With State and National Emergency Declarations imposed due to the COVID-19 ‘Coronavirus’, the force majeure provisions in properly drafted contracts will be tested. Construction contractors and owners must now evaluate if productive work on projects can proceed in this COVID-19 context. Can social distancing and other mitigation measures allow for the same rate of production anticipated in the schedule, or can any work proceed at all? Will materials now be delivered late? Can you get permits if the municipal agency is closed? These are all delay triggering events. But are they events that entitle a contractor or other party to relief pursuant to the contract’s delay/force majeure provisions?
The first step is to examine the relevant contract provision. For example, AIA A201 provides standard delay language that does not expressly provide for a pandemic as the basis for an extension of time. The A201 in Section 8.3 does provide for an extension of time to perform the work when the delay arises from “… other causes beyond the contractor’s control.” More than likely, this language will cover delays arising from the current COVID-19 pandemic. Consideration should also be given to whether any concurrent delays exist. If a concurrent delay exists and was caused by a party seeking an extension of time, then the contract may not allow for that extension. Some contracts preclude an extension of time for what are called ‘concurrent delays’ – two delays occurring at the same time, one that is an ‘excusable’ delay and the other that is not.
Second, a delay notice must be sent to the other contractual party in accordance with the contract requirements. The notice should be sent to the party at the address in the “notice” section of the contract. The delay notice should state the date on which the delay commenced, the reason for the delay and the anticipated duration of the delay. If the contract allows for an adjustment to the contract amount for costs arising from a delay, then you should also include in the notice that you are tracking such costs and that the costs will be submitted as a change order. YOU MUST MAKE SURE THE NOTICE IS SENT WITHIN THE TIME PROVIDED IN YOUR CONTRACT FOR SUCH NOTICES.
Third, you should examine a plan to recover the lost time. Split shifts, additional labor, overtime or other means may be required of you to recover lost time even though you are not the source of the delay. You should examine your contract to see what your obligation would be in this instance and if you are entitled to additional compensation if directed to ‘accelerate’ or perform work in a compressed schedule.
This pandemic will present many challenges in many venues and forms, not the least of which will be delays or other issues, such as employees who contract COVID-19 after being directed to report to work. Please do not hesitate to contact us if you need help analyzing the circumstances of your delay, or any rights or issues arising from this pandemic. Most importantly, we must remember to work cooperatively toward a resolution and a return to normalcy. As President Kennedy once said, “ask not what the Country can do for you, ask instead what you can do for your Country.” Those words ring true in this crisis.