Tag Archives: concurrent delay

RECOVERING COMPENSATION FOR UNREASONABLE DELAYS UNDER THE SUSPENSION OF WORK CLAUSE

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Federal government construction contracts for fixed-price contracts contain a suspension of work clause found in F.A.R. 52.242-14 (a copy of this clause can be found at the bottom of this posting).   This clause allows the government, through the contracting officer, to order the suspension, interruption, or delay of the construction work.  This clause further permits the contractor to obtain an equitable adjustment for the increased costs it incurs associated with the delay / suspension of its work for an unreasonable period of time. George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229, 236-37 (Fed.Cl. 2005).  The unreasonableness of the delay / suspension depends on the actual circumstances of the project, but it is this finding of unreasonableness that triggers additional compensation to the contractor.  See id.   The test applied to determine whether the contractor is entitled to an equitable adjustment for additional compensation pursuant to the suspension of work clause is as follows:

 

1.  The delay must be of an unreasonable length extending the contract’s performance;
2.  The delay must be proximately caused by the government;
3.  The delay resulted in injury or damage to the contractor; and
4.  There is no concurrent delay caused by the contractor.

 

CEMS, Inc. v. U.S., 59 Fed.Cl. 168, 230 (Fed.Cl. 2003) quoting P.J. Dick, Inc. v. Principi, 324 F.3d 1364, 1375 (Fed.Cir. 2003).

 

As reflected above by the fourth factor, “even if the government has caused an unreasonable delay to the contract work, that delay will not be compensable if the contractor, or some other factor not chargeable to the government, has caused a delay concurrent with the government caused-delay.”  George Sollitt, 64 Fed.Cl. at 237.

 

This suspension of work clause is designed to make the contractor whole for unreasonable delays, but additional profit would be excluded from any additional compensation owed to the contractor.  See F.A.R. 52.242-14(b).

 

As mentioned in previous postings, contractors need to understand the clauses incorporated into their prime contract so they can appreciate how to best preserve their rights when they encounter a delaying event.  Also, understanding the clauses will enable the contractor to best present their request for equitable adjustment or claim in a manner that supports their position for additional compensation.

 

F.A.R. 52.242-14

Suspension of Work (APR 1984)

(a) The Contracting Officer may order the Contractor, in writing, to suspend, delay, or interrupt all or any part of the work of this contract for the period of time that the Contracting Officer determines appropriate for the convenience of the Government.

(b) If the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted (1) by an act of the Contracting Officer in the administration of this contract, or (2) by the Contracting Officer’s failure to act within the time specified in this contract (or within a reasonable time if not specified), an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable suspension, delay, or interruption, and the contract modified in writing accordingly. However, no adjustment shall be made under this clause for any suspension, delay, or interruption to the extent that performance would have been so suspended, delayed, or interrupted by any other cause, including the fault or negligence of the Contractor, or for which an equitable adjustment is provided for or excluded under any other term or condition of this contract.

(c) A claim under this clause shall not be allowed (1) for any costs incurred more than 20 days before the Contractor shall have notified the Contracting Officer in writing of the act or failure to act involved (but this requirement shall not apply as to a claim resulting from a suspension order), and (2) unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of the suspension, delay, or interruption, but not later than the date of final payment under the contract.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

“CRITICAL PATH” AND “CONCURRENT DELAY” BASICS AS INTERPRETED BY COURTS

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The terms “critical path” or “critical path method (CPM)” are frequently used terms in construction contracts and, importantly, delay-related claims.  These terms refer to the construction schedule and the method to establish delays to the substantial completion date.  To the construction participant,  specifically project management, these terms are must-know terms and are vital to the proper planning and management of the project!  A project is composed of many individual construction activities that are all interrelated.  Each activity has a scheduled duration or the number of days for the activity to be performed.  And, many activities cannot begin until predecessor activities are completed.  Project management needs to understand and appreciate all of this in order to successfully manage a project by the milestone substantial completion date that is agreed upon on the front-end.

