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Situations That Can Lead to an Owner Caused Delay in Construction

June 26, 2019

The construction process involves many moving parts and a diverse team of professionals working together. With this era’s shortage of skilled labor, the process is fragile, so complications can easily create delays or even total standstills in the construction process. For example, a subcontractor might alter the manpower on a job, or a design detail is discovered to be insufficient or not constructible, requiring the engineer or architect to make plan changes. Each of those examples, if not handled well could trigger a cascade of delays.

In other situations, the owner can simply change their mind on what they want in their building. If done at the wrong time it can result in owner caused delays in construction. Since construction projects often involve high overhead, a lot of manpower, and considerable payrolls for everyone involved, even slight breaches of schedule can be very expensive. It’s often written in the construction contract if the owner interferes with the contractor’s work, the contractor can demand compensation for the additional time.

Project owners who aren’t well versed in construction project management can end up doing (or omitting) things that end up interfering, increasing the risk of construction delay claims. Read on to learn more about which situations owners should avoid or need to handle appropriately in a timely matter.

Poorly Written or Misunderstood Contracts

Many construction delays have at least one of their roots in the project’s construction contract. The contract is usually the first document experienced construction managers and risk management consultants go to when a major issue gets brought up (the construction schedule is often the second). It is important for the contract to be clear and understood by the parties.

An unclear or poorly written contract increases the risk that one or more of the parties will misunderstand their duties and responsibilities. One risk that comes with this lack of clarity is that the owner and contractor may develop a dispute over the agreement during critical moments in the project, which may delay construction.

In another scenario, misunderstanding the construction contract can lead the owner to provide the wrong answer to a contractor’s question. If that wrong answer leads to a delay because of rework, the contractor could turn around and claim it was an Owner-caused delay in construction.

Poorly Prepared Plans and Specifications

From our experience handling delay claims, we’ve seen that poor architectural plans and specifications cause delays time and time again. In some project delivery methods, the architect works on behalf of the owner and sends the contractor the work-in-progress construction documents. The contractor then prepares the bid package and schedule estimates to complete the work. When construction is ready to begin, the contractor expects the plans and specs to be complete.

However, if the plans have major issues and/or the specifications are incomplete, the contractor ends up spending time and resources dealing with RFIs and Change Orders to try to resolve the issues. The contractor often alleges the owner has delayed the construction as a result of the poor design. The argument often used is that it was the project owner’s responsibility to make sure the architect’s plans were complete when construction began.

Lack of Funding

Construction financing is the oxygen that a project needs to continue towards completion. Since 2008, banks and lenders have become more selective when it comes to investing in real estate and construction projects. More astute lenders are now hiring their own construction risk management consultants to perform draw inspections.

The process for the contractor to receive payments is usually defined in the construction contract. When the owner receives a payment application it is important to promptly review it, and if approved, release funds to the contractor.

A lack of timely payments can quickly drain the contractor’s cash reserves to cover operating expenses. This can lead to scenarios where the contractor (whether the prime or subcontractor) has to resort to tactics such as pulling people from the job to work on another where they are being paid, which can create construction pacing delays that they can argue are owner-caused. In a worst-case scenario, a contractor would go bankrupt.

Lack of Due Diligence

An owner must supply the contractor with all the necessary information for the contractor to properly prepare a bid. In the case of new construction, the owner often works with engineers, surveyors, and consultants to conduct environmental, geological, and other investigations of the property to determine factors such as the kind of soil and bedrock, the (non)existence and depth of groundwater & hazardous substances, as well as any other subsurface conditions that may affect the construction project.

If the owner doesn’t perform thorough due diligence or fails to supply the contractor with all information needed, the project has an increased risk of encountering unforeseen events that can lead to extensive change orders for increased costs and delay claims.

Construction Site Access Complications

Getting men and materials to a construction site usually involves coordinating a lot of vehicles and equipment. Coordinating and handling this magnitude of traffic can be a major logistical challenge. For example, a project that is mid-block in a downtown environment usually has little room to receive trucks and stage materials. Depending on the location, the size of the project, and the site design, the construction staging area may be off-site such as an adjacent or nearby parking lot.

While the construction is ongoing, the owner should do their best to not interfere with access to or surrounding the construction site. For example, opening part of the property to public traffic could hamper deliveries, which can add hours per day or per week of delay in construction.

Meddling or Absent Owners

Finally, it is generally considered bad practice for an owner to interfere with the contractor’s performance.

Interference can entail anything from trying to perform concurrent operations which can create construction site access complications mentioned above, to trying to micromanage the contractor’s work. One common scenario of interference is when owners conduct overzealous inspections or hold the contractor to unreasonable standards. This kind of meddling invites delay claims against the owner, as well as claims for increased costs.

Likewise, being absent or unreachable is the other extreme. Failures to make timely decisions can also lead to owner-caused construction delays.

Need assistance with owner caused delay in construction?

Are you wrestling with construction claims and having trouble interpreting the specialized jargon they use? Our team of construction experts boasts an in-depth knowledge of how best to tackle any problem. Furthermore, they have advanced communication skills that enable them to explain complex technical issues to non-technical decision-makers.

To learn more about VERTEX’s Construction Claims Consulting services or to speak with a Construction Delay Claim Expert, call 888.298.5162 or submit an inquiry.

This article was originally published by Xpera Group which is now part of The Vertex Companies, LLC.

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