Chapter 7 Delay

• Library: Arkansas Construction Law Manual (2016 Ed.)

Delay

Jeffrey H. Moore^* © 2016

7.1 Scope of Chapter.......................................... 7-2

7.2 Types and Causes of Delays.......................... 7-2

7.3 Excusable and Non-Excusable Delay............. 7-3

7.4 Compensable and Non-compensable Delay.... 7-4

7.5 Concurrent Delay......................................... 7-5

7.6 Burden of Proof and Apportionment in

Delay Cases................................................. 7-5

7.7 Methods to Establish Delay.......................... 7-6

A. Schedule Analysis........................................ 7-6

1. Impact vs. As-planned (not favored).. 7-7

2. Measured Mile................................. 7-9

3. As-built But-for............................... 7-9

4. Window Analysis........................... 7-10

5. Time Impact Analysis..................... 7-10

B. Importance of Critical Path Method

(“CPM”)..................................................... 7-11

1. Explanation................................... 7-11

2. Examples....................................... 7-11

3. Recovery for Delays to the Critical

Path.............................................. 7-12

4. Recovery for Delays Off the Critical

Path.............................................. 7-12

5. As-planned Schedule Important...... 7-13

6. Schedule Updates to Reflect Actual

Sequencing and Schedule Adjustments........ 7-13

C. Productivity Analysis.................................. 7-14

7.8 Delay Damage Theories.............................. 7-15

A. Detailed, Actual Cost Information............... 7-15

B. Jury Verdict Method................................... 7-15

C. Total Cost Method...................................... 7-16

D. Quantum Meruit........................................ 7-17

7.9 Damage Elements...................................... 7-17

7.10 No Damage for Delay Clauses..................... 7-18

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7.1 Scope of Chapter

This chapter reviews the important topic of delay in the construction context. It first describes the types and causes of delay and follows with an examination of the concepts of excusable, non-excusable, compensable, non-compensable, and concurrent delay. Burden of proof and methods to establish delay are addressed, including types of schedule and productivity analysis. The chapter then turns to methods to prove damage amounts and elements. Finally, it covers the significant topic of no-damage-for-delay clauses.

7.2 Types and Causes of Delays

Delay to a construction project can result in damages due to the owner, contractor, subcontractor, and possibly others. The causes of delay can be considered either excusable or non-excusable, compensable or non-compensable. Examples of delay can range from weather delay,¹ delay in delivering material to the jobsite, delay in moving obstructions,² delay in supplying skilled labor to the job, or any cause that hinders or delays complete performance of the construction contract.³

Contractors can experience increased costs of general conditions such as onsite management personnel, jobsite trailers, bonding, insurance, and utilities. Additionally, contractors can suffer greater costs for direct labor due to acceleration, loss of productivity, or both. Portions of home office overhead called “unabsorbed home office overhead” can increase the contractor’s costs. Escalations in prices of materials and subcontract costs can increase as well.

Owners, likewise, can suffer from delays. Missed deadlines can delay the start of revenues generated by a completed project, also known as rate of return on investment. Losses can include interest, lost profits, extended oversight costs, and extended costs of professional time and services arising from the delay.

7.3 Excusable and Non-Excusable Delay

Excusable delay relates to whether a party may be entitled to more time to perform; non-excusable delay relates to whether a party whose delay is not excusable remains responsible for the time or costs, or both, associated with the delay. Generally, weather can be considered excusable delay, but not necessarily.⁴ In some instances, a certain number of days of delay should be expected and therefore not excusable until the expected number of days is exceeded.⁵ Other examples of excusable delay for a contractor will be the delay caused by the owner who: (1) materially changes the scope of the project, (2) fails to deliver portions of the project site to the contractor, (3) fails to remove obstructions such as utilities and encroachments upon the project site, or (4) any number of other things that can delay the contractor. In addition to additional time resulting from the excusable delay, the contractor, or in some cases the owner, may be entitled to compensation for the delay.

7.4 Compensable and Non-compensable Delay

In general, any delay not the fault of the contractor that increases the cost of performance of the contractor will be considered compensable delay.⁶ Delay resulting from the fault of the contractor may be considered non-compensable. The concept of compensable delay is based upon the implied obligation in every contract not to unreasonably hinder or delay the performance of the other party.⁷

For example, in Housing Authority of Little Rock v. Forcum-Lannom, Inc., the contractor was the successful low bidder on a Housing Authority construction project for slum clearance and urban renewal development in Little Rock. The contract called for the construction by the contractor of a storm sewer system and street surfacing, as well as curbs and gutters. The parties agreed to a price and the work was to be completed within 360 days. Thereafter, liquidated damages were to accrue at $100 per day for each day of delay in completion.⁸

Although the contractor had timely presented claims for delay to the owner and its representatives, the claims for weather delay and obstructions were rejected. On appeal, the trial court’s finding of fact in favor of the contractor prevailed, and the contractor was awarded judgment for the costs of delay plus judgment for funds unlawfully withheld from the contractor by the owner for liquidated damages.

7.5 Concurrent Delay

Concurrent delay is best understood as delay that is not a direct cause of any harm. In other words, when there are two causes of harm, either of which caused the delay, one delay is not the “but-for” cause of the delay because the other cause (concurrent cause) is also directly responsible for the delay. Concurrent delay is often seen as a defense to liability for increased costs of performance or loss of expectancy. If the performance would have cost more, or the expectancy would have been lost or lessened in any way by the other delay (concurrent), then the delay may not be compensable.

7.6 Burden of Proof and Apportionment in Delay Cases

Each proponent is responsible for carrying the burden of proof for its claim. Whether the owner seeks relief, or the contractor seeks it, the proponent is responsible for both: (1) going forward with proof and (2) persuading the decision maker of the justness of the claim.

7.7 Methods to Establish Delay

Generally, damages for delay are not required to be proven with mathematical certainty. Rather, the fact of damage along with proof based upon a reasonably complete set of figures will entitle the proponent to a determination of fact by the judge, jury, arbitrator, or other tribunal following Arkansas law.⁹ Methods for calculating delay vary. The following is a non-exhaustive list of several methods.

A. Schedule Analysis

Schedule Analysis is the fact-intensive process of assimilating the sequencing...