In a previous article, I discussed the reasons that contractors can claim a delay on their project. Unfortunately, some contractors submit delay claims to which they aren’t entitled.
This may be because they don’t understand the contract document or the basics of construction variation claims. Regrettably, some contractors are just serial claimants claiming for anything and everything, while many submit delay claims in a desperate effort to claw back time and money which has been lost because of their poor management and blunders that were made in planning and managing the project.
Submitting delay claims which have no sound basis or justification is detrimental
- The contractor has wasted their time preparing the claim, time which could have been better spent on managing the project, or on claims which have more chance of success.
- The client has to waste their time to review and reject the delay claim. This causes them to become irritated by the contractor. An irritated client may:
- Make life difficult for the contractor on the project. We’ve all had difficult clients!
- Refuse to employ the contractor on another project.
- Lodge counterclaims against the contractor.
- Sometimes the contractor is so desperate to pursue the delay claim that they may even declare a dispute, possibly incurring additional costs to engage a legal defense.
- Inevitably contractors will have a legitimate cause to submit a delay claim on the project, but the client that has already received a number of spurious variation claims from the contractor will be less inclined to accept the legitimate claim, often requiring the contractor to submit numerous supporting documents. In some cases, they may even reject the claim based on the numerous other spurious claims the contractor has submitted. This inevitably results in both the contractor and the client incurring additional costs to resolve the dispute over the legitimate delay claim.
- Clients don’t want to work with contractors that have a reputation for submitting numerous bogus claims.
When Are Contractors Not Entitled to Submit a Delay Claim?
It is important to note that contract documents do vary, so it is always essential to understand what your contract document says. But here are some general principles. Contractors aren’t entitled to claim a delay, or for an extension of time when:
1. Contractors’ actions
The delay is due to the contractor’s actions (or lack of action) which were caused by their poor performance or lack of project management. They also can’t claim for faults caused by their subcontractors and suppliers. Sure, they may have a reason to claim against the supplier or subcontractor for their non-performance but not against the client.
2. Work is interrupted by normal weather events
For example; if the project is executed in the rainy season then the contractor is usually expected to allow for the normal (average) rainfall that would occur in that month, or in winter they may have to expect snow and winter storms.
Again as stated above some contractors may have had the foresight to ensure that in the contract document all weather events are claimable.
3. The delay doesn’t impact items on the critical path
The critical path is the sequence of connected activities on the construction schedule where a delay to one of these activities will cause the following activities to be delayed, ultimately causing the project to be finished late. So as an example; a contractor is constructing a new house and the work also includes installing a new fence around the property.
Now, the contractor may have indicated on their construction schedule that they intended to install the new fence at the start of the work, which would help them secure the project site. But, if the client doesn’t give the contractor the details for the fence on day one it doesn’t prevent the contractor from proceeding with the construction of the house.
Sure, the contractor may have to take other measures to secure the property, such as erecting a temporary fence around the work area. If the contractor has stipulated in the contract that they required details of the new property fence early so that they can erect this fence to secure the work area they may have reason to claim for the additional cost of a temporary fence. But, they certainly can’t claim for a delay to the project, unless the details for the new fence are received so late near the end of the project that the fence cannot be completed before all of the other construction activities have been completed and the contractor has to remain longer on the project to install the new fence and the items immediately associated with the fence installation (such as maybe the final landscaping).
Obviously, using the same example above, the roof of the house is on the critical path to completing the house, since none of the internal fit outs and finishes can be completed without the roof. So, if the information required to construct the roof is received late then this will delay the completion of the house.
4. The client issues an instruction for the contractor to stop work for reasons related to the contractor’s actions
Which could include; the contractor is working unsafely, they don’t have the required permits which the contractor was supposed to arrange, the contractor hasn’t completed the required quality tests, or that their work was defective.
5. The contractor has to redo their defective work
6. The drawings or design information from the contractor’s team is late
Unless the reason for this lateness is because the client unreasonably delayed approving the information, or the client made late changes to their requirements which caused the contractor’s designers to suffer a delay.
