Construction projects are high-stress and expensive jobs that involve a variety of parties, from owners and contractors to builders and suppliers. All the stakeholders in a construction project work as part of a system in order to complete a project on time and on-budget. Since these large construction projects involve large and expensive equipment, and a fluctuating level of manpower, the longer a construction job takes, the more complications arise—the higher its costs rise and the greater is the potential for litigation. Here’s where construction law and the services of a construction attorney become vital to the process.
Most litigation comes from this friction in the process between slow-moving systems and set construction schedules where small delays can disrupt larger forces. However, due to the high costs of these disruptions, most contractors and owners usually require well planned schedules with various outlets for change. Unfortunately, these scheduling changes can lead to legal disputes which need discussed by a construction attorney.
Disputes by Delay (Inexcusable and Excusable Delays)
Delays in completing components of or completion of a construction project can have significant and multiple financial impacts on both the owner and the contractor, which can trickle down to the entire team. Sometimes, these delays are easily-resolved and the construction law process doesn’t get involved. However, in some cases, the responsibility falls to the courts to determine who, if anyone, is responsible for the delay and then who must bear the increased costs.
There are two general categories into which construction delays typically fall. First, there are inexcusable delays, where the delay is the fault of the contractor or third parties such as subcontractors or material suppliers. Second, there are excusable delays, attributable to circumstances beyond the contractor’s control and, importantly, where the delay is not caused by the fault or neglect of the contractor or third parties for whom the contractor is responsible.
Sometimes, delays may be inexcusable, like error on the part of a contractor or a subcontractor. Inexcusable delays may be divided into compensable delays, where the contractor may recover damages for the extra costs of the delay. In such a situation, the contractor can recover money as damages from the owner to cover all the extra costs incurred as a result of the delay, and also receive a time extension. Generally, delays that are attributable to an owner’s fault or neglect (or a party which the owner is responsible, such as a materials supplier or an architect) are compensable, and delays which are unforeseeable, but attributable to neither party’s fault or neglect, are noncompensable delays, in which case, additional time, but not additional money damages as compensation, is awarded.
Generally, in construction law, a contractor is liable for any foreseeable costs as a result of a delay in completing a project. Many contractors assume that they are not liable for an owner’s delay, however, they should consult with a construction attorney to ensure liability. In some cases, which we will discuss more later, the contract may contain a liquidated damages provision which limits liability somewhat.
Sometimes, due to weather or other concerns, an excusable delay occurs, for which an extension may be made to the project. For some excusable delays, the contractor may be entitled to recover delay damages for which the owner is responsible. In most cases, the contractor is excused from liability only for delays that are caused by the actions or inactions of the owner, architect, or other parties working directly with the owner. Other events beyond the contractor’s control, like weather, also falls into an excusable delay, however the contractor assumes liability for delays regarding failure of the contractor’s subcontractors or material suppliers to perform on time, in correcting defective work, or in severe weather that is not unusual to the area and built into the plan.
General Damage Disputes
Whether an owner be unhappy with the quality of workmanship, either by the general contractor or subcontractor hired by the general contractor, or to the quality of materials used, or damage to the property while doing to project uncovered by contractor’s insurance, one of the most common reasons construction law or the services of a construction attorney may be used are during the damages process.
Not only does physical damage fit into the law, but also if a contractor agreement specified an date for completion of the project, and the general contractor fails to complete the project on time and the owner suffered damages because of the delay, the owner may claim compensation.
Due to the difficulty of calculating damages at the time of contracting, contracts frequently include funds for liquidated damages, which are established on a per-day basis for each day the project is not completed on schedule.
Damages for Delay or Acceleration
Without an enforceable liquidated damages contract, the owner is still entitled to recover its actual damages for inexcusable delays. This may include interest, rental charges and other expenses incurred because of the delay. If the contractor changed the date to finish its work before the contract date via a verbal contract, but events prevent early completion, the contractor may recover delay damages from the owner even if it finishes the project by the date specified in the written contract. In other words, completing the project by the date specified in the contract does not necessarily prevent the contractor from recovering delay damages so long as the contractor could have reasonably finished by an earlier date.
Likewise, acceleration damages are the extra expenses incurred by the contractor when the owner requires it to complete the project, or a portion thereof, in less time than provided in the contract documents. Damages recoverable based on acceleration typically include additional labor costs, overtime, costs of rental equipment, construction law, and any other expenses in its attempt to finish the project.
Whether the problem or concern is employee or contractor-related or whether it comes from the tension inherent in large systems and construction schedules, whether a part of the construction team or seeking the services of a construction attorney, construction projects are complex systems that involve multiple people and businesses, large mechanical equipment, and other complications. Good communication can avoid problems. However, when situations impede construction, talking with a professional with a sense of construction law such as a construction attorney can help explain the litigation process.