Contract delay 6

[brnt]

I am a site inspector on a project where the contractor wants to be paid for down time due to a delay. The contract clearly states he can be paid for costs for a delay caused by the owner or their representatives. Basically a rough grading contractor ran into some under ground springs and the engineering firm was to come up with a stradegy for dealing with them. The engineering firm hummed and hawed and danced around but didnt come up with an answer for 2 weeks. The contractor did all they could and then had to sit for 7 days waiting for an answer. They parked their equipment and sent their men elsewhere. They have sent a bill for the 7 days the equipment was sitting idle. The hourly rate for the equipment includes an operator, but their operators were not onsite.Should they get paid the full hourly rate or should there be a discount because their operators were not onsite?

 

[BenJohnson]

Sounds pretty clear to me that "a delay [was] caused by the owner or their representatives" (ie, engineering firm).

It's crazy to expect that the contractor would force the operators to sit with their equipment when no work can be done. I am sure the operators would be back at work soon as a solution to the problem was found. It's not as if the operators were off doing some other work. No, they were on-call and I am certain they got their normal salary from the contractor for the full 2 weeks.

You job is to make sure everyone follows the contract to the letter. The contract does not say, "pay the contractor 3/4 time for delays." You should stick to the contract and don't wander into the business of arbitrating a problems. I am sure the contract has provisions which spell out how disagreements can be arbitrated, and it doesn't include the inspector!

 

[dik]

If it was a delay outside the control of the contractor, he should be compensated for all costs associated with it. You should ask for a statement of costs, review it, comment on it if unreasonable, and ask for a resubmission. The resubmission should be reviewed and a Notice of Change (or whatever) should be issued for the additional costs to bring it into the Contract (most construction contracts that I've encountered). If there is a disagreement with the Contractor, then most Contracts have a means of accommodating Disputes...

Dik

 

[cr1973]

I for one do not believe the contractor should be reimbursed for those 7 days. Perhaps for the first day, when the spring was found and nobody knew what to do. But the contractor should have just focused on a different project in the mean time.

To sit there and wait, and expect to be paid for it, is poor taste on the contractor's part. I would pay them for that partial day that was lost when the spring was first encountered, and that is it.

How is this different than say if it were to rain for a week straight? You could argue the spring is an act of god, like the rain, and the delay was not due to design error.

 

[cnstengineer]

The contractor should be entitled to fair compensation for the delay plus an extension of contract time if the delay was outside of his control. He should be paid for the ownership cost of the equipment to sit for the 7 days with a reasonable markup for overhead and profit. He should not be paid for the operated cost of the equipment. If the contractor had another project to utilize the equipment, then it should have been discussed about pulling off of the job until a sloution to the problem was developed and then pay the contractor to remobilize.

 

[MiketheEngineer]

While i can't disagree with what has been said - we are Engineers not Lawyers. Call one!!

 

[dik]

Mikey... you call a lawyer and you will need one! Best to try to resolve it first... using normal Contract Admin tools...

Dik

 

[brnt]

cr1973-- I dont think it was a realistic option for the contractor to focus on another project. For the first week the contractor did as much as he could on the site but finally ran out of things to do. The contractor notified the engineer that he was running out of things to do. The engineer never gave a clear answer as to when the answer was going to come. Basically the engineer implied the answer was going to come any day. The project is 25 miles from the city in a small town and it was not realistic to haul rock trucks and track hoes offsite when the answer was going to come any day and when the contractor has a dead line to finish the job.

I represent the owner of the project. The truth of the matter is the engineer caused the delay and in a perfect world he should pay for the delay. I wonder how many engineers out there agree with this?

 

[brnt]

Ben Johnson--the contract states the contractor should be paid for costs incurred by the delay. It doesnt get much more specific than that. I have been on jobs in similar situations where the operators just sat in their trucks. Which made me wonder if there isnt some sort of case law out there which has established a precedent. The contractor had his operators working on other jobs so why should he be paid twice for his operators?

 

[dik]

brnt:

Get timecards for the employees on the project and see if they were working elsewhere... if they were sent home due to lack of work, they are entitled to compensation... in the same fashion that their employers are. It may be that the Contractor has key employees slated to do the work and if sent home, they may find other work, or whatever... same with equipment and/or operators. Most Contractors I've been involved with are 'past masters' at delay claims... and you may find costs coming out of the woodwork...

If the Contractor has a deadline, then the added costs and delays are to his benefit and the Contract time should be extended by the delay.

If the engineer caused the delay, then he can be liable for all costs associated with it... BTW, most engineering liability insurance packages exclude damages due to delays.

Dik

 

[BenJohnson]

You are on thin ice here trying to mediate between the engineer, contractor and owner. Right now, the people with problems should be meeting and talking and trying to find a solution. If a settlement can't be reached, then the Dispute Clause of the Contract should be started - in most cases that involves a lawyer (which everybody dreads).

By law, the contractor has the responsibility to limit his losses. If he has options for putting the equipment and/or operators to work in some other job - then the contractor should have exercised that option.

The Engineer has an obligation to exercise reasonable standard of care. Typically this has meant the customary or usual practice of members of the profession. That raises the question whether the engineer did sufficient site investigation to discover the underground springs.

The Engineer also has an obligation to respond quickly so the Contractor will not incur damages for delay. Was the solution to the problem of the springs so difficult that it required 2 weeks to find a fix? If he kept on promising a solution "any day", there may be professional negligence on his part.

Every State has tons of case law that spells out who is at fault. But be sure the negotiations between affected parties have reached an impasse. After that, a lawyer should be called. But remember, lawsuits are expensive and hugely time consuming - probably far more expensive than simply paying the equipment operators for a week. I am sure your client, the owner, has a lawyer telling them the same thing.

