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Common Impediments To Delay Damage Recovery

Friday, May 02, 2003 02:48 pm

Common Impediments To Delay Damage Recovery

Claims for delay damages present particular challenges for contractors. Delay claims are frequently complex from a factual and evidentiary standpoint. They place an imperative on a level of administrative discipline and record keeping that may or may not have been maintained during the course of the work.

Even with the presence of clear owner-caused delay, and even in the absence of an enforceable no-damage-for-delay clause, contractors may be frustrated in their attempts to recover delay damages. The three most common impediments to recovery are the lack of timely notice, the inability to segregate owner-caused delay, and the failure to prove delay in overall project completion. The question of no-damage-for-delay clauses, while very much related to this topic, is outside the scope of this article. Readers are referred to "The Eroding Enforceability of No-Damage-For-Delay Clauses," CCM July 2001, p. 1.

Lack of Timely Notice

It should be stated at the outset that contractual requirements for prompt written notice of a claim are not always enforced in delay situations. The most common reason is that the project owner, having caused the delay, is well aware of the situation, has actual knowledge of the delay, and suffers no prejudice as a result of the lack of formal notice. It is dangerous, however, for contractors to ignore notice requirements or assume they will not be enforced. There are a number of cases to the contrary.

Public works contract documents in New York City include a provision requiring prompt written notice of any event that will lead to a claim, followed by a detailed itemization of increased costs. The highest court of New York has upheld the enforceability of these notice requirements. A.H.A. General Construction, Inc. v. New York City Housing Authority, 699 N.E.2d 368 (N.Y. 1998); CCM December 1998, p. 2.

One contractor argued that in a delay situation, it is impossible to predict the downstream cost impact and therefore not feasible to provide the itemized statement of increased costs within the timeframe mandated by the contract clause. A New York court rejected this argument and relied on the contractor's failure to give written notice as grounds for denial of a claim for delay damages. Heckler Electric Co., Inc. v. City of New York, 715 N.Y.S.2d 619 (N.Y.Sup. 2000); CCM February 2001, p [...]

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