Quantcast
Home / Commentary / OPINION: Know how your contracts are set up to deal with pandemic-related delays

OPINION: Know how your contracts are set up to deal with pandemic-related delays

Eric Meier is a Milwaukee, Wisconsin-based partner at Husch Blackwell and is leader of the firm’s Construction Academy team. He represents construction and business clients from contracting through litigation and every point in between. (Photo courtesy of Husch Blackwell)

Eric Meier is a Milwaukee, Wisconsin-based partner at Husch Blackwell and is leader of the firm’s Construction Academy team. He represents construction and business clients from contracting through litigation and every point in between. (Photo courtesy of Husch Blackwell)

It is not hyperbole to say that the whole world is in the midst of unprecedented times.

Although the federal government has not issued specific mandates to the construction industry, states and cities have enacted their own policies, first as part of “stay at home” and not as part of “return to work” orders. At each end of the stay-return spectrum, most jurisdictions have deemed construction an “essential business,” allowing projects to continue.

Amid the pandemic, schools have had to adjust to on-line learning, restaurants have had to pivot to take-out and curbside service, and contractors have had to change on the fly as well. Contractors have not just added more sanitary stations and emphasized cleaning practices, but have also enacted social distancing as part of efforts to keep workers safe. These safety measures are not only important, but in many jurisdictions, are also being closely monitored and enforced. For example, Maryland’s governor announced measures empowering local health departments to take actions against construction crews not following social distancing guidelines.

Social distancing on jobsites necessarily runs counter to many efficiencies and coordination practices that are typical for a construction project. Reduced crew sizes, staggered work schedules and other measures are intended to emphasize safety, but often come at the cost of speed. Schedules are not just affected by these on-site protections, but also by material supplies and other off-site COVID considerations outside of contractors’ control.

Although the slowing of projects may seem obvious to those in the trenches, it would be unwise to assume that project owners are concentrating on a corresponding delay. Even if owners generally acknowledge the severe effects of COVID and applaud work undertaken by contractors to continue delivering on their promises in this difficult time, there are still formal steps that should be taken to memorialize current events in a manner consistent with the parties’ contracts. Failing to do so could result in exposure to liquidated damages or other delay damages at the end of a project, even though COVID-19-caused delays are not a contractor’s fault. Now more than ever, it’s essential to know your contractual rights and obligations as it relates documenting and asserting claims based on uncontrollable project delays.

The first step to determining your rights and obligations is to find the relevant contract language. This will vary from contract to contract, and we recommend that you consult an attorney if you have questions about a particular contract. However, owners and prime contractors frequently use contract forms from the American Institute of Architects (“AIA”), ConsensusDocs or Design-Build Institute of America (“DBIA”) as a starting point. Although your particular contract may use a modified version of this language, the list below will direct you to the provisions that you should pay particularly close attention to in those contracts.

Samantha Schacht is an attorney in Husch Blackwell's Milwaukee office. (Photo courtesy of Husch Blackwell)

Samantha Schacht is an attorney in Husch Blackwell’s Milwaukee office. (Photo courtesy of Husch Blackwell)

AIA A201-2017 – General Conditions of the Contract for Construction
– Section 8.3 – Delays and Extensions of Time
– Section 15.1.3 – Notice of Claims
– Section 15.1.6 – Claims for Additional Time

ConsensusDocs 200 – Standard Agreement and General Conditions Between Owner and Constructor (Lump Sum)
– Section 6.3 – Delays and Extensions of Time
– Section 6.3.3 – Notice of Delays
– Section 6.4 – Notice of Delay Claims
– Section 8.4 – Changes Notice

ConsensusDocs 230 – Standard Agreement and General Conditions Between Owner and Constructor (Cost of the Work Plus a Fee with GMP)
– The language in this contract is the same as in the ConsensusDocs 200, except that Section 8.4 of the ConsensusDocs 200 is renumbered as Section 9.4 in the ConsensusDocs 230.

DBIA 535 Standard Form of General Conditions of Contract between Owner and Design-Builder
– Section 8.2 – Delays to the Work
– Section 10.1 – Requests for Contract Adjustments and Relief

Once you’ve identified the relevant clauses in your contract, read them carefully with an eye on answering the following critical questions: (1) is COVID-19 an excusable delay; (2) what is the allowable timeframe to submit a delay claim; and (3) what are the required elements of the claim? We’ll discuss each of these questions in our next article.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

*