Schedules, Delays, and Acceleration

14 May, 2016 CONSTRUCTION LAW 0

Chapter 13
Schedules, Delays, and Acceleration

Contractors, subcontractors, and owners all recognize the importance of time on construction projects. As a general rule, these parties will incur additional costs or lose income if a project is late. Because delays can cost money, contracts typically define and limit the time to complete the work by establishing a specific number of days for performance of the work or by identifying a contractually required completion date. Owners often insert detailed scheduling requirements into their construction contracts to emphasize the importance of timely completion as well as to assist the owner to manage the project. Liquidated damages and early completion bonus provisions can be included to provide direct economic incentives to the contractor to meet or beat the contract performance time.

Construction delays are a significant risk on any project. A properly drafted construction contract therefore will address identified risks of delay and allocate those risks between the parties. Owners often include provisions that protect them in the event of delay. Such provisions include liquidated damages clauses, default, and termination clauses.

Contractors and subcontractors are typically given some protection in the event of delays that are not their fault. Contract clauses that excuse the contractor/subcontractor from certain delays include a force majeure clause, a scheduling clause, the time extension clause, the changes clause, and the claims clause.

Construction scheduling is a common tool in the day-to-day management of the construction process. Scheduling has become more sophisticated and more complicated with the use of computers and specialized software. Critical Path Method (“CPM”) scheduling is a detailed mathematical model of the construction plan that generally requires computers to manage and implement. Project managers use CPM scheduling as a means for determining what work must be completed at any point in time to ensure the entire project remains on track. Owners also use CPM schedules as a tool for measuring the contractor’s performance while work is under way.

Frequently, the most visible work to a casual observer may not be the most important activities from a CPM scheduling standpoint. While some project managers have a natural sense of which work activities are critical from a scheduling perspective, many others need a tool to identify those activities that are critical and otherwise manage a complex job. A properly prepared and updated computer schedule is that tool.

Schedules also have been used to compute progress payments. In these situations, work activities detailed on the CPM are price loaded for payment purposes. As the schedule is updated to reflect actual progress, the value of the work completed to date can be computed. Thus, on some jobs, the computer not only tracks progress and projects a completion date, but also computes the value of progress payments.¹

Scheduling can affect every aspect of a construction project. Developing a planned schedule before the bid often influences how much the final bid price will be. Scheduling helps the contractor control how long a project will take. It also can influence crew size and crew makeup, the equipment spread needed on the job, and identify when permanent equipment and long lead materials must be ordered.

This chapter addresses the legal issues pertaining to time on a construction project. Topics will include setting the contract performance time, scheduling the work, the different categories of delay, the risks of delay, the right to contract time extensions, how to pursue and defend against delay claims, contract limitations barring or limiting delay claims including “no damages for delay” clauses, and the damages that often arise from project delay. Although the context of the discussion of the principles in this chapter is generally the owner-general contractor relationship, these basic principles also apply to prime contractor-subcontractor relationships.

I. Allocating the Risk of Performance Time in the Contract

The parties’ contract is the first place to look to identify: (1) performance time and how time will be measured; (2) scheduling requirements; (3) adjustments to the performance time; and (4) the allocation between the parties of the financial risks associated with schedule changes, delays, suspensions, and accelerations. A party entering into any construction contract must carefully read and understand how the contract addresses these issues because delays, suspensions, and acceleration can significantly impact job costs.

While the express terms of the contract typically will address many of the issues involving time, additional legal rights and duties can arise from obligations the law will imply or read into every contract. For example, there is an implied contract obligation that neither party will delay, hinder, or interfere with the performance of the other party. A party that hinders or prevents performance by the other party, or that renders performance impossible, may not benefit from its wrong.² This rule of law prevents a party from taking advantage of its own contract breach. These implied obligations provide a legal basis for the recovery of damages arising from delays that are the fault or responsibility of the other party.

Traditionally, the contractor’s obligation to complete the work within a certain period of time is expressly set forth in the written contract. Contracts usually will set the performance time either by a specific completion date or by a defined performance time, such as a certain number of “work days” or “calendar days” from Notice to Proceed. A defined performance time is a material term of the contract when the contract makes “time of the essence.”

