There might be a compromise between the general contractor and the commercial developer when it comes to resolving concurrent delays
Over the years, general contractors and commercial developers have debated their rights during a concurrent delay. When a concurrent delay happens, the question arises: should the general contractor receive a) an extension of time to complete the project (due to unforeseen delays), b) an extension of time along with an increase in the contract price, or c) neither, since the delay was caused (at least in part) by the contractor itself?
What Is a Concurrent Delay?
A concurrent delay occurs when:
- two or more unrelated delays happen at the same time;
- each delay would have, on its own, delayed the project;
- the delays fall under different parties' responsibilities, though one might be due to a force majeure event;
- the delays are involuntary; and
- the affected work is significant and impacts the project's critical path.
How Do Courts Handle Concurrent Delays?
Courts across the country handle concurrent delays during construction projects in various ways.
For public construction cases, federal courts usually determine that when delays arise from "inextricably intertwined" causes from both the government/commercial developer and the general contractor, these delays are not considered compensable, nor can liquidated damages be assessed. Instead, courts often grant an extension of time to the general contractor without awarding any monetary damages.
The idea of concurrency can be puzzling, with one court noting that it is "at best murky and confusing." Courts typically first analyze a project's critical path to see if the delay can be separated or if it results from "inextricably intertwined" causes. If these causes cannot be separated, the burden falls on the party seeking damages to prove that the delay would not have occurred "but for" the event causing delay under the control of the other party. This is a challenging task because if there is a concurrent cause of delay outside the other party's control, it generally prevents recovery of damages.
In cases where apportionment is possible, some federal courts may allocate the delay based on how significantly each concurrent event impacts the project. Some courts believe it is fair that the cost of the delay be shared proportionately between the parties. There is strong precedent supporting the idea that if delays can be separated, liability can and should be assigned appropriately.
How To Handle Concurrent Delays in Construction Contracts?
General contractors and commercial developers have differing views on managing concurrent delays in construction contracts.
General contractors typically prefer a contractual provision that allows them to receive both more time to finish the work (including daily general conditions costs) and an increase in contract price to cover expenses from delays beyond their control. Their reasoning is that they shouldn't incur costs from delays that aren't their fault.
On the other hand, commercial developers usually advocate for a provision that denies any extension of time or increase in the contract price if the general contractor has not resolved its own delays, regardless of delays outside their control. They argue that a contractor should not receive modifications to contract terms while it still has outstanding delays.
A middle-ground solution could be to allow general contractors an extension of time without an increase in the contract price for delays outside their control, as long as they're actively curing their own delays. This compromise both encourages prompt resolution of the parties' issues and aligns with typical court rulings, which often grant extensions for delays not caused by the contractor.
For further information, both commercial developers and general contractors should consult legal counsel experienced in construction contracts to help negotiate terms related to concurrent delays.
