No Damage For Delay
Words: John Swindal
The Swindal Group (www.swindalgroup.com) is a full-service construction consulting company providing specialty contractors with practical advice on contract formation, contract review, contract revision, contract negotiation, litigation strategy, document review, general business planning, strategic planning, and contract management strategies. John B. Swindal (jbswindal@swindalgroup.com) is the Managing Director of the Swindal Group.
I was outside enjoying a cool, late summer breeze this morning when I became white hot with frustration and I decided to highlight this month with one of the more outrageous contract clauses that masonry contractors are often faced with…”No Damage for Delay.”
As with most onerous Subcontract clauses, there are degrees of a no damage for delay clause ranging from full exoneration of the general contractor regardless of the cause of delay to the promise by the general contractor to support and expedite the masonry contractor’s delay claim with the Owner. In short, this type of Subcontract clause allows ZERO monetary compensation to a masonry contractor for any / all delays caused by the architect, Owner, general contractor or other trade contractors.
The smallest delay (regardless of cause) results in extensive loss of money that is compounded by the hour in many instances and can become crippling when the delay continues into days or even weeks. The additional cost that a mason contractor incurs includes demobilizations, remobilizations, equipment, and scaffolding overruns and a loss of efficiency from our brick and stonemasons.
In some states a No Damage for Delay clause is prohibited by statute…it is very important that you and/ or your attorney review statutory framework for No Damage for Delay clauses in your home state and any state you are working or intend to work in the future. In other states there is no prohibition on No Damage For Delay Clauses, which leaves the mason contractor with three options:
1) give up the contract
2) attempt to negotiate the clause out of the contract or revise the clause or
3) manage the existing language to minimize the effect on the bottom line.
The third option (managing the No Damage for Delay Clause) is imperfect but often the road most traveled with these clauses. It is imperative to closely study the language of the clause as at a minimum the clause will normally allow the masonry contractor to preserve the day(s) actually lost due to the delay regardless of its cause. In this instance, there will be a notice requirement (within 48 hours or within 24 hours) that must be strictly adhered to or you will waive your right to the additional days caused by the delay.
While certainly not as ideal as recovering costs absorbed by the delay, at the end of a project a well-documented delay that is timely submitted to the Contractor and the resultant additional days added to the schedule can protect your organization from liquidated damages, consequential damages, or other potentially disastrous situations.
Make sure you are familiar with the No Damage for Delay clauses in all of your Subcontracts and proactively manage all delays pursuant to the notice provisions contained within these clauses…additional days are much better than nothing.
(Nothing contained in this article is intended to convey, constitute or be construed as legal advice.)