If a project takes longer than expected due to unforeseeable reasons beyond the contractor’s control, then the contractor may have a delay claim against the owner. Typical delay-claim damages include extended general conditions, home office overhead, and financing costs.
Delay claims are one of the most common issues that arise on construction projects. Typically, the burden is on the contractor to prove a delay claim, and the contractor must prove the following three elements:
- the length of the delay;
- the causal link between the delay and the owner’s wrongful acts; and
- the harm to the contractor due to the delay (i.e., the contractor’s damages).
The second element can be the most difficult to prove. To show a causal link between the owner’s wrongful acts and the delay, the contractor must show that the owner’s actions affected the activities on the critical path of the project.
The Armed Services Board of Contract Appeals recently considered a contractor’s roughly $450,000 disputed delay claim against the federal government. In Appeal of Wright Brothers, the Building Company, Eagle LLC, a contractor agreed to repair and renovate a building for the Air Force. It was a $3.8 million project that was originally scheduled to take one year to complete. Through a series of changes and other issues that arose on the project, it ultimately took nearly four years to complete the project.
The contractor presented a claim to the contracting officer, and the CO denied the majority of the claim, leaving about $450,000 in dispute. The contractor then appealed the CO’s decision to the BCA.
The BCA denied the appeal and concluded that as to the delay claim, the contractor had failed to carry its burden to prove that claim. In particular, the BCA found that the contractor had failed to prove a causal link between the government’s alleged wrongful acts and the alleged delay by showing that the government “affected activities on the critical path of the contractor’s performance of the project.”
The BCA wrote that “[t]he critical path is the longest path in the schedule on which any delay or disruption would cause a day-for-day delay to the project itself; those activities must be performed as they are scheduled and timely in order for the project to finish on time.”
The contractor hired an expert who opined that a critical path analysis was only required when the contractor needs to “determine the amount of excusable and/or compensable delay.” The expert reasoned that the amount of excusable and/or compensable delay was already determined because the government granted time extensions to the contractor for the delay period in question (i.e., 986 days). Thus, the contractor argued that it was undisputed that the government had caused 97% of a three-year delay.
The BCA did not agree. Instead, the BCA accepted the government’s assertion that the contractor “failed to discuss the impact of its own delay in the context of a critical path analysis, or any proper analysis offered by [the contractor’s expert].” As a result, the contractor “simply failed to meet its burden here.”
As to the contractor’s argument that the government already admitted it caused the delay by granting time extensions, the BCA concluded that “an extension of time granted by the contracting officer does not equate to an administrative determination that the delay was not due to the fault or negligence of the [contractor].”
Relatedly, even if the CO admitted that the government was responsible for the delay, the BCA found that it was not bound by that determination because the BCA reviews the contractor’s claim de novo (i.e., with zero deference to the CO’s conclusions).
In short, the BCA concluded that the contractor’s delay claim failed because the contractor “provided no context to support a finding that the alleged delays and disruption ran through the project’s critical path, and, as such, appellant has failed to meet its burden of proof.” The court blasted the contractor’s expert’s opinions as being of “little benefit in deciding this appeal.” It appears the BCA reached that conclusion because the expert did not perform a critical path method analysis and simply relied on the fact that the government purportedly conceded its responsibility for the delays.
Bottom Line: Contractors asserting a delay claim must perform a critical path analysis showing that the owner’s wrongful acts impacted construciton activities in a manner that caused a day-for-day delay on the project. Even if the owner seemingly concedes it was responsible for the pertinent delays, the contractor should make every effort to carry its burden of proof and show a critical path delay to the project.
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