Common Construction Delays

1. Construction Delays / Impact AnalysisLegal Issues and Documentation Contracting Officer Perspective Presented by Tom Coleman MSI Universal, Inc.

2. Common Construction Delays • Weather • Ineffective Project Management • Material and labor related delays • Design errors • Failure to act within a reasonable time • Differing site conditions • Not performing with due diligence • Subcontractor problems • Labor disputes

3. Required Management Tool FAR 52.236-15 -- Schedules for Construction Contracts “… a practicable schedule showing the order in which the Contractor proposes to perform the work, and the dates on which the Contractor contemplates starting and completing the several salient features of the work (including acquiring materials, plant, and equipment). The schedule shall be in the form of a progress chart of suitable scale to indicate appropriately the percentage of work scheduled for completion by any given date during the period.”…. “If the Contractor fails to submit a schedule within the time prescribed, the Contracting Officer may withhold approval of progress payments until the Contractor submits the required schedule.”

4. United States Court of Federal Claims definition of “critical path”: “Essentially, the critical path method is an efficient way of organizing and scheduling a complex project which consists of numerous interrelated separate small projects. Each subproject is identified and classified as to the duration and precedence of the work. . . . The data is then analyzed, usually by computer, to determine the most efficient schedule for the entire project. Many subprojects may be performed at any time within a given period without any effect on the completion of the entire project. However, some items of work are given no leeway and must be performed on schedule; otherwise, the entire project will be delayed. These latter items of work are on the “critical path.” A delay, or acceleration, of work along the critical path will affect the entire project.” Haney v. United States, 676 F.2d 584, 595 (Ct. Cl. 1982).

5. What is a CPM Schedule? Information system Plan Tracking tool Constantly evolving Project management tool Provides the owner with the contractors plan to complete the project within the original contract period. When events change the planned schedule the contractor must immediately identify what and who caused the change and does it affect the completion date.

7. FAR 52-242-14 Suspension of Work Clause Only unreasonable government delays are compensable because the government has a reasonable time to make changes before it becomes liable for delay. Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283, 1289 (Fed. Cir. 2000). Contractor cannot include profit in unreasonable delay claims.

8. Unreasonable Delay • For the government to be found liable for an action or inaction that delays contract work, the delay in question must be unreasonable. • An equitable adjustment to the contract is warranted when “the resulting [government-caused] interruption or delay is for an unreasonable length of time causing additional expense or loss to a contractor.” See John A. Johnson & Sons, Inc. v. United States, 180 Ct. Cl. 969, 986 (1967) (Johnson & Sons)

9. Delays • Excusable – delay is not the result of actions or inactions by either party at contract. • Delay arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor. (52.249-10 -- Default (Fixed-Price Construction) • Inexcusable – delay caused by the contractor • Examples include failure to coordinate work, too few workers, and low productivity.

10. Delay Types • Concurrent – both parties actions or inactions were a direct cause of the delay(s) • The contractor bears the burden of separating and apportioning concurrent delays • Sequential – delays in a sequence of tasks that may be caused by either or both of the contracted parties.

11. Excusable Delays FAR 52.249-10 Termination for Default Construction Unusually severe weather? Delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of both the Contractor and the subcontractors or suppliers • Acts of God or of the public enemy, Government in either its sovereign or contractual capacity • Acts of another Contractor in the performance of a contract with the Government • Fires, Floods, Epidemics, Quarantine restrictions, • Strikes, Freight embargoes,

12. Delay Types • Compensatory – a delay caused by actions or inactions by one of the contracted parties that results in financial injury to the other party at contract. • The burden of proving a compensable delay is borne by the contractor • Government caused delays = equitable adjustment/claim • The contractor must prove the extent of the government-caused delay, and its increased costs, to prove its injury, and there was no concurrent delay. • Contractor caused delays = liquidated damages • The Government must prove the extent of contractor caused delay, and there was no concurrent delay.

13. Schedules As-Planned versus As-Built • As-Planned - graphical representation of the contractor’s original intentions for the completion of the project and it shows the different critical paths as well as the planned activities and their sequence. • As-Built - shows the actual sequence and progress of the activities on the project as they occurred in real time, including the slowdowns, work stopages, and accelerations. The as-built schedule provides evidence to substantiate an assessment of liability for any delays.

14. Timely Schedule Delay Analysis The purpose of timely delay analysis is to calculate the contribution of each party to the total project delay on a monthly basis. Generally the CPM as-planned and CPM as-built schedules are the data source for delay analysis

15. Critical Path Schedule Updates • Because the critical path changes over time, critical path schedule updates are needed to analyze delays, must be updated monthly at a minimum • “If the CPM is to be used to evaluate delay on the project, it must be kept current and must reflect delays as they occur.” Fortec Constructors v. United States, 8 Cl. Ct. 490, 505 (1985), aff’d, 804 F.2d 141 (Fed. Cir. 1986).

