Protecting the Owner from Construction Delays: Perspectives from the Construction Manager and Construction Litigator Kenneth E
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A publication of Bowles Rice LLP Winter 2019 Protecting the Owner from Construction Delays: Perspectives from the Construction Manager and Construction Litigator Kenneth E. Webb, Jr., Esquire, Bowles Rice LLP Robert L. Beers, Jr., President, Beers Construction Consultants, Inc. Ken Webb is a partner in the Rob Beers is President of Beers Delays on a construction project cost money. Invariably, the Charleston, West Virginia office Construction Consultants, Inc., a longer the delay, the more the delay costs. Those allegedly of Bowles Rice. A member of the company that provides project firm’s Construction Law Practice management services, full CPM injured by the delay typically seek compensation for the cost of Group, Webb concentrates his scheduling (preparation, analysis the delay from the owner of the project. The allegedly aggrieved practice on business litigation, and review), construction claims party – typically the general contractor or one of the multiple shareholders’ rights litigation, preparation and analysis, and construction disputes and litigation support to businesses in prime contractors – might ask for an “equitable adjustment” to professional liability defense. the construction industry. Other the contract sum at the end of the project seeking to increase the services include cost control cost of the work to recover for the added cost of the delay. In Webb has represented all types systems, documentation control, the authors’ experience, these requests for extra compensation of businesses in a variety of legal dispute resolution and expert disputes, including restrictive testimony. Prior to forming his are seldom equitable – more often than not, the party seeking to covenant and non-compete company, Beers served as a increase its compensation played a significant role in the events litigation and general breach of district manager for a national that led to the alleged delay. This article discusses how the owner contract actions. He has served consulting firm in Washington, D.C. of the construction project can manage and mitigate the impact as an attorney for majority and minority shareholders in Before going into the consulting of construction delay claims from both a construction manager’s valuation/dissenters’ rights business, Beers worked for nearly perspective and a construction litigator’s perspective. cases and has represented 20 years in the commercial owners, contractors, construction industry. He How the Construction Manager Protects subcontractors, architects, managed the design and engineers and sureties in construction of numerous, the Owner from Construction Delays construction disputes. He multi-million-dollar projects, For most owners, timely completion of their project can has also represented lawyers, including government buildings, determine its success as to the quality and cost of the work, yet bankers, architects and highway and bridge work, and engineers in defense of commercial buildings. He served owners may believe that they are powerless to avoid or overcome professional liability actions. as Project/Construction Manager contractor delays. How can the owner manage the impact of for residential buildings, retail delays if the contractor alone controls resources and the means Webb’s litigation experience establishments, municipal water and methods of performance? More troubling, owners may includes dozens of civil jury and and wastewater plants, and more. bench trials. He has participated not learn that completion of the project will be delayed until in numerous arbitration Beers holds an associate’s degree late in the game, further limiting the owner’s power to control proceedings and has appeared in civil engineering, a State the outcome. In desperation, the owner retains attorneys and before the Supreme Court of of Virginia Class A Contractor Appeals of West Virginia and License and is a certified their experts to sort through piles of documents to determine the Court of Appeals for the instructor for Virginia Insurance responsibility for the late completion. Too often, such action Fourth Circuit. Continuing Education Program. results in litigation, an outcome that few have survived contentedly. This article will initially explore how owners can Webb earned his law degree from The Ohio State University Moritz take measures to increase their ability to manage the contract College of Law. He is recognized time and anticipate potential delays early enough to deal with by Super Lawyers and Best them effectively. Lawyers in America® for his work in Business, Commercial and Construction Litigation. How Projects Typically Fail to Meet the Contract Completion Date Unsuccessful projects that fail to meet the completion date predictably share the following shortcomings: • Poorly developed schedules that underestimate activity durations given available resources, lack correct logical 30 WINTER 2019 relationships and/or omit detail required scheduling? Do they understand complex sequence of construction dictated by the Protecting the Owner from Construction to effectively manage the work. delay issues? Schedule analysis, like any project design, the approval of submittals Delays: Perspectives from the Construction • Untimely or irregular schedule updates trade, requires many years of experience in required to confirm the contractor’s Manager and Construction Litigator that fail to accurately project the impact the trenches to be considered competent. compliance with the design intent and the to the completion date as activities are Owners rarely have that expertise in-house. timing of the procurement of equipment Kenneth E. Webb, Jr., Esquire, Bowles Rice LLP completed. and materials. Robert L. Beers, Jr., President, Beers Construction • Schedule manipulation to overcome And how about the architect? Most can delays that unrealistically projects timely provide a schedule specification that appears From the owner’s perspective, the schedule Consultants, Inc. completion. competent. However, it is very rare that and periodic progress updates also provide architects have the experience to develop an important tool to measure progress and The development of a comprehensive schedule specifications that are tailored predict if progress is on track for timely schedule specification, coordinated with to the owner’s particular management completion. The following provisions related contract provisions, will allow the approach or consistent with relevant establish the minimum elements required owner the tools to hold the contractor contract provisions of the current project. to allow the schedule to serve as an effective accountable to a higher standard of tool for the owner: performance in the construction and The owner must also ask if in-house • The Critical Path Method (CPM) of implementation of the project schedule. managers are qualified to evaluate the scheduling is required. All activities schedule-related provisions proposed by its are logically related with constructive1 Evaluating the Owner’s In-house Expertise attorney. If not, the cost of retaining a and resource2 links. Constraints allowed Well before the project is offered for consulting scheduling expert during the only as milestones or external conditions.3 pricing, it is prudent to evaluate the design development phase may well scheduling expertise of in-house managers, eliminate the need, at a much higher cost, to • Updated schedules required monthly consultants under contract (including the retain a scheduling expert during litigation. with progress and without changes. architect) and construction managers if Changes submitted in a separate the contract is multiple prime. In-house Developing the Scheduling Specification schedule. managers may have some scheduling The project schedule is primarily the • All schedules to be provided in native background, but do they have the expertise contractor’s tool to manage the complex format using Primavera P6. to provide specifications related to interrelationships between trades, the Continued on Page 50 WINTER 2019 31 Protecting the Owner schedule, projects fail to reach substantial completion by the from Construction Delays: date set out in the contract documents. Oftentimes, the delay in Perspectives from the completing the project is lengthy and results in a claim against the owner for a significant amount of additional money. Such Construction Manager and claims typically allege that some act or omission of the owner Construction Litigator or the owner’s architect caused the duration of the contractor’s Kenneth E. Webb, Jr. performance to exceed the time for performance set out in Robert L. Beers, Jr. the contract documents. In the claims, the allegedly delayed (continued from p. 31) contractors seek their additional stay costs – the contractor’s additional costs of extended performance plus overhead and profit. • Provide activities in such detail that individual crews are identifiable. The Importance of a Well-Maintained Project File • Obtain written confirmation from major subcontractors and in Defending Delay Claims suppliers that they approve the schedule. By design, construction projects are document intensive. The files There is clearly much more required of a schedule specification, such for the typical project contain written contracts with general and as establishing acceptable industry standard methods of proving supplemental provisions, plans and specifications. The contract delays. However, these core provisions, if wholly implemented, documents typically contain an initial