Excusable Delays: Compensable or Not?

Every construction project incurs setbacks. Such setbacks may result in delayed performance by one or more trades. Such delays may be inexcusable, particularly if the trade caused the delay. Others may be “excusable” delays. Excusable delays allow the trade to extend its Contract Time. If the delay is also “compensable”, the trade may also be entitled to an increase in its Contract Sum. However, not all excusable delays are compensable. Compensable delays are generally those caused by the Owner or its agents.

Though the standards may vary from state to state, the owner may be responsible for delays in the following circumstances: (1) owner interference with contractor’s performance of the work; (2) delayed or restricted site access; (3) owner’s failure to coordinate the various contractors and subcontractors; (4) defective plans and specifications; (5) changes in the contractor’s work; (6) delays in making changes or in shop drawing approvals; and (7) failure to make timely progress payments.

Some courts find that the specification of a starting date constitutes an implied warranty that the project site is prepared and available for performance of the work. The Owner is liable to the contractor for damages resulting from a breach of this warranty. Some courts hold the owner strictly responsible for breaching this implied warranty regardless of the owner’s control over the causes of the delay. However, some courts have found that no implied warranty of site availability exists.

Delays by one trade during its performance of the work can result in delayed performance by another trade. The trades do not have control over other trades with whom they do not contract. Generally, the party who is in the best position to reduce a risk of loss bears that risk. Where the Owner contracts with each of the trades individually, it is usually in the best position to bear the risk.

Defective plans and specifications can cause potentially significant delays. The contractor is generally not responsible for such delays. However, if the contractor knew or should have known that the plans and specifications were defective, he may have an obligation to notify the Owner. If he fails to notify the Owner, any resulting delay would likely be inexcusable and non-compensable.

When an Owner makes changes to the project, delays can ensue. Work may need to be stopped or even redone. If these situations occur, the contractor is allowed additional time and money to complete the work. Similarly, if the Owner does not timely respond to necessary changes to the project or submitted shop drawings, resulting delays are compensable. Finally, if the Owner fails to make timely progress payments, the contractor may have a right to suspend its work. If this occurs, such delays are also compensable.

Delays on a jobsite are going to happen. Some are excusable and some are not. However, a delay being excusable does not necessarily ensure that it is compensable. Generally, the courts will look at whether the Owner had any control, direct or indirect, to determine if an excusable delays is also compensable.

Kelly Gindele is a Cincinnati attorney practicing at Dressman Benzinger LaVelle psc.