Blueprint for Success: Navigating Delay Claims
Understanding Delay Claims
A delay claim seeks extra time or compensation due to events that slow down a project. If the delay is caused by the owner or their agents, the contractor may be entitled to recover reasonable costs suffered as a result.
There are two crucial concepts involved: (1) excusable vs. non-excusable delays, and (2) the project’s “critical path.”
Excusable and non-excusable delays are those outside or within the contractor’s control, respectively. This distinction is crucial; an excusable delay potentially entitles you to compensation, while a non-excusable delay does not.
The project’s “critical path” refers to the series of connected tasks defining the minimum overall project duration. Each task on the critical path is dependent on the completion of the previous one, therefore any delay to a task on this path will directly result in a delay to the project's overall completion date.
Complying with Contractual Notice Requirements
Most construction contracts contain notice provisions requiring the contractors to give written notice of delay claims within specific time limits. Courts have repeatedly confirmed that they will strictly enforce these clauses, especially in commercial projects involving sophisticated parties.
Recently, in Symtech Innovations Ltd. v. Siemens Canada Limited (“Symtech”), the Court emphasized that compliance with notice provisions is a “condition precedent,” or a required prerequisite, to maintaining a claim, even if the contract does not use “failing which” language.
The purpose of timely notice is to allow the other party to consider its position, assess the financial consequences, and potentially take corrective action before the issue escalates. Thus, the notice must be timely and specific enough to alert the other party that a claim for delay-related costs will follow. As the Court put it in Symtech, “the mere grumblings of a contractor” do not amount to sufficient notice. Courts have also said that documentation of delays in site meeting minutes is not a substitute for notice. However, this is not to say all notice must be in the form of a letter. In one case, an email exchange was deemed adequate as it clearly communicated the claim being advanced and complied with the contract’s requirements.
Proving Who is Responsible
A delayed project completion date is not sufficient evidence for a delay claim. The contractor must identify the specific cause of their delay, show why it was excusable, and prove that it was directly caused by the other party’s actions or inactions.
For example, in Walsh Construction v. Toronto Transit Commission (“Walsh Construction”) the owner was held responsible for significant delays due to incomplete design, ongoing changes, failure to provide exclusive jobsite access, utility coordination issues, and delayed handover. Conversely, in BBL. Con Design Build Solutions Limited v. Varcon Construction Corporation, the contractor was barred from recover due to their own contribution to the delay, which included failure to provide design elements and permits in time for a subcontractor to meet milestones.
“Concurrent delays” occur where multiple parties or events allegedly contribute to a delay. In such instances, adjudicators usually break the total delay into parts and assign responsibility accordingly. The adjudicator will want to see exhaustive evidence in order to determine whether each event is excusable or non-excusable, concurrent or isolated, and on or off the critical path.
Showing the Financial Impact and Entitlement to Compensation
Once the cause of the delay is established, the contractor must still show the financial impact of the delay. The contractor must also show that the contract provides for compensation for the sort of delays it experienced. It may be the case that the contract permits an extension of time, for instance, but no monetary compensation for certain excusable delays.
If the contractor is entitled to compensation, typical recoverable costs include extended site supervision and overhead, additional labour or equipment expenses, or prolonged field and office costs related to the extended project period. Depending on the terms of the contract, damages may also include a markup on these items.
The goal of any delay analysis is to develop an accurate and reasonable evaluation of the project’s delay. Maintaining detailed records is paramount. Adjudicators often expect detailed and accurate documentation that clearly links each claimed cost to a specific delay, going beyond the minimum necessary to meet contractual record-keeping requirements. Therefore, we encourage all our clients to always keep detailed and organized records while the project is ongoing, such as schedules, correspondence, timesheets, invoices, and daily logs. Ideally, you will be able to identify each delay event and its duration, impact, and associated cost, on an event-by-event basis.
The Importance of Expert Evidence
Expert delay analysis is essential for judicial decision-makers to understand the timing and scope of a delay. Given the complexity of construction projects, adjudicators often rely on expert reports and testimony to explain how and why delays occurred. Experts can analyze the critical path, quantify the impact on completion dates, and assess whether requested time extensions or costs are reasonable. For example, see Walsh Construction, where the adjudicator accepted the expert’s analysis of 1,047 days of compensable delay, versus the owner’s position of 411 days.
The Bottom Line
If you’re an owner, construction manager, contractor, subcontractor, or supplier navigating these issues, understanding these evidentiary requirements is crucial to effectively manage risk and protect your interests.
HOW WE CAN HELP
Our team of skilled construction law specialists have years of experience successfully litigating delay claims from start to finish. Contact RAR Litigation Lawyers for risk assessment, strategic advice, and litigation representation.