As the name would suggest, a delay claim arises out of a construction project where work has not proceeded pursuant to the schedule. Work has either been extended or accelerated because due to circumstances which were not anticipated when the parties entered into the construction contract. Although there are many causes of Wisconsin construction delays, the most common causes of delays are differing site conditions; changes in requirements or design; weather; unavailability of labor, material or equipment; defective plans and specifications; interference by the owner, and the failure of the owner to approve changes. Delays will often force a contractor to extend its schedule to complete the work required under the contract and result in additional costs. Such costs may include the costs of maintaining an idle workforce and equipment; unabsorbed office overhead; lost efficiencies; and general conditions. However, in order to receive an extension of time for project completion, or to recover additional costs, the contractor must meet a number of prerequisites.
First, the delay must not be caused by the contractor but instead must be excusable. Examples of excusable delay include design errors and omissions, owner-initiated changes, changed conditions, unanticipated weather, and acts of God. In contrast, a non-excusable delay is a delay for which the contractor has assumed the risk under the contract. Many disputes arise over whether a delay that appears to be excusable was contractually the responsibility of the contractor if it was foreseeable, or it was caused by the contractor’s own actions.
Delays may be further classified into compensable and non-compensable delays. If a delay is compensable, the contractor is entitled to recover compensation for the costs of the delay in addition to time extensions to complete the project. Most contracts will include classes of delay which are compensable, such as changes required by the owner. The contractor may also be liable for the negligent acts of its subcontractors. If a subcontractor was responsible for the delays, the contractor cannot recover delay damages from the owner as those delays are the responsibility of the contractor. However, if the subcontractor has a direct contractual relationship with the owner of the project, the contractor most likely will be able to recover damages. To recover damages, the contractor must show that the delay was the cause of the damages.
WHAT DELAY DAMAGES CAN BE RECOVERED?
The delay damages that are recoverable is dependent on what role the party has in the project. Many sophisticated owners use contracts with liquidated damages with a per day cost for delays. Absent such a provision, an owner must prove actual damages. Common owner claims would include:
- Owner’s project management and supervisory expenses
- Project-specific overhead expenses
- Loss of use
- Lost rents
- Lost profits from a business not opening
- Project-specific insurance costs (i.e. Builders risk)
- Construction loan interest expenses
- liquidated damages
Common damages available to a contractor for delays include :
- Project supervision costs
- Extended general conditions
- Temporary facilities such as toilets, job site trailer rental, site power, and water
- Liability insurance
- Equipment rental costs
- Equipment maintenance
- Field labor if the scope of work is increased as a direct result of the delay
- Increased material costs
- Lost productivity caused by the delay due to disruption and inefficient task sequencing
- Hourly labor rate increases due to longer duration of project
- Demobilization and re-mobilization expenses for extended delays
The damages available are ultimately dependent on the unique facts of every situation. In most commercial construction cases, expert testimony would be necessary to establish a delay claim.