 

[ukengineer58]

on the face of it it is simpl. contractor had contract with client so he gets paid for delay. client has contract with engineer so he may claim against him .this will be lengthey and legally thrawt. thr contractors costs should be based on reasonable incurred costs. which he should provide back up for including showing tha his guys were standing not on another job.

 

[BigInch]

Stick to the contract! It doesn't get any simpler than that.

It doesn't matter what anybody thinks at this time. In some circles the contract will state a different payment rate for non-operational time, in others, straight time is acceptable. It It is the owner's responsibility to check what rates are to be charged and paid and under what conditions and circumstances BEFORE signing the contract.

P.S. inspectors, or engineers, have no jurisdiction in that matter, unless stated in the contract what their responsibilities will be in that case, or unless both parties want to agree now to binding arbitration by the inspector, engineer or other third party. Otherwise keep out of it. Way far out of it.

"People will work for you with blood and sweat and tears if they work for what they believe in......" - Simon Sinek

 

[bimr]

I agree with Biginch.

It is ridiculous to offer an opinion prior to a reading of the Contract. Have you read the Contract in detail and what does the Contract state?

Site Inspectors generally have no authority to make contractual decisions and are only responsible for documentation of what has actually occurred on the jobsite. I would recommend that you do not provide any opinions as it is not your contractual responsibility

 

[BigInch]

For now, read the contract and pay the contract rates to show good faith in your word and level of intelligence when you signed.

I see responsibility split equally between owner and engineer, provided the contract did not pile it all on the contractor. They need to answer a couple of questions, How could the owner reasonably expect the engineer to know about the spring beforehand? Should he not have taken responsibility to adequately investigate subsurface conditions himself, or was that the engineer's (expert's) job to recommend that approach to his client. Why didn't the engineer request the owner to do a geotech investigation beforehand? The engineer is paid to make those recommendations to a client whenever he feels it is necessary to avoid risk to the client. If not, then the engineer effectively accepts all risks associated with not warning his client. If none of that was contemplated, then they both blindly accepted the risk that underground conditions could vary. Since the engineer is the professional here, paid for his expert opinions and recommendations, IMO most of that risk should fall on him.

Unless it was specifically stated in the contract, in writing, that the contractor would accept the risk of any discovery of unknown underground conditions, it would be difficult to find him at fault, unless those conditions were prevalent everywhere in the area and the owner & engineer can demonstrate beyond a doubt that the contractor had prior knowledge of same in the area and it was likely to encounter the same on the specific site. Otherwise they have the responsiblity to deliver to the contractor a site that is fit for purpose to do the work as contracted. The contractor is only liable for the KNOWN conditions described to him before or at the time of contract signing. That's what he bid on.

My best advice; settle any disagreements man to man in the most friendly manner possible. Getting lawyers involved will cost all parties many times more than 2 weeks of standby charges in money and 1000 x more in aggravation.

BTW dik, I liked the "Call a lawyer and you'll need a lawyer" line. Great one. Nothing more true than that.

"People will work for you with blood and sweat and tears if they work for what they believe in......" - Simon Sinek

 

[brnt]

bimr--Yes I have read the contract. In this part of the world it is a standard contract that is used on all construction projects. It doesnt go into great detail about how costs are determined when the owner causes a delay. There is a 2 sentence description in the clause that basically says the contractor is able to charge for extra costs associated with a delay.

There was a geotechnical report done--test holes were drilled. But you drill 15 or 20 test holes on a large site it is reasonable you can miss a spring.

The contract states the contractor can charge extra for an unknown condition. The spring is an unknown condition. The contractor is being paid extra for the weeping tile he installed.

The client has paid an engineering firm as a consultant to run the project.The client has also paid our firm to act as his eyes and ears. He is too busy and short of manpower to have his own employees attend the site.

I am not a lamp post on the job or a secretary recording what is going on. I am expected to have an opinion and help in ironing out complications.My bosses are busy and don't have any special insight. It is a detail that has to be worked thru one step at a time and there is no perfect answer.

 

[bimr]

To answer your specific question: "The contractor did all they could and then had to sit for 7 days waiting for an answer. They parked their equipment and sent their men elsewhere. They have sent a bill for the 7 days the equipment was sitting idle. The hourly rate for the equipment includes an operator, but their operators were not onsite.Should they get paid the full hourly rate or should there be a discount because their operators were not onsite?"

Unless the Contractor can prove that the operator was dedicated to the project, my opinion is that you should not have to pay the operator. However, there are other considerations.

[ul]
[li]If you have some type of specialized equipment and the operator has to be retained for that purpose.[/li]
[li]If the operator will quit to go to another project and be lost to you for a future long term employment.[/li]
[li]Most firms pay the construction workers a minimum of say 3 hours to show up and then the workers are sent home. This happens in situations like yours and on rain days.[/li]
[/ul]

However if you have just a short duration project, you should not have to pay.

 

[BigInch]

My recommendation is, The contractor has the right to be paid for whatever the contract conditions specify. Talk nicely to him and he might consider something else. Tell him you will be nice when the next delay is his fault.

"People will work for you with blood and sweat and tears if they work for what they believe in......" - Simon Sinek

 

[GoldDredger]

I agree with MiketheEngineer, contact a lawyer. That doesn't necessarily mean your 'bringing' a lawyer in, but at least you will get a legal interpretation of contract law in your area (state).

If you work for the state, you probably even have an in house legal department to contact. I recommend you ask your bosses to get 'unbusy'.

 

[jgailla]

bimr and BigInch have it nailed.
I don't understand why someone would want to call in a lawyer on what appears to be a routine and contractual change order.