can a subcontractor have cp delay when the gc does not

Can a Subcontractor Have a Critical Path Delay Can a Subcontractor Have a Critical Path Delay

When the GC Does Not?When the GC Does Not?

Christopher Carson, PSP

Shannon Campbell, PSPShannon Campbell, PSP

Shannon Campbell, PSP

• Degree:

– B.S. Civil Engineering

– M.S. Engineering Management

• University:

– B.S – United States Military Academy

– M.S. – University of Missouri-Rolla

• Years of Experience:

– 10 years

2

• Professional Field:

– Engineering Claims Consultant

• Something you do not know about me:

– Served 6.5 years in the military as an army engineer travelling to 14 different countries across 5

continents – many of these visits were to view construction projects throughout the world.

Chris Carson, PSP, CCM, PMP

• Corporate Director of Project Controls, Alpha Corporation– Responsible for standards, processes, and procedures for a team of schedulers, analysts, and project

managers in multiple office locations, as well as analysis, work product, and testimony

– Developed and manages the in-house project controls training program at Alpha

• Certifications: – PSP (Planning & Scheduling Professional – AACEi)

– CCM (Certified Construction Manager - CMAA)

– PMP (Project Management Professional – PMI)

• University: University of Virginia, Mechanical Engineering, 1972

• Professional Field: 38 years of experience in Construction Management Services specializing in Scheduling, Schedule Analysis, Estimating, Claims

33

Scheduling, Schedule Analysis, Estimating, Claims

• Active in AACEi (Association for the Advancement of Cost Estimating International)

– Author of Recommended Practices in Scheduling & Forensic Schedule Analysis RP

• Active in PMI (Project Management Institute) College of Scheduling

– Vice President of Scheduling Excellence

– Managing Director for SEI (Scheduling Excellence Initiative) writing Best Practices and Guidelines for Scheduling and Schedule Impact Analysis

– Serving on team writing Best Practices for Scheduling for GAO

• Active in CMAA (Construction Management Association of America)

– Served on committee revising Time Management Chapter of CMAA’s CM Standards of Practice

• Active in Planning Planet (global planning association)

– Chief Editor for US, writing Planner Users’ Guide, developing accreditation Guild for planners

• Something you don’t know about me: I’m a glider co-pilot, see picture

Can a Subcontractor Have a Critical Path Delay When the GC Does Not?

Introduction

• Entitlement to Delay Damages only when there is Critical Path

Delay to Project Completion

• What happens when an owner impact extends the time a

subcontractor is on the job but the impact does NOT extend the

Project Completion?

• What, if any, entitlement does the Subcontractor have to recover

4

• What, if any, entitlement does the Subcontractor have to recover

delay-related costs?


Topics to be Covered• Example

• Pass-Through Claims

• The Miller Act

• Combating the No Damage For Delay Clause

• Strategies for Proving a Subcontractor’s Delay Claim

• From the Owner’s Standpoint

5





• The Miller Act




6


As–Planned Schedule - Office Building

Months

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Foundations

Structural Steel

Roof

CurtainwallNTP

4

4

1

Interior Finishes Punch

ListCoord. Dwgs.

Fab/Deliver MEP Rough In MEP Finishes3

43

4

4

3

1

7

As–Planned v. As–Built Schedule

Months

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Foundations

Structural Steel

Roof

Curtainwall


ListCoord. Dwgs.

Fab/Deliver MEP Rough In MEP Finishes

NTP

4

4

1

3

4

4

1

4

Fab/Deliver MEP Rough In MEP Finishes3

43 3

1

3 Wks

Foundations

Structural Steel

Roof

Curtainwall


ListCoord. Dwgs.

Fab/Deliver MEP Rough In MEP Finishes

NTP

4

4

1

3

43

4

4

3

1

8




• The Miller Act




9



Pass-Through Claims• Privity of Contract

• Recovery of Damages through a Pass Through Claim

• Definition:

A pass-through claim is a claim:

1) by a Subcontractor who has incurred damages due to the

10

1) by a Subcontractor who has incurred damages due to the

actions of the Owner/Government with whom it has no

contract; and

2) submitted by the GC who has a contractual relationship with

both the Subcontractor and the Owner/Government.


Severin Doctrine

“a prime contractor may sue the Government on behalf of its

Subcontractor, in the nature of a pass-through suit, for costs

incurred by the Subcontractor [due to the Government’s

conduct] . . . [i]f the prime contractor proves its liability to the

Subcontractor for the damages sustained by the latter . . . a

11

Subcontractor for the damages sustained by the latter . . . a

showing [which] overcomes the objection to the lack of privity

between the Government and the Subcontractor.”


