How Slow and Steady Can Lose the Race – Pacing and Delay Claims

In the well-known fable, the tortoise’s slow and steady pace prevailed. But how often do your construction projects resemble a fairy tale? The practice of “pacing” makes common sense in construction just as it does in racing. But pacing can be misunderstood in the context of a delay claim and can even cause the contractor to lose its claim for delay damages. Here’s a cautionary look at pacing and delay claims.

The concept of liability for delay is familiar, but important to restate as a foundation of this discussion. Delays fall into one of four categories, with differing outcomes.

• • Owner-caused delays are often called “compensable delays.” The contract and/or common law typically allows the contractor relief for added time and cost for these delays. (This is contemplated in Section 6.3.2 of ConsensusDocs 200.)
  • Delays caused by an event outside of both contracting parties’ control, such as acts of God, unusually severe weather, strikes, war, and other similar events, are often referred to as “excusable delays.” Depending on the contract language, the contractor typically is entitled to additional time but no compensation for these delays. This avoids liquidated damages and owner delay claims, but affords no affirmative compensation for the contractor. (Note that Section 6.3.1 of ConsensusDocs 200 identifies both “compensable” as well as “excusable” delays.)
  • Delays caused solely by the contractor are termed “non-excusable delays,” with the contractor not recovering time or money and the owner potentially entitled to liquidated or delay damages. (Indeed, Section 6.4 of ConsensusDocs 200 contemplates that the owner may assert a claim for additional costs against the contractor.)
  • But what happens when compensable, excusable, and/or non-excusable delays concurrently delay the final completion of the work? The result is typically like excusable delay – added time but both parties are barred from recovery of affirmative monetary damages. (As described by Jimmy Buffet, “it’s nobody’s fault.”) Concurrent delay is almost always at the center of every dispute over delay damages.

When a contractor has a delay claim, the owner and its experts typically scrutinize project data for contractor-caused delays, because, as noted above, concurrent delays could neutralize a contractor’s claim for delay damages. That in turn leads to arguments about “pacing.”

Imagine this situation. The contractor is about to set highway beams, which were cast in a curved configuration based on the owner’s engineering drawings. In preparation for beam hanging, the contractor realizes that the beams don’t match the curvature of the bents and bent caps already in place. The owner checks the beam engineering and verifies that the beams have been properly cast to its drawings but the owner’s drawings were in error. The beams must be returned and recast, and the beam manufacturer says the earliest delivery date for new beams is ninety days out.

But the investigation also reveals that one of the contractor’s bents is off – located far enough from its design location that it must be replaced. The contractor estimates that it will take sixty days to correct its defect – fifteen days for demolition and forty-five days for the new bent. So, the contractor submits a delay claim for thirty days of compensable owner-caused delay and sixty days of time extension for concurrent owner and contractor caused delay.

Fast forward four months. The beams were recast and delivered as planned within ninety days. The contractor submitted its delay claim for thirty days of compensable delay and sixty days of time extension. However, the owner argues that the entire ninety-days was concurrent delay and the contractor is entitled to no compensation. Why? The owner points out that the contractor’s bent demolition didn’t begin immediately after discovery of the problem; and the bent replacement work didn’t start immediately after demolition was completed; and once started, the replacement work didn’t proceed continuously. Crews occasionally left the bent work for work in other project areas. The owner documents that the previous bents were completed in forty-five days, while this bent demo and replacement work spanned eighty-nine days.

The contractor explains that it was “pacing” the bent work. Knowing that the new beam delivery was three months out, there was no need to press the bent work, which had thirty days of float. It need not complete its replacement beam until the new beams were delivered. So why “hurry up to wait?”

The owner’s argument, though, adopts a common delay analysis technique. Scheduling experts routinely measure actual completion of items of work against scheduled completion of those items to determine if a contractor’s production meets its scheduling goals.

How will the contractor’s pacing argument fare? The contractor will have a greater likelihood of success if it clearly informed the owner at the outset that it was intentionally pacing the replacement work and not pursuing that work at its normal pace for critical path work.

The starting point of the analysis is the burden of proof. The contractor bears the burden to show the cause of the delay to completion of the work. The owner may have a corresponding burden to show the defense of a contractor-caused delay, but the contractor should be prepared to demonstrate the limits on any such alleged contribution.

The contractor should be prepared to demonstrate that its pacing was an intentional and voluntary decision, made in real time, and in recognition that the paced work is sub-critical.  But four months after that decision might be a bit too late to document this project strategy. Documentation is almost always more persuasive if done in real time.

To best position itself to pursue a claim for time and cost relief when it is pacing some activities of work, the contractor should take the following steps:

• • Step 1: First and foremost, declare its intent to pace the non-critical work. This should be done by letter to the owner and/or in schedule narratives. Be transparent and contemporaneous in documenting the decision to pace.
  • Step 2: Document that the critical path is being delayed and show that the paced work is not critical. Demonstrate that the pacing is being performed in recognition of the float available in the paced work.
  • Step 3: Document contemporaneously the contractor’s ability to resume work at normal production if the paced work does become critical or near-critical. Show that the pacing was not due to limited resources.

The contractor who follows these practices will have a greater likelihood of winning the concurrent delay argument. Federal case law remains the most developed body of law on the subject, and those opinions generally provide that the contractor will have to demonstrate its intentional decision to pace the work.

The above discussion only scratches the surface of this topic. Delay analyzes can be complex subjective, and complicated, particularly when trying to analyze concurrent delay. The quality of the contractor’s contemporaneous scheduling, including updates and revisions, critical path, logic, and durations, is paramount to the recovery of delay damages.

In addition, the contract language may contain limitations on the availability and process for obtaining relief in the form of added time and cost to the contractor. For instance, Section 6.3.3 of ConsensusDocs 200 requires that the contractor give the owner written notice of a delay to the contractor’s work and obligates both parties to mitigate the effect of such delay.  Section 8.4 further provides that a contractor must submit a claim for time and/or cost relief within fourteen days of the event giving rise to the claim, and then twenty-one days thereafter, the contractor must submit supporting documentation for the claim. Should the contractor anticipate that it will pace its work, it would be prudent for the contractor to indicate as much in these contractually-mandated notices.

As the tortoise told the hare, “I’ll get there sooner than you think.” He knew his plan and was open about it. The moral of the fable is that “the race is not always won by the swiftest.” As it applies to construction delay claims, the moral is that slow and steady on non-critical activities may be good, but if the contractor is quiet about it, the contractor might lose the race!

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The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.