Hurry Up and Wait Pacing a Delay on a Construction Schedule

Whitney Judd | Kilpatrick Townsend & Stockton

Construction projects are rarely completed without delays or adjustments made to the project schedule. To avoid liability when scheduling disputes arise, parties must prove that they are not responsible for a delay to the project schedule. The exact cause of a delay however becomes difficult to prove where there are concurrent delays and both parties contributed to schedule disruptions. Pacing is a self-imposed delay where one party makes a conscious and deliberate decision to suspend performance of an activity on a construction schedule in response to a preceding delay caused by the other party. A party may choose to pace if it is more cost-effective to do so, but the decision to pace a scheduled activity does not come without risk. Pacing done to mitigate the impacts of a delay and to assist the project, may provide the true delaying-party with evidence to later claim that the paced activities were concurrent delays that relieve it of responsibility for the delay it caused.

Pacing can be direct or indirect, depending upon the paced activity’s relationship to the preceding delayed activity. Pacing is direct where the performance of the paced activity is dependent upon performance of the preceding delayed activity. For example, a contractor may choose to delay the production of window panes where the owner is already delayed in delivering the glass for the windows to the jobsite. Pacing is described as indirect where the paced activity is not dependent upon the performance of the preceding delayed activity. Here, an owner may choose not to rush its approval of shop drawings where the contractor has already delayed project commencement. Courts in various jurisdictions have supported decisions to pace activities by both contractors and owners, recognizing that there is no need for parties on a construction project to “hurry up and wait.”

While pacing can, under some circumstances, prove to be cost-effective, it is not a decision that should be made without careful thought and consultation with legal counsel. If an activity is paced and then later determined to be the cause of the delayed completion of the project, the decision to pace may in the end result in liability for the delay. As a general matter, if the pacing party causes additional delays to other critical activities on the project schedule, the pacing party may still be liable for delay damages. A contractor or an owner who decides to pace an activity should be diligent and consistent about properly documenting the preceding delay by the other party, as well as any costs associated with the delay. The pacing party should also document the status of the paced activity before it is intentionally delayed, as well as the progress of the activity after it is paced. This documentation is critical because it may otherwise be challenging to legally distinguish a paced activity from a concurrent delay if a scheduling dispute arises.

One way to keep a thorough record of the cause of project delays is for the pacing party to send notice of the other party’s preceding delay and to clearly communicate in writing the pacing party’s intention to relax performance on a subsequent activity. The notice should include documentation of the other party’s delay and proof that the succeeding activity to be paced is not already delayed or otherwise off schedule. As the project continues to move toward completion, the pacing party should also continue to maintain records of the timing and progress of both the delayed and the paced activities, as well as the costs associated with each.

Additionally, parties to a construction contract may prepare for future pacing of activities on a construction schedule at the time of contracting. Parties should engage experienced and knowledgeable counsel to negotiate construction clauses that add “pacing” or “paced delay” as defined terms and that address when pacing may be appropriate and how pacing may be utilized. Use of counsel in the contract negotiation phase may limit future liability for delays and allow the parties greater control over the possible legal outcomes in the event of a dispute.

Footnotes

[1] Appeal of MCI Constructors, Inc., D.C.C.A.B. No. D-924, WL 331212 (June 4, 1996) (holding that delays by a contractor’s supplier were excused where the owner had caused previous delays: “Although it is clear that MCI completed roofing later than the date called for in the as-planned schedule, and it is true that MCI was having difficulty prodding [its supplier] …to complete its delivery instrumentation, we conclude that those delays simply did not affect the project completion in view of the overriding [owner-caused] critical path delays”). See also Balfour Beatty Rail, Inc. v. Kansas City Southern Railway Co., 173 F.Supp.3d 363 (N.D. Tex. 2016) (where an owner’s delay in delivering materials to the contractor was not consequential because the contractor previously delayed commencing the work and was already behind schedule).