 

 

Now, to the non-construction participant or lay person, the terms “critical path” or “critical path method (CPM)” do not mean much because they are not used in everyday language.  However, technical terms that are not part of everyday vocabulary need to be explained so that a lay person that is not a construction participant can understand and appreciate the significance of the terms–think judge or jury!   Oftentimes, the best way to explain the critical path is to analyze  court decisions that have interpreted this term in connection with a construction dispute.  The following are construction cases that have defined or interpreted the critical path:

 

CRITICAL PATH 

 

 

“The critical path is the longest series of the work activities through the performance of a whole project. If an activity on the critical path exceeds its scheduled duration, the termination of the project will be delayed unless some other activity on the critical path is performed in less than its scheduled time. A work activity not on the critical path may be completed later than its scheduled time without affecting the termination of the project unless the non-critical activity exceeds its “float” and thereby becomes an activity on the critical path.”

U.S. Fidelity & Guar. Co. v. Orlando Utilities Com’n, 564 F.Supp. 962, 968 (M.D.Fla. 1983)

 

“The project can be represented by a network of discrete paths that sequence interdependent tasks or milestones leading to project completion. The critical path, the longest path at any point in time, determines the project’s expected completion date.” 

Gulf Contracting, Inc. v. U.S., 23 Cl.Ct. 525, 529, n.2 (Cl.Ct. 1991)

 

 

“Essentially, the critical path method is an efficient way of organizing and scheduling a complex project which consists of numerous interrelated separate small projects. Each subproject is identified and classified as to the duration and precedence of the work. (E.g., one could not carpet an area until the flooring is down and the flooring cannot be completed until the underlying electrical and telephone conduits are installed.) The data is then analyzed, usually by computer, to determine the most efficient schedule for the entire project. Many subprojects may be performed at any time within a given period without any effect on the completion of the entire project. However, some items of work are given no leeway and must be performed on schedule; otherwise, the entire project will be delayed. These latter items of work are on the critical path. A delay, or acceleration, of work along the critical path will affect the entire project.”

Haney v. United States, 676 F.2d 584, 595 (Ct.Cl. 1982)

 

“Critical Path Methodology” (CPM) is a term of art for a method of scheduling and administering construction contracts. The Court of Claims has explained that CPM enables contractors performing complex projects to identify a critical path of tasks that must each be completed before work on other tasks can proceed. A delay on the critical path will thus delay the entire project: Essentially, the critical path method is an efficient way of organizing and scheduling a complex project which consists of numerous interrelated separate small projects. Each subproject is identified and classified as to the duration and precedence of the work. (E.g., one could not carpet an area until the flooring is down and the flooring cannot be completed until the underlying electrical and telephone conduits are installed.) The data is then analyzed, usually by computer, to determine the most efficient schedule for the entire project. Many subprojects may be performed at any time within a given period without any effect on the completion of the entire project. However, some items of work are given no leeway and must be performed on schedule; otherwise, the entire project will be delayed. These latter items of work are on the “critical path.” A delay, or acceleration, of work along the critical path will affect the entire project.”

Morrison Knudsen Corp. v. Fireman’s Fund Ins. Co., 175 F.3d 1221, 1232-1233 (10th Cir. 1999)  (internal citations and quotations omitted)

 

 

As explained, construction schedules contain numerous activities that are interdependent on one another and are required to complete the project.  Each activity contains a duration required to complete the given activity.  Schedules typically identify the milestone of substantial completion.  Most schedules identify the critical path by tracking the longest duration path  through the activities to achieve completion.  If an activity on the critical path is not completed on time, it will delay the completion date.  Sophisticated scheduling software allows contractors to identify each activity’s early start date (earliest time an activity can start provided its predecessor activities are performed), early finish date (simply taking the early start time plus the scheduled duration), late start date (the latest time an activity can start without delaying the completion date by factoring in the scheduled duration), and late finish date (simply taking the late start time plus the scheduled duration).  By showing the early start date and late start date, project management is able to determine the float time with the activity.  In other words, if an activity has both an early start and late start date, the float allows an activity to be delayed from its early start date to its late start date without actually delaying the completion date of the project.  Naturally, there is much more to construction scheduling and determining the critical path (or revising the critical path during the course of construction) than this!  The point is that the critical path, as interpreted in the cases above, is critical because this is really how delays are proven on a construction project (whether the delays are used to offset liquidated damages, establish an entitlement to extended general conditions, or flow down extended general conditions and liquidated damages to the trade subcontractor responsible for the delay):

