But it seems that construction delays, meaning you might not get paid, are a peculiarity of construction in the US. It is a clause included in private sector contracts and appears to be aimed at saving both the Client and Main Contractor money, but putting subcontractors at risk! – and this without any Forensic Delay Analysis (FDA) that actually places the blame on one of the parties! It is interesting to note, however, that some American state courts are expelling these clauses and declaring them invalid!
So let's take a look at what happens when there are construction delays elsewhere and the standard Construction Contract Forms – JCT, NEC, FIDIC, etc. – are being used. The original Contract Form between the Client and the main Contractor will have the End Date defined. This is usually the delivery date. The Main Contractor, assuming they have carefully drawn up a sensible Construction Programme, will impose Completion Dates on all subcontractors they appoint . These latest dates will allow all subsequent work to begin and finish in a timely manner.
If the Client decides that they want changes to be made to the work originally contracted for this, it may take longer. The Main Contractor will specify this when submitting the revised price, after which it is up to the Client to proceed with the idea or decide it will take too long. Often, particularly in the case of commercial office fit-outs, the Client's issue with any extensions of time may well mean that they will have to extend the lease on the existing premises. The most common figure I have found for this is “£600,000 per month or part thereof” and often the lease extension must be for a minimum of 3 months! This amount is known as “liquidated and assessed damages” (LAD).
The worst LAD I have ever encountered was for renting an offshore barge on a long sea outfall. That was a modest £80,000 per hour or £1.92 million per day!
So with that kind of amount of money owed to them, is the Customer likely to pay? I doubt! The final monthly payment request from the Main Contractor is unlikely to be anything like this amount! So who are the “YOU” that might not get paid?
Figuring this out involves digging deep and finding someone capable of doing a Forensic Delay Analysis (FDA). Even planners are a rare breed and they don't come cheap! Your services will probably cost the contractor around £60,000 – and these guys want your money on a weekly basis! I know, I used to be one of them! Now this FDA can show that the construction delay was due to any part of the contract. What does the main contractor – and I've never heard of a Subbie paying for one – which is why it could end up being a good investment. The delay may have been caused by the slowness of the Client's Architects or Consultants in providing additional requested information or detailed specifications for the changes requested by the Client. It becomes the Customer's fault and you want your payment!
This is why construction delays may not get you paid! The problem is that the cost of trying to prove that the delay is someone else's fault is such that contractors often give up! Especially subbies, if found guilty, usually just shrug their shoulders and go bankrupt!