A. “Time Is of the Essence” Clause

Under the common law, performance time is not a material term of a construction contract. Unless the parties made time a material term of their agreement, the law will imply that the contractor has a “reasonable time” to perform its work. As a result of this common law rule, parties usually include a provision in their written contracts making “time of the essence.” Courts have long construed this language as making time a material term of the contract. Once so designated, an unexcused delay in completion would constitute a material breach. In an owner-general contractor relationship, the owner would be entitled to recover any damages arising from such a breach. Failing to make “time of the essence” can create many practical and legal problems during performance.³

The party that drafts the contract may add language to the “time is of the essence” clause to further reinforce the importance of time. For example, an owner might include a sentence in the “time is of the essence” clause that states: “Any additional or unanticipated cost or expense required to maintain the schedule shall be borne solely by the contractor.” Similarly, a subcontract that lists a specific completion date also may include a clause that states: “The contractor shall have the right to decide the time, order, and priority in which the subcontractor’s various work items shall be performed and all other matters relative to the timely and orderly conduct of the subcontractor’s work.” This type of language not only purports to make time a material term of the contract, but allocates specific risks or contract rights to one of the parties. Evaluating a party’s rights or duties under a contract requires consideration of all the language employed.

The next sections begin with the traditional clauses and progress to the more detailed contract provisions that affect how delays, suspensions, and accelerations are handled.

B. Contract Commencement and Completion Dates

Most time-related questions arising on construction contracts begin with the contract start and completion dates. Construction contracts usually specify performance periods either by setting out start and completion dates or by establishing that the work shall be completed within a specified number of days after receipt of the Notice to Proceed or commencement of work. Performance days may be specified in either calendar days or work days.

Contracts may include interim milestone dates, which identify the dates certain elements of the work must be completed. Where time is declared to be of the essence, the unexcused failure to meet defined milestone dates or performance times will provide bases for claims for actual or liquidated damages, an acceleration directive, or may result in default and possibly termination.

If a contract provides a specific date for the commencement of work, the owner is generally deemed to have warranted that the work site will be ready for work to proceed on that date. If the owner fails to have the work site prepared so that the contractor can begin work on the date promised, the contractor would be entitled to an extension of the performance time and the owner may be liable for any delay damages suffered by the contractor.⁴ To avoid liability for such delays, owners often include a statement in the contract that the specified commencement date is only a projection or an estimate. To avoid misunderstandings and disputes, all parties should clearly define start dates, when performance time commences, interim completion milestones, performance times, and substantial completion and final completion dates.

C. Substantial Completion and Final Completion

Courts developed the concept of “substantial completion” of a construction contract to protect contractors from the otherwise harsh rules governing executory contracts. Under common law, the promisor generally was not entitled to be paid until it fully completed performance. That rule proved impractical in construction when minor punch-list items could substantially delay the contractor’s right to any payment.

The courts developed the concept of “substantial completion” or “substantial performance” to give the contractor legal entitlement to payment even though some minor work remained uncompleted. Under this legal principle, once the contractor achieved “substantial completion,” it was entitled to the contract price less the value of the uncompleted work. This principle applies to all construction contracts unless the express terms of the contract state otherwise.

Many contracts will define “substantial completion.” For example, substantial completion may be defined as “the stage in the progress of the Work when the Work or a designated portion thereof is sufficiently complete…so the Owner can occupy or utilize the Work for its intended use.”⁵ Under this definition, substantial completion can be achieved even though minor omissions or deficiencies exist so long as the omissions do not affect the use of the project or designated portion thereof.

Most contracts allow the contractor to bill for its retainage once substantial completion has been achieved, less an amount sufficient to protect the owner for the incomplete work. Generally, an owner may not assess, and a contractor is not liable for, delay or liquidated damages after substantial completion.⁶ Thus, even when a contractor has not fully completed the work specified in its contract, the owner may not recover actual delay damages or liquidated damages if the contractor has achieved substantial completion.

Final completion is reached after the contractor has completed all work activities. However, warranty work (as opposed to punch list work) does not affect final completion.

