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April 17, 2000
By Andrew D. Ness
Thelen LLP
Proving or disproving a construction delay claim is a substantial undertaking in the best of circumstances. But the analysis of construction delays takes a major leap in difficulty when there are multiple sources or causes of delay with interrelated effects. Even on straightforward projects, numerous activities for innumerable reasons are not completed exactly as scheduled. Is every activity that is not completed when scheduled a "delay," or are many of these inconsequential when assessing liability in a delay claim context? Sorting the consequential from the inconsequential only begins with establishing the project's critical path through Critical Path Method analysis. While there are some more or less established rules of logic and law that have been developed for analyzing multiple and concurrent causes
of delay, the task quickly becomes very difficult in the
complex and convoluted factual situation typical of most
major construction disputes. However, the basic principles
as revealed by the case law can be readily stated.
A. One Activity – Multiple Delays
The
most straightforward situation involving multiple sources
of delay occurs when there are two separate causes of delay
to a single work activity. For example, an owner-directed
change may have caused a particular activity to be less
efficient while at the same time the contractor may have
used a smaller crew or less efficient equipment than planned
to perform the work. How then is the extended duration of
the activity to be apportioned between owner and contractor?
Almost every impact claim contains issues of this nature.
It may seem apparent that the owner-directed change had
an adverse effect on the time to perform a particular activity,
but whether the impact was substantial or insignificant
is debatable, and it is a challenge for either side to quantify
the effect specifically.
The
only hard and indisputable fact in these situations
is that the activity took longer to complete
than planned -- and both parties typically will
agree on that much. But did the owner's action
cause the entire delay, was the contractor simply
not diligent in pursuing the activity or was
its planned duration too short to begin with?
Even if the owner delayed the activity to some
extent, did the contractor act properly to mitigate
its losses? 1/
Critical Path Method analysis does not answer
these questions, and they obviously are dependant
on the facts in each instance. The facts, therefore,
determine entirely how the delay is apportioned
between owner and contractor in these situations.
B. Multiple Activities – Multiple Delays
The
level of complexity steps up considerably when the situation
involves different causes of delay acting on different activities,
whether at the same time or at different times during the
project. For example, take a building project where the
owner has delayed structural steel delivery by making late
design changes. The contractor has had difficulty excavating
the site in order to begin the foundations. How is the overall
project delay from these two causes to be apportioned between
owner and contractor? Which one is really delaying the project,
or are both causes delaying completion?
A
case where the court wrestled with the concept
of multiple delays to multiple activities, with
at best mixed success, is Merritt-Chapman
& Scott Corp. v. United States. 2/
In that case, the U.S. Court
of Claims had an opportunity to interpret an
early version of the Suspension of Work clause.
It found in favor of the contractor that entitlement
under the Suspension of Work clause existed even
though there was a clear concurrent delay to
another critical activity from another cause.
The government caused delay by failing to provide
an access road to part of the work site. The
absence of the road prevented the contractor
from disposing of excavated material from the
site. As a result, the work could not proceed
until the road was available. The Board of Contract
Appeals, which first heard the claim, also found
that adverse weather caused a similar delay for
independent reasons. Rain and winter weather
(a non-compensable source of delay) would have
prevented the contractor in any event from advancing
the work even if the road had been completed.
The BCA denied the contractor's Suspension of
Work claim on that basis. The Court of Claims
reversed holding that concurrent causation was
not a factor in the then-existing version of
the Suspension of Work clause. The court placed
significance on the fact that the following language,
present in later versions of the same clause,
was absent:
No
[monetary] adjustment shall be made to the extent that
performance by the Contractor would have been prevented
by other causes even if the work had not been suspended,
delayed or interrupted.
The
Court thus strongly implied that if this sentence had been
included in the contract in the Merritt-Chapman &
Scott case, the contractor's claim would have been denied.
The Court of Claims rested its decision on the specific
language of the then-current version of the Suspension of
Work clause rather than reaching any broader conclusions
regarding the principles applicable to concurrent delay
situations.
C. Delays that Affect Only Float
The
key step when facing a multiple activity, multiple delay
situation is to determine whether either delay is affecting
the critical path or if both of them are. If only one delay
is affecting the critical path and the other delay is using
up only available float, the non-critical delay is not delaying
the project. The entirety of the project delay is due to
the delay affecting the critical path. 3/
This
rule was first illustrated clearly by a 1976
government construction case involving the erection
of 104 steel radio towers in the Philippines.
