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Matt has written articles and given presentations on all aspects of construction law. Find a resource here.

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Best Practices top posts include claims preparation, contract drafting, and litigation pitfalls. You don’t want to miss these ones.

Matthew DeVries

Matt is a construction & litigation attorney at Burr & Forman LLP and father of seven young kids.

Texas Court Gobble-Gobbles New Federal Overtime Rules

Posted in Best Practices, Federal Construction, Legislation

On this Thanksgiving Eve, contractors and other employers can take a breathe and gobble down some extra turkey and pumpkin pie without worrying about the new increases in overtime rules.

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On Tuesday, November 22, 2016, a Texas federal court entered a nationwide injunction blocking the U.S. Department of Labor’s (“DOL”) new federal overtime rules from taking effect on December 1, 2016.  The DOL’s new overtime regulations, which were finalized in May 2016, would nearly double the minimum salary threshold requirements for the common white collar exemptions from $23,660 ($455/week) to $47,476 ($913/week).  The DOL estimates that 4.2 million workers who are currently classified as exempt under the white collar exemptions would be affected by the new rules.

In September 2016, 21 states and dozens of business groups filed lawsuits seeking an immediate injunction to block the new rules from taking effect on December 1, 2016.  U.S. District Judge Amos Mazzant ruled Tuesday that the states were able to show a likelihood of success on the merits of their challenge and irreparable harm if the new rules went into effect and that the DOL exceeded its authority by raising the minimum salary threshold.  Judge Mazzant’s ruling recognized that the DOL enjoys “significant leeway” to establish the types of job duties required for exemptions, but nothing in the FLSA permits the DOL to classify employees by salary levels.  “Congress defined the [white collar] exemption with regard to duties, which does not include a minimum salary level,” Judge Mazzant said. “With the final rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

The legal battle over the federal overtime rules is far from over. There is little doubt this decision will be appealed to the United States Court of Appeals for the Fifth Circuit.  At least for now, however, the new overtime rules will not go into effect. Employers are no longer required to meet the December 1, 2016 deadline.  It is unlikely the nationwide injunction would be lifted before the Trump Administration takes office in January 2017, and it is unclear whether the new Administration will push for the new overtime rules to take effect or repeal them altogether.

(Special thanks to Carlton Hilson for contributing to this post!)

What A Trump Card Means In The Game of Construction and Development

Posted in Development, Federal Construction, Leadership, Transportation

Like many of you, I stayed up late on Tuesday night / Wednesday morning to watch the 2016 election returns.  I dragged myself into the office after only a few hours of sleep and my phone was immediately ringing. Some clients. Some association contacts. Some reporters.  They all wanted to talk about the same thing: What would Donald Trump do as President when it comes to construction and development?

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If you listened to President Elect Trump’s victory speech, you learned a few things that will impact individuals and business owners in the construction world:

  1. A President Trump will likely move on illegal immigration.  As I commented to the Nashville Business Journal’s  inquiry on this subject, this will unlikely affect unskilled labor shortages hurting many states:

    “How does that affect various states with labor shortages? If we pull those back, it’s only affecting a small subsection,” DeVries said. He noted that both government agencies and many large private contractors have policies prohibiting the use of illegal immigrants on construction projects.

    “I don’t think him being elected as the new president is going to have a direct effect, negatively or positively, on this particular issue of a lack of skilled labor,” DeVries said.

  2. A President Trump will push for major stimulus package for investment on infrastructure improvements.  Indeed, by pledging to double Clinton’s $275 billion proposal, Trump indirectly pledged to spend more than $500 billion repairing America’s roads, bridges, highways, airports, waterways and other infrastructure. ENR reports that the proposal could be as much as a $1 trillion, 10-year plan. The real question is whether he will find enough allies in Congress to get a growth package in place and passed in order to stimulate the road-building industry.
  3. A President Trump will likely move to repeal or otherwise limit a number of the policies put in place by Executive Orders by President Obama.  Many Republicans in the House and Senate oppose the various regulatory rules and Executive Orders that touch the construction industry, and they want Trump to move quickly. These include regulations on wages and overtime for Federal contractors, OSHA and other safety issues (like silica dust) and environmental hurdles.
  4. A President Trump is expected to overhaul or repeal the Affordable Care Act, which affects many small- to medium-sized business owners in the construction industry.   While affordable healthcare is an ancillary issue to construction executives, it remains a significant business issue that a new administration will tackle in 2017.

