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Delay Claims on Construction Contracts, by Corinne Maddox, CCM, CFM

Construction delays are costly to all parties involved, but the biggest burden falls on the owner. Delay claims are requests (often resulting in lawsuits on major projects) by the general and subcontractors for financial compensation for delays to a project. Delay costs by the contractors are real and can be substantial. They include costs such as labor to supervise the project for longer durations, overtime labor, job trailer, utilities, equipment rental, material storage, interest and inefficient use of job labor due to disruptions in the project. The delay may or may not have been within the contractors' control, and the cause of the delay is often subjective and a significant part of the dispute. Owners should anticipate claims, particularly when they (or a third party such as their architect or equipment supplier) contributed to the delay. Costs can be avoided or minimized by clarifying as early a possible how and when the construction will be impacted by a delay. Look for alternatives - the cost to expedite a delivery may be a fraction of the cost to delay the project, and alternate approaches to solve the problem may be feasible. When delay claims occur, evaluate the schedule to determine whether the cause of the delay actually impacted the project's "critical path". For example, a door hardware delay would not impact drywall installation. With all change requests, clarify and document any schedule impact. Consider contract terms and conditions for delay scenarios prior to award of contracts. Avoidance and proper handling of delays and claims, when they occur, are critical to a successful project.

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