The longer a construction project goes past the original estimated completion date, the more costly it can be for the contractor or property owner. If left unresolved long enough, a construction delay can result in litigation.
We can sort delay damages into two categories: critical delays and non-critical delays. A critical delay is one that causes a project to take longer, and non-critical delays do not. Common delay damages include:
- Extended field overhead, such as the extra expenses of renting a field office, paying staff, etc.
- Unabsorbed home office overhead, meaning costs incurred by the delay but not assignable to a specific project
- Liquidated damages, such as lost revenues, additional rentals and storage fees, and financing costs
- Escalation of labor, equipment and materials costs during the delay
- Costs associated with idled workers and equipment, and additional storage of materials
Both owners and contractors can cause a delay, and both can sustain financial damages due to the other party’s conduct or outside forces like the weather.
Excusable vs. non-excusable delays
Some delays may be considered excusable under the terms of the contract. An excusable delay is one for which the contractor is entitled to either an extension or further compensation. For a non-excusable delay, the contractor assumes the risk of damages. In addition, an owner can dispute that they owe the contractor for an excusable delay if the contractor is negligently responsible for the cause of the delay, or if the delay was reasonably foreseeable.
Litigating construction delays can be complicated, and the parties involved need experienced and capable legal representation. When choosing an attorney, you should select one who can explain construction delay law to you. Specifically, how the law applies to your case, and what your rights and obligations are under your contract. Most importantly, your lawyer should be a reliable advisor on what to do to best preserve your company’s rights and secure its best financial position.