What I Learned from My Kids About Delay Claims

Posted in Claims

This past week, I came home to a complete mess in our backyard—it was littered with debris, trash, plates and utensils, and overturn patio furniture.  My instruction to the kids yesterday morning was stern: “Clean up this mess by the time I get home…or else!”

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One kid fixed the furniture in 15 minutes. One kid picked up the plates, bowls and utensils in 30 minutes. And one kid wasted six hours with an empty trash bag wandering, playing, napping, etc.  The trash is still there because of the significant delays on the job.  My son had every excuse, but I was not buying any of them.

It almost goes without saying that if you have to pursue or defend a delay claim, you are going to need some evidence (whether by expert or otherwise) to establish or to challenge entitlement to the damages sought. And we all know that there can be different routes to the same goal. However, the different methods of schedule analysis can lead to varying results. So, which method is correct?

According to a great Construction Law International article by my friends Don and Rob, there are eight guidelines that any schedule delay analysis comply with, including:

  1. Compare the planned work before and after each delay. Practically, this means that you should compare the plan to perform the remaining work before each delay and the plan to perform the remaining work after that delay, which will require a review of the schedule updates during the project. This will also involve looking at the estimated impact, as well as the actual impact, of the delay.
  2. Identify the critical delays. Generally, the delay must affect the critical path of the work to be compensable. If the delay absorbs the “float” in the schedule, then it is not compensable. According to the authors, “If an activity does not have any float, by definition it is critical as it would impact the required contract completion date.”
  3. Evaluate the delays in both a chronological order and a cumulative manner. If you do not look at the delays in sequence, it can “mask” what actually occurred on the project.
  4. Adjust the completion date to reflect excusable delay as it occurs. This will assist in finding the actual float values and determining which activities are actually critical at any point during the project timeline.
  5. Include accurate as-built information. Again, it is important analyze the actual progress of construction, which can best be achieved through accurate as-built data.
  6. Minimize projected future delays. If you include projected future delays in the schedule, they should be minimized because projected delays can alter float calculations and possibly change which activities are critical.
  7. Correct any logic flaws. If you correct any logic flaws found in the schedule, make sure to document and explain the changes at the time they are made. Understand that judges and arbitrators can be skeptical when substantial changes are made after construction is complete.
  8. Tie causation to each delay. Ultimately, you will have to show whether the delay is non-excusable, excusable/compensable, or excusable/non-compensable.

Using these guidelines, any contractor can begin to evaluate and prepare a potential delay claim as the conditions on project causing the delay occur. If the claim turns to a dispute, you will have done a significant amount of preliminary work that an attorney and/or consultant will need to assist you in the claim.  As for my child’s delay claim, this dad is not buying it!

How To Track Increased Construction Costs For Proving Claims

Posted in Best Practices, Claims, Claims and Disputes

I previously blogged about the importance of using daily reports to prove construction claims.

In addition to daily reports, the following records should be prepared and maintained in the normal course of business to help prove claims and effectively manage the project:

  • Correspondence file containing all correspondence relating to a specific claim, including letters and/or memoranda to and from the DOT and subcontractors.
  • Meeting minutes and internal memoranda concerning the claim should be maintained in order to document attempts to resolve matters with the DOT and its representatives.
  • Plans and specifications, including all amendments, details, clarifications, and options of the owner concerning the plans and specifications.
  • Change/work order file showing all changes or work orders requested with regard to the particular aspect of the work that is the subject of the claim.
  • Schedules, including the as-planned and updates.
  • Job photographs and videotapes, for both status of work in place and possibly evidence of the conditions leading up to the change.
  • Subcontractor and/or supplier files documenting all dealings between the contractor and the subcontractor concerning the area of the claim.
  • Miscellaneous evidence file containing all other evidence that could help support the claim, such as inspection reports, completion schedules, projections, flow charts, work progress, accident reports, photographs, etc.
  • Job cost records, which will be critical to showing the additional costs incurred.