4/ The Army
Corps of Engineers Board of Contract Appeals
considered a 161-day delay and held that 114
days were the government's responsibility. The
contractor's claim was based on the government
placing a hold on work relating to a particular
portion of the towers. The BCA sought to determine
the critical nature of the affected work by examining
the impact of the suspension on the contractor's
overall progress. The government's hold prevented
the contractor from erecting prototype towers
that were intended to prove out the contractor's
fabrication and erection procedures. As a result,
the contractor commenced construction of the
production towers before the planned prototypes
-- entirely out of the planned sequence. Fabrication
errors that otherwise would have been detected
during the prototype stage were not discovered
until a later point in the erection process.
The government argued that the disruption and
delays caused by these fabrication errors should
be to the contractor's account. The BCA disagreed.
It found that the contractor "would have
been equally prompt and aggressive [in the prototype
phase] as it was in the [production phase] in
devising remedial measures." The BCA accordingly
concluded that the design change by the government
"was solely responsible for the frustration
[of the contractor's] plan of attack on tower
erection."
The
BCA also determined that the financial difficulties of one
of the critical subcontractors prevented that subcontractor
from performing any effective work and that this represented
a 37-day concurrent delay for which no compensation was
allowable. The rest of the period when this subcontractor
was having financial problems was not found to have affected
project completion -- it was not on the critical path. The
concurrent delay period ended when the contractor cured
the subcontractor's problems by taking over the work itself.
Similarly,
in a case involving the construction of an air
refrigeration system at a Navy flight center,
the government was responsible for furnishing
the equipment necessary for final testing, balancing
and start up of the system. 5/
The project schedule indicated
that this equipment would be delivered to the
site relatively early in the project, but its
delivery was delayed -- a delay attributable
to the government. The Federal Circuit, however,
determined that the government-furnished equipment
was not required until the end of the project.
Accordingly, the delay in its delivery did not
impact the critical path. Thus, the court determined
there "was no period in which the Government
was the sole cause of the delay." Despite
what may have been indicated by the original
schedule, delivery of the government-furnished
equipment was an activity with substantial float,
and the float was not used up. Accordingly, the
government escaped paying delay damages by showing
that its delay used only float, and the delay
to project completion was caused by the contractor's
own problems.
While
the rule that a delay that utilizes only float is not a
concurrent delay is a simple and logical proposition, be
forewarned that it is not as easy to apply in practice as
it sounds.
D. "True" Concurrent Delays
If
both delays affect the critical path rather than
utilizing available float time, the delays can
be accurately referred to as concurrent. For
example, in Smith v. United States, the contractor
was denied delay damages despite government delay
in resolving design issues early in the project.
6/ The court
found that the government-caused delays were
not critical to performance because the contractor
was not in a position to begin full-scale production
at the time of the owner-caused delays. The court
stated that the contractor's "delay claims
require analysis as to the validity of [contractor's]
cited examples of government caused delay, and
analysis of [contractor's] state of readiness
at those times." While the government caused
some delay, the contractor was not in a "state
of readiness" to proceed with the work at
the time of the government's delay.
It
is important to note that to be considered concurrent
delays, the delays need not actually take place
at the same time. The burden is on the party
claiming damages resulting from delay to provide
a reasonable basis for apportioning the effects
of these concurrent delays between owner and
contractor. 7/
If the concurrent delays are so intertwined as
not to be segregable or if the contractor otherwise
fails to provide a reasonable basis for apportionment,
then the claim for delay damages will be found
insufficient. This is because the claimant has
failed to demonstrate that the other party actually
delayed project completion. Put another way,
where the effects of concurrent delays are intertwined,
it cannot be said that "but for" the
other party's delay, the contract would have
been completed earlier.
A
case involving a contractor build-out of interior
office space shows how a potentially valid delay
claim was lost because of the failure to segregate
the effects of the delays by each party. 8/
The contractor alleged that
changes to the government's build-out specifications
and security requirements delayed completion
by five months. The BCA found, however, that
the contractor had an unreasonable difficulty
understanding the government's requirements.
The contractor apparently misinterpreted the
government's soundproofing requirements and mistakenly
thought he was required to tear out a substantial
amount of drywall he had just installed. The
BCA also noted that the contractor had unreasonably
delayed ordering the ballistic materials when
clarification was needed with regard to only
one particular item that could have been ordered
separately. As none of these intertwined effects
could be segregated, the BCA denied the delay
claim entirely.
The
reasoning that one cannot affirmatively recover
damages for a period of unsegregated concurrent
delay applies in both directions. The contractor
cannot recover delay damages when it cannot segregate
the owner's delays from its own. Similarly, the
owner cannot enforce a claim for delay damages
(generally liquidated damages) for contractor
delays that are not segregated from the owner's
own delays. 9/
When concurrent delays cannot be segregated,
generally neither party may recover damages for
the resulting project delays. 10/
In effect, concurrent delays
are treated as excusable but not compensable.
