Delay and Disruption

 

Delays to work on site may be split into two types: delay to progress and delay to completion.  Delay to progress may not cause delay to completion.  Much dispute over liabilities for delayed completion involves assessing whether delays to progress were critical to completion.

 

Building projects which have fixed completion dates usually contain provisions to extend the construction period where delay to completion has been caused by an event for which the employer is to blame.  Equally they may provide for the payment of damages by the builder to the employer where the builder is to blame for the delay.  Certain events which are outside the control of both employer and builder may also be grounds for extending the contract period.

 

A non-critical delay to progress may be disruptive and, to prevent a delay to progress becoming a delay to completion, the sequencing and methodology of the work may have to be adapted.  This may increase construction costs.  A contractor’s entitlement to an extension of time may be conditional upon its using its best endeavours to prevent delay to completion.  If the employer is to blame for the delay to progress, the contractor may reasonably expect to be compensated for the additional costs arising from it.

 

Delay to progress may therefore provide grounds for the contractor’s claiming compensation whether or not completion is delayed.  Delay to progress does not usually provide grounds for the employer’s claiming compensation.   Delayed completion may entitle the employer to compensation where and to the extent it suffers loss as a result of late completion.  Often the anticipated loss from late completion is assessed at the outset and entered into the building contract in the form of liquidated and ascertained damages.  Absent such pre-assessment the compensation due may be the sum total of the employer’s actual losses due to the late completion, subject to the applicable laws of contract.

 

All of the above holds true where time is not of the essence.  Where time is truly of the essence, late completion would be a fundamental breach of contract.  In such circumstances, extending the contract period, permitting the work to be finished late and adjusting the sums paid to compensate the aggrieved party would not be an appropriate remedy.