Page 56 - Colorado Construction & Design

Sean Hanlon, Partner (L);Thomas Morales, Associate (R)
The Construction Law Corner: “At the Intersection of Construction and Law”
Construction in the COVID-era: Is Your Business Safe Merely Because
it is “Essential?”
by Sean Hanlon, Partner
and Thomas Morales, Law Clerk
Sean Hanlon and Thomas Morales discuss some COVID-19 impacts on the construction industry despite its designation as an “Essential Business”.
Thomas: Sean, our clients’ construction projects have continued despite the impacts of the pandemic, largely because construction is almost universally deemed
an “essential business.” Does this mean owners and contractors are out of the woods?
Sean: Not quite. While it is true that most stay-at- home orders allow construction to continue, projects are still impacted by the pandemic. Many projects are experiencing increased costs due to delays and
lost productivity.
Thomas: That’s right. For example, contractors and subcontractors must now implement PPE procedures and maintain social distancing requirements. That decreases labor productivity and adds costs not contemplated before the pandemic. A job that used to take one worker a day might now take a few hours more. Multiply that by each worker for each trade, and that adds up fast.
Sean: Indeed. The pandemic is also causing delays through labor and material shortages, and permitting and inspections remain backlogged as government workers phase back to work.
Thomas: And if owners, contractors, or subcontractors become insolvent and can’t continue operations, projects incur substantial schedule and cost impacts.
Sean: Unfortunately, yes. So, the construction industry is by no means immune from pandemic-related impacts, even if it is deemed “essential.” And all of these impacts will inevitably lead to claims for schedule or cost relief.
Thomas: Sean, I remember reading an article in CCD by you and Kevin Bridston titled Project Documentation Can Make or Break Your Claim. I imagine that advice is just as important now.
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Sean: Absolutely. The key is to know your contract.
For example, owners and contractors must review and comply with the contractual notice requirements. Failure to comply may result in a loss of entitlement.
Thomas: I’m glad you mentioned entitlement. I’ve been doing some research on whether parties are entitled to cost or schedule relief for these pandemic-related
delay claims.
Sean: What have you learned?
Thomas: Generally, and unless otherwise provided in the contract, contractors are not entitled to additional compensation as a result of pandemic-related, or force majeure, delays.
Sometimes, the contract does not mention force majeure anywhere. While not all states have addressed this issue in the absence of clear contractual language, there are generally three types of delays recognized
in construction:
Excusable delays are caused by factors outside the control of the owner and the contractor (i.e. force majeure). Generally, contractors are only entitled to a time extension for excusable delays.
Inexcusable delays are those within the contractor’s control, and do not entitle the contractor to additional time or money.
Compensable delays are those caused by the owner. For these delays, the contractor is entitled to both additional time and money.
Sean: Correct. And no matter how your contract treats these delays and contemplates pandemic-related
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