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Who pays for that construction delay?

That question may be what makes this topic one of the most common sources of disputes in the construction industry. You would think that, since these disputes are so common, they would be easy to navigate. Unfortunately, that is often not the case.

The confusion and misunderstandings surrounding construction delays may be why who pays for them when they occur becomes such a point of contention. No one wants someone telling them they have to shell out more money for something for which they don't feel responsible, which is usually at the core of these disputes.

Common construction delays

Claims can arise out of delays that none of the parties involved in the project may have anticipated when negotiating and executing the contract. Some of the more common delays include the following:

  • Weather
  • Design or requirement changes
  • Unavailability of labor
  • Defective specifications or plans
  • Unavailability of equipment or materials
  • Owner interference
  • Differing site conditions

These delays extend the time the project will take to complete and increase the cost of getting the job done. If the contractor could or should have anticipated a delay, the burden of paying for it may fall to it. Excusable delays include many things, such as changes by the owner, design issues and weather, among other circumstances and situations.

Compensable construction delays

Most construction contracts include the types of delays whose costs will not be the responsibility of the contractor. However, what do the parties do about the delays not accounted for in the contract? A contractor may recover the costs associated with a construction delay if the actions of another party could have prevented it. That is, unless another delay occurs at the same time for which the contractor bears the responsibility.

Delays caused by subcontractors brought in by the contractor may be the responsibility of the contractor as well. If a contractor wants to be sure to recover the costs associated with the delay, he or she will need to show a causal link between the delay and the financial losses, along with a causal connection with the party supposedly responsible for the delay.

Determining who pays for construction delays

As you can see, there may not be a clear-cut way to determine who bears the responsibility, and hence the costs, for a construction delay. It may be necessary to conduct a thorough review of the circumstances and the contract in order to figure it out. Even then, it may be necessary to enter into mediation, arbitration or litigation in order to receive a final determination.

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