When Hurricane Helene struck North Carolina, it caused severe disruptions to construction projects across the state. Baxter International’s North Cove facility in Marion, N.C., was completely shut down after floodwaters damaged the site and bridges leading to it. Elsewhere, landslides and floods wiped out large sections of Interstate 40, making transportation of materials and equipment nearly impossible. Many contractors in western North Carolina found their projects halted, and their schedules thrown off by this force majeure event.
In situations like these, contractors and subcontractor need a plan to mitigate the impact of such natural disasters on their projects. Here are five practical tips to help you secure time extensions and/or compensation for delays:
1. Include a Robust Force Majeure Clause in Your Contract
When disaster strikes, your contract is your first line of defense. A well-drafted force majeure clause can make the difference between bearing the costs yourself and getting an extension or compensation. The clause should clearly list specific events such as hurricanes, floods, and road closures as qualifying force majeure events.
Make sure the clause also specifies what type of relief you are entitled to—whether it’s an extension of time, compensation for additional costs, or both. Without this clarity, owners may argue that delays due to weather or other external events don’t qualify for relief. As we saw with Hurricane Helene, road closures and site flooding can bring construction to a complete halt. A strong force majeure clause can help shift the risk of these delays from the contractor to the owner, ensuring you don’t suffer financially for something out of your control.
2. Provide Immediate Notice to the Owner
When a force majeure event occurs, time is of the essence. Many contracts have a requirement for the contractor or subcontractor to give prompt notice to the owner as soon as it becomes clear that the event will impact the project timeline. This is often a strict requirement, and failure to provide timely notice can void your claim for additional time or costs.
For example, if Hurricane Helene causes road closures that delay the delivery of materials, you need to inform the owner right away. This notice should be in writing and include as much detail as possible about how the event will affect your project. Timely notification not only keeps the project owner informed, but also helps to preserve your rights under the contract to seek an extension or compensation later on.
3. Keep Detailed Documentation
After a force majeure event, the burden is often on the contractor to prove that the event caused the delays and that the contractor took reasonable steps to mitigate the impact. Documentation is key to making this case.
Start by keeping detailed records of how the event affected your project. Take photos of the site conditions before and after the storm, save emails from subcontractors and suppliers about delayed shipments, and keep copies of any official announcements about road closures or weather conditions. This documentation will provide the evidence you need to support your claim for additional time or costs.
In addition to documenting external factors, make sure you also track your own efforts to minimize delays. For example, if you rerouted materials or brought in additional labor to catch up, keep a record of these actions. This will show the owner that you took reasonable steps to mitigate the delay, further strengthening your claim.
4. Coordinate with Local Authorities and Agencies
In major disasters like Hurricane Helene, local and state authorities often have critical information that can help you manage the impact on your project. For example, www.driveNC.gov provides lived updated information on road closures affected by the storms.
Staying informed can help you plan around obstacles and demonstrate to the project owner that you are taking the necessary steps to minimize delays. In addition, these updates may provide you with valuable documentation to support your claim. For example, if road closures prevent the delivery of materials, documentation from the state and local agencies can help validate your request for additional time.
5. Consider Insurance Options
While a well-drafted force majeure clause can help protect you from financial loss, depending on the size of the project and whether the owner/developer is foreign, there may be insurance coverage in some limited instances. According to IRMI, force majeure insurance is a type of insurance that can cover certain losses that occur when a project is delayed or halted due to an unforeseen event (i.e., fire, earthquake, war, revolution, flood, and epidemics).
Force majeure insurance typically covers the costs of restarting a project after a natural disaster, as well as any losses resulting from the delay. In some cases, it may even provide coverage for increased material costs caused by supply chain disruptions—something that was a major issue after Hurricane Helene. In this is part of your insurance program, you can further protect your business from the financial impacts of a disaster.
By following these five tips, you can be better prepared to handle force majeure events and protect your construction projects from the financial consequences of delays. Whether it’s including a strong force majeure clause in your contracts or ensuring you have the right insurance, these steps will help you navigate the challenges that come with natural disasters like Hurricane Helene.