Section 8.20 Compensable Elements of Delay

• Library: Construction Law 2016 Supp

I. (§8.20) Compensable Elements of Delay

Several elements of damages are recoverable in the event of a delay claim. Increased labor costs are recoverable for the delay period. Generally, the increased labor costs include both the wages paid and a mark-up for the labor burden costs, including Social Security taxes, unemployment taxes, health and welfare benefits, and workers’ compensation premiums. See United States Steel Corp. v. Mo. Pac. R.R. Co., 668 F.2d 435 (8^th Cir. 1982), cert. denied, 459 U.S. 836 (1982). Moreover, a party can seek to recover the escalation in wage rates arising after extended performance. Id.

In addition to increased labor costs, the escalation in material costs can be recovered. Luria Bros. & Co. v. United States, 369 F.2d 701 (Ct. Cl. 1966). To recover for material cost escalation, the contractor must be able to show that, but for the delay, the materials could have been purchased at an earlier time before a price increase or before a guaranteed price had expired. Moreover, if the materials were purchased in advance but then were required to be stored for a longer period of time than anticipated, the contractor may be able to recover the additional costs associated with the extended storage period.

In Missouri Department of Transportation ex rel. PR Developers, Inc. v. Safeco Insurance Co. of America, 97 S.W.3d 21 (Mo. App. E.D. 2002), the court affirmed a $1.5 million verdict in favor of a paving subcontractor for...