If a contractor expects to seek additional compensation for an encountered condition, it should create an additional job cost category describing the extra work. Once the new cost category is created, the supervisor responsible for completing the daily report should assign all additional labor and equipment hours to the newly created cost code. Where an unforeseen condition creates additional work not included in the original contract, recording labor and equipment hours is quite easy. On the other hand, when unforeseen conditions create no new work, but rather, take the form of impeding a crew’s progress, the recording task becomes more difficult.

Image: Tanzer18

Top 14 Most Common Scheduling Mistakes by Contractors

Posted in Claims and Disputes, Project Management, Scheduling

Many delay, disruption, and loss of productivity claims are lost or substantially reduced in value because mistakes, errors and carelessness are reflected in the original schedule and plan of operations. The original schedule is often the first piece of documentation that the owner receives demonstrating the contractor’s professionalism in planning and management.

Contractors should pay great attention to the scheduling process and avoid many of the common mistakes that can lead to a loss of credibility on the project. It is impossible to list all of the possible initial scheduling mistakes, but the following is a list of the Top 14 mistakes in the initial construction schedule that some courts and boards of contract appeals have noted:

  1. No proof of the information used to prepare schedule
  2. Errors in technical logic
  3. Incomplete schedules
  4. Overlooking procurement of critical materials
  5. Failure to consider physical restraints
  6. Failure to consider weather restraints
  7. Failure to consider resources
  8. Failure to consider the economics of the sequencing
  9. Failure to consider uncertainty and risk in establishing durations
  10. Schedule does not “tie in” to the anticipated means and methods and/or estimate
  11. Logic intentionally deviates from the manner in which the contractor intends to build
  12. Elimination of float by increasing durations
  13. Unrealistic productivity or durations
  14. The schedule submitted to the owner was not used to build the project

Again, the schedule can often set the tone for the job. In court, it is the document that establishes the benchmark of all time related claims. As such, it has a tremendous impact on the judge and jury and influences the credibility they will attach to the evidence that follows.

Eeeek! What To Do When You Find Bones or Human Remains On the Construction Site?

Posted in Best Practices, Claims and Disputes, Project Management

Last month, authorities in Suffolk, Virginia were investigating a construction site where human bones were found.  Forensic experts were called in to excavate the site and determine whether they were recent or from an old burial ground.  Has this ever happened at one of your sites?

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If you find bones or other archaeological artifacts during excavation and construction, here are a few tips on what you should do:

  • Stop work.  Many contract documents, including the AIA 201 (2007), require the contractor to “immediately suspend” the operations upon the discovery of human remains or other archeological findings.  Even if your contract does not address this situation, you should stop work to properly analyze the situation.
  • Call others.  This includes the owner, the architect/engineer of record, and local police.  Check your state’s law to see whether you have an obligation to notify any other public authority, such as Tennessee Code section 11-6-107, which requires you to notify the coroner or medical examiner upon the discovery of human remains during construction.
  • Assess options.  Depending on your jurisdiction, you may be required to rebury the remains pursuant to a local statute.  For example, if you have excavated a cemetery or other historical burial site, you will be required to rebury the remains by using either a funeral home or an archeological group.
  • Preserve claims.  As always, the parties’ contract should address risks such as “bones” found on the construction site.  Generally, the owner of the site is required to take action to continue the work and resolve the problem.  The contractor may be entitled to additional time and money for the impact of the discovery and remediation efforts.

