In this article, our construction dispute solicitors explain what you can do if your project is delayed due to the actions/inaction of a contractor. We explore the basis for making a construction delay claim and provide an overview of the process. We also discuss some common pitfalls to avoid and round-off with possible remedies to get your project back on track or receive compensation.
Contents:
- Can I make a construction delay claim?
- What steps can be taken to prevent construction delays?
- How do you prove causation in a construction delay claim?
- How to make a construction delay claim
- Do I need a solicitor to help make a construction delay claim?
- What are the common issues to avoid when pursuing a construction delay claim?
- How long do you have to file a construction delay claim?
- Remedies if you are successful with your claim
- Summary
Can I make a construction delay claim?
At its simplest, establishing a construction delay claim involves:
- ascertaining the type (and consequently impact of) the delay i.e it resulted in the contract being completed later than planned
- its root cause and who was responsible for it
- whether the delay is compensable or non-compensable
Let’s look at each of these elements in turn.
Critical and non-critical delays
Not all delays to a project will inevitably setback an important milestone or the completion date. The determining factor is whether the delay is considered a ‘critical’ delay that pushed all subsequent events back, or a ‘non-critical’ delay that only affects specific activities but does not impede completion.
The construction programme is key here. It is likely that you will have agreed to a set date or expected date for completion of the works in your building contract. This date will have been informed by the construction programme submitted by your contractors illustrating the works/activities to be carried out to take the project to completion. Within it there will be ‘critical’ activities that need to be carried out in a particular order and time to achieve completion, the combination of which defines a critical path. If the delay in question impacts the project’s critical pathway, it is likely to be considered a critical delay. Non-critical delays can usually be corrected through change orders.
Excusable or non-excusable delay
Delays in construction can be caused by multiple factors, some within a party’s control and others outside of it, such as:
- Poor or defective original project planning.
- Weather conditions making works difficult.
- Unplanned changes to the original scope of works or design.
- Design errors discovered during the execution phase.
- Unavailability or shortages in labour, equipment or materials.
- Poor contract management, execution or quality of works.
- Other external factors such as regulatory changes, pandemics (think covid) or national strikes etc.
Whatever the reason for the delay, the question is one of liability when it comes to making a construction delay claim. This is understandable – a contractor cannot be held liable for delays that they were not responsible for. The first place to look is the construction contract, which typically sets out which risks and events are outside the control of the parties and deemed excusable.
Examples of excusable delays include factors such as:
- severe weather.
- national strikes.
- terrorist attacks.
- government shutdowns.
On the other hand, excusable delays are those attributable to a party because of their own action or inaction. Examples of non-excusable delays attributable to a contractor (or their subcontractor) include:
- failure to provide sufficient manpower.
- faulty workmanship and quality issues.
- improper planning, project execution or management.
It follows that a non-excusable delay attributable to the contractor would need to occur to form the basis of a construction delay claim against them.
Compensable or non-compensable delay
If the delay is considered compensable, this means the contractor can claim for the extra time and expenses needed to complete the project. If you as the project owner/employer have caused the delay and it is considered compensable, the contractor is likely to have a delay claim for additional time and compensation. Where the delay is caused solely by the contractor’s action, inaction or negligence, then it is likely to be considered non-compensable.
A critical, non-excusable and non-compensable delay is central to a successful construction delay claim. If any of these elements are missing, you might struggle. For example, if the delay was inexcusably the contractor’s fault but did not affect the critical path, then it is unlikely to have materially affected the completion date.
What steps can be taken to prevent construction delays?
Although some delays are unavoidable, it is important to take steps to prevent a delay from occurring in the first place where possible. Prevention is much better than cure in this situation because of the sheer impact of construction delays. Not only can they impact your finances, but delays can also lead to legal disputes, and damage relationships with stakeholders.
By taking proactive steps to prevent delays, construction projects are more likely to be completed on time, within budget, and to the satisfaction of all parties involved. Actions you can take both at the outset of the project and as it progresses include:
- Effective project management: A well-defined project plan with clear timelines, milestones, and responsibilities headed by a proactive project manager is fundamental in helping to prevent delays.
- Open and clear communication: Clear communication between all stakeholders, including contractors, subcontractors, suppliers, and project managers, is another key feature. Regular meetings, progress updates, and the timely resolution of issues can help ensure everyone is on the same page.
