There are a number of people involved in the construction process: contractors, owners, subcontractors, suppliers, etc. All have a vested interest in on-time performance (which usually makes on-time payment). Delays in performance are among the most frequently litigated construction project issues. Construction projects usually involve expensive equipment, a fair amount of overhead, a lot of manpower, and extensive payrolls for both owners and contractors handling the project. When the job takes longer than expected, costs for the project increase. In most cases, the rate at which costs increase on the job are equal to the rising risk of potential litigation. Untimely performance results in high costs for almost any project. That's why contractors and owners alike will usually insist upon a well-planned and even complex schedule for the project.
Construction schedules serve a number of important purposes regardless of whether you are looking at the issue from the perspective of the owner or the contractor.
- The project schedule is the means by which the project plan is laid out with heavy emphasis on the sequence of work, as this can be a major hiccup when not taken into consideration.
- Schedules can be depended on in certain circumstances to protect certain parties from liability costs resulting from delays.
- The schedule can be used to determine who is at fault construction project delays. It could clearly exhibit that one party was delayed by another party (i.e. that all important sequence of work noted above) or that another party was actually the cause of a claimed delay.
Because the schedule for a construction project is so important, it should be monitored and updated constantly. The complete failure to perform according to the agreed upon project schedule can result in significant liability. For instance, in Burnett & Doty Development Co. v. Phillips(1978) 84 Cal.App.3d 384, where the contractor failed to timely complete construction as set forth in the contract, the Court found it was liable for all losses attributable to the delay including the developer's loss of profits.
For more information about construction performance delays and other common construction contract disputes, get in touch with the commercial real estate experts at The Law Office of Retz & Aldover LLP.