Supply Chain Delays: What Claim Issues Are You Seeing?
By: Brian R. Gaudet
Mike McKenna provides insights for the Construction Super Conference on the types of supply chain/delay claim issues that he is seeing in the industry, and what trends he believes will emerge later this year. Mike said:
The issues vary greatly, as there are so many factors that can influence such issues. Covid, while fading, still lingers. The tremendous increase in gasoline costs are being reflected in increased costs and surcharges. The somewhat nebulous impact of the war in the Ukraine. Lastly, inflation, a non-issue for so many years, is a real problem. I have clients that have literally had their cost of steel increase by 50-100%. To me, Owners are wrongfully turning a blind eye on such issues. This is wrong as the Owners are the ones that are ultimately getting a windfall, i.e. paying for something way under the going cost.
Two, failing to recognize there is no way that a Contractor can simultaneously build contingencies into bid for things that may or may not happen and at the same time be asked to submit the lowest responsible bid. Three, the issue becomes even more significant when Owners demand that MBE, WBE, DBE, etc. submit bids on this basis and then ignore the impact of these material costs when it is the Owner’s demand for their participation in their contracts that placed them in the cross-hairs of such issues. There need to be a growth of the Implied Covenant of Good Faith and Fair Dealing to deal with the balance of equities in such situations.
In many industries, the “supply chain” mantra is familiar and persistent. This month we continue the topic with a focus on claims specifically related to delays.
