Construction Law & Ethics

Discussion Responses

J V

1. Why is it critical to notify an owner quickly if situations change on a project from what was required in the contract?

So that design team or the responsible party can make changes accordingly or find solutions effectively in order to keep the project on time and on budget. In other words, quickly find out if any changes will cause a change in the contract considering both time and money.

TH

What is required in documenting a formal claim for extra money and time?

There are numerous documents that can support a claim for extra money and time. There must be substantial proof for additional time and money. For costs there needs to be proof of costs associated with the work of the contractor, plus additional contractor costs, and original time / costs. Some specific documentation includes time cards, schedule, quality control reports, correspondence, productivity reports, daily construction reports, job log, cost estimates, milestone review, labor cost reports, material cost reports, or even a weather log. This is another reason why daily reports are required for construction. It provides the paper trail on why a claim was required. It also assists in quantifying time and costs. 

D G

Discuss some examples of excusable and non-excusable delay.

Excusable delays like we recently had are events caused by Mother Nature. A natural disaster is an factor beyond our control for delaying a project. Another excusable delay would be in lock-down situations by law enforcement. This delay again is beyond our control. When McAllen had lock-down La Plaza Mall ( I believe last year) for gunman robbing a jewelry store, the location businesses and construction sites were halted the remainder of the day.  

Non-excusable delays can be the subcontractors not showing up to work or materials not being delivered on time. That is the purpose of proper scheduling. This responsibility falls on the shoulders of the contractor to ensure the project remains on schedule. 

S S

What risks do contractors take when contracts contain a No Damage for Delay clause?

Known as the “no pay for delay” clause, some risks contractors might face include accruing expenses. Contractors can attempt to justify or defend certain matters (i.e. excusable delays) where the contractor has no control over circumstances. Contractors can experience risk of having project completion date delayed.

Ahlers, J. P. (Oct. 5, 2011). “No damage for delay” clauses (part 1): a primer. Retrieved from https://www.acslawyers.com/no-damage-for-delay-clauses-part-1-a-primer/

S P

Why is it critical to notify an owner quickly if situations change on a project from what was required in the contract?

 

It has been my experience that owners need to be notified because:

· The owner needs to be aware if additional monies for the project will be needed for such changes. 

· Architect and engineer may request more re-design fees and monies owed for additional services.

· For an owner to avoid contract can breach, an owner needs to be in control of the project funds to assure themselves the funding is still adequate.

· Owners need to be notified of the possibility to extend loan periods plus any additional interest rates increases.

· Owners need to know if there is a loss of use on the project building of the owner.  Have the owner project requirements have changed?  Many times, owners have to comply with their own business requirements.

· Owner may have opportunity to file a claim against a contractor if poor work or substandard work was performed.

· Owner need to be aware of changes as they will affect project schedules or critical path scheduling.

· Owner may be able to assist with architect / contractor dilemmas and resolve the discussion sooner.

· An owner plays an important role in resolving construction matters, financial matters and avoid potential litigation matters if kept informed during construction changes.

 

J P

What is required in documenting a formal claim for extra money and time?

A contractor must submit a Request for Information or whatever specific document is called out in the specifications.  As mentioned above, the RFI form that we use at work has the following: the line item, specification item, detail description of the inconsistencies and possible cost, impact to the project and the delay.

D C

Discuss some examples of excusable and non-excusable delay.

Excusable: Unforeseen events not at the hands/responsibility of the contractor.  Example: bad weather, design changes requested by owner, labor strikes.

Inexcusable: Anything that the contractor could've prevented.  Example: Lack of material, lack of proper equipment, failing to schedule workers properly and just overall bad management by the manager.

J P C

What risks do contractors take when contracts contain a No Damage for Delay clause?

“No Damage for Delay Clause” entitles contractors to not pursue any pricing or additional compensation for any delays in the project, unless stated otherwise in the prime contract.

O A

What risks do contractors take when contracts contain a No Damage for Delay clause?

A “no damages for delays” clause: This limits damages for construction delays, accelerations and other inefficiencies, can serve a fair purpose, despite the perceived severity to a contractor who falls behind schedule for reasons beyond its control.  Some of the risk associated with a “No Damage for Delay clause” for contractors in a contract are follow:

· The right of the contractor to recover any cost or damages incurred as a result of delay shall not be entertained

· The contractor working on the project shall assume all liability, financial or otherwise, in connection with the contract

· The contractor shall save the owner from all damages or claim that may arise because of inconvenience experienced by him

· This can allocate risk of delays between parties in the contract involving the contractor and the subcontractors

· The project can lead to extension of time of which the contractor will spend extra days, weeks or months on the job site

· The contractor will accrue more spending as those extension of time will result in paying the workmen without any return on that will add to his profit