7. The contractor encountered ground conditions which they hadn’t allowed for
But it was reasonable for them to have anticipated these conditions. So, for instance, the construction work could be slowed down because they have to excavate in rock.
However, if the rock was visible on the ground surface when they priced the project, or it was mentioned in the geological report made available to the contractor when they priced the project or could be seen in open excavations or bores, or which was visible on neighboring properties, then the contractor should have allowed for excavating in rock in the construction schedule.
8. The contractor implemented safe working conditions
Which are a requirement by the authorities or are conditions specified in the contract document, or which are the normal safe working conditions for the industry.
9. Carrying out quality test
Time is lost when carrying out quality tests and inspections as required in the contract documents, or which are the standard requirements in the industry.
10. Work disruptions and strikes
The contractor loses time due to work disruptions and strikes caused by their employees, or the employees of their subcontractors or suppliers.
11. There are errors and omissions on drawings prepared by the contractor’s designers
The contractor can claim against their own designers but not against the client, even if the client has reviewed and approved the drawing.
12. Construction schedule
The contractor misunderstood the construction schedule, or the construction schedule was flawed.
13. Changes to legislation are made
Where the proposed changes were known when the contractor priced the project. As an example; if a new national or state public holiday was declared before the contractor submitted their price then the contractor would have known to add in the additional day into the construction schedule.
14. Contractor’s requirements
For long lead items, the client wasn’t aware that the contractor required an extended period of manufacture the item. For example, the contractor might require nine weeks to manufacture a specialist window, but then the client needs to be made aware that the information for this window is required nine weeks ahead of time.
The contractor cannot claim the information was late if the client issued details for the window four weeks before it had to be installed and they had never been informed by the contractor that the details were required nine weeks in advance. For this reason, it is good practice that with the construction schedule the contractor also supplies the client an information required schedule which lists when information is required from the client.
Of course, the lead times for when information is required should be reasonable and not there to simply try and trip the client up.
15. Increased scope of work
The client increases the scope of work and the increased scope can be executed within the contract period and without impacting the critical path activities of the original works. Sure, the contractor may have to bring on additional resources for which they can claim mobilization and demobilization costs, but they cannot claim for delays to the project.
16. Damaged utility line
The contractor damages a utility line they should have known was present (it was indicated on drawings) or where they have to move a known utility line (unless moving this line wasn’t in their scope of works).
17. Activities delay
The client’s activities and operations delay the contractor, but these operations and activities were clearly outlined in the contract document. These could include restrictions on working hours and security checks to enter the project site.
18. Assumptions
The contractor wrongfully assumed something on a drawing when the information wasn’t provided or wasn’t clear, which resulted in the contractor having to redo work. If anything is unclear the contractor has a duty to raise a question to clarify the item. The time taken to resolve the issue may be a reason to claim additional time.
19. Damage repair
The contractor has to repair damage caused to the work by the weather.
20. Specifications’ change
The client changes specifications for items but the materials can still arrive before they are required.
21. Permits
Construction permits and permissions which the contractor is supposed to arrange haven’t been received (unless the contractor can prove the reason is due to the client not fulfilling their obligations, or they can prove that they’ve done everything timeously and within their power to obtain the permits which are now being unreasonably withheld for reasons beyond their control).
In addition, there is often more than one delay on a project. Sometimes these delays overlap or are concurrent. The overlapping portion of the two delays can only be claimed once. However, the concurrency of delays can become a complicated issue and often depends on whose fault the first delay is as to what portion of the second overlapping delay can be claimed. But this is a topic best left to the experts, or another article.
Conclusion
Frivolous and spurious delay claims are a waste of time. They are an irritant to clients and they can impact the integrity and reputation of contractors. Contractors must understand the contract document, the construction schedule, and general contractual procedures.
If you are not sure about a contractual issue ask for expert advice. Wise up to your contractual rights. My book: ‘Construction Claims: A Short Guide for Contractors’ provides some useful guidance, as do many other similar books.
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