Last week’s post on the Las Vegas Raiders’ stadium got me thinking about scheduling language in construction contracts. Scheduling is a critically important piece of the construction contract puzzle, yet not all contracts contain firm schedules or even start dates. This may be because the general contractor wants some flexibility as to when the work will start. But, for the subcontractor, an elusive start date can wreak havoc on its operations. We recommend clear language in the contract as to when the work is expected to start and some remedy if the contract is materially delayed.
Here is some typical Scheduling language that we see:
TIME IS OF THE ESSENCE Time is of the essence for both Parties. They mutually agree to see to the performance of their respective obligations so that the entire Project may be completed in accordance with the Subcontract Documents and particularly the Progress Schedule as set forth in Attachment A.
Areas of Concern
We often see provisions that limit a subcontractor’s remedy should the project be delayed. For example:
In the event of any delay in the Project or the Subcontract Work, whether or not caused by Contractor, Subcontractor’s sole and exclusive remedy for such delay shall be a commensurate extension in time for the performance of the Subcontractor Work.
If you had planned for this project to be completed over the winter, and now it’s extending into your busy summer, you cannot recover overtime pay for your employees finish this job while working on others.
We also see provisions that assess liquidated damages in a heavy-handed way. For example:
Nothing in this Section shall be construed to preclude Contractor from levying and assessing liquidated damages against Subcontractor for any delay in performance by Subcontractor unless such delay shall be caused solely and completely by fault of Contractor, or assessing Subcontractor for any liquidated damages assessed against Contractor under the Contractor’s Subcontract where such liquidated damages are caused in whole or in part by Subcontractor’s delay in performance of its work.
How often will you be able to prove that the upstream contractor is solely responsible for delays? That is a pretty difficult burden.
Take Away: As you review your construction contracts, be on the lookout for the scheduling provisions. Do they allow you any flexibility to demand additional compensation if the project is materially delayed? If you are not sure, we recommend you have an experienced construction attorney review your contract.