Understanding a Construction Delay Claim

What is a Construction Delay Claim?

Like trains and planes, a construction project needs to run on time. When a schedule gets delayed for a period of time, it is important for contractors, general managers, and other professional builders to document the setback with a construction delay claim. 

A construction delay claim is a formal request for compensation that is made by a contractor to a project owner when the contractor believes that they have incurred damages as a result of delays to the project.

A builder may reduce his loss if he implements Critical Path Method (CPM) scheduling in his contract provisions. This algorithm defines contingencies that occur during a building project and may grant the contractor an extension of time and avoid additional costs. By recording the situation with a construction delay claim, the contractor is protected from future contract disputes and possible litigation.

There are three main types of construction delay claims that can be classified into three categories depending on the cause of the delay:

Different Types of Construction Delay Claims

Once you’re in the middle of a set-back, you need to determine the cause of your project delay and the estimated length of time a general contractor needs to correct the situation. Claims are also divided into three categories:

1. Excusable or Inexcusable Delay Claims
2. Compensable or Non-compensable Delay Claims
3. Critical Path or Noncritical Path Delay Claims

Excusable Delay Claims vs. Inexcusable Delay Claims

The first thing you need to identify is whether the cause of your delay is excusable or inexcusable. An excusable delay is a type of force majeure, which is an unforeseeable event that interrupts the construction project timeline. An inexcusable delay claim, on the other hand, is when the contractor is at fault for the delays.

Examples of Excusable Delays

• Site conditions like Weather and natural disasters, such as heavy rain, hurricanes, earthquakes, or wildfires.
• Errors in the design of the project.
• Hindrance by a third party, such as a regulatory agency that discovers a rule violation. This could include a black-mold infestation or destruction of an endangered species’ habitat.
• The owner changes the original design.
• A dispute emerges regarding property ownership.
• Bad faith is revealed, including knowledge of a fault line on the property.
• Unforeseen hindrances e.g. during a remodel, you might uncover a rotted floor that needs to be removed and replaced.

Examples of Inexcusable Delays

• Poor quality construction that must be rebuilt affecting the project schedule.
• Slow acquisition of necessary equipment, tools, or supplies.
• Lack of supervision of workers resulting in unsafe working conditions and/or delayed labor productivity/delay damages.

The excusable vs. inexcusable determination of a claim will impact compensation made to a contractor, subcontractor, or owner.

Compensable Delay Claims vs. Non-Compensable Delay Claims

The second thing you need to identify is whether the delay is compensable or non-compensable. A compensable delay claim means that the contractor can bill the project owner for any extra time and expenses associated with the delays in project completion. A non-compensable delay claim, on the other hand, does not entitle the contractor to additional compensation from the owner regardless of the extension of time and material costs.

In order to be compensated regardless of the completion date, the contractor needs to prove that the delays were caused by an event that was beyond their control, such as poor weather conditions or a change in the design of the project. The contractor also needs to show that they took reasonable measures to avoid or mitigate the effects of the delay. If the contractor is found to be at fault for the delays, then they will not be eligible for compensation from the owner.

Critical Path Delay Claim vs. Noncritical Path Delay Claim

Compensation may often depend on the construction schedule’s final completion date stated in its CPM scheduling. The project’s management critical path’s timeline identifies each construction stage, the length of time it will take to complete, and its dependence upon the work preceding it.

A critical path delay claim is one in which the contractor proves that the delays were caused by an event that was beyond their control and that the delays will cause a ripple effect throughout the project, pushing back the completion date. A non-critical path delay claim is one where the contractor does not prove that the delays will cause a ripple effect and, as a result, the final completion date is not pushed back.

Smart professionals insert extra “float” time into every phase of their critical path to allow for contingencies. In one scenario, a builder might be slated to lay a foundation by August 1 but will schedule an additional 20 days of float time. Despite setbacks, if a contractor remains within the CPM’s allotted time, it is still considered an uncritical delay because it does not exceed the final completion date.

However, if one obstruction or a succession of delays has a cumulative impact on the final completion date, the client may face lost profit due to extra interest payments, higher insurance premiums, loss of rental income, and other streams of revenue. When a project enters this critical period, a contractor may owe compensable costs to the client.

How Electronic Options Can Expedite Construction Delay Claims

Prompt filing of a construction delay claim is important throughout the build. It’s not a time to be slowed down by paperwork and difficult calculations. If a builder needs to notify his construction partners, including his client, bank, inspector, or architect, timing is crucial. If this delay is not addressed in a timely manner, it could damage a builder’s reputation, sabotage your credit, or impact future work acquisition. A digital platform with an easy-to-use construction project management app can save a contractor precious time.

Don’t be intimidated by electronic options. People often learn a new app on a mobile device over a coffee break or lunch hour. A template for a construction delay claim will include contact info and a description of the problem. The drag-and-drop feature of the affordable GoCanvas’ construction templates allows you to expound on the reason for the slow-down, outline options to correct the issue, and estimate additional time and cost. GoCanvas apps have the capacity to capture signatures, edit submissions, and dispatch data. They also have options to capture images and provide API service that puts full research tools at your fingertips. This documentation will ultimately help when making decisions regarding who is at fault, who can be compensated and when the status becomes critical.

Construction Delay Claim Forms Available with GoCanvas Apps

GoCanvas has created a full collection of construction apps that are designed to expedite the challenging demands of a building project. Records of your construction progress can also help you plan future projects.

Delay Notice Construction Forms for Contractors

Excellent for documentation and reference, this app outlines potential solutions to get a project back on track.

Construction Project Notification of Dela

This straightforward app summarizes any delay situation with relevant fields.

Memorandum of Delay Construction Forms for Contractors

With a focus on compliance, this app helps you report a delay in a project. Working with timelines, this app follows the effect on the scope of work.

GoCanvas designs easy-to-use apps for busy professionals. These apps work with you to digitalize your office and reduce your paper load. The Application Store also features apps that help you streamline and track Project Implementation, Inspections, and Work. Contact us today to learn more.