Some owners will include a provision in their contracts providing for a separate liquidated damages amount for any delays to reaching final completion after substantial completion is achieved. Such a provision can give the owner the right to specified damages if final completion of punch-list work is not accomplished within a stipulated number of days following the date of substantial completion.

Contractual warranty periods may commence upon substantial completion, beneficial occupancy, or final completion of a project or a phase of the project. On projects with phased completion dates, the warranty commencement date(s) may not correspond to the dates when systems or equipment are to be placed into operation. As many vendors’ warranties are often tied to the initial date of operation, a contractor or subcontractor could face a significant warranty gap. Therefore, during the bid or proposal stage, contractors and subcontractors should carefully review the contract documents to identify all warranty requirements and commencement dates and compare that information to the warranties offered by vendors.

D. Typical Contract Time and Scheduling Clauses

There is no uniformity in how construction contracts address scheduling, delays, and time extensions. Each contract needs to be reviewed and understood without assumptions as to how these issues are handled. Generally speaking, contract clauses addressing scheduling and time have become increasingly detailed over the last 30 years. Parties often must consider multiple provisions in the contract to understand the scheduling and time obligations as well as the nature, size, and scope of changes a party can make to the schedule before it must compensate the other party.

A construction contract may contain provisions covering one or more of the following topics pertaining to scheduling, performance durations, and delay:

Provisions making time of the essence, setting the contract performance time, and defining when contract time commences.
Provisions detailing the contractor’s obligations to prepare, update, revise, and utilize a construction schedule.
Provisions giving the owner the right to actual or liquidated damages in the event the contractor is late.
A force majeure clause identifying those delays considered excusable and that, if encountered, entitle the contractor to a time extension.
Time extension provisions providing instructions on how the contractor must apply for a time extension when it believes an excusable delay has occurred.
A claims clause that provides instructions on how the contractor is to seek time extensions and, in certain circumstances, delay damages, for excusable delays.
A no-damages-for-delay clause limiting the contractor’s right to additional compensation for delays that otherwise may be compensable.
A suspension of work clause allowing the owner to suspend the contractor’s performance and identifying what relief the contractor may obtain for any such suspension.
Default and termination clauses giving the owner rights, including the right to terminate or order acceleration, if the contractor falls behind schedule.

Parties should always identify and understand all contract provisions addressing scheduling, how changes to the schedule are made, how delays are to be evaluated, the process for obtaining contract time extensions, and which party bears the risks of any costs associated with different types of delay.

The AIA A201 General Conditions (2007 ed.) address delays and time extensions at Section 8.3. ConsensusDocs 200 Standard Agreement and General Conditions between Owner and Constructor (© 2011, Revised 2014) addresses these issues at Section 6.3 (Delays and Extensions of Time).

Section 8.3 of AIA A201 (2007 ed.) provides:

8.3 DELAYS AND EXTENSIONS OF TIME
1. 8.3.1 If the Contractor is delayed at any time in the commencement or progress of the Work by an act or neglect of the Owner or Architect, or of an employee of either, or by a separate contractor employed by the Owner; or by changes ordered in the Work; or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor’s control; or by delay authorized by the Owner pending mediation and arbitration; or by other causes that the Architect determines may justify delay, then the Contract Time shall be extended by Change Order for such reasonable time as the Architect may determine.
2. 8.3.2 Claims relating to time shall be made in accordance with applicable provisions of Article 15.
3. 8.3.3 This Section 8.3 does not preclude recovery of damages for delay by either party under other provisions of the Contract Documents.⁷

Section 6.3 (Delays and Extensions of Time) of ConsensusDocs 200 provides:

6.3 DELAYS AND EXTENSIONS OF TIME
1. 6.3.1 If the Constructor is delayed at any time in the commencement or progress of the Work by any cause beyond the control of the Constructor, the Constructor shall be entitled to an equitable extension of the Contract Time. Examples of causes beyond the control of the Constructor include, but are not limited to, the following: (a) acts or omissions of the Owner, the Design Professional, or Others; (b) changes in the Work or the sequencing of the Work ordered by the Owner, or arising from decisions of the Owner that impact the time of performance of the Work; (c) encountering Hazardous Materials, or concealed or unknown conditions; (d) delay authorized by the Owner pending dispute resolution or suspension by the Owner under section 11.1; (e) transportation delays not reasonably foreseeable; (f) labor disputes not involving the Constructor; (g) general labor disputes impacting the Project but not specifically related to the Worksite; (h) fire; (i) terrorism; (j) epidemics; (k) adverse governmental actions; (l) unavoidable accidents or circumstances; (m) adverse weather conditions not reasonably anticipated. The Constructor shall submit any requests for equitable extensions of Contract Time in accordance with Article 8.⁸