In the situation above, forensic experts will continue to investigate to determine whether any crime was committed.  At the conclusion of the investigation, the property owner and contractors can continue their work.

LOL! OMG. HUH? Court Finds That Text Message Can Form Binding Contract

Posted in Best Practices, Case Law, Contract Docs, Legal Trends, Project Management

In the world of Twitter, Facebook and LinkedIn, it is no secret that individuals are communicating regularly on their smartphones about their business affairs. Recently, a court addressed the question about whether a text message can constitute a writing sufficient under the Statute of Frauds to create an enforceable contract.

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In St. John’s Holdings, LLC v. Two Electronics, LLC, the Massachusetts’ Land Court concluded (in what appears to be a case of first impression) that a string of text messages can constitute a writing under the Statute of Frauds sufficient to bind the parties to sell certain property.

The transaction involved numerous discussions and emails, including four drafts of a letter of intent from Buyer to Seller for purchase of a piece of property.  None of the drafts of the letter were signed by Buyer.  Ultimately, Seller’s agent texted Buyer’s agent, asking him to sign the letter and provide a deposit.  About two hours later, after Buyer signed the letter and provided a deposit, Buyer’s agent sent the following text to Seller’s agent:

Tim, I have the signed LOI and check it is 424[pm] where can I meet you?

The two agents met later that day to deliver and accept the letter and deposit.  When the Buyer’s agent asked for a copy of the Seller’s executed documents, Seller’s agent sent the following text:

[Seller] was out of town today.  He will get back to us tomorrow.

Here’s the problem: the Seller accepted a third party’s offer to purchase the property at the same time, and refused to execute and deliver the letter of intent from the original Buyer.

The general rule in most states is that contracts for the sale of land are enforceable only if they are supported by writing that includes the essential terms and is signed by the party against whom whom enforcement is sought.   This is called the Statute of Frauds.  Thus, the questions in St. John’s Holdings were: (a) whether a text message can be a writing under the Statute of Frauds; (b) whether the alleged writing contains sufficiently complete terms and an intention to be bound by those terms; (c) whether the text message is signed; and (d) whether there is an offer and acceptance.

The court concluded that the text message from Seller’s agent was a writing that, read in the context of the email exchanges between the parties, contained sufficient terms to state a binding contract between Seller and Buyer.  In addition, the court found that the final text message contained a valid electronic signature to be “signed” within the meaning of the law.

Although this case deals with the purchase of real property, which is subject to the Statute of Frauds, there are many lessons for the modern construction project.

First, we live in a mobile, technology-driven environment.  Even the judge’s opinion reads like a primer on technology: “E-mails facilitate rapid, almost instantaneous communication, but in many cases they analogize more closely to telephone calls, or at least to voice mail messages, shot back and forth between parties whose chief goal is prompt response….”  The judge also noted that “e-mails reveal that the parties are really just ‘talking’ with the help of the internet, and not sitting down across a virtual table to electronically ‘write up’ a memorandum of any contractual significance.”

Second, claims succeed or fail based upon the documentation.  Whether you are talking about the formation of a contract, the validity of a change order, or the supporting evidence for a delay claim, the documents are key to either winning or losing.  Your claim is a story, and it must be told based upon the contemporaneous records on the project.

Third, you must harness digital data. More and more litigation and arbitration involve discovery of texts, emails and photographs for proving or defending a claim.  You should have a written policy that addresses the use of cell phones and tablets with an eye for document preservation.  Are change orders being discussed by text?  What about photos of an accident?  And did you think about use of personal email accounts by your project members?  All of these issues need to be addressed.

 

Subcontractor’s Failure to Strictly Comply With Notice Provision Costs $200,000

Posted in Best Practices, Case Law, Claims and Disputes, Legal Trends, Tennessee

Whether you are an owner, contractor, subcontractor or supplier, you will want to read the rest of this post since it illustrates precisely what all those attorneys have been telling you for years: “Please, please, please read your contract.” In this instance, one party’s failure to strictly follow the contractual notice provision was a $209,235.36 mistake.

