Has El Niño Adversely Impacted Your Construction Project?

HAS EL NIÑO ADVERSELY
IMPACTED YOUR CONSTRUCTION PROJECT?

This year's winter rains have impacted almost every contractor. The abnormal weather conditions have delayed most projects and adversely impacted many contractors' productivity. Many contractors now ponder what rights they have to recover the additional costs that they have incurred as a result of the inclement weather. This article shall review what facts a contractor must establish to recover compensation for adverse weather conditions.

Weather Related Delay Claims

In order to prevail on a delay claim, the party asserting the claim must prove that the delay was excusable, compensable and critical. If the contractor fails in establishing all three elements, it will not be able to recover additional compensation. However, if the contractor establishes that the delay was excusable and critical, it will be entitled to an extension of time.

Generally, most contracts do not excuse all weather related delays. Typically, the contract will only excuse rain delay days that were not foreseeable. Many government contracts now include an addendum that sets out the average rainfall for the anticipated construction period. For example, if during the scheduled period of construction, there were more than twenty days in which there was measurable rainfall, the contractor is only excused from performance on days with measurable rain after the twentieth day. In essence, these types of contract clauses require the contractor to assume the risk for all but unforeseeable weather-caused delays. Thus, it is necessary to first review the construction contract to determine how weather related delays are treated.

In most contracts, adverse weather delays are generally not compensable, but they will entitle a contractor to an extension of time. Nonetheless, if another preceding compensable delay extended the construction time into an adverse weather period, the weather related delays will be compensable. Similarly, if the owner requires the contractor to accelerate his performance to avoid adverse weather or to recapture the weather related delays then the contractor would be entitled to compensation. An example of additional compensation to recapture time lost to a rain delay is presently occurring at the San Francisco Airport. The Airport Commissioners are currently considering offering over nine million dollars in incentive, if the contractors can overcome the rain delays and complete the projects on time.

The final element of a weather related delay claim is establishing that it was a critical delay. Simply stated, the contractor must establish that the weather related delay adversely impacted the completion date for the project. Clearly, the completion date will not be impacted by abnormal rainfall when the only work that is occurring during the period is interior work. On the other hand, framing work would be impacted by abnormal rainfall. Thus, an analysis of how the work is impacted by the adverse weather is necessary.

Weather Related Disruption Claims

While inclement weather may not delay the project, it could adversely impact the contractor's performance. For example, the adverse weather could result in an uneven labor force, inefficient labor force, out-of-sequence work, trade stacking, out-of-sequence material deliveries, and/or a loss of project momentum.

The determination of the right to compensation for a weather disruption claim is generally the same as that made for a weather related delay claim.

To prove a disruption claim, it will be necessary to identify the impacted activities. Specifically, the contractor should make contemporaneous records which establish which activities were impacted and the additional labor and costs associated with the disruption. If the contractor has failed to keep such contemporaneous records, there are other methods for proving the claim which include an engineered analysis, modified total cost, and/or a comparison analysis.

The disruption claim typically includes the additional direct and indirect costs for the impacted activity. The direct costs would include the increased labor, material and equipment costs. The indirect costs can include home office overhead and site overhead.

Documenting the Claim

Obviously, any determination of an excusable weather delay or disruption will require proof that the work was impacted by the weather. Climatological data can be obtained from reports prepared by the National Atmospheric and Oceanic Administration. The reports can be found in most public libraries or on the Internet. In addition to establishing the actual number of rain days and the amount of rainfall, it is also necessary to prove that the contractor's work was in fact impacted by the delay.

The contractor should also keep daily job logs that document the weather conditions. The daily log should identify what trades, if any, were impacted by the adverse weather. The log should also set forth how the weather disrupted the project's performance.

In closing, if you properly documented the adverse weather this winter, el niño storms may not have been as disastrous as originally believed.

This article, ©1998, was written by William C. Last, Jr. Mr. Last is an attorney specializing in Construction Law. He can be contacted at 415-764-1990. This bulletin is published periodically to provide general information about current legal issues. If you have a specific legal question or need legal advice, you should contact an attorney.