- Comprehensive contracts: Clear and detailed contracts that outline expectations, timelines, and consequences for delays can help prevent disputes and delays. All parties involved should fully understand the terms of the contract and their responsibilities before beginning work.
- Planning for contingencies: It's important to anticipate potential risks where possible and have contingency plans in place to address them. This includes alternative suppliers or backup workforce that can be called in case of unforeseen circumstances.
- Regular monitoring and reporting: Regular tracking of progress and reporting on key indicators can help identify potential areas of delays early on and allow for timely intervention to enable the project to remain on track.
How do you prove causation in a construction delay claim?
You may be confident that the contractor is liable for the inexcusable delay event, but the next step is to prove that ‘but for’ their defaulting act, the project would have remained on track. Establishing a causal link is an important element of any contractual claim, without which the claim can fail entirely.
In the context of construction delay claims, you need to prove that the cause of the delay (attributable to the contractor) affected the activities on the critical path of the project, leading to delayed completion. This is usually done by engaging an expert witness to perform an in-depth analysis (also known as delay analysis). There are various methods of conducting a delay analysis, each with its own benefits and limitations. Which one you use is likely to depend on the contract, the extent and quality of project records, as well as the overall size and complexity of the project. Each method will fall into either one of two approaches:
Prospective analysis
Performed before or at the same time as a delay event(s) occur, this method first looks at the cause of the delay and then its effects on the project timeline.
Retrospective analysis
Performed after a delay event, this method is used to establish whether the delay actually caused the project to be completed later than expected. This is more commonly used in practice as disputes often arise after late completion. Retrospective analysis can be more complex than prospective analysis because it requires the availability and review of project records and documents.
Let’s examine the common delay analysis methods in turn.
Impacted As-Planned method
This prospective approach involves starting with the baseline schedule and then adding hypothetical events to represent the impact of delays. By comparing the completion date resulting from the impacted as-planned schedule to the original, you can quantify the delay.
✅ This method is relatively simple, easy to understand and implement.
❎ It assumes the original plan was correct and does not account for subsequent changes to it, or any mitigation measures. The results remain theoretical or hypothetical.
Time Impact Analysis (TIA)
This contemporaneous technique involves isolating and analysing the position before and after individual delay events to quantify the extent of impact on the project’s critical path.
✅ A widely used prospective form of analysis and preferred method of the SCL protocol, it can convincingly showcase a chain of causation along the critical path, taking into account changes as they occur.
❎ TIA is reliant on the availability of detailed and regular progress data, and can be costly and complex to implement, especially for larger more complex projects with multiple delay events.
Collapsed As-Built (CAB)
Frankly the converse of the as-planned method, this method involves extracting delay events from the project schedule based on as-built information. As-built information includes all changes, delays, and disruptions that occurred during the construction process.
✅ Neither requiring a baseline programme nor progress updates, CAB is easier to implement. Rooted in logic, by simply removing the delay events - it can determine the earliest project completion date that could have been achieved ‘but for’ them.
❎ It requires carefully documented accounts of the delays for accurate analysis, which may not always be available. Although easier to implement, overall it can also be time-consuming/costly to produce.
Window Analysis
This involves analysing delays by dividing the project schedule into specific time periods or ‘windows’. The analysis starts with the baseline construction schedule and compares it to the as-built schedule. Changes in the critical path are quantified within each window to evaluate the impact on the project's completion date and milestones. This method relies on contemporaneous schedule updates shared by the contractor and project records.
✅ One of the more widely accepted and simpler methods, window analysis provides real-time consideration of delays as they arise during work, is not hard to calculate and is useful for identifying trends in delays and their effects on project progress.
❎ It is very involved and consequently expensive, requires complete as-built performance records, an approved baseline schedule and reliable progress updates. This can be particularly challenging to implement and track for projects involving complex schedule updates.
Retrospective Longest Path
As the name suggests, this is a retrospective method for analysing delay. It uses the as-built schedule to calculate the longest continuous critical path working back from the project's actual completion. This is then used to determine where and what caused the project to deviate.
✅ This method is known to be effective in identifying critical path issues and pinpointing the key causes of delay. It is heavily based on the facts of what actually happened, making it more reliable in accurately evidencing the actual cause of delay.