Delays Caused When Government (Owner) Pushes Contractor’s Work into Rainy/Adverse Weather Season

David Adelstein | Florida Construction Legal Updates

There are a number of horizontal construction projects where a contractor’s sequence of work and schedule is predicated on avoiding the rainy season (or certain force majeure events).  The reason is that the rainy season will result in delays due to the inability to work (and work efficiently) during the adverse weather (including flooding caused by the weather).   If the work is pushed into the rainy season, is such delay compensable if the government (or owner) delayed the project that pushed work out into the rainy season?  It very well can be.

For example, in Meridian Engineering Co. v. U.S., 2019 WL 4594233 (Fed. Cl. 2019), a contractor was hired by the Army Corps of Engineers to construct a flood control project for a channel in Arizona. Due to delays, including those caused by the government, the project was pushed into the monsoon season, which caused additional delays largely due to flooding caused by the heavy rain.  One issue was whether such delays were compensable to the contractor – the government raised the argument that the contractor assumed the risk of potential flooding from the rainy season.  The Court found this argument unconvincing:

[The contractor’s] initial construction schedule planned for a completion of the channel invert work, a necessary step in protecting the site from flooding, to be completed by late June 2008…[M]any issues arose in the project’s early stages that led to cumulative substantial delay, including those caused by the government’s failure….The government cannot now claim that [the contractor] assumed the risk of flooding from monsoon season when the government was largely responsible for [the contractor’s] inability to complete the project prior to the beginning of the monsoon season.  Simply put, the government cannot escape liability for flood damages when the government is responsible for causing the contractor to be working during the flood-prone season.

Meridian Engineering, 2019 WL at *7 (internal citations omitted)

In other words, but for delays caused by the government, the contractor’s work would not have been pushed into the monsoon season.  The Court’s outcome, perhaps, would have been different if the contractor was the sole cause of delays that pushed the project into the monsoon season or the contractor’s original schedule was unrealistic to begin with.

It very well can be.

For example, in Meridian Engineering Co. v. U.S., 2019 WL 4594233 (Fed. Cl. 2019), a contractor was hired by the Army Corps of Engineers to construct a flood control project for a channel in Arizona. Due to delays, including those caused by the government, the project was pushed into the monsoon season, which caused additional delays largely due to flooding caused by the heavy rain.  One issue was whether such delays were compensable to the contractor – the government raised the argument that the contractor assumed the risk of potential flooding from the rainy season.  The Court found this argument unconvincing:

[The contractor’s] initial construction schedule planned for a completion of the channel invert work, a necessary step in protecting the site from flooding, to be completed by late June 2008…[M]any issues arose in the project’s early stages that led to cumulative substantial delay, including those caused by the government’s failure….The government cannot now claim that [the contractor] assumed the risk of flooding from monsoon season when the government was largely responsible for [the contractor’s] inability to complete the project prior to the beginning of the monsoon season.  Simply put, the government cannot escape liability for flood damages when the government is responsible for causing the contractor to be working during the flood-prone season.

Meridian Engineering, 2019 WL at *7 (internal citations omitted)

In other words, but for delays caused by the government, the contractor’s work would not have been pushed into the monsoon season.  The Court’s outcome, perhaps, would have been different if the contractor was the sole cause of delays that pushed the project into the monsoon season or the contractor’s original schedule was unrealistic to begin with.

9 Best Practice Tips for a Schedule Analysis of Construction Delays

Matthew DeVries | Best Practices Construction Law

A number of families will be traveling this holiday season, and some are travel-savvy enough to check out travel websites for real-time traffic information and identification of construction delays.  When savvy contractors face delays on a project, they immediately take steps to provide notice, document, evaluate and plan for recovery from those delays.

It almost goes without saying that if you have to pursue or defend a delay claim, you are going to need some evidence (preferably by an expert) to establish or to challenge entitlement to the damages sought.  And we all know that there can be different routes to the same goal. However, the different methods of schedule analysis can lead to varying results.  So, which method is correct? In a great Construction Law International article by my friends Don Gavin and Rob D’Onofrio, the authors suggest a series of best practices that should improve on the reliability of schedule analysis and increase its acceptability in the industry.  According to the article, there are nine guidelines that any schedule delay analysis comply with, including:

  1. Compare the planned work before and after each delay. Practically, this means that you should compare the plan to perform the remaining work before each delay and the plan to perform the remaining work after that delay, which will require a review of the schedule updates during the project.  This will also involve looking at the estimated impact, as well as the actual impact, of the delay.
  2. Identify the critical delays. Generally, the delay must affect the critical path of the work to be compensable.  If the delay absorbs the “float” in the schedule, then it is not compensable.  According to the authors, “If an activity does not have any float, by definition it is critical as it would impact the required contract completion date.”
  3. Evaluate the delays in both a chronological order and a cumulative manner.  If you do not look at the delays in sequence, it can “mask” what actually occurred on the project.
  4. Adjust the completion date to reflect excusable delay as it occurs.  This will assist in finding the actual float values and determining which activities are actually critical at any point during the project timeline.
  5. Include accurate as-built information.  Again, it is important analyze the actual progress of construction, which can best be achieved through accurate as-built data.
  6. Minimize projected future delays.  If you include projected future delays in the schedule, they should be minimized because projected delays can alter float calculations and possibly change which activities are critical.
  7. Correct any logic flaws.  If you correct any logic flaws found in the schedule, make sure to document and explain the changes at the time they are made.  Understand that judges and arbitrators can be skeptical when substantial changes are made after construction is complete.
  8. Tie causation to each delay.  Ultimately, you will have to show whether the delay is non-excusable, excusable/compensable, or excusable/non-compensable.
  9. Get an expert on board early. As we learned earlier this week, if your going to join a “battle of the experts” then make sure you have an expert.

Using these guidelines, any contractor can begin to evaluate and prepare a potential delay claim as the conditions on project causing the delay occur.  If the claim turns to a dispute, you will have done a significant amount of preliminary work that an attorney and/or consultant will need to assist you in the claim.

Question: What other best practices can you identify for putting together a delay claim?

Looking for an Excuse? Here Are Four Excusable Delays for Construction Projects

Matthew C. Olsen | Faegre Baker Daniels | May 11, 2017

No commercial construction project is immune to delays. Some delays to the critical path of a project may be outside the control of the parties. If this is the case, the delay may be considered “excusable,” meaning the parties 1) share the risk of the delay, but 2) receive a time extension to complete the project due to the delay. Otherwise stated, a party may recover time under the contract for the delay, but not money. Typically, a project owner may not rely upon an excusable delay to terminate a contract for default or recover or assess damages resulting from these delays.

If your next construction project suffers a delay, and your contract does not specifically address the issue, consider whether one of the following four common “excuses” applies, all of which are explained in more detail in Chapter 15 of Bruner and O’Connor on Construction Law:

1. Abnormal Weather Conditions or Events

Weather can be unpredictable, particularly in the Midwest. Snow in March? 70 degrees in January? These certainly seem out of the ordinary. But at what point does weather become “abnormal,” such that a delay to the critical path of the project is outside the control of the parties and therefore “excusable?” As outlined in Bruner and O’Connor on Construction Law, “[w]eather can be ‘abnormal’ in four distinct respects — temperature, humidity, precipitation and wind velocity — and the effect of each on construction activities varies markedly depending on intensity, the sensitivity of construction activities being performed at the time of the weather occurrence, and the state of construction and site conditions.”1 Whether such weather conditions are “abnormal” may also require consideration of historical weather averages

For any weather delay, context is key. For instance, tradesmen performing work on the interior of a building are much less likely to suffer delays due to weather than exterior tradesmen (such as painters). Similarly, a 15-minute downpour may be less likely to result in an excusable delay for a concrete subcontractor than consistent drizzle for two days.

2. Labor Strikes or Work Stoppages

To determine whether a labor strike or work stoppage is excusable depends on the foreseeability of the issue. An excusable delay is more likely to result if the labor strike or stoppage was 1) unforeseeable at the time the parties entered into the construction contract and 2) the problem was unavoidable and outside the control of the parties. Even if a strike or stoppage occurs, though, a party may have a conditional obligation to take reasonable actions to mitigate the stoppage. Otherwise, a party may be unable to avail itself of an excusable delay.