 

CRITICAL PATH USED TO PROVE DELAYS 

 

 

“Contractors have the burden of proving delays attributable to the Government. It may be impossible to establish government-caused [owner-caused] delays without a means of showing the critical path.”

Daewoo Engineering and Const. Co., Ltd. v. U.S., 73 Fed.Cl. 547 (Fed.Cl. 2006)

 

“In order to prevail on its claims for the additional costs incurred because of the late completion of a fixed-price government construction contract [owner contract], the contractor must show that the government’s [owner’s] actions affected activities on the critical path  of the contractor’s performance of the contract.  The reason that the determination of the critical path is crucial to the calculation of delay damages is that only construction work on the critical path had an impact upon the time in which the project was completed.  One established way to document delay is through the use of Critical Path Method (CPM) schedules and an analysis of the effects, if any, of government-caused events upon the critical path of the project.”

George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229, 240 (Fed.Cl. 2005) (internal citations and quotations omitted)

 

Sometimes, there are concurrent delays to the project occurring at the same time that both impact / delay the completion date.   Concurrent delays have been defined by courts as:

 

CONCURRENT DELAYS AND APPORTIONMENT 

 

 

 “The doctrine of concurrent delay involves the premise that where both parties to the litigation caused delays then neither party can recover damages for that period of time when both parties were at fault.”

Broward County v. Russell, Inc., 589 So.2d 983, 984 (Fla. 4th DCA 1991)

 

 

“Where both parties contribute to the delay neither can recover damage, unless there is in the proof a clear apportionment of the delay and the expense attributable to each party.”

Blinderman Const. Co., Inc. v. U.S., 695 F.2d 552, 559 (Fed.Cir. 1982) (internal citation and quotation omitted)

 

 

“Courts will deny recovery where the delays are concurrent and the contractor has not established its delay apart from that attributable to the government.”

William F. Klingensmith, Inc. v. U.S., 731 F.2d 805, 809 (Fed.Cir. 1984)

 

 

“[C]ontractor may not collect damages from the government due to delay where that contractor was itself in a state of concurrent delay. Generally, courts will deny recovery where the delays are concurrent or intertwined.  Even where both parties are responsible for delay, a contractor may not recover unless it is able to apportion the delay and expense attributable to each party.The burden of apportioning delay falls on the plaintiff. Courts will deny recovery where delays are concurrent and the contractor has not established its delay apart from that attributable to the government.”

Smith v. U.S., 34 Fed.Cl. 313, 325 (Fed.Cl. 1995) (internal citations and quotations omitted)

 

 

“The general rule barring recovery for government-caused unreasonable delay when there has been concurrent delay caused by the contractor does permit recovery, however, when clear apportionment of the delay attributable to each party has been established. Because the equitable adjustment claim for compensable delay is the contractor’s claim, the burden is on the contractor to apportion the delay between the parties. Generally, courts will deny recovery where the delays  are concurrent or intertwined and the contractor has not met its burden of separating its delays from those chargeable to the Government.”

George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229, 238-39 (Fed.Cl. 2005) (internal citations and quotations omitted)

 

 

This articles covers just the basic elements of critical path and concurrent delay based on interpretations from Florida and federal courts.  Understanding these terms and how courts have interpreted these terms is important so parties know what they need to do to prove a delay (and how they need to prove the delay and sustain their burden of proof) based on the factual dynamics and circumstances of their dispute.  Without this understanding, parties are not in the best position regarding developing strategy and themes associated with their case to assist is persuasively presenting testimony / evidence to support their position.

 

For more information on substantial completion, please see: https://floridaconstru.wpengine.com/what-is-substantial-completion/

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.