These
are the basic legal principles that govern concurrent delays,
and they are both logical and simply stated. But, applying
them to the facts of a given case rarely is straightforward.
However, in one other area there are a few cases that shed
light on analyzing complex concurrent delay situations.
E. Independent vs. Dependent Delays
It
often is hard to distinguish between two truly independent
sources of delay, both affecting the critical path, and
a delay that is dependent on another in the sense that they
have a cause-and-effect relationship to each other. For
example, consider an owner delay to the foundation work
for a building, followed by a contractor delay in structural
steel delivery. The contractor can argue that in the face
of a known owner delay to the foundation work, it did not
become concerned with the slippage in the structural steel
delivery date. Why? Because the foundations were not going
to be ready for steel erection if the steel was delivered
as originally scheduled. In fact, on-time delivery of the
steel would have caused a storage problem until the site
was ready for it. How is such an argument to be treated?
Some cases hold that in such a situation, the burden shifts
to the owner to demonstrate that the contractor's original
schedule, which was not followed after an owner-caused delay,
could not have been met even if the owner delay had not
occurred.
In
one such case, the Armed Services Board of Contract
Appeals rejected a concurrent delay argument
in a case involving a three-month delay to the
start of work. 11/
The bid documents provided the approximate date
that the notice to proceed was to be issued,
and the contractor was required to begin performance
within 10 days afterward. The government issued
the notice to proceed, but the building to be
renovated continued to be occupied, preventing
commencement of the work. Three months later
the building was available, and the government
issued a second notice to proceed. In defending
against the resulting delay claim, the government
argued that the contractor failed to obtain its
bonds in a timely manner and that this three-month
delay in obtaining bonds also prevented the start
of work and was concurrent with any government-caused
delay. The BCA rejected the government' s argument
on the basis of the contracting officer's own
testimony that issuance of the second notice
to proceed was not delayed because of the bond
problems. Implicitly, the BCA recognized that
the contractor could have expedited obtaining
the bonds had the government been ready to permit
the contractor to start work. Thus, the slowness
in obtaining the bonds was a dependent delay.
It was the result or downstream effect of the
government's delay in making the work site available
and not an independent cause of delay by the
contractor.
This
point also was addressed in a case involving
construction of a subway station. The public
owner's allegations of concurrent delays were
dismissed on the basis that the alleged concurrent
delays really were just a side effect of the
owner's critical path delay. 12/
The contractor claimed an
88-day delay in its ability to drive piles for
the station, a critical path activity, because
it could not close a traffic lane in the adjoining
roadway until a suitable detour was designed,
approved and installed. The owner alleged that
the contractor was in no position to begin driving
the piles as of the date when the alleged delay
by the owner began, pointing to lack of approval
of the contractor's shop drawings, incomplete
negotiations with the pile driving subcontractor
and the contractor's failure to have procured
the piles themselves. The BCA disagreed, terming
the claim of concurrent delay "speculative
or theoretical."
When
a significant owner caused, construction delay such as
the RW 11 design conflict occurs, the contractor is not
necessarily required to conduct all of his other construction
activities according to his pre-delay schedule, and without
regard to the changed circumstances resulting from the
delay....
The
occurrence of a significant delay generally will affect
related work, as the contractor's attention turns to overcome
the delay rather than slavishly following its now meaningless
schedule.
[The
owner] is required to demonstrate that, but for the delay
caused by [the owner], the contractor could not have performed
the project in less time, and would necessarily have been
delayed to the same extent in any case.
The
BCA thereby shifted to the owner, once a prima facie delay
case was presented, the burden of proving that the contractor
could not have avoided the alleged concurrent delay had
the owner-caused delay not occurred. Because there was no
evidence that the contractor could not have accomplished
these allegedly delayed activities earlier if required to
do so, the contractor's delay claim was upheld in full without
any reduction for concurrent delays.
Similarly,
in a dispute involving construction of a chlorination
facility for a water treatment plant, the District
of Columbia Contract Appeals Board rejected the
public owner's assertion that the contractor
was responsible for concurrent delays. 13/
The board found that there
was a 252-day critical path delay caused by the
owner's failure to resolve defective design issues
and failure to respond to the contractor's proposals
relating to chlorine injection pumps and other
major components of the project. The board was
able to segregate three specific periods of delay,
finding all three to be the owner's fault and
on the critical path. In defense, the owner argued
that the contractor delayed roofing installation
by 146 days by failing to timely execute the
roofing subcontract and to submit roofing shop
drawings. The board found that the built-up roof
was delayed, but was not on the critical path.
