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Monday
Jan232012

Construction Schedules & Delay Claims - General Contractor Claims

This is the second in a series of articles on Construction Schedules & Delay Claims.  In this article, we will address delay claims against owners.

As we mentioned in the first installment of this series, delay claims are difficult (and expensive) to prosecute.  Despite the difficulty and expense, the general contractor (and, of course, subcontractors) should follow basic procedures and practices during the project in order to protect and preserve these claims.

The first step at the outset of any construction project is to read the contract.  The Contract will address (1) how the general contractor is to submit the delay claim; (2) what information needs to be provided; (3) when it needs to be submitted; and (4) what the general contractor’s remedies are.  Although provisions impacting delay claims can be found in almost any section of the general contract, liquidated damages and delay claims can generally be found in (1) the Agreement (AIA A101, A133, etc.); and (2) the General Conditions (AIA A201), particularly Articles 4 (Architect), 7 (Changes in the Work), 8 (Time), and 15 (Claims and Disputes).

The general contractor should follow the notice provisions, both in terms of when the notice must be submitted and what information is required to be submitted.  The general contractor should also make sure that the subcontractors are aware of the notice requirements (both the timing and substance of the notice).

Some notice provisions are extremely detailed.  If there is ever a doubt about the impact of an event or an owner change, the general contractor should simply reserve the right to request additional time once the effect upon the schedule is fully understood.  At the time of a delay event, it is impossible to know the exact amount of delay that the general contractor will suffer simply because it is impossible to see into the future.  As long as it complies with the contract, the general contractor should reserve rights to assert delays and, when the general contractor does know the impact, notify the owner.  If the general contractor is required by contract to state the number of days at the time of the initial notice, it is important to make sure that you have requested enough time and reserve rights to more accurately address that particular claim.

General contractors should be careful when executing change orders.  If the general contractor signs a change order that does not provide time or does not reserve time, then the general contractor may be bound to that document and may not get additional time as a result of that change.  When in doubt, the general contractor should write in a reservation of rights to submit for a schedule extension.

While each individual change order may not, by itself, warrant an extension of time, the cumulative effect of multiple change orders may provide a basis for a time extension.  While these type of claims are difficult to prove, if the general contractor encounters a project where there are an inordinate amount of change orders, it is the proper course to reserve the right to request a time extension with each change order.

Aside from contact compliance, there are a few practical issues that assist the fair and reasonable discussion and processing of delay claims:

 

  • It can be uncomfortable to submit and discuss delay claims because, if valid, these issues will cost the owner a lot of time and money.  However, it is important to realize that delays cost the contractor too.  Every day that the contractor is working on that project costs thousands of dollars.  As difficult as it may be to discuss delays during the project with the owner, it is far more difficult to address them at the end of the project, when it comes as a surprise.  The better practice is to address these issues early.                    
  • Provide Information.  Tell the owner and architect what information you need, when you need it, and the consequences of not receiving that information when you need it.                    
  • Give Forewarning.  Before sending official notice, it is best to be courteous and tell the owner/architect what you need and when you need it.  Pick up the phone and tell the owner/architect that you need response to RFI No. __ or direction to proceed with Change Order Proposal No. __ within the next two weeks.  Give the owner/architect sufficient verbal notice to get you the information.                    
  • Give written notice, but call again.  If you don’t get a response from the first call, then call again and inform the owner/architect that you will be sending a notice letter within the next day or so, that you are just following the terms of the contract, and that you hope that the information/direction will be provided.
  • Provide solutions.  Be proactive in providing “pre-notice,” written notice, and solutions.  You will gain respect and credibility if you are seen as being part of the solution, rather than part of the problem.

For additional information, please contact Jack DiNicola at DSU.

Reader Comments (2)

I am so glad to here this legal information for homeowner

January 30, 2012 | Unregistered Commenterjackhhampton

It is always good to know a good lawyer or someone who knows the laws. I think we would rather have a contractor change things instead of going ahead and doing things the wrong way.

September 12, 2012 | Unregistered CommenterSteve

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