Coronavirus Delay and Disruption Claims

AuthorBy Patrick A. McGeehin and John I. Spangler III
Published in
The Construction Lawyer
, Volume 41, Number 2, Season 2021. © 2021 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Coronavirus Delay and
Disruption Claims
By Patrick A. McGeehin and John I. Spangler III
Impact of COVID-19 on
Construction Projects
In March 2020, when the coro-
navirus pandemic (COVID-19)
was declared to be a national
emergency in the United States,
the impact on the construction
industry was immediate and sig-
nicant. Many states shut down
construction projects,2 and even
in those states that designated
construction as an essential
business, the use of personal
protection equipment, social
distancing, and delays to the
supply chain caused signicant
project delays and disruptions.
While the stop work orders
were eventually lifted, and
much of the construction industry returned to work, the
industry remains impacted by the pandemic. Jones Lang
LaSalle’s 2021 Construction Outlook Report predicts non-
residential construction to actually shrink in 2021, a result
of fewer new starts and delayed starts in 2020. It also sees
a wide disparity between various market segments, with
the distribution, healthcare, and manufacturing segments
showing some strength, and the ofce, education, retail,
entertainment, and hotel segments remaining challenged.
Disrupted supply chains also continue to cause equipment
shortages and delivery delays, and the cost of materials,
particularly lumber, copper, and brass, continue to rise.4
For the foreseeable future, jobsites will continue to
operate with additional safety protocols in place, creating
added layers of complexity, reduced efciency, increased
project risks, and higher costs. These factors are causing
projects to take longer to build and be more costly to
construct. Contractors incurring added costs as a con-
sequence of COVID-19 face signicant challenges in
seeking to recover some of their added costs from proj-
ect owners.
In this article, we explore the types of problems con-
tractors are encountering and the related costs that they
are incurring due to COVID-19, along with potential ave-
nues that can be explored for submittal of claims, relief
from liquidated damages, and reimbursement of certain
costs under relevant contract terms. In addition, we will
discuss the issue of specic government relief efforts (e.g.,
Payroll Protection Program loans (and forgiven amounts))
and how those efforts potentially impact the amount that
a contractor might recover in those instances where its
contracts allow for compensation.
COVID-19 as a Basis for Delay
and Disruption Claims
COVID-19-related delays and disruptions may well lead
to delay and disruption claims. In construction parlance,
delay and disruption claims have distinct technical deni-
tions. A delay extends the planned duration of a project,
and a delay claim seeks added contract time due to the
delayed period of performance. The contractor may also
seek to recover some or all of the added costs incurred
due to the prolonged period of performance, but its enti-
tlement to compensation is dependent upon whether the
delay is compensable or noncompensable.5
Disruption claims often run hand in glove with delay
claims, but differ from delay claims and delayed time peri-
ods, and focus instead on lost efciency or productivity.
The fundamental distinction is that a delay claim seeks
compensation for a prolonged period of performance,
while a disruption claim seeks compensation for damages
suffered as the result of impacts to productivity making
the contractor’s work more difcult or less efcient to
perform. Disruption or inefciency can occur even if the
project was completed on time if the disruption reduced
the contractor’s planned or expected productivity. In the
COVID-19 context, lost productivity or efciency may
arise from COVID-19 social distancing requirements or
other safety precautions requiring changes to the con
tractor’s planned means or methods of performance that
result in diminished productivity.
In making a delay or disruption claim due to COVID-19
impacts, the contractor has the burden of proof and must
show that COVID-19 caused the alleged delay or disrup-
tion and that the owner is obligated to provide the added
time or nancial relief requested, and the contractor also
must prove the amount or quantum of time and damages
it is entitled to recover.6 A contractor cannot merely rely on
its allegations, but must point to facts and evidence in the
record that prove the three essential elements of its case:
liability, causation, and resultant injury.
If the contractor
cannot make this showing, the owner may be entitled to
summary dismissal of the contractor’s claim.8
Patrick A. McGeehin
John I. Spangler III

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