Can a Subcontractor Have a Critical Path Delay when the GC Does Not?

"Can a Subcontractor Have a Critical Path Delay when the GC Does Not?" by Christopher Carson, PSP, Mark Boe, PE, PSP and Shannon Campbell, PSP

Abstract

To prove entitlement to delay damages, it has been reasonably established (by best practices as well as case law) that a Contractor must show a critical path delay to Project completion. But, what happens when an Owner-impact extends the time a Subcontractor must remain on the job, but doesn’t extend the Project completion date? Shouldn’t the Owner be liable for any damages to the Subcontractor? If not the Owner, wouldn’t the GC have some risk? What type of analysis would be required to prove entitlement to these Subcontractor delays? Does current case law have any answers? This paper will discuss the issues, examine existing case law, establish how experts analyze and prove subcontractor delays, and provide an example of an analysis for this condition.

Introduction

It is a generally accepted principle in construction that only delays critical to project completion can be considered compensable or liable from the Owner. Non-critical delays simply absorb project float, and do not allow recovery of delay (time-related) damages. As such, a Subcontractor that is extended on a project due to a non-critical delay may not be able to recover for the costs of its superintendent, office staff, trailers, and sometimes equipment.

Another concern for Subcontractors is that GCs often insist on contract language that delay costs are only reimbursable if liability exists and delay costs are actually recovered from the Owner. The inclusion of such language can shift the risks of delay on construction projects to Subcontractors—the party that may have the least amount of control over the progress of construction. But that doesn’t mean the Subcontractor does not actually incur delay-related costs, including when the Subcontractor incurs delays to its work that is not on the project’s critical path.

A common example of this type of delay is when a drywall Subcontractor who is delayed on a particular floor due to an Owner change in the rough-in electric, but the project schedule shows the drywall activities have sufficient float remaining to absorb the delay. The overall project completion date is not extended but the drywall contractor is forced to be on the project longer than anticipated. In this situation, the question becomes: Is the Subcontractor entitled to recover for the extra costs it has incurred due to these delays?

To address such questions and facilitate the discussion, this paper is organized into the following sections:

  • Pass-through claims: The contractual relationship between a Subcontractor and an Owner
  • Recovering Delay Damages Through the Miller Act
  • Combating the No Damage for Delay Clause
  • Overall Strategies for Proving a Subcontractor’s Delay Claim

The recommendations in this paper are technical scheduling suggestions based on the authors’ experience with construction delay and disruption cases. We recommend that parties that may be involved with these issues seek guidance related to any potential legal implications from a knowledgeable construction attorney.

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