Contract Time and Completion

• Pages: 279-309

Contr act  Time  and  Compl etio n 279

11.01  si gni fiC anC e o f t ime  fo r p erf orm anC e

Whether a construction contract is completed on time is one of the three most

critical factors (along with the quality of the work and its price) that are likely

to determine the owner’s view of whether the construction contract is con-

sidered successful. Moreover, disputes between contracting parties concern-

ing the construction process occur more frequently about the timeliness of the

contractor’s performance than any other single cause. The legal issues relating

to time of performance, thus, are a key element of construction law.

Historically, time was not considered such a crucial element of a construc-

tion project. The uncertainties of the construction process were considered to

be so great that timely completion was not deemed a material element of a

construction contract, unless there was an express agreement to that effect

in the contract. This rule persisted well into the 20th century. For instance,

the Nebraska Supreme Court reaf rmed the principle as late as 1971.1 If time

of performance is not considered a material element of contract performance,

1. Kingery Constr. Co. v. Scherbarth Welding, Inc., 185 N.W.2d 857, 859 (Neb. 1971) ( nding

that time is material only if expressly so stated in the contract, because delays are foreseeable in

construction).

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Contract Time

and Completion

AND REW D. NESS

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280 CO N S T RU C T I O N L A W

then failure to complete the work by the agreed completion date is only a

breach of an immaterial performance obligation, justifying no more than nomi-

nal damages, and certainly not sufcient to justify contract termination.

This historical common law rule does not comport with the reality of

the early 21st century. In an era when rm commitments are made to host

a nationally televised football game on a given date, even before ground is

broken on the stadium construction, timeliness of performance can often be

the most important element of the contractor’s performance. No one would

seriously argue that the old rule ts today’s realities.2 However, out of an abun-

dance of caution, it is typical to specify in a construction contract that time

of performance is considered material in order to avoid any doubt. This is

generally accomplished by a simple statement that time is considered “of the

essence,” such as:

Time limits stated in the Contract Documents are of the essence of the Con-

tract. By executing the Agreement the Contractor conrms that the Contract

Time is a reasonable period for performing the Work.3

11.02   Con str uCt ion  s CheD uli ng—CritiCal Path 

Method  sChedules

The pace of modern life is not the only reason why timely performance is

almost always a crucial element of construction contracts. Major advances in

planning capabilities and scheduling techniques permit skilled construction

contractors to greatly reduce, though not entirely eliminate, the uncertainties of

the construction process that were considered inherent and beyond reasonable

control in earlier years. The key advance in this respect is the development of

network analysis systems for construction project scheduling, particularly the

critical path method, or CPM. CPM was invented in the 1950s by E. I. DuPont

DeNemours & Co. as a computerized program for planning and scheduling

work at DuPont’s chemical plants. Thanks to its adoption in the early 1960s

by the U.S. Army Corps of Engineers and other military services, CPM quickly

became a standard planning tool for complex construction projects. Two of the

many judicial attempts to describe CPM follow:

2. “Anyone actively involved within the construction process knows that time is of the essence

whether such is stated or not. . . . To the vast majority of entities involved in the construction

process, time is an absolute implied material feature of every contract.” MICHAEL S. SIMON, CON-

STRUCTION CLAIMS & LIABILITY § 12.2 (1989).

3. American Institute of Architects, AIA Document A201–1997, General Conditions of the Con-

tract for Construction § 8.2.1 (1997) [hereinafter AIA Document A201–1997].