1. 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

2. 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

3. AGENDA What is a Delay Claim? Contract Language Related to Delay
Types of Delays
Types of Damages
Requirements for a Successful Claim

4. AGENDA Contractor’s Delay Claim Submission Owner’s Defense
Owner’s Damages / Counterclaim
Contractor’s Defense
Case Study

5. 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

6. Contract Language “Time is of the essence” Contract time of completion
Contract milestones / Phasing
Scheduling specifications (CPM or bar chart)
Notice provisions

7. 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

8. 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

9. 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

10. Types of Delays Third-Party Delays Permit acquisition
Utility relocations
Adjacent contractors
Government Actions/Inactions

11. Types of Delays - Analysis
Excusable / Non-excusable delays
Compensable / Non-compensable delays
Force majeur (Beyond either party’s control)
Concurrent delays

12. 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

13. 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

14. Owner Damages Liquidated Damages Examples of Owner’s Actual 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

15. Requirements for a Successful Claim
The burden of proof is on the contractor

16. Requirements for a Successful Claim
Three elements needed:
Liability (Entitlement)
Causation
Damages (Quantification)

17. 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

18. Contractor’s Delay Claim Submission
Why the owner is responsible for delays and associated costs
Schedule analysis
Damages
Substantiating documentation
Transparency

19. Determine Type of Delay:
Owner’s Defense
Determine Type of Delay:
Excusable
Non-excusable
Owner-caused
Force majeur
Contractor-caused
Compensable
Non-compensable

20. Identify Concurrent Delays:
Owner’s Defense
Identify Concurrent Delays:
Excusable
Caused by Owner and Contractor
Non-compensable

21. 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

22. Owner’s Damages / Counterclaim
Why the contractor is responsible for delays and liquidated or actual damages
Schedule analysis
Damage calculations
Substantiating documentation

23. 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

24. Delay Claim Case Study

25. 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.

26. The As-Planned Schedule (What was supposed to happen)

28. The As-Built Schedule (What actually happened)

30. The As-built Schedule shows that there were six delays that resulted in an eight month delay to the project.

32. Because the project finished eight months late, the contractor submitted the following claim to the owner:

34. Before analyzing the contractor’s costs, the owner performed a Delay Responsibility Analysis as follows:

36. Delay Responsibility Analysis
Delay Type
Access Delay
Differing Site Conditions
Re-design
Strike
Lack of Progress
Re-work
Responsibility
Owner
Neither
Contractor

38. 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:

40. 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.

41. THE END

42. Delay Claims from the Owner and Contractor’s Perspectives
Questions?

43. 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