Liquidating Agreements• Acknowledgement of liability to the Subcontractor

– Satisfies the Severin doctrine requirement that the GC is technically and legally liable to the

subcontractor for the claim before submitting to Government

• Limits liability to the amount that a prime is able to recover from the

owner

– Protects the prime

12


E.R. Mitchell Constr. Co. v. Danzig

• Basics of the case

• Players

• Facts

• No dispute of Federal Government liability

• Government approved schedule

13

• Government approved schedule

• Government put on notice of damages to both GC and

subcontractor

• Owner responsible delays not of project schedule critical path

• Results

• Subcontractor satisfied all requirements for entitlement to

Eichleay damages


Pass Through Claims -

General Information

• J.L. Simmons v. United States – provides the definition of the

requirements of a liquidating agreement

• Case law varies among State courts

• Benefits of the Pass Through Claim

14

• Benefits of the Pass Through Claim




• The Miller Act




15



The Miller Act

• Basic Purpose – means for a subcontractor to receive payment for labor

and materials furnished Players

• Successful recovery of delay damages through the Miller Act

16


The Miller Act -

Recovering Delay Damages

• Generally recoverable if characterized as increased cost of labor and

materials – other costs have been successfully recovered

• Not relevant whether fault lies with the Owner of the Prime

• Seen as the only alternative in many cases for a subcontractor to recover

17

• Seen as the only alternative in many cases for a subcontractor to recover

increased costs


The Miller Act -

Considerations & Recommendations

• Is a payment bond required?

• Was the payment bond actually attained?

• Timely initiation of a payment bond

• Limited liability by surety – multiple claimants may require each to take a

18

• Limited liability by surety – multiple claimants may require each to take a

pro rata share of the penal sum




• The Miller Act




19



No Damage for Delay (NDFD)

• Basic Purpose – protects an owner or GC from paying monetary damages

when a project is delayed

• Sample Clause

“No payment or compensation of any kind shall be made to the contractor

20

“No payment or compensation of any kind shall be made to the contractor

for damages because of hindrance or delay from any cause in the

progress of the work, whether such hindrances or delays be avoidable or

unavoidable.”


No Damage for Delay - Enforceability

• Unenforceable in many states

• Established exceptions otherwise –

• (1) not contemplated by the parties;

• (2) so unreasonable in length as to amount to an abandonment of

the project by the Owner;

21

the project by the Owner;

• (3) caused by acts of bad faith or fraud by the Owner; or

• (4) caused by active interference by the Owner.

• A fifth exception is also sometimes cited - delays caused by gross

negligence.


No Damage for Delay – Considerations

• Sometimes incorporated by reference or in a “Flow-Down” Provision

• May be defense for an owner when presented with a pass through claim

• Has been circumvented by use of a liquidating agreement as already

discussed

22




• The Miller Act




23



Strategies for Proving a Subcontractor’s Delay Claim

• Review and Negotiation of the Contract

• Timely Notice

• Waiver of Rights

• Good Documentation

• Involvement in the Baseline Schedule and Subsequent Updates

24




• Review and Negotiation of the Contract

• Subcontractor should

• Carefully review contract, especially from a legal perspective

• Assume any NDFD will be enforced

• Attempt to remove or reduce general assumption of delay risk

25

• Attempt to remove or reduce general assumption of delay risk

• Reduce to specific risks that are under sub’s control

• Watch for verbiage that limits recovery to “active interference”

only by Owner

• Attempt to include language that provides a “Grace Period” that

delays must exceed to allow an adjustment for delays

• Allows a contingency for that period to be carried

• Seek language related to specific events, proof required or price



• Timely Notice

• Assume that notice requirements will be enforced and meet them

• Keep the GC informed so he can inform the Owner

• Owner then has opportunity to participate in mitigation

• Owner must be made aware of delays contemporaneously

26

• Owner must be made aware of delays contemporaneously



• Waiver of Rights

• Watch for waiver language

• Could be part of a payment application or certification

• Could be part of a change order indicating all past claims are

waived as of change order date

27

waived as of change order date

• Provide reservation of rights language to any document if

contemplating submitting a delay claim



• Good Documentation

• Key to proving damages

• Accurate and contemporaneous

• All documents including bid documentation, daily reports, pay

requisitions, invoices, correspondence, all input into baseline and

28

requisitions, invoices, correspondence, all input into baseline and

update scheduling process, minutes, resources both planned and

actual




• Ensure input into all schedules

• Review any updates provided by GC to ensure no acceleration or

stacking of crews are planned

• Ensure adequate time and sequencing

29

• Ensure adequate time and sequencing

• Note subcontractor’s expectations for period of performance

• Includes planned resources in crews and composition

• Stockpiling and materials distribution needs

• Watch for reduction in durations or overlapping of work

• Watch for shifts in start dates, access dates, or completion dates

• Document any problems with schedules




• Review total float for subcontractors’ work to identify criticality at

project schedule

• Attempt to have the impacts to the subcontractor shown on the

schedule

30

schedule

• If failed, document the delay or disruption

• Recognize that the Measured Mile is the most effective analysis for

loss of efficiency

• Requires good resource information

• Related to the schedule to prove impacted & unimpacted times

• Includes participation in any REAs submitted by GC – subcontractors

can lose their rights against the Owner if not involved with REAs




• The Miller Act




31



From the Owner’s Standpoint

• Provide fair allocation of risk

• Assign risk to the party most able to control it

• This will reduce claims efforts

• Provide timely and fair review and approval of legitimate time extension

requests

32

requests

• Follow the same general rules as outlined in the strategies for the

Subcontractor

• Should an Owner be able recover equivalent damages from a

Subcontractor due to Subcontractor impacts?


Conclusion• Negotiate the Contract

• Know the Contract

• Be involved in the schedule from start to finish

• Maintain accurate documentation

• Seek legal advice

33

Can a Subcontractor Have a Critical Path Delay Can a Subcontractor Have a Critical Path Delay

When the GC Does Not?When the GC Does Not?


Questions?


Chris Carson, PSP

can a subcontractor have cp delay when the gc does not

Business