❎ An entirely backward-looking approach, its use is redundant in ongoing projects and is not appropriate in projects with concurrent delays. It also has limited capacity to capture and accommodate for changes, re-sequencing or mitigation applied to the critical path as the project unfolded.
With several methods available, it is important to carefully consider the specific requirements of your project and the complexity of the delays involved when choosing how to analyse delays.
How to make a construction delay claim
While it may be apparent that a project is due to exceed its planned completion date in advance, most construction delay claims are initiated once late completion has occurred. It is common in practice to present a claim for losses suffered by a delay against the final bill submitted by the contractor, or as a counterclaim to additional time claims. In any event, the following provides a general overview of the steps involved in making a construction delay claim:
- Gather documentation: Before starting any claim, it is important that you get your documents in order. The quality and extent of evidence can be the deciding factor between a successful and unsuccessful construction delay claim. Locate and collate any project or progress reports, schedule updates, daily logs or correspondence that support your position.
- Review the contract: The first place to turn to when making a construction delay claim is the contract. Construction contracts typically contain provisions concerning delays and what preliminary steps to take. It is important to follow any prescribed processes and deadlines to avoid putting the validity of the claim at risk.
- Notify the contractor: Most contracts will require that you provide notice in writing to the other party. This communication tool alerts the contractor of the potential grounds for a formal claim, and often kick-starts negotiations. It is important to ensure the notice is drafted in line with the contractual requirements. A notice should include sufficient details about the potential claim, such as a narrative of the delay event, its impact, and any supporting documentation. Many contracts also require you to issue a non-completion notice before being entitled to make deductions from final accounts.
- Negotiations: Following receipt of the notice, parties may enter into negotiations to find a mutually acceptable resolution. Many contractors will also put forward that they were entitled to an extension of time, and should consequently be relieved from some or all liability for paying damages for the delay.
- Alternative dispute resolution (ADR): If negotiations with the contractor are unsuccessful, ADR is a preferred route for resolving construction disputes, without going to court. ADR is known to be quicker and more cost-effective than litigation. In any event, courts expect parties to attempt some form of ADR before issuing a formal claim. They may even impose cost penalties on an ultimately successful party for unreasonably refusing to engage in ADR. There are different forms of ADR, including adjudication, mediation, arbitration and expert determination.
- Litigation: Legal action through the courts should really be used as a last resort. It is time-consuming and costly. Additionally, it may not be treated confidentially like ADR which is typically a private process. That said, it may be the only option available if all other avenues have been exhausted. There are separate steps and protocols to comply with before issuing a claim in court. At this stage, engaging specialist legal services is key.
Do I need a solicitor to help make a construction delay claim?
While it is not obligatory to enlist legal support for your construction delay claim, this is a complex area of law. You can get a solicitor involved at any stage – some project owners or developers prefer their legal representatives to conduct negotiations on their behalf. For more complex delay claims, especially if there are concurrent delays or the contractor is claiming they were entitled to an extension of time, professional legal advice can make the difference between winning and losing your claim.
What are the common issues to avoid when pursuing a construction delay claim?
Construction delay claims can be complex and challenging to prove. To improve your chances of success, keep in mind some of the following common pitfalls that can undermine your claim:
- Lack of Documentation: One of the most significant mistakes project owners can make is failing to maintain thorough documentation throughout the construction process. Without detailed records that support your case, it becomes more difficult to prove the delay was outside of your control or caused late completion. It can also render some delay analysis methods difficult to utilise. Ensure that all communications and project developments are documented meticulously to evidence any later claim.
- Not following proper procedures: To avoid jeopardising a delay claim from the outset, it is important that you follow any procedures outlined in the construction contract regarding written notice and timeframes. Ignoring these terms can invalidate your claim. Make sure to review the contract carefully.
- Overlooking mitigation efforts: Contractors may argue that you failed to mitigate your position and therefore should not be entitled to full damages. To avoid this pitfall, you need to demonstrate that you actively sought solutions where possible during the delay to minimise your losses, such as effective communication, potential workarounds etc.
- Making unsubstantiated claims: Courts can quickly see through claims that are made in bad faith or lack a clear basis. Investigations and supporting evidence such as expert input or reports, witness statements and project documents can help show that you have reasonable grounds for bringing the claim and that it is not based on hearsay or vague recollections.
