No commercial construction project is immune to delays. Some delays to the critical path of a project may be outside the control of the parties. If this is the case, the delay may be considered “excusable,” meaning the parties 1) share the risk of the delay, but 2) receive a time extension to complete the project due to the delay. Otherwise stated, a party may recover time under the contract for the delay, but not money. Typically, a project owner may not rely upon an excusable delay to terminate a contract for default or recover or assess damages resulting from these delays.
If your next construction project suffers a delay, and your contract does not specifically address the issue, consider whether one of the following four common “excuses” applies, all of which are explained in more detail in Chapter 15 of Bruner and O’Connor on Construction Law:
1. Abnormal Weather Conditions or Events
Weather can be unpredictable, particularly in the Midwest. Snow in March? 70 degrees in January? These certainly seem out of the ordinary. But at what point does weather become “abnormal,” such that a delay to the critical path of the project is outside the control of the parties and therefore “excusable?” As outlined in Bruner and O’Connor on Construction Law, “[w]eather can be ‘abnormal’ in four distinct respects — temperature, humidity, precipitation and wind velocity — and the effect of each on construction activities varies markedly depending on intensity, the sensitivity of construction activities being performed at the time of the weather occurrence, and the state of construction and site conditions.”1 Whether such weather conditions are “abnormal” may also require consideration of historical weather averages
For any weather delay, context is key. For instance, tradesmen performing work on the interior of a building are much less likely to suffer delays due to weather than exterior tradesmen (such as painters). Similarly, a 15-minute downpour may be less likely to result in an excusable delay for a concrete subcontractor than consistent drizzle for two days.
2. Labor Strikes or Work Stoppages
To determine whether a labor strike or work stoppage is excusable depends on the foreseeability of the issue. An excusable delay is more likely to result if the labor strike or stoppage was 1) unforeseeable at the time the parties entered into the construction contract and 2) the problem was unavoidable and outside the control of the parties. Even if a strike or stoppage occurs, though, a party may have a conditional obligation to take reasonable actions to mitigate the stoppage. Otherwise, a party may be unable to avail itself of an excusable delay.
3. Acts of God
The phrase “Acts of God” commonly refers to catastrophic natural disasters such as hurricanes, avalanches, tornadoes, or other unforeseen and uncontrollable events. Of course, as many acts of God involve weather, they may be classified as a typical weather delay as well. In such circumstances, these delays are excusable. Yet, unlike excusable weather delays, any risk of loss from acts of God may also be borne by an insurer and its insured under a builder’s risk policy or other property coverage.
Some acts of God may even be so catastrophic that a project becomes commercially impracticable to complete. Under these circumstances, a party may have grounds to terminate a contract instead of merely seeking extra time to complete the project.
4. Unavailability of Materials
All projects rely upon the availability of certain materials to timely and efficiently complete construction. If there is an unexpected shortage on concrete, copper, oil, or some other essential material or product, then a contractor may be delayed or forced to pay a premium on normally available materials. As a result, a contractor should not be expected to pay any price for materials if prices skyrocket, and a contractor should not be required to ship materials from across the world simply because there is a shortage in North America. Therefore, and even though it is presumed that contractors are aware of foreseeable industry conditions when they initially contract for a project, if the shortage was unforeseen and sufficiently severe, then an excusable delay may result.
As always, any party to a construction contract should carefully consider their construction agreement to determine the negotiated extent (or limits) of excusable delays.
1 Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law, § 15:43 (Dec. 2016 Update).