The underlying roof was installed timely, which
allowed interior work to proceed in the dry,
and the contractor could have proceeded with
instrumentation work had it not been delayed
by the owner. The board concluded that late completion
of the built-up roofing did not delay any follow-on
activities and had no effect on the project's
critical path. This holding can be viewed either
as a finding that the alleged concurrent delay
was not critical and thus was irrelevant or that
the alleged concurrent delay was dependent and
not independent.
The
owner also asserted that difficulties with the instrumentation
subcontractor caused a 471-day concurrent delay. The board
concluded that these difficulties in large part were caused
by the owner's design failures. The balance of the problems
that the contractor had "prodding" its subcontractor
to perform, the board concluded, fell into the category
of "why hurry up and wait" and simply did not
affect project completion in view of the overriding owner-caused
delays. The owner was unable to convince the board that
the contractor's delays would have occurred but for the
other more serious owner-caused problems. Thus, when a contractor
can demonstrate that it did not hurry up to complete work
activities on time because it would then just be waiting
on owner-delayed activities before proceeding further, it
has effectively demonstrated that its delays were dependent
and effectively a result of the owner's delay and not an
independent, concurrent cause of project delay.
On
a related point, it is clear that the contractor
need not address every possible delay issue once
the contractor makes a prima facie showing of
owner-caused delay that focuses on critical delays.
14/ At
that point, the burden then shifts to the owner
to show that even absent the owner-caused delays,
the project would have been delayed. The owner
must demonstrate that omitted events not addressed
by the contractor have relevance and that their
omission affects the contractor's analysis. Moreover,
the owner must offer "cogent, well developed
evidence and arguments" regarding alleged
concurrent causes of delay. 15/
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For more information about the issues covered in this report, please contact Andrew D. Ness in our Washington, D.C. office at 202-508-4368 or at adness@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
ENDNOTES
1/
Midwest Industrial Painting
of Florida, Inc., 4 Cl. Ct. 124 (1983); Edwards
Manufacturing, Inc., ASBCA No. 26936 84-1,
BCA 17,205 (1984).
2/
208 Ct. Cl. 639, 528 F.2d
1392 (1976).
3/
See, Wiezel, Refining the
Concept of Concurrent Delay, 21 Pub. Cont.
L.J. 161, 163-64 (1991).
4/
Fischbach & Moore International
Corp., ASBCA No. 18,146, 77-1 BCA 12,300
(1976).
5/
B. Kelso, II v. Kirk Brothers Mechanical Contractors,
16 F.3d 1173 (Fed. Cir 1994).
6/
34 Fed Cl. 313 (1995), appeal
dismissed, 91 F.3d 165 (1996)
7/
William F. Klingensmith,
Inc. v. United States, 731 F.2d 805, 808-09
(Fed. Cir. 1984).
8/
Green v. General Services
Administration, GSBCA No. 12,621, 96-2 BCA
&28,306 (1996).
9/
C.D. Murray Co., Inc.,
ENG BCA No. 5018, 89-1 BCA 21,275, at 107,291
[government's burden, when seeking liquidated
damages, to demonstrate relative effects of its
delays as compared to contractor's]. See also
Finke, The Burden of Proof in Government
Contract Schedule Delay Claims, 22 Pub. Cont.
L.J. 125, 154-57 (1992).
10/
Commerce International
Co. v. United States, 167 Ct. Cl. 529, 338
F.2d 81 (1964). The history of this rule is further
discussed in James, Concurrency and Apportioning
Liability and Damages in Public Contract Adjudications,
20 Pub. Cont. L.J. 490, 498-503 (1991).
11/
C.E.R., Inc., ASBCA
No. 42,767, 96-1 BCA 28,029 (1995). 12/
John Driggs Co., ENG
BCA Nos. 4926, 5061 and 5081, 87-2 BCA 19,833
(1987). 13/
MCI Constructors, Inc.,
D.C.C.A.B. No. D-924, 1996 Westlaw 331212 (1996).
14/
Bechtel Environmental,
Inc., ENG BCA Nos. 6137, 6166, 1996, Eng.
BCA LEXIS 24
15/
Bechtel Environmental, supra. See,
Utley-James, Inc., GSBCA No. 5370, 85-1 BCA 17,816 and
the discussion of this issue in Wickwire, Hurlbut &
Lerman, Use of Critical Path Method Techniques in Contract
Claims: Issues and Developments, 1984 to 1988, 18 Pub.
Cont. L.J. 338, 381 (1989).
©2000 Thelen LLP
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