How to Manage Delays in Construction Projects as an Owner or a Contractor

Whether you are renovating the basement of a residential home or building a high-rise condominium, one of the most important factors for a successful construction project is completing it on time. This is why, in most construction contracts, the start and end dates of the project are usually listed on the first page. If the project is not completed within the scheduled timeframe, then there are financial implications for all parties involved in the project.

For an owner renovating a basement to rent out, the delay means a loss of rent. For the contractor building the basement, it means more labour, overhead, and an inability to complete other profit-generating projects. For larger projects, where the construction is being completed on a property where a business that generates hundreds of thousands in monthly revenue is to operate, a delay in the project could lead to major financial losses. Delays must be carefully considered and managed in construction projects.

As an owner, if you want to avoid delay, you can take these steps:

• Hire reputable service providers that have a proven track record.
• Ensure that the contract has a liquidated damages clause that requires the contractor to pay a fixed sum per day of delay.
• Include a requirement in the contract that the contractor has to provide and update a detailed construction schedule;
• The contract should define who is responsible for delays in particular situations.
• The contract should define what steps the contractor will take if the project is delayed to get it back on schedule (ex., requiring more manpower);
• The contract should have a clause that “time is of the essence”.
• Weekly meetings should be implemented to ensure timely communication and that the project remains on schedule.

As a contractor, if you want to avoid delay, you can take these steps:

• Ensure the design is complete.
• Manage your portfolio of projects and ensure you have the labour to complete the project.
• The contract should carefully define excusable delays (ex., rain or snow);
• The construction schedule should be realistic and build in contingencies;
• Source, build, and foster your relationship with suppliers and subcontractors;
• Project changes should be streamlined and defined in change orders that adjust the construction schedule.
• Accurately and regularly review and update your construction schedule; and
• if delay is unavoidable, engage in clear communication with the owner and request a change in the construction schedule to avoid delay damages.

If a party wants damages or additional compensation due to delay, you must take these steps:

• Most contracts have notice requirements for delay; be sure to adhere to the notice requirements and any other provisions of the contract with respect to a delay claim.
• If there is no notice requirement, be sure to provide written notice that delay compensation is being sought in a reasonable timeframe.
• Organize the facts and backup documents for the delay claim and provide them to the opposing side as soon as possible; and
• If you are having difficulty assessing a delay claim or preparing a delay claim package, enlist the help of a delay expert.

If you are having issues with the delay of a construction project, please contact Corestone Law.