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In Schindler v. Tully Construction Co., 139 A.D.3d 930 (May 18, 2016), the New York Supreme Court, Appellate Division, reversed a trial court’s award of delay damages in favor of a subcontractor on a public contract.  The general contractor entered into an agreement with the City of New York Department of Sanitation to construct a garage. The subcontractor agreed to to furnish and install five elevators for the project. Although the court’s decision does not elaborate on the details, the subcontractor filed suit and was awarded more than $200,000 in damages incurred as a result of delays in performance of the work.

The prime contract between the City and the general contractor, which was incorporated into the subcontract by reference, contained a strict notice provision:

. . . within forty-five (45) Days from the time such damages are first incurred, and every thirty (30) Days thereafter for as long as such damages are incurred, verified statements of the details and amounts of such damages, together with documentary evidence of such damages.

. . . [a failure] to strictly comply with the requirements of Article … 11.1.2 shall be deemed a conclusive waiver by the Contractor of any and all claims for damages for delay arising from such condition.

While the words “condition-precedent” do not appear to be expressly stated in the contract, the court found that the contract contained “a condition-precedent type notice provision.”  The appellate court held that the letters and emails relied upon by the trial court “did not strictly comply with the contractual notice requirement, since they did not contain verified statements of the amount of delay damages allegedly sustained by the plaintiff and were unsupported by documentary evidence.”  The appellate court also found that actual knowledge of the delays and claims did not excuse the subcontractor from complying with the the notice requirements of the contract. Accordingly, the appellate court reversed the award of damages in favor of the subcontractor and held that the subcontractor’s complaint should be dismissed.

Do you think the court in Schindler reached the right conclusion?  Like every legal question, the answer is: It depends!  Depending on the law in your state, “strict compliance” and “substantial compliance” compel different results.  For example, in Lee Masonry, Inc. v. City of Franklin, the Court of Appeals of Tennessee held that an owner’s actual knowledge of the events giving rise to the claims at issue did not bar recovery even though the contractors did not strictly comply with the notice requirements.  The appellate court also held that if the contractors did not fully comply with all of the notice provisions, such non-compliance would not be a material deviation from the contract requirements:

We agree with the trial court’s assessment that, based on meeting minutes, daily reports, revised schedules, and default letters to [the engineer], the City had actual knowledge of the delays and disruptions on the project and how they were impacting [the contractors]. As the trial court noted, “[a]ny further written notice would not have served any practical purpose.”

Strict or substantial compliance. When you are required to strictly comply with a particular provision or legal requirement, then any departure from that requirement (no matter how insubstantial) can void the claim or provide an absolute defense.  On the other hand, if only substantial compliance is required, then you need only meet the primary purpose or central aim of the contract or statute is met.  It is an equitable doctrine that if you act in good faith but fail to meet the exact requirements, the law treats the requirement as having been meet.

Your takeaways?  Read the notice provisions in your contract and check your state’s laws on the substantial compliance doctrine.  Read this post on providing notice and ten other tasks when pursuing a construction claim.  Don’t make a $200,000 mistake by failing to follow the contract and law.

 

Top 7 Factors Affecting Labor Productivity Losses On A Construction Project

Posted in Best Practices, Legal Trends, Project Management, Scheduling

Construction labor is always in the news. Last month, I wrote an article for the Nashville Business Journal challenging industry leaders on how to respond to the shortage of skilled labor in the area.  Recently, the U.S. Department of Labor issued new overtime regulations, which no doubt will affect your workforce.  When you deal with construction claims, many believe that the largest component of any request for additional compensation is generally labor costs.

