Construction sites are filled with potential for litigation – from the investment costs put up by owners to the numerous contractors, builders, and suppliers involved in creating the structure or development. While each may have their own task, trade, or objective, no party on a construction project is immune from surprises that stem from the slow-moving and unpredictable ways of work sites – where even minor delays can become major disruptions.
Since contractors and owners are well aware of the likelihood and the costs associated with disruptive forces on construction projects, they’ll often include a "change order" clause in construction contracts to establish procedures for making changes to the work and pricing those changes. These changes in work – whether caused by plan deficiencies, changes in site conditions, or other issues not known when the initial contract was signed – are addressed through “change orders."
A clear and enforceable change order clause, at a minimum, should include:
- Clarity regarding what will and will not constitute a change in scope. An unanticipated finding is not enough to justify a change unless it can be shown it’s a material one – meaning, both parties believed and relied on some other expectation at the time the contract was initially signed, and that the new finding substantially changed the scope of the work.
- Clarity on how change orders are to be requested and handled. Construction projects are time-sensitive endeavors, and parties involved do not want a project halted each time a contractor claims they’re entitled to a change order because of a slight deviation or change in plans. Construction contracts will typically require an owner’s consultant or architect, acting as a type of arbiter, to determine what is and is not change-order worthy. If there is a dispute, there’s usually an agreed-upon mechanism in the contract to handle this without having the contractor walk away from the job.
Even with these proactive contractual measures, however, dispute and litigation may still be unavoidable.
Construction Delay Claims and Litigation
Construction delay claims arise from allegations that one party did or did not do some part of the contract, which now delays its completion. For example, a general contractor of a large commercial construction site may terminate a sub-contractor for not timely performing under the contract and causing delays for other trades on the job site. Since time is money, as they say, an extended completion time means extra costs for which one party seeks reimbursement.
The argument behind the construction delay claim is largely centered on the “domino-effect” concept – that is, one delay in the highly-sensitive chain of trades and tasks will create a chain-reaction of delays, and ultimately delay the entire project.
In construction, where there exists so much to go wrong, delays may occur in any phase of a project – from the initial planning and scoping stage to development, contracting, and construction. Delays in any phase have costs associated with them that can trickle down from owners and general contractors to various sub-contractors and vendors. That includes out-of-pocket costs borne by stakeholders affected by project delivery delays, and various expenses incurred by parties that must continue work beyond a completion date.
Construction delay claims generally fall into two general categories:
- Excusable Delays: Delays caused by events beyond a contractor’s control, such as weather, may be considered excusable delays for which project extensions may be made, and, in some cases, entitle contractors to delay damages for which the owner is responsible. Often, a contractor is excused from liability only for delays caused by the actions / inaction of owners, architects, or other parties which work directly with owners. Contractors generally assume liability for delays caused by its subcontractors’ or suppliers’ failure to perform, defective work, or even adverse weather which is not unusual to the area and was noted in the project plan.
- Inexcusable Delays: Inexcusable delays can include compensable delays, where contractors may recover damages for extra costs created by the delay, and receive extensions – usually due to an owner’s fault or negligence. Delays which are unforeseeable, and attributable to neither party, are generally noncompensable – meaning only time extension, but not additional damages, is awarded.
Even in the absence of a liquidated delay damages clause – which stipulates when damages will begin to accrue on a per-day basis – parties may still be entitled to recover actual damages for inexcusable delays, including damages for:
- Rental charges;
- Office expenses and overhead;
- Lost productivity / lost profits;
- Interest; and
- Other expenses incurred due to the delay.
Contractors may also recover delay damages from owners due to delays, including delays which prevent early completion. This means that even when a project is completed by the date specified in the contract, contractors may still recover delay damages, provided the contractor could have reasonably completed the project by an earlier date. Additionally, contractors required to complete a project, or a portion of a project, in less time than stipulated by the contract, may recover acceleration damages, including damages such as:
- Costs of additional labor;
- Rental equipment; and
- Other incurred expenses.
For any party that seeks delay damages arising from a construction project, there are several methods to obtain evidence and support claims. For example:
- Litigating a construction delay claim will often require an in-depth analysis to determine who actually caused the delay. Our team can evaluate construction sequencing and review time-management software often used by contractors and owners to track the timeline of a construction project. These computer programs typically organize a project’s trajectory by trade or task, keep detailed records, document expenses, and calculate anticipated profit margins per trade or by job / task sequence. While tracing the source of delay can help support a claim or defend against one, creating the data to be traced may enable some parties to abuse the delay claim – meaning those who create the breadcrumbs can, in some ways, can control where it leads. Appropriate attention should be given the programs used for construction projects, and the accuracy of data recorded.
- To defend against a delay claim, it becomes critical to go behind budgeting and accounting methodology. Our attorneys and relevant experts meticulously comb through job records, documented communications and e-mails, project files, and financial documentation such as budgets, bids, and proposals to track them throughout the duration of a construction project. Doing so will allow us to determine if items budgeted in one phase of the project were properly charged against that phase.
Evaluations like these can be time-consuming endeavors which require review of thousands of pages of documents, files, and electronic data. However, they can unearth insight and information crucial to both construction delay claims and construction defect claims – two allegations which commonly arise in the same case.
Speak With A Houston Construction Delay Attorney
Hendershot Cowart P.C. is a Houston-based civil trial firm that serves clients throughout Texas in a range of construction law matters – from construction contract review, negotiation, and drafting to construction arbitration and litigation over delay, defect, and other damages claims. Our firm handles cases involving commercial construction projects.
If you wish to discuss a potential construction delay claim or any construction legal matter, call (713) 909-7323 or contact us online to speak with an attorney.