Scheduling clauses may be detailed or abbreviated depending on the philosophy of the owner or its consultant. For example, the AIA A201 General Conditions (2007 ed.) includes only a brief and general scheduling specification:

§ 3.10 CONTRACTOR’S CONSTRUCTION SCHEDULES
1. § 3.10.1 The Contractor, promptly after being awarded the Contract, shall prepare and submit for the Owner’s and Architect’s information a Contractor’s construction schedule for the Work. The schedule shall not exceed time limits current under the Contract Documents, shall be revised at appropriate intervals as required by the conditions of the Work and Project, shall be related to the entire Project to the extent required by the Contract Documents, and shall provide for expeditious and practicable execution of the Work.

In keeping the scheduling specification in the A201 document both general and brief, the AIA decided to let the parties decide for each specific project whether further scheduling provisions were needed. Generally, any additional provisions will be found in an addendum to the A201 General Conditions or in Division 1 of the technical specifications.

Division 1 (General Requirements) of the technical specifications is easy to overlook and may contain important provisions on how the project is to be scheduled and how delays are to be treated. Scheduling provisions can run for pages and identify a host of scheduling activities the contractor must perform. For example, detailed clauses may require (a) the contractor to prepare both a preliminary schedule and an overall computerized CPM schedule meeting specified requirements, (b) regular look-ahead schedules, (c) periodic updates to the CPM schedule to reflect actual progress and changes in the logic of the overall construction plan, and (d) details on how the schedules will be used to assess and quantify delay.

Scheduling clauses may require the contractor or construction manager to submit at the contractor’s expense a recovery schedule when the project falls behind schedule. Such a provision might read: “If the contractor’s schedule is delayed on its critical path by fourteen (14) calendar days or longer, the contractor shall be required to, at no additional cost to the owner, prepare and submit to the owner and architect a supplementary recovery schedule to explain how those activities shall be rescheduled to regain compliance with the contract schedule.” The contract may also obligate the contractor to accelerate its performance to regain the lost time so that the project completes on time.

Subcontracts may include scheduling provisions that identify the subcontractor’s specific responsibilities in the event it falls behind schedule. The following subcontract clause illustrates this point:

In the event subcontractor fails to meet any interim completion date provided for in the subcontract for any reason, contractor shall be entitled to direct subcontractor to immediately implement whatever means are necessary to bring the Project back on schedule, including supplying additional manpower, working overtime at subcontractor’s sole expense, or by re-sequencing and/or accelerating the Work, provided such re-sequencing and/or acceleration is possible.

II. Use of Schedules in Project Management

Parties involved in construction should understand that there is no single best way to schedule a project. Different contractors will have different ideas on scheduling, based on past experience and the characteristics of the job in question. Of course, the contract may have mandatory requirements detailing how to develop and maintain the schedule and how to track progress via the schedule.

Most construction project schedules are generated with CPM personal computer–based scheduling software, such as Primavera P6 Professional Project Management, Primavera Suretrak Project Manager, or Microsoft Project. Since the mid-1990s the Primavera products have utilized the Precedence Diagramming Method (PDM) of CPM scheduling, which allows the user to define relationship activities in more ways than just “start to finish,” as did the older arrow diagramming method. Relationships can be defined in PDM as start to start (i.e., tying the start of one activity to the start of another) and finish to finish (i.e., tying the finish of one activity to the finish of another). With “leads” or “lags,” a user can define activities that lag behind or lead other activities by an identified number of days, thus giving more scheduling flexibility than was available in earlier software.

