By: Jennifer M. Horn
As part of an ongoing series, Construction Law Signal will examine basic construction contract clauses and offer tips for navigating the nuanced arena that is the negotiated construction contract.
“No Damage for Delay” Clauses On Public Projects: In the Mid-Atlantic Region, Geography Matters
A “No Damage for Delay” provision is a classic construction clause that, if present in the contract, provides that where a contractor is delayed by an event that is not the contractor’s fault, the contractor’s remedy in that instance is limited to an extension of time – and no additional money is provided. However, more time can be little consolation to the contractor when every dollar counts. A myriad of issues can result in delay on a job site. Unforeseen subsurface site conditions can cause delay. These could include:
- Inclement weather;
- Acts of God;
- Design changes;
- Problems with obtaining access to one’s work site;
- Strikes and/or labor disputes; and
- Failure to have timely delivered material and equipment.
In addition, poor project coordination, the inability to mobilize adequate labor and/or delays caused by the actions or failure of another contractor to act on a project also frequently result in delay.
As a consequence, costs associated with delay may occur. These costs may manifest in the form of wage escalation, extended equipment costs, or inefficiency. Also, increased finance costs, extended job supervision and field overhead costs, and reduced profits are typical costs associated with delay.
In the realm of public contracts, where the contractor can not negotiate the terms of the contract, different states have reached different conclusions about the validity of the “no damage for delay” clauses that limit a contractor’s ability to recover money in addition to being granted an extension of time in which to perform the work. For instance, in New Jersey and Virginia, the legislation provides that “no damage for delay” clauses are void against public policy.
In Maryland, Pennsylvania and Delaware, however, the validity of “no damage for delay” clauses has been upheld in various courts of law. In short, one must be cognizant of the controlling contractual jurisdiction before jumping to conclusions regarding the force and effect of “no damage for delay” clauses in a construction contract.
Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.