Some delays can be compensated, and some cannot. It depends on the delay type, whose fault it is, and who can be compensated. This blog post will clarify any confusion about who can be compensated and when.
In my last blog post, we briefly discussed critical vs. non-critical delays. You can read that post here:
Excusable Delay or Inexcusable delay?
First, we need to know if the delay was excusable or not.
An excusable delay is something that is beyond the contractor's control. Usually, a clause in the contractor's contract labeled Force Majeure outlines these delays. An excusable delay will often be caused by outside forces such as fire, floods, hurricanes, and other acts of God or war and terrorism, vandalism, and other acts such as material delivery delays beyond the contractor's or the client's control.
A Contractor is never liable for an excusable delay. Thus, he will not be responsible for any compensation or loss to the client. The contractor is entitled to a time extension on the project and cannot be held to the original schedule. He would also not be entitled to monetary damages unless the client caused the delay. A sample of what might be compensable would be a change or error in the drawings.
An excusable delay will usually be a no-fault situation with only an extension of time and no compensation to either party.
An Inexcusable delay is caused by either the contractor or the subcontractors and is always the General contractor's responsibility. Examples are delayed mobilization, failure to acquire proper permits, and poor planning. Inexcusable delays are entirely the contractor's fault and can result in monetary damages being replaced by the building owner or other subcontractors. A lot will depend on the contract wording and how the delays occur.
Suppose a General Contractor, Subcontractor, or Owner feels that the delay or delays on a job are compensable. In that case, a demand can be filed under The breach of Contract clause usually found in the original contract. You cannot file for an excusable delay or always on an inexcusable delay. If you have been accused of a delay and a demand has been placed on you, you can also use defenses to deny the claims. Your best bet is to retain a construction attorney to walk you through the steps.
In other words, You are not entitled to any compensation for excusable delays most of the time. These are considered no-fault situations. Inexcusable delays can sometimes be compensated, and if they are the result of contractor negligence, they will be payable to the owner, but there are times when the owner is at fault and may have to compensate the General Contractor. Either way, claims for delay can be difficult to prove and expensive to pursue. It's often easier and cheaper to keep the build going and move on.
The Takeaway
Unfortunately, delays will happen. Your best bet is to come to terms with the idea that there will be delays, and it will, for the most part, be out of your hands. Setting realistic expectations will help you be less stressed and uptight about your delays when they come along. In fact, stressing and micromanaging the build so there will not be delays could very well CAUSE delays. So back off and don't get aggressive with the scheduling.
Be Patient and reasonable. No one wants to go to an owner or GC and explain that there will be a delay, even more so if you are known for having a fit when a delay is presented to you. If a contractor is afraid to tell you about a problem and then the problem goes unreported, your small delay may turn into a disaster, so be approachable and reasonable. Keep those lines of communication open.
The best thing you can do is be prepared. Know that delays will happen and try to figure out when and where they might happen. For example, if your build is in winter or spring, figure out the weather in your build. Cold, rain, or snow can slow the build down or even stop the build completely. If you are ready for these delays it will be much less stressful when they do happen.
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