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In a recent Construction Briefings article by Kathleen Harmon, the author breaks down loss of productivity claims based upon a claim of acceleration to overcome excusable delays, or a claim for cumulative impact of an owner’s changes project.  In general, labor productivity refers to the measurement or unit of work that is accomplished for a designated period of time. A contractor generally bids a scope of work based upon certain assumptions regarding labor costs and labor productivity. A compensable loss in terms of labor productivity happens when the contractor uses more hours to complete a given unit of work than it would have used absent the intervening cause. According to Harmon, the top seven factors affecting labor productivity losses on a construction project include:

  1. Weather. Adverse weather is a significant cause of lost productivity on a construction project. The parties contract generally will address where he contractor is entitled to additional time for “unusually severe weather” and the type of proof that may be required for submitting a claim. The lost productivity may include those days when the contractor experiences adverse weather, but also when delays caused by the owner push the project schedule into weather conditions that impact performance.
  2. Out of sequence work.  The contractor may be entitled to seek additional compensation when its work is impacted by having to change its anticipated method of performance or sequence of work. When a contractor has to modify its work plan due to owner interferences or delays, it can experience lost productivity having to work around the unforeseeable event.
  3. Crowding and stacking of trades. Like out of sequence work, a contractor may be impacted by multiple trade contractors working in an area that was not otherwise anticipated. The crowding and stacking of trades can have a significant impact on labor productivity, and courts have recognized a loss of efficiency experienced by a mechanical subcontractor when the general contractor accelerated the work, causing overcrowding on the project, increased man-hours, and unavailability of materials.
  4. Overtime.  According to Harmon, fatigue and increased absenteeism due to scheduled overtime work can have an adverse impact on productivity. Again, the underlying cause must be compensable for these type of impacts are recoverable.
  5. Restricted site access.  Since the contractor is generally entitled to control its own means and methods of performance, restricted site access can also significantly affect labor productivity.  This may include actual access to the site as well as anticipated use of certain laydown areas.
  6. Unavailability of manpower.  Lack of skilled labor has a direct impact on the schedule, many times causing the contractor to accelerate its work to overcome the delays associated with maintaining a steady workforce.  Given the traditional contract language placing the risk of labor on the contractor, it is difficult to prove and recover additional compensation due to the unavailability of manpower.  But it remains a real problem in some areas.
  7. Cumulative impact.  Contractor may be able to cover for the combined impact of multiple changes on a project. This is sometimes called the “ripple effect” of having multiple changes on the project.

As a construction lawyer, I see the causes of lost productivity after the fact during the claims process or litigation.  As a contractor with the right project management team in place, you can see these causes before the fact.  Your job should be to identify the events and circumstances leading up to a loss of productivity. You should document both the cause and the impact in your daily reports and other key project documents. It will be very important to identify those causes of delay that are beyond the reasonable control as opposed to inefficiencies caused by the owner or other parties.

One Awesome Case Discussing The Difference Between Delay and Disruption Damages!

Posted in Case Law, Claims and Disputes, Legal Trends, Scheduling, Texas, Transportation

Rarely do you find a case that succinctly addresses a construction law issue.  Today, one of my legal alerts pointed me to one such case dealing with delay damages and disruption damages. This is a must read!

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In County of Galveston v. Triple B Services, LLP, decided on May 26, 2016, the Court of Appeals of Texas reviewed a contractor’s claim for damages on a road expansion project.  While the legal issue focused on the County’s right rely on the defense of sovereign immunity, the Contractor’s (and it expert’s) characterization of the damages was critical to the outcome of the case.  Since the applicable statute waives a county’s sovereign immunity for breach-of-contract damages that are “a direct result of owner-caused delays,” the Court had to decide whether disruption damages—as opposed to delay damages—were recoverable.

The Contract.  The County entered into an agreement with the Contractor to expand a three-mile stretch of road. Under the contract, the County was responsible for moving gas, water, and fiber-optic utilities.  According to the Contractor’s expert, the contract established a “baseline schedule … created by the County’s engineer,” which showed a starting date with unhindered access along the area of the road where the utilities were located. The contract allowed for “delay damages” if the Contractor’s request for those damages “is determined to be compensable.”

