What Construction Firms Need to Know About Concurrent Delay
Despite the prevalence of lawsuits, a majority of construction contracts fail to directly address concurrent delay. This is a problem for owners and contractors
Concurrent delay is a frequently litigated construction claim. These types of cases tend toward both the complex and constructively technical.
It may then come as a surprise that, despite the prevalence of lawsuits, a majority of construction contracts fail to directly address concurrent delay in a project. The phenomenon of silence surrounding the concurrent delay issue is a critical problem for owners and contractors.
There is no regulation that governs the legal definition of concurrent delay in construction contracts. That is not to say there are no guidelines to assist owners and contractors as they negotiate terms.
AACE International Recommended Practice (RP) 10S-90 and 29R-03 are often cited in litigation where damages are sought on this issue. The parties and their counsel should consider these references when negotiating documents.
However, these sections are not dispositive of how concurrent delay should be defined for a specific project. Both RP 10S-90 and RP 29R-03 provide several tenets to defining the term. In some cases, concurrent delay is limited to delays where both the owner and contractor are at fault. In other instances, the definition is broader.
A generally accepted view
The construction industry has generally accepted the view that concurrent delay occurs when there are two or more delays that take place over the same period of time and result in project delay. Delay can occur from circumstances outside of the parties’ control, including those not anticipated ahead of time.
A majority of construction agreements don’t detail with specificity the rights and obligations of the parties in the face of such delay. What typically occurs is the agreement will include a project schedule setting forth deadlines for project milestones. When a delay is anticipated or occurs, a party has a contractual notification obligation.
Construction contracts tend to be ambiguous in addressing the procedures to follow after notification occurs. Contracts may provide contractors an extension to project deadlines, but uncertainty following the identification of what happens next leads to frequent disputes.
Numerous failures to define concurrent delay in construction contracts and a lack of a generally accepted definition has led to inconsistent application of the law. Construction claims are brought in numerous forums, including arbitration, panel review and local courts. Without a bright-line rule on how to define concurrent delay and resulting damages, an inconsistent precedent has been established across various forums.
The best mechanism to control the outcome of any potential dispute is for the parties and their counsel to clearly define the rights and obligations of the parties at the onset of the relationship. Courts have increasingly decided that delays on the part of owners precludes their ability to recover liquidated damages for project delays.
Such limitation in recovery can amount to a large loss for an owner. Allocation of risk and definition of available relief is a primary reason to negotiate concurrent delay. Parties should understand that general contract principles apply to these contracts, and the parties are free to negotiate to their best position.
Concurrent delay is defined largely by the construction contracts governing the project. Parties would be wise to head off potential litigation by addressing, at the forefront, the rights and obligations of each party. Since there is inconsistent precedent across various venues, the negotiation of terms leads to a more predictable outcome in the event of a dispute.
Regulatory guidelines can assist owners and contractors as they work through terms. However, the parties are free to modify the definition of concurrent delay in their agreement to better suit the project. Owners and contractors are best advised to seek legal guidance on the negotiation of terms to ensure that the contract documents allow for the flexibility they need to meet reasonable deadlines and lower the risk of dispute in the event of a delay.
If you have any further questions about concurrent delay, or how to comply with your legal obligations under the laws referenced above, please contact us here.