DELAYS AND SUSPENSIONS OF WORK

• Can be both psychologically and financially destructive

• Delays may be due to:
– Force Majeure
– Breach of contract by one of the parties
– Differing Site conditions
• The old adage, “Time is money”, is definitely true in these
situations
 DELAYS AND SUSPENSIONS OF WORK

• Time is of the essence

– Contracts contain a statement ‘Time is the essence’
– Taken absolutely literally, the words mean that the
contractor or subcontractor has an absolute duty to perform
the contract within the stated time and is liable for breach if
delay occurs
– Not only is the contractor bound by it to perform in time,
but owner is also required to review and approve drawings
and payments at contractual terms
 DELAYS AND SUSPENSIONS OF WORK

• Delay vs. Suspensions of work

– A suspension results from a written directive of the owner
to stop performance of all or part of the work
– A delay differs from a suspension in two ways
• A delay may only be a slowing down of work without
entirely stopping it
• It is triggered by something other than a formal written
directive from the owner
– Both result in increases to direct and indirect time related
costs to both parties
– In addition the contractor experiences increases in direct
costs due to inefficiencies caused by interruption of
performance
 DELAYS AND SUSPENSIONS OF WORK

• Compensable vs. Excusable delays

– An excusable delay is a non-compensable loss of time for
which the contractor will receive an extension of time but
no additional payment
– Not a fault of either party but the contactor must bear costs
associated with delay while owner absorbs time related
costs
– A compensable delay entitles the contractor to both time
extension and to compensation for the extra costs
– Unless ‘no-damage for delay’ clause is present, owner
caused delay is a compensable delay
 DELAYS AND SUSPENSIONS IN
CONTRACTS
• No damages for delay clauses
– Contractor waives his right to any cost adjustment for any
delay whatsoever, even if owner caused delay
– Only an extension of time allowed for proven delays
– Classic example of an ‘exculpatory clause’
• Judicial attitudes on No-Damages-for-Delay clauses
– Judiciary is loathe to enforce this clause, as contractor is in
a take it or leave it situation
– When owner acts or omissions have been particularly
egregious, courts often refuse to enforce the clause
 CONTRACTS WITH NO PROVISIONS FOR
DELAYS
• Some contracts are silent on the issue of damages for delay
• No express language which either establishes or denies
contractor’s right to be paid for extra costs associated with
owner caused delays
• Only way to recover costs is through a lawsuit proving breach
of contract on part of the owner
– The particular breach that has to proved is the owner’s
implied warranty not to impede or interfere with
contractor’s performance
 DELAY IN EARLY COMPLETION
SITUATION
• What happens when a contractor is delayed due to interference
of the owner, although all the contract work is still finished on
or before the contract completion date?
• Contract period = 24 months
• Case I: contractor worked at normal pace for 14 months, got
delayed due to owner by 4 months and then again worked for
10 months to complete the contract
– Time taken = 28 months
• Case II: contractor worked at accelerated rate for 14 months,
got delayed due to the owner for 4 months and then finished
the work in 4 more months at faster rate
– Time taken = 22 months
 Complete
14 months normal work 4 months 10 months normal
Case 1 work
delay
4 months
late
24 months contract period

2 months
4 months early
14 months faster work 4 months faster
Case 2
delay work

Complete
 DELAY IN EARLY COMPLETION
SITUATION
• Many owner will take the stand in the second case that, since the contractor
finished the contract early, there was no damage caused by the delay
• Owner’s consider that the contractor’s bid should be based on taking the
full allowable time for contract completion
• The weakness of owner’s view is that the contractor accepted all risk of
performance of the contract and, in the absence of an owner-caused delay,
would be liable for all extra-time related costs if the contract was not
finished on time as well as liquidated damages
• Therefore the contractor should be entitled to save costs by finishing the
work earlier than required by contract, if able to do so
• The owner causing a 4 month delay is liable for the resulting extra costs to
the contractor even though the contractor finishes the contract work early
 CAUSES FOR DELAY AND SUSPENSIONS
OF WORK
• Defective specifications
– When specs and drawings contain errors, the delay often
result due to:
• Attempting to comply with the error
• Waiting for the errors to be corrected and revised specs to be issued
• Site availability problems
– Site availability at the time of issue of NTP
– Unless stated in contract, contractor is entitled to full use of
site at the time of NTP
– Owners failure to provide reasonable means of access to
the work or interruption of access previously provided
 CAUSES FOR DELAY AND SUSPENSIONS
OF WORK
• Changing and Differing site conditions
– Changes directed by the owner
– Changes because of problems associated with DSC’s
– The requirement to perform added work can cause a delay

• Owner’s failure to act administratively

– By failing to act or acting in a ‘dilatory’ manner
– If owner doesn’t cooperate, contractor is delayed
– Problems arise when additional information, instructions or
a directive to proceed in connection with changes are not
given promptly
 NOTICE REQUIREMENTS

• Purpose of the notice requirements

– The contractor must furnish a written notice to owner
within a stated period of time following any event which he
perceives will cause a delay
– Without such a notice, owner may not know that some act
or failure to act is delaying the contractor
– It is also necessary to establish a start date for the delay. In
case of a dispute this will prove valuable
– Means that, even though not specifically notified formally,
the owner knows that work is being delayed
 NOTICE REQUIREMENTS

• Constructive notice
– If an act of god shuts down the work or the owner issues a
written directive to suspend all work, the owner has
constructive notice of delay
– Constructive notice means, that even though not
specifically notified formally, the owner knows that the
work is being delayed
– But still, the contractor should always give prompt written
notice of delay to the owner