Disruption Claims

Subscribe to Disruption Claims via RSS

When a contractor bids a job, it does so based on a planned sequence of work and productivity of job labor. There are many issues that can arise while building a project that affect labor productivity, and many of those issues are not the contractor’s responsibility. The terms of the contract will often dictate whether a loss of productivity is compensable.

A contractor that suffers a loss of productivity may be entitled to additional compensation. Many methods have been used to calculate loss-of-productivity damages.

In JH Kelly, LLC v. AECOM Technical Services, Inc., a federal court recently considered several different methods for calculating a loss of productivity on a project.Continue Reading Three Ways to Potentially Calculate Lost Productivity Damages

When a contractor’s work on a project is impacted due to no fault of the contractor, the contractor may consider bringing a claim to get paid additional compensation for that impact. Oftentimes, the contractor may assert that its work was delayed, disrupted, or it was otherwise more inefficient than planned.

A contractor asserting a delay, disruption, or inefficiency claim against a project owner can expect the owner to look to any available defenses it has to the claim. After having read many cases involving these types of claims, one can see that the same defenses are frequently asserted.

The top three defenses to delay, disruption, and inefficiency claims include failing to timely submit a contractually compliant claim, waiver / release, and the contract expressly barring such claims. The rest of this post will provide a quick overview of those common defenses.Continue Reading Top Three Defenses Against Delay, Disruption, and Inefficiency Claims

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:

  1. the length of the delay;
  2. the causal link between the delay and the owner’s wrongful acts; and
  3. 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.Continue Reading No Critical Path Analysis for a Contractor Delay Claim? Expect Your Claim to Be Denied.

If a contractor is unable to perform its work as efficiently as expected due to the actions of other project participants, the contractor may incur loss of productivity damages. There are many ways to price those types of damages. Some methods are better than others, but the least accepted method is the total cost method.

Under the total cost method, the contractor shows the amount it cost to complete its work and subtracts the contract amount. For example, if the contract amount was $10 million, but it cost the contractor $15 million to complete its work, the contractor might claim that it is owed $5 million.

Courts frequently reject the use of the total cost method because it does not take into account damages that are the result of the contractor’s unrealistic bid or the contractor’s own improper performance of its work.Continue Reading Subcontractor’s Modified Total Cost Claim Allowed to Proceed to Trial

There are many ways a project owner or contractor can breach a construction contract. The following is a list of the six most common types of claims a contractor may assert against an owner or a subcontractor might make against a prime contractor:

1. Payment claims: One very common dispute is where the owner fails to timely pay the prime contractor or the prime contractor does not pay a subcontractor on time. Cash flow is very important in construction. If the owner does not timely pay the prime contractor, then the prime contractor may have difficulty paying its subcontractors and the subcontractors may not be able to pay their sub-subcontractors and/or suppliers.

Many times, payment disputes turn on whether the owner had a valid reason for withholding funds from the contractor. For example, if the contractor has submitted a payment application for deficient work, then the owner should not have an obligation to pay for that work. But if it turns out that the work was not deficient, then the owner may have breached the contractor by not timely paying the contractor.

Continue Reading The Six Most Common Contractor Claims

In United States ex rel. Aarow/IET LLC v. Hartford Fire Insurance Company, an electrical subcontractor sued a general contractor and the payment bond surety for $2.9 million in additional labor costs incurred on a federal government project. The subcontractor alleged that the general contractor mismanaged the project and disrupted the subcontractor’s work. The general contractor filed a motion to dismiss, which the trial court granted because, among other reasons, the trial court believed that a no-damages-for-delay clause in the parties’ contract barred the subcontractor’s claim.
Continue Reading Court Concludes No-Damages-for-Delay Clause Did Not Bar Subcontractor’s Disruption Claim