One of the most useful aspects of computer scheduling is the ability to define the critical path to the completion of the project. By definition a delay to a work activity on the critical path will directly delay the completion of the project (based on the logic of the schedule). Many activities are not on the critical path and delays to those activities would not affect the project completion date until a delay lasted long enough to push the activity onto the critical path.

Non-critical activities have float—the amount of time an activity can be completed late without affecting the overall project completion date. Under typical time extension clauses, a contractor would not be entitled to a contract extension for delays to a non-critical work activity until the delay consumed all available float associated with the activity.

The wide availability of inexpensive scheduling software has created its own problems. For example, someone with relatively little experience in CPM scheduling can generate an impressive-looking but potentially inaccurate and flawed schedule. Anyone preparing a schedule needs to have experience with the software system as well as an understanding of both the general construction process and the specific work to be performed.

Schedulers can underestimate the time required for a particular task or deliberately build extra time into a schedule to allow greater flexibility or ensure avoidance of liquidated damages. These schedules can create problems when preparing updates during performance. Some schedulers may try to mask delay by changing or deleting logic or by adopting assumptions in their updates even though the assumptions cannot be supported by manpower, equipment availability, or subcontractor capacity. In these circumstances the schedule is used to hide performance problems and can become a confusing, inconsistent, and counterproductive tool.

Good schedulers try to anticipate and provide for all foreseeable events, including lead time for material deliveries and expected weather, to name only two. While a good scheduler will consider many potential variables, it is impossible to predict all factors that might affect performance time. Thus it must be understood that a construction schedule is only a documented plan that is subject to change as time goes by and events unfold. The actual work may proceed faster or slower than scheduled.

Under any scheduling format, there are several general principles to keep in mind when developing and updating a schedule:

A schedule should be a management tool for planning, sequencing, and performing the work. If it serves some other purpose or serves no purpose at all, it may create problems.
The schedule should reflect the contractor’s intended plan for doing the work. As construction plans change during the course of the work, the schedule should also change.
A well developed and properly updated schedule is an extremely valuable tool for keeping the owner both informed and happy.
Delays in performance should be reflected in updates to the construction schedule. It is not advisable to hide delays through manipulation of the scheduling software. When that happens, the altered schedule ceases to be a management tool and can create problems for the contractor.
Subcontractors need to be aware of the actual plan for the work. Different schedules for different participants (i.e., owner v. subcontractor) usually are seldom worth the problems they create.
Subcontractors’ entitlement to time extensions is determined by their written subcontracts. A contractor can aggressively manage subcontractors but should not ignore a subcontractor’s rights when the subcontractor is entitled to a time extension. A properly updated schedule helps to manage subcontractors.
Some delays will not affect the critical path and thus not affect the projected completion date. Other delays may be critical and will generate schedule slippage. Either way, the parties are better off knowing the status of the project based on a realistic schedule.

Whatever the reason, contractors sometimes finish ahead of schedule, which allows them to save considerable sums of money in overhead and time-sensitive expenses. Certainly no court would penalize a contractor for completing a project early—unless, of course, the contractor achieves early completion by violating the contract or the implied duty of cooperation owed to the owner or another party involved with the project.

With limited exceptions a contractor has the right to schedule the job to finish early. A bidder sometimes prices a job based on a performance time shorter than the time provided in the contract to save general conditions costs and put itself in a more competitive position to win the work. A contractor may publish a schedule showing an early completion date and then work to achieve that schedule. Unless the contract states otherwise, the owner is obligated to cooperate and not impede the contractor’s efforts to achieve early completion.

Problems can arise when a contractor falls behind an early completion schedule or suffers delay that prevents the contractor from completing early but still allows it to finish by the contract completion date. Whether a contractor is in violation of its contract when it falls behind an early completion schedule may depend on the precise wording of the contract. For example, some default clauses provide that the contractor can be found in default if it fails to make sufficient progress to complete the work by the contractually required completion date. Other contracts provide that the contractor is in default if it falls behind the approved construction schedule. Under the second example, a contractor falling behind an early completion schedule may be in technical violation of the contract even if it is still on track to complete the work by the contract deadline. A contractor needs to understand how the contract is drafted before announcing any intention to finish early.

