Construction Law Insider

The key to the timely completion of a construction project is the preparation and maintenance of a comprehensive project schedule utilizing the critical path method (CPM) of scheduling. Preparation of a CPM schedule requires that all of the necessary construction activities be identified, workdays be established and assigned to the activities, and the activities be logically connected in the sequence they need to be performed. Once the schedule is completed, it will indicate the first and last date that an activity can commence, and the first and last date that an activity can be completed. This provides the scheduler with the knowledge and a graphic representation of when the last day an activity can be completed without affecting the start of the next interrelated activity. If a critical path activity is delayed, the completion forecast of the project will be delayed.

The preparation of the CPM schedule is only the start of the process for successful project completion. The schedule is a living document and must be closely monitored and updated on a monthly basis. The schedule should incorporate the actual progress of the work, compare the actual progress with the previously approved project schedule, and show current conditions and revisions required by actual experience. The updated schedule should be submitted to the owner for review and comment on a regular basis. Pursuant to the construction contract, the owner should have the right to approve, disapprove or make modifications to the project schedule or take other action as allowed by the contract.

If the updated schedule shows delays, the owner should have the right to direct remedial action of the contractor, such as working overtime or employing additional work shifts. The owner should also have the right to expedite specific items of the work, even out of sequence. Provided the contractor (or the subcontractors) are not behind in the progress of the work due to delays for which they are responsible, the owner should be required to reimburse the contractor for the cost of acceleration. If, however, the contractor or the subcontractors are behind in the work, or are delaying the progress of the work necessary to complete the project in accordance with the project schedule, then, if directed by the owner, the contractor should provide a recovery plan which should include, among other things, working overtime or utilizing additional personnel as may be necessary to keep abreast of the general progress of the work. In such cases the costs incurred on account of the overtime should be borne entirely by the contractor (for which the contractor’s contingency--if there is one--may be used) and/or the appropriate subcontractors without additional cost to the owner.

In addition to providing for the allocation of costs to accelerate the work on account of a delay, the contract should have detailed provisions dealing with excusable and compensable delays. Excusable delays entitle the contractor to extensions of time; compensable delays entitle the contractor to the reimbursement of costs, such as general conditions costs. While excusable delays often include traditional force majeure events, such as acts of God, governmental mandates or extraordinary weather conditions—all of which must negatively affect critical dates—such delays may also include acts of the owner which have an adverse time impact on the project schedule. The reimbursement of compensable delays is often the subject of negotiation between the owner and the contractor, with owners often taking the position that only if the delay was caused by the owner would the delay be considered compensable, otherwise the delay would be excusable, but not compensable and the contractor would not be entitled to additional compensation.

For more information on the topic discussed, contact:

• Melissa T. Billig  |  billig@thsh.com  |  212-508-6730
• Kenneth M. Block  |  block@thsh.com  |  212-508-6790
• Perry Chresomales  |  chresomales@thsh.com  |  212-702-3177
• Brandon P. Reiner  |  reiner@thsh.com  |  212-508-7527
• Stuart Rosen  |  rosen@thsh.com  |  212-508-6719
• Hillel E. Sussman  |  sussman@thsh.com  |  212-508-6704