Managing delays
Not every late finish costs the association money, but some can. Here is how to tell the difference before the contract is signed.
A construction delay is either excusable (caused by conditions outside the contractor's control, like a permit backlog) or non-excusable (caused by the contractor). Excusable delays extend the schedule without penalty; non-excusable delays can trigger liquidated damages if the contract states them. Check the contract for what counts as excusable and whether liquidated damages apply.
Two kinds of delay, and why the label matters
Every capital project runs late sometimes. What matters is who caused it. A delay is excusable when the contractor did not create it and could not have prevented it, a hurricane closing the permit office, a utility relocation the association controls, a design change the board requested. A delay is non-excusable when it comes from the contractor's own crew, scheduling, or subcontractors.
"Excusable delays" are "unforeseeable and beyond the control of the contractor."
Source: Excusable and Non Excusable Delays, Cohen Seglias Pallas Greenhall and Furman
A non-excusable delay, by contrast, is caused by the contractor or its subcontractors, and it does not carry the same protection: it can expose the contractor to default, to liquidated damages, or to actual damages the association proves. The label is decided by the cause, not by how frustrated the board is.
Liquidated damages are not automatic
A liquidated damages clause sets a fixed dollar amount the contractor owes for each day it misses a milestone without excuse, substantial completion, final completion, or a stated phase. If your contract does not include one, there is no automatic daily penalty, only the harder path of proving actual losses. And if it does include one, that clause has to hold up.
"in order to be enforceable, liquidated damages must be specifically stated in the contract and must reasonably estimate the actual or anticipated damages contemplated by the parties at the time of contracting."
Source: Liquidated Damages for Delayed Completion in Construction Contracts, Duane Morris LLP
Read this clause, if one exists, before the board signs, not after the project runs late. Whether a given liquidated damages clause is enforceable can depend on state contract law; ask your attorney to review the clause, not just its existence.
What is actually within the board's control
Permitting is the excusable delay boards run into most often, and it is worth understanding why it is unpredictable. Building codes like the International Building Code are model codes: they only take effect once a local government adopts them, and that local jurisdiction, not the code's publisher, controls how fast permits move and what local permitting rules apply. A board cannot negotiate that timeline into a contract; it can only build schedule slack around it.
What the board can control is how it absorbs the cost of a delay once one happens. The extra cost of an excusable delay, extended equipment rental, added site supervision, is exactly the kind of uncertain item a project's contingency exists to absorb. When the delay is instead the contractor's fault, the added cost is more often negotiated through a change order or, where one exists, recovered through the liquidated damages clause above.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
A hurricane shuts down the county permit office for three weeks, delaying your contractor's start date. What is this delay, under the excusable and non-excusable framework?
Your contract has no liquidated damages clause. The contractor finishes six weeks late with no excuse. What can the board actually do?
The county building department takes four months longer than usual to issue a permit for your reroof. Who actually sets that timeline?
Sources
- Excusable and Non Excusable Delays, Cohen Seglias Pallas Greenhall and Furman
- Liquidated Damages for Delayed Completion in Construction Contracts, Duane Morris LLP
- International Building Code, product and adoption page, International Code Council
- Change Orders, Associated General Contractors of America
- Recommended Practice 40R-08, Contingency Estimating, General Principles, AACE International
Capital Projects
This is the last lesson in Capital Projects. If a delay has you looking at the budget, go back to Managing cost overruns next.
Whether a delay counts as excusable, whether a liquidated damages clause is enforceable, and how long your local building department takes to issue a permit all vary by contract language, state contract law, and your jurisdiction.