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Owner Liability For Delay Of Separate Contractors

Monday, January 03, 2005 03:48 pm

Owner Liability For Delay Of Separate Contractors

It is common for project owners, for a variety of reasons, to award multiple prime contracts on a single construction project. The biggest risk created by this practice is liability for delay or disruption in its many forms.

Owner Held Liable to Contractor

The biggest challenge posed by award of multiple prime contracts is the coordination and sequencing of trade work. In one case, the owner's general building contractor failed to complete the rough-in work on schedule, forcing the electrical contractor to work in a stop-and-start, out-of-sequence fashion. The electrical contractor's actual labor hours were almost three times its pre-bid estimate. The project owner was held liable for the cost overrun. Amp-Rite Electric Co., Inc. v. Wheaton Sanitary District, 580 N.E.2d 622 (Ill.App. 1991); CCM February 1992, p. 3.

In another case, a project owner allowed the HVAC and electrical contractors to attach equipment to the structural steel before the fireproofing had been applied to the steel. The owner was liable to the fireproofing contractor for the increased cost incurred as a result of working out-of-sequence in obstructed areas. Bagwell Coatings, Inc. v. Middle South Energy, Inc., 797 F.2d 1298 (5th Cir. 1986); CCM November 1986, p. 3.

Another project owner issued a notice to proceed to the structural steel contractor on a bridge project with the knowledge that a separate prime contractor would be unable to complete the substructure on schedule. The owner was held liable for the delay experienced by the steel contractor. United States Steel Corp. v. Missouri Pacific Railroad Co., 668 F.2d 435 (8th Cir. 1982); CCM April 1982, p. 4.

Similarly, the slow performance of an HVAC contractor delayed completion of the masonry work and reduced the labor efficiency of the masonry crews. The project owner was responsible for the increased masonry costs. The Sherman R. Smoot Co. of Ohio v. Ohio Department of Administrative Services, 736 N.E.2d 69 (Ohio App. 2000); CCM January 2001, p. 8.

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