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Disruption Vs. Delay Claims

Disruption vs. Delay Claims

At times it is important for a contractor to distinguish between claims for time-based delay and claims for disruption. Most construction contracts identify an end date for the completion of all work. A delay is the period of time beyond the scheduled finish date and the date the contractor completes the work. Examples of delay include weather impacts beyond the normal expected weather for the project location; incomplete project documents; and untimely decision making by the owner.  A disruption occurs when the contractor is caused by others to perform work in a manner that is less efficient then the contractor’s original plan.  Courts recognizing the distinction have explained that delay claims typically arise from an inability to do work, whereas disruption claims result from actions that make the work more difficult and expensive to perform than reasonably anticipated. Confusion often occurs due to the overlap between delay and disruption claims. The failure of a contractor to complete a project on time may result in both types of claims. For example, the contractor could have a claim for extended home office overhead that is tied directly to the length of delay caused by the owner (or with a subcontractor, caused by the general contractor). In addition, the owner may have performed work through others in the same work area that denied access to the project in the manner planned by the contractor, thus causing the contractor to alter its crew sizes or use equipment other than the contractor planned to use. In the first example, the contractor does not have a claim unless the contractor can demonstrate the owner caused a delay to the completion time of the project. In the second example, the contractor could have a claim even though it completed the project timely. Contractors often attempt to distinguish between delay and disruption claims to avoid a “no damage for delay” clause. Where the contractor is required to expend additional funds to timely complete the work, he may be able to make a disruption claim, as distinguished from a delay claim which results only in extended job site overhead and extended home office overhead. An owner or a contractor may be liable for disrupting a contractor or a subcontractor by failing to properly coordinate the activities of various separate contractors or subcontractors. The result could be stacking of trades, performing work out of sequence, or acceleration of the work to avoid the conflict. This example illustrates why it is often difficult to distinguish disruption claims from delay claims. If the only result of the disruption is an extension of the time to complete the work, it may be difficult to differentiate a claim for disruption from a delay claim. However, if the result is a higher cost for labor or equipment than planned by the contractor, the disruption claim could be pursued even if the project finished on time. Understanding this distinction is critical to preserving and pursuing a claim for labor inefficiency or other losses caused by disruption to the contractor’s planned method of performance. Co-authored by: Gene Atwood & Charles “Chad” Walker, Jr.

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