Completion Time
Construction contracts usually provide for completion by a certain date or within a certain period of time. Some construction contracts may even provide that construction work is to be completed within a specified number of working days or in accordance with a construction schedule, critical path method or otherwise.
There can be many legal problems associated with construction completion times. This is a fertile field for lawyers involved in construction-related practices. Therefore, astute construction people should make every effort to protect themselves and thus avoid problems, attorney’s fees and related expenses.
It is extremely rare to find a construction contract that provides for a fixed or a determinable completion time without a companion clause excusing the contractor from delays occasioned through circumstances beyond his control. The contractor should insist upon such an excuse clause. The contract clauses which excuse contractor’s delays because of circumstances beyond his control are called “force majeure” clauses; force majeure meaning a superior or irresistible force.
Typical delay excuse clauses provide that the contractor is excused for periods of delay occasioned because of delaying activities of the owner or his representative, strikes, shortages or unavailability of workers or materials, fires, floods, tornadoes, unforeseen casualties, unanticipated adverse weather conditions, other acts of God, riots, civil unrest, wars, transportation delays and other conditions beyond the reasonable control of the contractor.
In negotiating construction contracts, the contractor should use care to assure that delays will be excused and time for completion extended for any period of delay occasioned because of circumstances over which the contractor would have no control.
On the other hand, the owner will wish to assure that the contractor’s completion time will not be extended where the contractor has failed to fix a realistic completion time or diligently proceed with construction.
Also, the owner will wish to assure that the contractor’s completion time will not be extended because of circumstances caused by the contractor – for example his failure to timely order long-lead equipment and material items or to properly schedule and coordinate the work.
Naturally, the contractor should endeavor to agree only to a completion time which he has carefully considered in 1ight of his peculiar knowledge and experience. If he lacks the knowledge or experience necessary to make a realistic completion time estimate, the contractor should consult others who have the required expertise.
The owner should have a realistic completion time schedule so that he may plan his contemplated occupancy, financing and other considerations in light of reasonable completion projections.
In circumstances where no completion time is fixed in the contract, the law generally presumes that construction will be completed within a reasonable time calculated with respect to comparable construction work completed in the same general locality and under similar construction circumstances. Because of the uncertainty involved, it is frequently advisable and beneficial to both parties to include a fixed or ascertainable completion time in the construction contract.
One of the main areas of dispute over completion time is the definition of “completion” itself. Contract language frequently contains terms such as final completion, substantial completion or simply completion but without defining any of those terms. Is completion or final completion that stage of progress when absolutely everything required under the construction contract has been fully done?
This author has experienced situations where the fixed completion date was mid-winter in the Colorado Rockies when not even a foolish landscaper would install sod or plant trees under four feet of snow.
Substantial completion is often defined as that stage of completion when the project can be used by the owner for its intended purpose. Surely an owner could use a hotel facility for its intended purpose long before any landscaping work has been done. But is that the time intended by the owner who had expected not only finished rooms, lobby and amenities, but also an aesthetically complete project which would entice business?
In negotiating construction contracts, the parties should pay careful attention to the definition of terms relating to completion times. Terms left undefined could cause later problems.
Many construction contracts (including the American Institute of Architects’ General Conditions) provide that a contractor will not be entitled to a time extension unless within a certain period of time following a construction delay he gives written notice to the owner and requests a time extension.
Some courts are stringent in their interpretation of these notice provisions, ruling that if notice has not been timely given the contractor’s completion time cannot be extended no matter what. Other courts are more liberal, ruling that if the delay was caused by the owner or if he knew or should have known of its existence, the requirement for written notice is not essential.
Since a legal result may not be easily predictable, contractors should use great care in following the contract provisions relating to time extensions. They should also use the same degree of care in documenting the amount of delay experienced.
Simply because there may have been a five-day excusable delay in obtaining certain materials does not necessarily mean that the contractor is entitled to a five-day extension. Instead, the contractor may be entitled to no extension or to an extension of time in excess of five days.
The length of extension (delay) would depend upon how critical those materials were to construction completion and the impact resulting from the procurement delay.
The impact may result in a longer period of excused delay because of the so-called domino effect. For example, the delay in obtaining materials may, in turn, delay several other crafts whose work is to follow, magnified by each different craft involved.
Construction scheduling experts, including those employing the critical path method (CPM), are frequently able to determine the cause and effect of delays encountered in construction. Their use may assist the contractor in obtaining reasonable time extensions or even additional compensation for experienced delays.
Owners always seem to complain that construction work is never completed on time. Whether this is completely true is certainly debatable. In any event, contractors should build in protections against having to bear the risk and losses attributable to delays experienced without fault on their part. The time to fashion these protections is during contract negotiations and before the construction contract is signed. On bid work, the contractor must simply analyze the owner’s completion time provisions and assess his risks accordingly.