A contractor suffers a “constructive penalty” when it is prevented from finishing a job early by an uncooperative owner. If the delay does not extend performance beyond the originally scheduled completion date, the owner may argue that because the contractor finished “on time,” either the contractor was not delayed or it suffered no damage as a result of the delay. However, as a general principle, a contractor can be damaged when it is precluded from finishing early.⁹

Delay can occur to activities on the critical path or can consume some or all available float on non-critical activities. Conceptually, loss of float time can reduce the contractor’s flexibility in sequencing its work and allocating resources, and may increase the cost of performance even if there is no overall project delay. To the extent that the contractor uses its own float time, it cannot complain, but owner-caused delays that consume only float time nevertheless could indirectly affect the critical path or increase the contractor’s cost of performance. While delays occurring to certain activities having float may have no adverse consequences on the contractor (other than delaying that non-critical activity), delays to other non-critical activities may create problems or result in added cost for the contractor.

Thus, there can be a difference between owners and contractors as to who “owns” float.¹⁰ Some government agencies and private owners have begun to use clauses specifically dealing with ownership of float. Two possible solutions to this issue have been suggested. One position is that the contractor owns float. In that context, the owner may use float without cost unless and until the contractor can show it needed that same float for its own planning and performance purposes. Once the contractor can show a need for the float that the owner has taken, the owner must compensate the contractor for taking the float.

The alternative and much more common position is that float belongs to the party that first uses it and no party can complain if the other consumes float for its own purposes.

III. Analysis of Project Delay

Delays on a project can occur for an infinite number of reasons. Some delays are caused by actions or inactions that are within the control of one of the parties and some delays occur due to the intervention or lack of cooperation by some third party. Still other delays occur due to acts of God.

As previously discussed, delays may only affect non-critical activities that do not impact the completion of the job. Other delays directly impact critical activities and, by definition, impact the completion of the project. Some delays not only are critical but cause a complete suspension of the project.

A legal evaluation of a construction delay considers the nature of the delay, the party or parties responsible for the delay, the activity or activities that were delayed, and whether the delay affected the overall project. In terms of the effect on the project, types of delay include:

Critical Delay—A delay to a work activity on the critical path of a project. The delay to a critical activity will directly affect the overall completion of the project. In CPM scheduling terms, a critical activity is any activity that has zero float or the largest amount of negative float. Critical delay may be excusable or nonexcusable depending on the cause of the delay.
Non-critical Delay—A delay to one or more non-critical work activities on the project. A non-critical work activity is an activity that is not a critical activity (not on the critical path) and therefore any delays would not affect the overall duration of the project. Non-critical activities have float time as compared to the critical path. A delay to a non-critical activity generally does not entitle the contractor to any extension of time since the delay should not affect the overall completion date of the project. However, if the duration of a delay to a non-critical activity lasts long enough, the delayed activity ultimately will become critical and further delays will impact project completion.

Once a delay event to a contractor’s work is classified as either critical or non-critical, it then becomes necessary to determine if that event is an excusable or nonexcusable delay. That determination generally controls the contractor’s entitlement to an extension of time.

A. Excusable Delays versus Nonexcusable Delays

The occurrence of a delay raises the issue of which party should bear the responsibility for the delay. In deciding this question, courts look to the causes of the delay and to the express and implied obligations imposed by the contract.

Construction delays fall into two legal categories: excusable delays and nonexcusable delays. An excusable delay provides a basis under the contract for an extension of the contract performance time. Excusable delays can also be further subdivided into either compensable delays, which permit the recovery of both time and money by the contractor, or noncompensable delays, permitting the contractor to receive a time extension but not money.

If the cause of delay stems from the actions or inactions of the owner, then the contractor’s delay generally is excusable.¹¹ Accordingly, the owner cannot recover liquidated damages for delays that are its responsibility.¹² In addition, the contractor often can recover delay damages due to owner-caused delays to the project.¹³

In contrast to an excusable delay, a nonexcusable delay is a delay for which the contractor must accept responsibility. In that regard, the contractor must recover the lost time or be responsible for the problems created by the delay. For example, the contractor may be liable to the owner for delay damages or liquidated damages for delay.