3. Acts of God

The phrase “Acts of God” commonly refers to catastrophic natural disasters such as hurricanes, avalanches, tornadoes, or other unforeseen and uncontrollable events. Of course, as many acts of God involve weather, they may be classified as a typical weather delay as well. In such circumstances, these delays are excusable. Yet, unlike excusable weather delays, any risk of loss from acts of God may also be borne by an insurer and its insured under a builder’s risk policy or other property coverage.

Some acts of God may even be so catastrophic that a project becomes commercially impracticable to complete. Under these circumstances, a party may have grounds to terminate a contract instead of merely seeking extra time to complete the project.

4. Unavailability of Materials

All projects rely upon the availability of certain materials to timely and efficiently complete construction. If there is an unexpected shortage on concrete, copper, oil, or some other essential material or product, then a contractor may be delayed or forced to pay a premium on normally available materials. As a result, a contractor should not be expected to pay any price for materials if prices skyrocket, and a contractor should not be required to ship materials from across the world simply because there is a shortage in North America. Therefore, and even though it is presumed that contractors are aware of foreseeable industry conditions when they initially contract for a project, if the shortage was unforeseen and sufficiently severe, then an excusable delay may result.

As always, any party to a construction contract should carefully consider their construction agreement to determine the negotiated extent (or limits) of excusable delays.

1 Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law, § 15:43 (Dec. 2016 Update).

 

8 Best Practice Tips For A Schedule Analysis Of Construction Delays

Matthew J. DeVries – April 22, 2014

A number of families will be traveling this holiday weekend, and some are travel-savvy enough to check out travel websites like www.911.Virginia.org for real-time traffic information and identification of construction delays.  When savvy contractors face delays on a project, they immediately take steps to provide notice, document, evaluate and plan for recovery from those delays.

It almost goes without saying that if you have to pursue or defend a delay claim, you are going to need some evidence (whether by expert or otherwise) to establish or to challenge entitlement to the damages sought.  And we all know that there can be different routes to the same goal.  However, the different methods of schedule analysis can lead to varying results.  So, which method is correct? In a great Construction Law International article by my friends Don Gavin and Rob D’Onofrio, the authors suggest a series of best practices that should improve on the reliability of schedule analysis and increase its acceptability in the industry.  According to the article, there are eight guidelines that any schedule delay analysis comply with, including:

  1. Compare the planned work before and after each delay. Practically, this means that you should compare the plan to perform the remaining work before each delay and the plan to perform the remaining work after that delay, which will require a review of the schedule updates during the project.  This will also involve looking at the estimated impact, as well as the actual impact, of the delay.
  2. Identify the critical delays. Generally, the delay must affect the critical path of the work to be compensable.  If the delay absorbs the “float” in the schedule, then it is not compensable.  According to the authors, “If an activity does not have any float, by definition it is critical as it would impact the required contract completion date.”
  3. Evaluate the delays in both a chronological order and a cumulative manner.  If you do not look at the delays in sequence, it can “mask” what actually occurred on the project.
  4. Adjust the completion date to reflect excusable delay as it occurs.  This will assist in finding the actual float values and determining which activities are actually critical at any point during the project timeline.
  5. Include accurate as-built information.  Again, it is important analyze the actual progress of construction, which can best be achieved through accurate as-built data.
  6. Minimize projected future delays.  If you include projected future delays in the schedule, they should be minimized because projected delays can alter float calculations and possibly change which activities are critical.
  7. Correct any logic flaws.  If you correct any logic flaws found in the schedule, make sure to document and explain the changes at the time they are made.  Understand that judges and arbitrators can be skeptical when substantial changes are made after construction is complete.
  8. Tie causation to each delay.  Ultimately, you will have to show whether the delay is non-excusable, excusable/compensable, or excusable/non-compensable.

Using these guidelines, any contractor can begin to evaluate and prepare a potential delay claim as the conditions on project causing the delay occur.  If the claim turns to a dispute, you will have done a significant amount of preliminary work that an attorney and/or consultant will need to assist you in the claim.

Question: What other best practices can you identify for putting together a delay claim?

via 8 Best Practice Tips For A Schedule Analysis Of Construction Delays – Real Estate and Construction – United States.