and/or money. When a contractor submits a claim for a price increase due to owner-caused delay, the owner responds that the delay was concurrent with a contractor caused delay. A compensable delay concurrent with a nonexcusable delay results in a nonexcusable delay, so the contractor is not entitled to a price increase or an extension of time.
In one case, the government changed the requirements for a materially handling control system, causing a delay in obtaining equipment. But when the contractor submitted a claim for delay damages, the government showed that the contractor was behind schedule in constructing the space to house the equipment and would not have been able to install the equipment notwithstanding the government-caused delay. Appeal of Beckman Construction Co., ASBCA No. 24725 (February 8, 1983); CCM May 1983, p. 5.
On another project, inaccurate government drawings delayed one aspect of the work for six weeks. The government was able to prove, however, that late delivery by one of the contractor’s key suppliers would have prevented the contractor from performing that work anyway. Appeal of Cline Construction Co., ASBCA No. 28600 (August 23, 1984); CCM November 1984, p. 6. Similarly, a government delay in issuing a necessary change order brought work to a standstill. But the government was able to show that the contractor would have been unable to perform due to a problem with a supplier. Appeal of Rivera Contracting, ASBCA No. 25888 (April 30, 1985); CCM August 1985, p. 6.
In another case, the government failed to obtain necessary construction easements in a timely manner. The contractor’s claim for delay damages was denied, however, because during the entire period of impaired site access, the contractor had not submitted an acceptable proposal for an excavation support system. And the contractor was not entitled to work without an approved system. Appeal of Volpe-Head, Joint Venture, ENG BCA No. 4726 (July 14, 1989); CCM August 1985, p. 6.
Project owners also use concurrent contractor-caused delay as an affirmative defense to contractor claims for an extension of time. In one case, the government assessed liquidated damages for late completion. The contractor claimed it had been entitled to an extension of the performance period due to government delay in finalizing the terms of a contract modification. The government rebutted this claim, however, by showing that the contractor’s problems with a supplier were concurrent with the government-caused delay. The contractor was not entitled to an extension of time. Appeal of Hood Plumbing, AGBCA No. 84-181-1 (October 28, 1987); CCM January 1988, p. 6.
It should be emphasized that when analyzing concurrent delay situations, one must pay attention to the critical path of the schedule. If contractor-caused delay that is off the critical path occurs concurrently with owner-caused delay that is on the critical path, the contractor can still recover for the owner-caused delay. The performance of the critical sequence of tasks would have been extended by the owner’s delay regardless of the contractor-caused delay. Wilner v. United States, 23 Cl.Ct. 241 (1991); CCM October 1991, p. 3.
Sometimes it is possible to identify a period of delay that resulted from a single, discrete event and segregate that delay from other periods of concurrent delay. In one case, design flaws forced the government to stop work on one portion of the project. Problems developed later with the performance of the contractor’s masonry subcontractor. The initial period of suspended work was compensable, owner-caused delay. But once the masonry problem became concurrent, the delay became nonexcusable. Toombs & Company v. United States, 4 Cl.Ct. 535 (1984); CCM July 1984, p. 2.
In another case, the government issued ten change orders that extended the necessary performance period by 153 days. During the performance of this work, however, the contractor suffered two delays on the schedule’s critical path: a 37-day strike delay and a 70-day delay caused by the contractor itself. The contractor recovered extended field overhead for only 46 days of the extended performance period. The concurrent delays of 37 and 70 days were subtracted. Appeal of B. D. Collins Construction Co., ASBCA No. 42662 (December 17, 1991); CCM March 1992, p. 4.
The government’s failure on one project to provide horizontal control points resulted in compensable delay. But when high river water made work impossible, an excusable delay became concurrent with the compensable delay. The contractor recovered additional compensation and an extension of time for the initial period of delay, but only an extension of time for the period after the water came up. Appeal of Harvey Honore Construction Co., Inc., ASBCA No. 47087 (September 27, 1994); CCM December 1994, p. 4.
In another case, the government failed to establish control points for the location of bridge footings, resulting in compensable delay. But the period of compensable delay ceased when it became concurrent with contractor-caused delay. The contractor did not have rebar cages assembled and would not been able to pour the footings in any event. Appeal of Tri-West Contractors, Inc., AGBCA No. 95-200-1 (December 3, 1996); CCM February 1997, p. 4.
Similarly, the government provided necessary drawings 43 days behind schedule. But the contractor was not allowed to commence work until its safety plan had been approved. The contractor’s late submittal of the plan resulted in approval 20 days after the government’s drawings had been due. The first 20 days of concurrent delay were nonexcusable. The subsequent 23 days of delay, when the contractor was ready and able to perform, were compensable. Appeal of Cape Romain Contractors, Inc., ASBCA No. 50557 (December 15, 1999); CCM February 2000, p. 5.
Sometimes multiple delay events are so intertwined that it is impossible for a court or administrative board to segregate periods of excusable, nonexcusable, compensable, and even concurrent delay. Each party has contributed to the delay and it is impossible to determine individual causation or to allocate responsibility. In these cases, neither party may hold the other responsible for the delay.
In one case, the government was unreasonably slow in responding to the contractor’s shop drawing submittals. But the contractor’s submittals had been vague and incomplete. It was impossible to apportion responsibility for the delay, so neither party could recover. “When delays result from a combination of causes and both parties are at fault to such extent that it is not possible to determine the degree of guilt of each, the government loses its right to assess liquidated damages and the contractor loses the right to collect delay damages.” Appeal of J.B.L. Construction Co., Inc., VABCA No. 1799 (November 7, 1985); CCM January 1986, p. 5
Similarly, a project bogged down when a contractor encountered differing site conditions and was also forced to perform remedial work in order to bring the work into compliance with the specifications. It was impossible to distinguish or allocate the delay impact of the two events, so the government was denied recovery of liquidated damages and the contractor was denied recovery of delay damages. Appeal of Coffey Construction Co., Inc., VABCA No. 3361 (February 11, 1993); CCM April 1993, p. 4.
A delay caused by a government design flaw was intertwined with delay caused by the contractor’s steel fabricator. Allocation of responsibility was impossible. Again, the government could not assess liquidated damages and the contractor could not recover for the cost of the delay. Appeal of C. G. Norton Co., Inc., ENG BCA No. 5182 (January 19, 1988); CCM May 1988, p. 6.
The government delivered faulty, government-furnished equipment to a project. The resulting delay was compounded by, and intertwined with, delay caused by the contractor’s slow electrical work. The government could not withhold liquidated damages and the contractor could not recover delay costs. “The Board leaves the parties where it found them.” Appeal of Gulf Construction Group, Inc., ENG BCA No. 5961 (October 13, 1993); CCM January 1994, p. 5.
And finally, an asbestos abatement contractor encountered asbestos fireproofing overspray on ductwork and piping. Neither the contractor nor the project owner, the U.S. Postal Service, had been aware of the condition. Much of the abatement work had been subcontracted. The subcontractor understaffed the job and failed to adhere to the established schedule. The contractor completed the project late and the Postal Service withheld liquidated damages. The Board ruled, however, that it was impossible to separate the delay caused by the overspray problem from the delay caused by the subcontractor problem. The compensable delay could not be segregated from the nonexcusable delay, so neither party could recover. The Postal Service could not assess liquidated damages and the contractor could not recover delay costs. Appeal of Karchner Environmental, Inc., PSBCA No. 4085 (March 13, 2000); CCM May 2000, p. 4.