Delays on the part of contractors can cost big time – construction contracts generally put the impacts of delay on the responsible party. But an emerging type of delay – the so-called “pacing delay” – is prompting a rethinking of how delays are litigated.
Pacing delay can be defined in several ways, though AACE International (formerly the Association for the Advancement of Cost Engineering) defined the term in 2006 as “[a] delay resulting from a conscious and contemporaneous decision to pace progress of an activity against another activity experiencing delay due to an independent cause.”
When both parties contribute to a delay, neither can recover damages. But some recent rulings have allowed contractors to receive both an extension and cost recovery when both the owner and contractor have a simultaneous delay. Why? “A contractor can be merely ‘pacing’ the work by utilizing the available float caused by the owner delay,” wrote analysts Ronald J. Rider, MBA, and Richard J. Long, P.E., who added that “the cases are few and, needless to say, the ‘pacing’ argument may be highly questionable.”
Why Hurry Up and Wait?
When a contractor is working toward the installation of a piece of machinery, for example, and learns that the machinery delivery date has been pushed back, the concept of pacing can pop up.
“The contractor’s argument is simple,” according to one example cited in a report by Philip M. Spinelli and James G. Zack, Jr. “Why work hard to maintain the current schedule when late delivery of the … equipment will cause a delay to the overall project?”
Sounds fair, but is this type of delay within the scope of the contractor’s rights? The answer for now appears to be perhaps. “Courts appear to acknowledge the fact that a contractor has the right to manage the project as they see fit in order to maximize their profit,” determined Spinelli and Zack. “The right to manage a project is fairly well unlimited, so long as the contractor’s management decisions do not violate some requirement of the contract entered into with the project owner.”
While this concept is mostly being hashed out in the United States, an Australian group came up with similar reasoning, writing, “[I]f the contractor can demonstrate its delay was to pace the work within an identified time window caused by the employer’s actions, then … the contractor is entitled to compensation for the delay.”
A well-drafted contract can limit liability for either party, lawyers note – at least to a certain extent. “Contractual language cannot eliminate delay claims,” wrote analysts for the New York Law Journal, “and owners and contractors should be prepared to deal with them.”
Get the DL on This Dynamic Issue
Emily Federico and James G. Zack, Jr. give a full run-down on pacing delay in a webinar for AudioSolutionz, “The Impact of Pacing Delay on Projects & Delay Claims.” Aimed at attorneys, construction managers, design professionals, capital project owners and their representatives, and project personnel, managers and executives, the conference defines pacing delay, goes over its causes, investigates a contractor’s legal right to pace owner-caused delays, explores impacts and risks, examines whether time-related damages are recoverable, and gives recommendations so both owners and contractors can defend themselves against pacing delay claims.