Construction Delays & COVID 19
Construction delays are often a common dispute amongst owners, contractors, subcontractors, design professionals, and the like. The judicial system is bound to see an increase in delay damage claims given the COVID-19 pandemic and resulting government shutdowns. Having an experienced construction lawyer is critical, now more than ever, in order to (a) negotiate construction contracts favorable to a particular client’s position (i.e. contractor or owner), and (b) to determine whether a delay attributable to the COVID-19 pandemic (or otherwise) is in fact actionable.
The first question an attorney must answer in assessing a delay damages claim is whether the delay is critical or non-critical.
Critical delays are defined as those that affect the project completion date, which is typically expressed in a Critical Path Method (CPM). Put simply, if there is no time to spare to complete a critical component of the project, as determined by the schedule outlined in the CPM, then any delay to that component of the project is likely critical. If the delay has no effect on the completion of the project, you guessed it… it is a non-critical delay. Occasionally, parties fail to detail a CPM and, in those cases, an experienced construction lawyer will know what contract documents to review to perform the critical/non-critical analysis.
Once it is established that a critical delay exists, the next step is to determine whether the delay is excusable or inexcusable.
Hindsight is always 20/20, which is why you want to negotiate important contract provisions at inception of the agreement. For example, a contractor who fails to negotiate a force majeure provision to excuse his performance for Acts of God, SARS, or other viral related pandemics, may find themselves responsible for delay damages. This is even more so if the contractor agreed and acknowledged that “time is of the essence” in the performance of the work delineated in the construction contract. The same applies to the owner who contracts to excuse these and other delays, sometimes unknowingly, thereby extending the time of the contractor’s performance.
Finally, it must be determined whether the delay is compensable or non-compensable.
This too requires an extensive review and/or proper negotiation of the construction contract to determine whether the party affected will be entitled to compensation for the delay. For example, generally speaking, an excusable delay will afford the contractor an extension to perform the work, additional payment, or both. However, if the construction contract contains a No Damages for Delay provision, all affected parties may be precluded from recovering money damages for any construction delays.
Through the lens of an owner, if it is determined that a contractor or design professional is responsible for a critical, inexcusable delay, questions will arise as to whether a liquidated damages provision exists in the relevant agreement in order to ensure that the owner is compensated for each day that the contractor fails to achieve project completion. Conversely, the contractor must ensure that they have sufficient contractual protections to compensate for added expenses such as additional labor and/or material costs for any excusable delays.
For a period, the COVID-19 pandemic stalled all construction within the tri-county area. If you are an owner/developer and, for any reason, your construction project suffered a critical delay as a result of COVID-19 or otherwise, you should contact a construction attorney well versed in construction law to analyze your contract and determine potential recourse against the respective construction parties. Equally so if you are a contractor being accused of a delay.
About the Author: Garrett J. Monteagudo is experienced in commercial insurance defense litigation, premises liability, commercial trucking, automotive negligence, general negligence, international tort and corporate law. He is a member of the Florida Bar, Broward County Bar Association, and the Dade County Bar Association.