Construction delays, whether from lack of subcontractor coordination, construction defects, design errors or omissions, late decision making, force majeure, etc., can have disastrous consequences for owners and contractors alike. Owners can suffer extended management, supervisory, administration, insurance and financing costs, overhead expenses, loss of income, and real estate taxes. Contractors can suffer similar expenses, as well as increased general conditions expenses, increased labor and material expenses, lost productivity and lost opportunities for new work.
Well-drafted contracts can limit the liability of the responsible party for the other parties’ losses and expenses through waivers of consequential damages for the benefit of the contractor (but often replaced with liquidated damages provisions) and “no damages for delay clauses” for the benefit of the owner (but often allowing for the recovery of actual general conditions costs incurred by the contractor). However, while minimizing exposure to the consequences of delay, contractual language cannot eliminate delay claims, and owners and contractors should be prepared to deal with them.
