Concurrent Delay – The Owner’s Newest Defense

"Concurrent Delay – The Owner’s Newest Defense" by

  • James G. Zack, Jr., CCM, CFCC, FAACEI, FRICS, PMP
  • Emily R. Federico, PSP

Description:

This paper explores the outcome of several U.S. court cases wherein the courts ruled that a contractor cannot use concurrent delay against the imposition of liquidated damages unless they had previously, during the project, filed a delay claim with the owner in strict accordance with the terms and conditions of the contract and governing statutes. This effectively eliminates the contractor’s right to respond to the imposition of liquidated damages at the end of the project as an affirmative defense.

1. Purpose – The purpose of the paper was to alert owners and contractors to several “game changing” court decisions concerning the classic concurrent delay defense generally asserted at the end of the project solely to defend against later completion damages.

2. Design / Methodology / Approach – The authors reviewed a number of recent U.S. Federal court decisions and one California Appellate Court decision concerning the use of the traditional concurrent delay defense to escape the imposition of later completion damages.

3. Findings & Value – What the authors found was that U.S. Federal courts are moving toward denial of the typical concurrent delay defense employed by contractors at the end of the job when the government owner seeks to impose liquidated damages. The Federal courts are relying upon what appears to be a rather new interpretation of the Contract Disputes Act to narrow the contractor’s ability to use concurrent owner caused delay as an affirmative defense. Additionally, the authors found one California Appellate Court case that eliminated the contractor’s ability to use concurrent delay as a defense, not on a statutory basis but on a contractual basis.

4. Research Limitations / Implications – The primary limitations are that at the Federal level there have been only a few reported cases that have followed this new trend. As such, it may be too early to determine whether this is a national trend. And, a single State court case does not a trend confirm. Given that only 1% of all civil court cases in the U.S. ever see their first day in court, it is not known whether these defenses against the use of concurrent delay are being employed in negotiation, mediation or arbitration.

5. Practical Use / Implications – The practical use for contractors reading this paper is to learn the lesson. When any delay event arises, file proper written notice as required. Follow up with an appropriate time extension request. If the contract requires that the owner respond in writing to any such request, demand that they do so. Then, if the time extension is denied, contractors should reserve their rights to dispute this denial at the end of the project. For owners, the practical use is to employ the analysis set forth by these court decisions in determining whether a time extension is owed and whether a contractor has properly set the stage to use concurrent delay at the end of the project as a means to defend against imposition of late completion damages.

6. Originality /Value – In performing the research for this paper, the authors could not find any other literature setting forth this potential trend concerning concurrent delay.

7. Conclusions – The paper provides current information concerning the use of concurrent delay as a defense as well as a procedure for contractors to reserve their rights to employ the concurrent delay defense in the event the project is completed late and the owner determines to impose liquidated or actual damages.

ADVICE: You need to be a Guild Member to view / download the articles in the Guild's Library.