- Not attempting ADR: If you unreasonably refuse to engage in ADR or reject any reasonable offers of settlement made by the contractor, courts can look on this badly and may penalise you even if you have a substantiated claim.
How long do you have to file a construction delay claim?
You should always refer to and follow any notice periods and time limits set out in the construction contract. A construction delay claim in essence is a claim for breach of contract - where the contract sets out a date for practical completion and this has been missed, the contractor is effectively in breach. For a normal contract, you must begin litigation within six years of the date of the breach. Any claims submitted after this date will be time-barred, unless a standstill agreement has been entered into between parties. If the contract is executed as a deed, the time limit is extended to 12 years. A deed must make clear on the face of it that the document is intended to be a deed and be signed in the presence of a witness, although the latter requirement will be satisfied if signed by two directors or a director and company secretary. It is common for construction contracts to be executed as deeds due to the extended limitation period.
Remedies if you are successful with your claim
If you are successful in your claim against a contractor, there are various remedies that can address the delay and its consequences. The best course of action will depend on the specific circumstances of the delay and your project. It is important to carefully consider your options and consult with legal experts to determine the most appropriate remedy for your situation. Common remedies include:
Damages
This is monetary compensation for your losses arising from the delay and the most common remedy sought. This is because in contract claims, damages are designed to put you in the position you would have been in if the default had not occurred. With construction contracts, there are often provisions for liquidated and ascertained damages (LAD). This is a predetermined sum payable by the contractor for missing an important milestone / the practical completion date specified in the contract. Not only can LAD deter the contractor from breaches, the advantage here is that you do not have to prove your losses flowing from the breach. The moment the milestone or completion overruns, the clause kicks in and payment is owed to you by the contractor at a daily or weekly rate as specified in the contract. There is therefore an element of certainty. It is important that the stipulated sum is a genuine pre-estimate of your loss. If these are unfairly high or unrealistic, then they risk being classified as a ‘penalty’. This will render the clause invalid. Calculating LAD to include in the contract can be a challenging task in itself requiring technical input.
If the contract does not provide for LAD, then you need to prove and quantify the losses incurred as a result of the delay, such as loss of revenue from sales or occupancy of the completed building. This can be difficult to calculate in practice. You will also usually need to show that you have tried to mitigate your losses, otherwise sums awarded can be adjusted.
Extension of time
If you want to maintain the working relationship with the contractor, or avoid the additional time and costs associated with finding a replacement, an extension may be an appropriate remedy in the face of delays. By alleviating some of the pressure, it also means that the contractor can focus on quality without rushing, which may lead to mistakes and further difficulties. The downside of course is that extending the timeline will push back the overall project schedule, and incur further costs. In practice, project owners/developers tend to extend the time for completion to accommodate any delays for which they are responsible. If the contractor were to then miss the extended completion time, you should then still be entitled to recover LAD.
Termination
Most construction contracts typically contains provisions allowing for termination in the event of specified breaches, which may include timely performance of works. It is important that you follow any notice procedures set out in the contract if you choose to invoke this potential remedy. Terminating the contract allows you to regain control over the project and find alternative contractors who may perform better. You may also be able to recoup damages that flow from the breach by the original contractor. That said, terminating can lead to legal disputes if not executed properly. Finding and mobilising a new contractor might also take some time, which can lead to further delays.
Acceleration of costs
In cases where time is of the essence and you cannot afford further delays, you may seek to expedite the work schedule to make up for lost time. This could involve the contractor increasing resources, such as labour and equipment, to speed up completion. Standard contracts may entitle project owners/developers to instruct the contractor to accelerate to make-up for their non-excusable delay. This option can mitigate the overall delay impact, but working at increased speed can lower the quality of workmanship. Disputes might also arise over who bears the accelerated costs. In practice, it is the contractors who often seek to invoke acceleration measures to avoid paying LAD.
Summary
Delays in construction projects can be stressful, expensive and far reaching. While planning for and preventing delays wherever possible would be ideal, sometimes they are unavoidable and out of your control. The type of delay, who was responsible for it, the extent of its impact and whether it directly resulted in late completion must all be established. A robust, professionally drafted construction contract helps you understand your rights and risk position. Thorough record keeping is also essential in proving your claim against a constructor. If you are faced with construction delays in your project and need legal advice or assistance, get in touch with our expert construction team today.
