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Damage in waitingDon't let costs of delay snarl your business
Another delay. At the owner's direction, the general contractor held up your crew for a whole day because the owner changed its mind at the last minute about where to house some telecommunications hardware.
Later that month, you submit your invoice on time, including an adjustment in labor plus costs for rented equipment you had to keep an extra day. Several weeks later, you receive your check, but the extra costs caused by the delay are conspicuously absent.
Scrawled on a note in the envelope is: "No payment for delay items!" The note also cites the paragraph of your subcontract with a "no damage for delay" clause in it. You've been burned again.
Don't let this scenario happen to you. An unmodified "no damage for delay" clause often is a "scorched earth" contract term that aims to keep you from recovering damages in a wide variety of situations.
A "no damage for delay" clause in the subcontract can cause more "damage" than you think. For example, some of these clauses make impossible the price adjustments for costs created not just by delays, but also by "obstructions," "hindrances" or even "performance by others on the project that increases the cost of the subcontractor's performance."
Fortunately, even when one or more "no damage for delay" clauses exist in the subcontract, most courts recognize that some circumstances are unforeseeable, such as unexpected subsurface conditions. If the subcontractor is not the cause of the unforeseeable circumstance, a court may judge that the "no damage for delay" clause cannot be enforced. Many state legislatures have limited the enforceability of "no damage for delay" clauses through anti-indemnity and other laws.
Think ahead
Of course, you don't want to have to go to court to collect the money you are owed. Sometimes litigation is the only option, but the adage, "An ounce of prevention is worth a pound of cure," applies.
The easiest way to help ensure that your subcontracts will not keep you from pursuing additional direct costs caused by another contractor, the construction manager, the architect or the owner is to include an exception letter conditioning your bid on use of the American Institute of Architects A401 document or making the subcontract subject to ASA's Addendum to Subcontract. In paragraph 7, the Addendum provides: "… Subcontractor shall be entitled to an equitable adjustment in the price of the work, including but not limited to any increased costs of labor, including overtime or materials, resulting from any change of schedule, acceleration, out of sequence work or delay caused by others for whom Subcontractor is not responsible …"
Using the Addendum may be very advantageous because its language overrides all language to the contrary, wherever it is in the amended subcontract.
Another key to preserving your right to pursue delay claims is to ensure that you always give required notice of delays or other problems as stipulated in the contract. You may be penalized if you do not follow the contract to the letter.
These are just a few ideas to help improve the experience of getting paid for extra labor, equipment rental and materials required on the job site. ASA's Payment Advocacy Year Web page contains many more ideas and payment resources.
This article is provided in conjunction with ASA's Payment Advocacy Year.
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