Expert, flexible training in the use of the most powerful scheduling software program in the world: Primavera P6 by Oracle. Call today! (916) 779-4145
Primavera Scheduling

All posts tagged Delay

Giving Notice for Delays

Categories: Critical Path
Comments Off on Giving Notice for Delays

Primavera Scheduling

There’s a book on the shelf in my home office that I love to pull down every few months because it contains such great advice for construction projects. The title of the book, Sweet on Construction Law, might seem a little quirky until you realize that the author’s name is Justin Sweet. The book was first published in 1997, which is when I bought my copy. Mr. Sweet joined the Berkeley Law faculty in 1958 and taught there until the early 1990s. Interestingly, his bio on the Berkeley Law website fails to mention this book. What a shame. If you can find a copy you owe yourself to read this book.

And how can you not like a law professor who despises most footnotes and considers legal writing…”turgid, ponderous, and plain old ‘dull'”? Most of us never pick up another textbook after university, but this book reads more like a non-fiction novel. It strives to engage the reader, not pontificate.

One particular gem in this book is his interpretation of notice provisions. Mr. Sweet tells a story of how the California Department of Transportation (CALTRANS) wanted to overturn a California Supreme Court decision that basically invalidated all notice provisions. I presume this was in the 1960s as Mr. Sweet describes his involvement as being “over thirty years ago” when he wrote this book.

CALTRANS  approached Mr. Sweet because he had written a journal article criticizing the court’s decision. At this point you might be thinking – if you are a contractor – that Mr. Sweet is the devil himself. I have yet to meet a contractor who doesn’t loath notice provisions. But hang on to your pitch forks for just a moment.

Mr. Sweet was intrigued by the language of a proposed bill that would allow notice provisions as long as they were reasonable. The bill was being carried by an assemblyman on behalf of CALTRANS. But because CALTRANS was not well-liked by the legislature, the assemblyman disguised the bill as being his initiative. Mr. Sweet was asked by CALTRANS to testify in support of the bill, which he did. It passed and is now part of the Public Contract Code.

In most situations the courts have little interest in deciding was is reasonable within a contractual relationship. Two parties can agree to almost anything as long as it is not illegal. During my 40 years in the construction industry I have been perplexed as to why some of my clients signed “those” contracts. Were they naive, or perhaps cunning? Is it possible the contractor sees something in that contract he can exploit to his advantage?

Nevertheless, Mr. Sweet recognized that sometimes one party has the upper hand. Using CALTRANS as an example, if a highway or bridge contractor wants to perform work in California he doesn’t have much choice but to accept contractual language dictated by CALTRANS. Therefore, as long as all construction contracts (public and private) contain reasonable notice provisions, everyone is being treated fairly.

Let us focus on just time extensions. A contractor should be entitled to a time extension when the delay is obvious to the owner. I have negotiated many time extensions with nothing more than a handshake. Delay fragnet? Time Impact Analysis? Forensic Analysis? Nope, nope, and nope. Now, clearly the CPM schedule plays a part because it identifies critical versus non-critical work for all parties to see. If we all agree that an excusable delay is holding up a critical activity what revelation do we expect from a computer?

A few years ago I testified on behalf of a contractor suing CALTRANS. The “expert” retained by CALTRANS (actually, just one of their field engineers) argued that since CALTRANS never reviewed the CPM Schedules they could choose which activities were on the critical path. Not surprisingly, none of the critical activities that I identified as having been delayed by CALTRANS were on the mythical critical path imagined by CALTRANS. The Dispute Resolution Board – which included a former CALTRANS employee – ruled entirely in our favor. It was the dumbest response to a lawsuit I have ever seen.

Okay, there was one other situation, in Albany, NY. My client had remodeled a high school. Remodeling projects are notorious for hidden conditions and this was no exception. I prepared an appropriate delay analysis. The school district went cheap and demanded that the architect be their expert on all matters. The architect was still owed a lot of money by the school district and perhaps for this reason showed about as much interest in my analysis as a teenager. During my testimony he mostly stared at his hands and never asked a single question. My client won big.

Returning to notice provisions, nearly all contracts I have reviewed during my career include a time limit for giving notice – typically less than three days after the event. But a twist on the typical notice provision that I reviewed recently states that the contractor can only request time for the days that follow the date of notification. Seems pretty stingy to me to deny a contractor the first few days of a legitimate delay unless there is some action the owner could have taken the rectify the delay immediately.

What about an ongoing delay? Should the contractor continue to give notice each and every day? Possibly, depending on the specific contract language. In any case, when Mr. Sweet wrote his book email was not a primary means of communication. The consulting firm I worked for had one email account in 1997 for the entire office. Hard for anyone under the age of 50 to imagine that. But clearly with email it becomes pretty simple to keep firing off delay notices.

Mr. Sweet proposed in his book that contracts for small projects (under $500,000) dispense with notice provisions altogether. In his opinion all the various notices a contractor is required to provide per the contract become rather onerous on small projects. And small contractors are not as adept at navigating all the pitfalls of the typical construction contract. Makes sense to me. Consider that CALTRANS has more stringent scheduling specifications for large projects than small projects.

Regardless, Mr. Sweet noted that courts are still inclined to accept claims for time extensions even when the notice provisions are not strictly adhered to as long as the delay was obvious to the owner. Oral communications are often acceptable if they are followed up in wofriting. Again, email makes it much easier to say “I told you so.” Moreover, if the contractor is required to submit daily reports to the owner, and the daily reports mention delays, then surely the owner has been notified.

I have heard the argument that strict compliance with notice provisions by the contractor can be a bad thing. The reasoning is that the contractor is acknowledging his responsibility to give timely notice, so the first time he fails to do so he is acutely aware of his mistake. I like this approach given how hard it is to always be in compliance on any project. Minor infractions should not result in a legitimate time extension being denied. Contractors are hardly the only ones who are imperfect. Change orders are often corrections to the contract documents.

At the same time, I dislike seeing “TBD” listed on change orders next to the requested time. How is the owner supposed to interpret an unspecified request? Will the contractor make a subsequent request not just for time but also for time-related damages? The owner might also decide to forgo extra work if it will delay the project. Conversely, the contractor needs to know whether the project end date will be extended to avoid unnecessary acceleration costs. “To Be Determined” leaves everyone in the lurch.

Thoughts? Fee free to email me.