Owner-Related Delays.  Although the Contractor’s plans for the construction project anticipated that the County would move the utilities by a particular date, those utilities were moved almost one year later.  Nevertheless, the Contractor completed its work within the contract time.  According to the Contractor, it incurred additional costs to hand-form manholes, set and reset barricades, extended field office overhead, as well as additional labor, equipment, street cleaning, flagging, and traffic control—all of which resulted from the County’s delays in moving the utilities.

Sovereign Immunity Argument.  The County argued that Section 262.007 of the Local Government Code waives a county’s sovereign immunity for construction contracts involving claims for delay damages.  Here, the County relied heavily on the testimony of the Contractor’s expert witness who testified about the Contractor’s damages resulting from the County’s delays. Since the County did not timely move the utilities as anticipated in the original construction plan, that schedule of work was “disrupted.”  By seeking disruption damages, the County argued, the Contractor sought damages that were excluded from recovery under the statute.

So, are these delay damages or disruption damages?

On appeal, the Contractor agreed that its “disruption damages” do not meet the definition of “delay damages” as traditionally understood in the construction law arena. However, it argued that the statutory waiver of sovereign immunity for damages that are “a direct result of owner-caused delays or acceleration” includes more than “delay damages” as defined under construction law: “Disruption and lost productivity costs are … recoverable damages under the clear meaning of the words of the statute.”

The Court turned to the construction law bible written by Phillip Bruner and Patrick O’Connor to address the inquiry, noting that delay damages have a technical definition distinct from disruption damages:

 Delay damages refer to damages “arising out of delayed completion, suspension, acceleration or disrupted performance”; these damages compensate the contracting party that is injured when a project takes longer than the construction contract specified. . . .

Disruption damages, on the other hand, are for a project that may be timely completed but nevertheless includes disruption to the contractor and compensates it for “a reduction in the expected productivity of labor and equipment—a loss of efficiency measured in reduced production of units of work within a given period of time.” . . . Disruption damages can also be caused by an “event [that] both disrupts and delays a critical path activity….” A project that finishes on time but at greater expense because of disruptive events or scheduling errors presents a claim for disruption damages.

The Court’s Decision.  Based upon a plain reading of the statute, the Court concluded that Section 262.007 allows a claim for disruption damages against a county “if the disruption damages directly result from the county’s delay in performance of its contractual obligations….” Significantly, the statute did not distinguish between “delay damages” and “disruption damages” that are directly caused by the breaching party’s delay.

Lesson Learned.   According to the expert in this case, the Contractor incurred significant increased costs to finish the work on time. The Court’s opinion provides an excellent roadmap of the type of expert proof required to establish the damages sought by the Contractor, including the following:

  • The expert examined the “daily summaries” of work and “the manner [the project] was intended to be executed … [and] the manner by which the project was actually executed and some of the specific things that caused that deviation.”
  • Using this information, the expert testified that the Contractor had to adjust its approach to accommodate the County’s delay by “segmenting the work into smaller segments of the roadway, waiting on the utilities … just a various sundry of impacts that caused them to not be as productive from a direct labor standpoint.”
  • The “waiting on the utilities” caused the Contractor to waste “man-hours trying to deal with working around utilities and bouncing around back and forth and dealing with not being able to set barricades and … progress the roadway [in the way] that they thought they would be able to in an unhindered manner.”
  • The expert also testified that the Contractor had to add “a number of crews because they were working in so many different areas to try and progress the work….”
  • Finally, the expert opined that the Contractor’s clean-up crew also had to perform additional work because “whenever you slow down that progression and create situations where you’re excavating and you’re staging materials in one location[,] … you wind up with … more debris than if you were just moving in a steady progressive manner.”

Although the project in this case was finished on time and the Contractor never completely “stopped” its work, the Court readily found that the Contractor was “hindered” because of the County’s actions.  Since the type of recoverable damages include those that are “a direct result of owner-caused delays,” the Contractor could recover its disruption damages.