16. Weather DelaysArmed Services Board of Contract Appeals decision All-State Construction, Inc. ASBCA No. 50513 (Sept. 22, 2004) • Unusually severe? • ASBCA The Board concluded that the term “unusually severe weather” includes both: • 1) an unusual number of days of severe weather at the work site; and • 2) unusually severe weather conditions (e.g., unusually heavy snow or rain, unusually high tides, unusually high or low temperatures) during a particular period at the site. • The Board stated: “The government provides no case support for its argument that the (Default) clause requires proof of an unusual number of days of unusually severe weather. Nor are we aware of any such support. We agree that minor deviations from the historic normal average daily temperature do not necessarily amount to unusually severe weather. The deviation for the seven days from 1 to 7 February 1996, however, was a 52 percent downward deviation below freezing. We find that deviation to be major and unusually severe in the context of construction work in cold weather.”

17. Weather DelaysArmed Services Board of Contract Appeals decision All-State Construction, Inc. ASBCA No. 50513 (Sept. 22, 2004) Suggested language: The Contracting Officer will provide a time extension for each workday that weather reduces production by more than 50 percent of the work elements scheduled to be completed during the period.

18. Seasonal Delays The increased costs of winter or summer construction may be compensable The increased costs of seasonal work may be apportioned for concurrent delays

19. Critical Path Schedule Updates • Blinderman Constr. Co. v. United States, 39 Fed. Cl. 529 (1997) “accurate, informed assessments of the effect of delays upon critical path activities are possible only if up-to-date CPM schedules are faithfully maintained throughout the course of construction.” • The contractor bears the burden of apportioning concurrent critical path delays

20. How is the burden met? • This burden is met if the contractor is able to prove four elements: • delay was unreasonable in length • the government was the proximate cause • the contractor was injured, and • there was no concurrent delay P.J. Dick Inc. v. Principi, 324 F.3d 1364, 1374-75 (Fed. Cir. 2003)

21. Tools for the Contracting Officer Information that the Contracting Officer needs to effectively monitor the contractors performance. • Pre CPM: AF Form 3064 Progress Schedule AF Form 3065 Progress Report AF 3064 indicates the project is on, behind, ahead of planned project schedule, but it does not show why the project it is behind schedule or what events that affective the construction activities on the schedule. • CPM Schedule

22. Progress Meetings Discuss Progress 1) Progress made in each area of the project 2) Critical Path Schedule • Work Done since last meeting • Planned work before next meeting • Any delays • Cause • Fault • Impact on overall schedule

23. Performance Period Modification If the Contracting Officer and Contractor agrees as to the delay being either solely caused by the Government and the delay is compensatory, a modification will be issued extending the contract performance period and equitable adjustment made to the contract price.

24. Performance Period Modification • If the schedule delay is determined to be inexcusable, the Contractor may be asked to furnish a revised CPM recovery schedule which demonstrates how the Contractor intends to accelerate their performance so as to meet the current contract performance period. Failure of the Contractor to provide the recovery schedule may be grounds for withholding progress payments pursuant to the Schedule of Construction clause of the contract.

25. Excusable Delays If there are excusable delays, the Contracting Officer must extend the contract by the period of excusable delay There will be no change to the contract price.

26. Deleting Contract Work • The government always bears the burden of proving the cost of deleted contract work “The Government has the burden of proving how much of a downward adjustment in price should be made as a result of the deletion of [certain specified materials]. Just as the contractor has that task when an upward adjustment is sought under the Changes clause …, and the Government bears the risk of failure of proof when a decrease is at issue. “ Nager Elec. Co. v. United States, 442 F.2d 936, 946 (Ct. Cl. 1971). Both parties must prove their equitable adjustment claims by a preponderance of the evidence. Teledyne McCormick-Selph v. United States, 588 F.2d 808, 810 (Ct. Cl. 1978).

27. How to Get Help NGB Advisory Services Contract Support Contract funded by NGB/A7O with MSI Universal, Inc through the ND USPFO and CETSC Minot Assistance provided at no cost to Units Simply call or email one of contract team members

28. How To Get Help Tom Coleman 785-422-3686 or 785-608-0684 tomc@msiuniversal.com Gary Heidle 703-582-7387 whcgary@gmail.com garyh@msiuniversal.com Bill Whitt 301-870-0919 or 301-385-6118 billw@msiuniversal.com

29. More Information The next module will discuss requirements for a CPM schedule and how to use the schedule to identify and measure progress and delays on a timely basis.

30. Questions???