A Few Tips on Entitlement and Quantification
Just this past month, we had substantial rain that caused flooding in many areas throughout Middle Tennessee. As spring approaches, how do you address the impact of unusually severe weather? Traditionally, the parties’ construction contract will dictate who bears the risk of loss in these types of situations. In other instances, the applicable common law will dictate whether additional compensation, or time, or both are recoverable.
In Daewoo Engineering & Construction Company v. United States, the contractor involved in building a 53-mile road around an island submitted to the Army Corps of Engineers a claim for delays and additional costs incurred because of high humidity, rainy weather, and moist soils encountered on the project. The contractor sought $13 million in additional costs incurred and more than $50 million for future costs not yet incurred. The government filed a counter-claim alleging fraud and other violations.
Although the appellate decision focuses on the government’s claims, the lessons learned about delays stem from the trial court’s opinion.
TRAIL COURT OPINION
The trial court criticized the contractor’s witnesses for lacking credibility. The court concluded that the $50 million portion of the contractor’s claim addressing future costs was no more than “a claim to gain leverage against the United States [and] violates the principles on which Congress enacted the Contract Disputes Act.” Apparently, the contractor was seeking a substantial modification of compaction requirements for embankment that would have greatly reduced problems for the contractor. In the court’s view, the $50 million in future costs was an inflated figure inserted into the claim as a ploy to expedite the Corps’ decision on whether to modify the compaction requirements
CALCULATION DAMAGES
The most notable lesson from Daewoo is that contractors should seek the guidance of experts to assist in calculating damages and to perform a schedule analysis for their claims. Here are some general tips:
- The contractor is usually entitled to additional contract time, but not additional compensation for weather delays.
The AIA contract documents provide that “if adverse weather conditions are the basis for a Claim for additional time, such Claim shall be documented by data substantiating that weather conditions were abnormal for the period of time, could not have been reasonably anticipated and had an adverse effect on the scheduled construction.” The ConsensusDOCs provide that “if the Contractor is delayed at any time in the commencement or progress of the Work by any cause beyond the control of the Contractor, the Contractor shall be entitled to an equitable extension of the Contract Time. Examples of causes beyond the control of the Contractor include, but are not limited to, the following: … adverse weather conditions not reasonably anticipated …” - Delays must be attributable to “unusually severe” weather or weather “not reasonably anticipated.
” Of course, by its very nature, such a claim will be factually driven. The contractor should be prepared to establish this by reasonable documentation, such as weather data from the National Oceanic and Atmospheric Administration (NOAA), which can be found at www.noaa.gov. - Weather analysis should be geographically limited.
Having moved from Washington, D.C. to Nashville in 2006, I can appreciate this point. The entire Middle Tennessee area closes down, including the government and schools, at the slightest hint of snow (…exaggerated slightly…), but it takes 30 inches in D.C. to paralyze the roads and commuters. The point is that “unusually severe weather” on a Nashville construction site may be different than a site in the nation’s capital. - The delays must actually impact the schedule.
While you may think that downtime due to weather should automatically entitle the contractor to a time extension, it will depend largely on the contract provision addressing weather delays. You will have to determine whether the inclement weather affected material delivery, access to the site, safety measures, etc.
As with most other issues involving time and money, the parties’ contract will determine what happens when Mother Nature refuses to cooperate with your construction schedule. What most likely doomed the Daewoo contractor was the difference in methodologies in assessing the claim. Although the claim was originally prepared using in-house personnel, the outside experts hired for trial abandoned altogether the methodologies the contractor utilized in the claim. The trial court concluded that “the experts’ method resulted in an entirely different claim to the Government . . . [and] . . . the claim that was certified by the plaintiff’s project manager became an orphan during trial, supported by no one and barely acknowledged by plaintiff’s attorneys.” ■
About The Author:
Matthew DeVries, construction attorney and LEED AP, is a member of the Construction Service Group of Stites & Harbison, PLLC, as well as the founder of www.bestpracticesconstructionlaw.com. He can be reached at matthew.devries@stites.com.
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Modern Contractor Solutions, May 2013
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