Many construction projects experience delay in some form. However, not all delays will cause a project to finish late. On the other hand, despite any and all best efforts to mitigate risk, one early delay can cause a domino effect of delays to derail a project completely. As a result, contractors may be entitled to file a construction delay claim. This article will guide the reader in understanding the different types of delay, what is compensable, and how to write a construction delay claim to help you get paid.
Scheduling to mitigate construction delays
The construction schedule becomes the bible in terms of when certain activities will start, their expected duration, and the scheduled end date. Many activities are dependent on others to be completed before another activity can start. For example, excavation work must be completed before the formwork is started. Because of those interdependencies, many large commercial construction projects utilize the critical path method of scheduling which include the following:
- List of all major activities and tasks necessary to complete the project
- The estimated duration of each activity
- The sequence of activities and any dependencies that exist between each activity
- Milestones or deliverables at the end of each activity
The critical path is the longest continuous path of activities in the schedule. Any delay on the critical path will delay the entire project.
Types of construction delay
There are many factors that may delay a project. Changes in scope, weather, unfavorable site conditions are just some of the delays that impact productivity on a project. Most of the delays on a project can be categorized as excusable or inexcusable.
These delays are generally the fault of the contractor and not the owner. Such items such as unavailability of labor, material or equipment demonstrate the poor coordination of the contractor and are an inexcusable delay. A contractor will generally not receive any additional time added to the schedule or costs compensated in the event of such a delay.
These are delays that are of no fault of the contractor or subcontractor. Some excusable delays include owner-initiated changes, inclement weather, or acts of God. Subcontractors are in the interesting position as they may additionally subject to poor coordination by the general contractor. Design errors or omissions or unsuitable work conditions may delay a subcontractor. While these may be inexcusable for the general contractor, they negatively affect the performance of the subcontractor.
Excusable, Compensable delay
In order to receive compensation for their additional costs incurred, the contractor or subcontractor must prove:
- The delay could have been avoided
- The extra costs incurred are the direct result of the delay.
For example, the electrical subcontractor arrived with his crew ready. However, a failure in the plumbing caused flooding in the electrical room. Every day that the general contract delays rectifying the issue, the electrical crew continues to be idle. Just this one activity will not delay the overall schedule. However, multiple coordination issues throughout the project can compound to cause significant delay by the electrical subcontractor. Therefore, it is the responsibility of the general contractor to ensure the coordination of all subcontractors and their worksite is ready for them.
Excusable, non-compensable delay
Occurrences such as weather or acts of war (in extreme cases) are understandable delays that happen through no fault of anyone. These delays will grant the contractor extra time for completion. However, they will generally not receive additional compensation of money.
Importance of documentation in a construction delay claim
Documentation provides evidentiary support of any construction delay claims. Daily reports, photos, and email communications are critical pieces of documentation. They are utilized to notify when the owner or general contractor was first notified of the issue(s) causing the delay. Anytime a delay occurs, it is important that the contractor documents the issue immediately. He should record a narrative of the cause of the delay and the length of the delay.
In order to have any weight, a construction delay claim must include appropriate documentation to substantiate a claim. Additionally, as time passes and the memories or participants become “fuzzy,” documentation serves as the most reliable witness.
Construction Delay Claim Letter Template:
Usually work orders, change orders, and invoices will be sufficient in processing the money owed to a contractor. However, in circumstances where delays are consistently impacting productivity or in non-payment of delay claims, the contractor may choose to issue a formal construction delay claim letter to receive the appropriate level of attention. The construction delay claim letter must be succinct and include the following items:
- Details of delay: Facts describing the cause of the delay and the length of the delay
- Cause of the delay: Cost of the labors, material, and equipment incurred as a result of the delay
- Substantiation of the claim: This will include when the owner or general contractor was notified of the delay and the impacts to productivity and schedule.
For your convenience, below is a sample letter template:
Owner / General Contractor
City, State Zip
ATTN: Project Manager’s Name
PROJECT: Project Name
Be advised that the following delays are directly impacting our performance:
– Delay #1
– Delay #2
– Delay #3
As a result of these delays, we have incurred additional costs to our labor, material, and equipment.
- Costs incurred from Delay #1
- Costs incurred from Delay #2
- Costs incurred from Delay #3
We have notified you of these issues as referenced in the attachments, and we reserve the right to seek compensation for these delays. Please call if you have any questions.
Enclosures: (# of daily reports included)