The reasons for nonexcusable delays vary and can include lack of adequate manpower, slow progress due to unqualified workers, poor planning, defective work, and failure to forward submittals timely, etc. In such cases, the contractor is not going to receive additional compensation or time to complete the work and may be liable for damages to the owner caused by such delay.

B. Excusable Delays

Generally, the contract will define when a delay is excusable. Contracts often include force majeure clauses that list some, if not all, excusable delays. Some contracts specifically enumerate the types of excusable delays for which a time extension is due.¹⁴ For example, the AIA A201 General Conditions (2007 ed.), § 8.3, lists the following excusable delays:

…act or neglect of the Owner or Architect, or of an employee of either, or of a separate contractor employed by the Owner; changes ordered in the Work, or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties, or other causes beyond the Contractor’s control; or by delay authorized by the Owner pending mediation or arbitration; or by other causes that the Architect determines may justify delay,…

Other causes of excusable delays to a contractor’s performance typically include differing site conditions, design problems, inclement weather, and acts of God.

Some contracts list examples of excusable delays and may or may not seek to limit the granting of time extensions to the specific listed delays. For example, Section 52.249–10 of the Federal Acquisition Regulation (FAR) sets forth the standard default termination clause for all federal government fixed price construction contracts. Subparagraph (b) of that clause both defines excusable delays and provides a relatively detailed exemplary list of excusable delays in this way:

(b) The Contractor’s right to proceed shall not be terminated nor the Contractor charged with damages under this clause, if—
1. (1) the delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor. Examples of such causes include—
  1. (i) Acts of God or of the public enemy,
  2. (ii) Acts of the Government in either its sovereign or contractual capacity,
  3. (iii) Acts of another Contractor in the performance of a contract with the Government,
  4. (iv) Fires,
  5. (v) Floods,
  6. (vi) Epidemics,
  7. (vii) Quarantine restrictions,
  8. (viii) Strikes,
  9. (ix) Freight embargoes,
  10. (x) Unusually severe weather, or
  11. (xi) Delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of both the Contractor and the subcontractors or suppliers.¹⁵

Each party to a construction contract must have a clear understanding of the intended scope and operation of such a clause when requesting time extensions or analyzing time extension requests.

IV. Typical Causes of Compensable Delay

In most cases, faulty or negligent acts or omissions or other conduct by the owner in contravention of the contractor’s rights will not only result in excusable delay but also entitle the contractor to recover its increased costs or damages arising from the delay. The duty to compensate the contractor for its costs associated with such a delay arises out of the owner’s obligations under the changes clause (to issue a modification due to the change in the performance time), to fix or account for a defective specification, or to compensate the contractor for a breach of the owner’s implied obligation to cooperate.

The obligation of the owner to compensate the contractor for certain delays can be altered by an enforceable no-damages-for-delay clause in the contract. No-damages-for-delay clauses are discussed later in this chapter. Some examples of acts or failures to act that can typically result in excusable and compensable delay are discussed below.

A. Defective Drawings or Specifications

Federal courts, as well as most states, have adopted the Spearin doctrine, which holds that an owner generally impliedly warrants that the plans and specifications it provides on a design-bid-build job are reasonably free from defects and errors.¹⁶ If such plans have errors or otherwise are insufficient for the contractor to perform the work, the owner may owe the contractor time, as well as money, to compensate the contractor for any resulting increased performance costs or time impacts.¹⁷

Under the Spearin doctrine, a contractor would be entitled to a change order to compensate it for the problems caused by the defective plans or specifications. Under a typical changes clause the change order would include the additional direct costs the defective specification caused the contractor to incur as well as an extension of the contract performance time. The scope of the change order also would include compensation for any costs arising from time impacts (i.e., delays) caused by the defective specification.

The applicability of the Spearin doctrine in delay cases may be altered by a no-damages-for-delay clause. For example, in one Ohio case, the court declined to apply the Spearin doctrine to delays arising out of a defective specification because the contract in question contained an enforceable no-damages-for-delay clause.¹⁸ The contract at issue in that case was executed in 1997—one year before the Ohio General Assembly declared no-damages-for-delay clauses “void and unenforceable as against public policy ‘when the cause [of delay] is a proximate result of the owner’s act or failure to act.’”¹⁹

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