Who Is Liable for Projects Taking Longer Than Estimated?
Keeping on schedule in a construction project can eliminate a lot of problems down the line. However, it’s difficult to adhere to the established schedule for most projects. To counteract this problem, many project managers try to plan ahead to ensure that any delays do not completely derail the project. Some delays may even be grounds for terminating a contract with the contractor. In this editorial, we’ll discuss the liability associated with projects taking longer than estimated. If you believe you may be held liable for a project taking longer than expected, contact one of the Portland construction attorneys with Cotney Attorneys & Consultants.
The Answer: It Depends on the Cause
Liability for projects taking longer than estimated depends on who or what is responsible for the delay. Contractors can only be held responsible for damages caused by delays that they are responsible for. Not every delay is caused by the contractor, and some delays are no one's fault. The key to determining liability is to look at the cause of the delay and who could have prevented it.
In most cases, it will be the contractor who is held liable. Contractors have a lot of control over how projects progress, and it is their responsibility to try to minimize interruptions as much as possible. Contractors can also restructure work to try to get things done on time. There are only a few key instances where the contractor will not be held liable.
Foreseeable vs. Unforeseeable Reasons
Contractors may be held liable based on the reasons for a delay. There are two types of reasons: foreseeable reasons and unforeseeable reasons. Foreseeable reasons are the kind that contractors should see coming and take action to prevent. For example, the contractor should be able to get all of the supplies before the scheduled start of the work. If he cannot, then he should take action to fix the problem. Failing to do so can make him liable for a delay that causes damages to the owner.
Unforeseeable reasons are the kind that no one should be able to see coming. Put simply, these are the problems that are out of your control. For example, the project starts but hidden damage is found that makes completing the work much longer. If there was no way to know that there was more damage, then it is an unforeseeable reason. And since you could not have prevented it, you may not be held liable for it.
Your Contract is the Key
Before you consider who will be held liable, consult the contract. The contract is the key to understanding liability. This is because it should outline how delays and damages are handled. Those clauses are a critical part of the contract for both parties. When set up in the right way, it can provide protection to both parties without fully eliminating liability.
In every contract, there should be a clause that focuses on how delays are handled. For construction companies, having protection from unforeseeable reasons can have a big impact if something happens during the project. It may be tempting to think that you can control everything that happens, but that assumption could be costly. If you are not sure how to set up this type of protection in a contract, work with a Portland construction lawyer to develop your contracts.
There should also be a clause that specifically focuses on the damages caused by delays. Negotiating this part of the contract can be effective at minimizing your risk should something happen. It’s possible to negotiate a contract where you only pay for specific damages or a portion of those damages. You can also set the terms of when and how you pay damages, which can help you avoid cash flow problems during a project. Partnering with a Portland construction attorney can help you develop a contract that takes all of this into account.
Liquidated Damages Clause
The exact clause that you want to focus on is called the liquidated damages clause. It outlines how you can be held for damages caused by foreseeable reasons. It’s important to have a liquidated damages clause because it will control how damages are calculated. If this clause is not included in your contract, then the other party can claim their actual (full amount) of damages.
The liquidated damages will often be less than then actual damages to a considerable degree. Furthermore, not including that clause is a mistake that many construction companies make since they assume that collecting liquidated damages is the default position. If you are unsure about how this works, it may be in your best interest to discuss it with a Portland construction lawyer.
Legal Help Can Make a Big Difference
One thing that construction companies struggle with in terms of creating legal protection is working with contracts. Every construction company needs a way of building high-quality contracts that protect themselves and their customers. This is why many construction companies partner with Portland construction lawyers to develop their contracts.
Lawyers can also do much more for your construction company than develop a contract. They can help you negotiate more favorable positions with subcontractors and provide you with some level of protection from lawsuits and other legal actions. These include OSHA violations and potentially losing your license.
Handling damages can be a complex process. Fortunately, the right preparation can make it much easier. If you have questions about damages liability and contracts, contact one of the Portland construction attorneys from Cotney Attorneys & Consultants.
If you would like to speak with one of our Portland construction attorneys, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.