subcontractor delay

8/2/2019 Subcontractor Delay

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

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

Christopher Carson, 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

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• 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

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, , ,

• 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 forScheduling 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 asubcontractor is on the job but the impact does NOT extend the

Project Completion?

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• What, if any, entitlement does the Subcontractor have to recoverdelay-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

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• From the Owner’s Standpoint






• The Miller Act



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As–Planned Schedule - Office Building

Months

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Foundations

Structural Steel

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Fab/Deliver MEP Rough In MEP Finishes3

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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

Interior Finishes PunchListCoord. Dwgs.

NTP

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3 Wks

Foundations

Structural Steel

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CurtainwallInterior Finishes Punch

ListCoord. Dwgs.

Fab/Deliver MEP Rough In MEP Finishes

NTP

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• The Miller Act



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Pass-Through Claims• Privity of Contract

• Recovery of Damages through a Pass Through Claim

• Definition:

A pass-through claim is a claim:

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1) by a Subcontractor who has incurred damages due to theactions 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 costsincurred by the Subcontractor [due to the Government’s

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

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. . .

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

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

• Basics of the case

• Players

• Facts

• No dispute of Federal Government liability

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• 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

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• Benefits of the Pass Through Claim






• The Miller Act



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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

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The Miller Act -

Recovering Delay Damages

• Generally recoverable if characterized as increased cost of labor andmaterials – other costs have been successfully recovered

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

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• een as e on y a erna ve n many cases or a su con rac or o 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

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• Limited liability by surety – multiple claimants may require each to take apro rata share of the penal sum






• The Miller Act• Combating the No Damage For Delay Clause


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No Damage for Delay (NDFD)

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

when a project is delayed• Sample Clause

“

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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

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• (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

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Strategies for Proving a Subcontractor’s Delay Claim

• Review and Negotiation of the Contract

• Timely Notice• Waiver of Rights

• Good Documentation

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• nvo vement n t e ase ne c e u e an u sequent p ates





• Review and Negotiation of the Contract

• Subcontractor should

• Carefully review contract, especially from a legal perspective

• Assume any NDFD will be enforced

• Attem t to remove or reduce eneral assum tion of dela risk

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• 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

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• wner must e ma e aware o e ays contemporaneous y





• 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

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• 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

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, , ,

update scheduling process, minutes, resources both planned andactual





• Involvement in the Baseline Schedule and Subsequent Updates

• Ensure input into all schedules• Review any updates provided by GC to ensure no acceleration or

stacking of crews are planned

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• 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





• Involvement in the Baseline Schedule and Subsequent Updates

• Review total float for subcontractors’ work to identify criticality atproject schedule

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

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• 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








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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

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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

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

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

Shannon Cam bell PSP

Questions?

Chris Carson, PSP

subcontractor delay

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