Delay Claims from the Owner

and Contractor’s Perspectives

Annual Program of the
Claims Avoidance and Resolution Committee
of the Construction Institute
March 11, 2010 – Los Angeles
Delay Claims from the Owner
and Contractor’s Perspectives

Claims Avoidance and Resolution Committee

Understanding Claims Subcommittee

• Dennis M. Mac Bride, Chair - SEPTA

• Craig Lindquist – CCS Group, Inc.

• Patrick Watz – AECOM

• John (Jack) Chiaverini – Retired, Perini Corporation

 AGENDA

• What is a Delay Claim?

• Contract Language Related to Delay

• Types of Delays

• Types of Damages

• Requirements for a Successful Claim

 AGENDA

• Contractor’s Delay Claim Submission

• Owner’s Defense

• Owner’s Damages / Counterclaim

• Contractor’s Defense

• Case Study
What is a Delay Claim?

In simple terms:

• Contractor: A request for compensation

and/or time due to owner-caused delays

• Owner: An assessment of liquidated

damages or a claim for actual damages
due to contractor-caused delays
Contract Language

• “Time is of the essence”

• Contract time of completion
• Contract milestones / Phasing
• Scheduling specifications (CPM or bar chart)
• Notice provisions
Contract Language
• Time extension requests (time impact analysis)

• Time extensions / change orders

• Liquidated damages

• “No damage for delay” clause

• Delays by other contractors clause

• Disputes clause
 Types of Delays
Examples of Owner-Caused Delays
• Site access
• Differing site conditions
• Shop drawing approval
• Design errors and omissions
• Extra work / change orders
• Failure by owner to timely provide materials
• Changed conditions, e.g., working hour restrictions
• Work suspension
 Types of Delays
Examples of Contractor-Caused Delays
• Procurement/Submittal problems (material &
equipment)
• Subcontractor delays
• Lack of adequate resources (labor, material,
equipment)
• Poor work sequencing
• Lack of productivity
• Rework
• Financial difficulties
Types of Delays

Third-Party Delays
• Permit acquisition

• Utility relocations

• Adjacent contractors

• Government Actions/Inactions
Types of Delays - Analysis
• Excusable / Non-excusable delays

• Compensable / Non-compensable delays

• Force majeur (Beyond either party’s control)

• Concurrent delays
Examples of Contractor Delay Damages
Recoverable
• Field office overhead (General conditions)
– Trailers, utilities, on-site supervision, etc.
• Added cost of work, e.g., winter work protection
• Subcontractor pass through
• Labor and material escalation
• Acceleration
– Directed and constructive acceleration
• Idle labor and equipment
• Lost productivity (inefficiencies)
• Insurance and bonding costs
Examples of Contractor Delay Damages
Not Recoverable (Depends on contract language)

• Home office overhead (G & A)

– Delay vs. total suspension of work
• Lost opportunities
– Lost business revenue, loss of bonding
capacity
• Legal and consultant fees
 Owner Damages
Liquidated Damages
• Described in contract
• $ per day for each day substantial completion is beyond
the current contract completion date
• Must be a reasonable estimate of damages and not a
penalty

Examples of Owner’s Actual Damages

• Owner costs
– Lost revenue, interest on financing, project
management, inspection, etc.
• Architect/Engineer costs/fees
– Additional shop drawing reviews, rate escalation,
etc.
• Construction Manager costs/fees
Requirements for a Successful Claim

The burden of proof is on the contractor

Requirements for a Successful Claim
Three elements needed:
• Liability (Entitlement)

• Causation

• Damages (Quantification)
Requirements for a Successful Claim
Liability
• Contractual duties and obligations
– Notice provisions
– Site access, accurate plans and specs
– Adequate resources, workmanship
Causation
• “Cause and effect”
• Link between delay and damages
Damages
• Substantiating documentation for extended
costs
• Actual costs or daily rates
Contractor’s Delay Claim Submission

• Why the owner is responsible for delays and

associated costs
• Schedule analysis
• Damages
• Substantiating documentation
• Transparency
Owner’s Defense
Determine Type of Delay:
Excusable Non-excusable

Owner-caused Force majeur Contractor-caused

Compensable Non-compensable
Non-compensable
Owner’s Defense
Identify Concurrent Delays:

Excusable

Caused by Owner and Contractor

Non-compensable
Owner’s Defense
• Liability Review - Contract terms
• Causation Review - Schedules, daily reports,
shop drawing logs, meeting minutes, etc.
• Damage Review
– Receipts, invoices, cost reports, etc.
– Reasonable estimates
___________________________________________
Owner Costs that Offset Contractor Damages:
• Overhead paid as part of change orders during
the extended period
• Liquidated or actual damages
Owner’s Damages / Counterclaim
• Why the contractor is responsible for
delays and liquidated or actual
damages

• Schedule analysis

• Damage calculations

• Substantiating documentation
Contractor’s Defense

• Contract Terms / Plans & Specs

– Ambiguities, conflicts, errors & omissions

• Change orders, RFI’s, etc. – Effect on

schedule and costs

• Schedule Analysis
– Owner-caused delays
– Concurrent delays
Delay Claim
Case Study
 Case Study
This is the story of a construction project that
was planned to be completed in 24 months.

Unfortunately, stuff happened and it was

completed much later.

Because of this, the contractor incurred extra

costs and requested additional compensation
from the owner.

The following describes the process that was

used to resolve this delay claim.
 The As-Planned Schedule
(What was supposed to happen)
1 2 3 4
A M J J
 The As-Built Schedule
(What actually happened)
1 2 3 4 5
A M J J A

Access Delay (1 mo
The As-built Schedule shows that
there were six delays that resulted
in an eight month delay to the
project.
1 2 3 4 5
A M J J A
Because the project finished eight
months late, the contractor submitted
the following claim to the owner:
C
Before analyzing the contractor’s
costs, the owner performed a Delay
Responsibility Analysis as follows:
1 2 3 4 5
A M J J A

Access Delay (1 mo
 Delay Responsibility Analysis
Delay Type Responsibility
Access Delay Owner
Differing Site Conditions Owner
Re-design Owner
Strike Neither
Lack of Progress Contractor
Re-work Contractor
1 2 3 4 5
A M J J A

Access Delay
Based on its Delay Responsibility
Analysis, the owner apportioned the
contractor’s claimed costs and
estimated the contractor’s entitlement
to additional compensation as follows:
 Clai
Field O ffice O ver
The contractor requested more than $700,000 in
additional compensation due to project delays.

The owner estimated that the contractor was

entitled to approximately $260,000.

They negotiated a settlement somewhere in

between . . .

. . . and everyone lived happily ever after.

THE END
Delay Claims from the Owner
and Contractor’s Perspectives

Questions?
Delay Claims from the Owner
and Contractor’s Perspectives
Additional Information

Construction Delay Claims, Third Edition, Barry B. Bramble & Michael

T. Callahan, 1999

Construction Delays: Documenting Causes, Winning Claims,

Recovering Costs, Theodore J. Trauner, 1990

Construction Scheduling: Preparation, Liability, and Claims, John

M. Wickshire, Thomas J. Driscoll, Stephen B. Hurlbut, 2008

CPM in Construction Management, Seventh Edition, Fredric Plotnick

& James O’Brien, 2009

Proving and Pricing Construction Claims, Robert F. Cushman, 2000

Recommended Practice No. 29R-03, Forensic Schedule Analysis,

AACE International, 2007