Construction Delay Claims – Critical Path Method Scheduling

Critical Path Method (“CPM”) is the most readily accepted method of measuring construction project delays. This scheduling technique is used to plan and manage a construction project.  The CPM schedule calculates the completion time for a project with discrete start and finish times for the construction project’s work activities.

The CPM schedule represents the set or sequence of predecessor and successor work activities including earliest start dates, latest start dates and completion dates for each activity.  The start of a discrete construction activity on the critical path is dependent on its predecessor work activity being completed based on estimated time durations in the CPM schedule.  For example, excavation for a building foundation is quite often a predecessor work activity to its successor work activity of pouring the concrete foundation. 

In our example, pouring the concrete building foundation is the work activity dependent on its predecessor work activity (foundation excavation) being completed in a reasonable time duration set forth in the CPM schedule.  Timely completion of the concrete foundation is dependent on timely completion of the foundation excavation to avoid delay to these two discrete work activities and the construction project as a whole.  Delays along the critical path may require additional time to complete the project and/or require accelerating work activities to make up for lost time.  Increased costs are often the direct result of delays and acceleration to make up for delays. 

Many project owners insist that liquidated damages be assessed for failure to timely complete interim milestone(s) and failure to meet the overall completion date.  Most courts and arbitrators recognize the CPM schedule as a tool for measuring construction project delays and calculating liquidated damages as well as other time related damages.  It is important for everyone involved in construction including owners, general contractors and subcontractors to understand how CPM scheduling is used to plan and execute construction work in addition to using CPM scheduling in proving or defending delay claims.

If you are experiencing delays, increased costs and damages on your construction project, please contact Milo D. Miller Law Group, P.C. at (720) 306-7733 to assist in navigating the often complex arena of CPM Scheduling and delay claims.

The materials contained at this site have been prepared by Milo D. Miller Law Group, P.C. for informational purposes only.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.

Preserving Miller Act Rights to Obtain Payment on Federal Construction Projects

Unlike private construction projects, construction professionals may not file or enforce mechanic’s lien rights on public construction projects. The Miller Act is a federal law designed to afford certain subcontractors and suppliers rights to obtain payment on a federal construction project when the prime contractor fails to pay them. The mechanism to recover payment is the prime contractor’s payment bond which is required on federal construction projects that exceed $100,000. The VA hospital in Aurora is an example of a federal construction project in the Denver area where subcontractors availed themselves of their Miller Act rights.

The Miller Act only provides remedies to certain subcontractors or suppliers depending on their position in the interrelated network of construction contracts. First-tier subcontractors and second-tier subcontractors and material suppliers may make a Miller Act claim. First-tier subcontractors and material suppliers are parties who have contracts directly with the prime contractor. Second-tier subcontractors and material suppliers are parties who have contracts directly with first-tier subcontractors. Lower tiered subcontractors and suppliers cannot assert a Miller Act Claim.

Miller Act Claims may be waived only in a writing signed by the party waiving its rights and only after the party waiving the right has provided labor or furnished material in the performance of the construction contract.

A Miller Act claim is governed by specific notice, timing and perfection requirements and if not followed strictly, can work to prevent a recovery and payment. However, when the requirements are met, the Miller Act can serve as an excellent method to obtain payment on a federal construction project. An experienced construction lawyer can assist in evaluating the validity and viability of a Miller Act Claim.

For more information, contact Milo D. Miller Law Group, P.C. at 720-306-7733.

The Construction Contract: Payment-for-Stored-Materials Provisions

Whether you are acting as owner, prime contractor or a subcontractor, payment issues associated with stored materials can arise.  For example, certain equipment or materials (i.e., HVAC equipment, custom counter-tops and commodities such as copper) may require long-lead procurement, or may offer significant cost savings to purchase early in the construction process.  Once acquired, however, these materials must be stored.

Who pays to store the material or equipment after procurement?  This question is one that typically requires an examination of the operative contracts and the contract documents as a whole.  Failure to adequately analyze the bid documents in addition to the contract documents can result in an unsuspecting subcontractor ordering materials or equipment under the mistaken belief it will receive payment for storage costs.  These contractors or  subcontractors may ultimately pay the entire cost of storage without reimbursement.  These types of errors can eliminate the cost-savings obtained by acquiring materials early, disrupt the construction process, and turn a profitable job in to a losing proposition.

In addition to being at risk for not getting paid for stored material costs, failure to obtain the right type(s) of insurance, or insurance in adequate amounts, can put contractors and subcontractors at further risk in the event of fire, theft or other perils that may arise on construction projects.

If you are confronted with stored material payment issues whether as an owner, prime contractor or subcontractor, please contact the Milo D. Miller Law Group, P.C. at 720-306-7733, to aid you through the payment and risk mitigation processes.

Pay-if-paid vs. Pay-when-paid in Construction Contracts

Frequently, subcontractors in the commercial, residential, industrial and government contracting arenas are  confronted with pay-if-paid clauses or pay-when-paid clauses in construction contracts.   Understanding the distinctions between pay-if-paid and pay-when-paid clauses and how the two contract clauses are typically enforced can mean the difference between getting paid within a reasonable time or forfeiting your rights to payment entirely.

In general, an owner’s failure to pay a general contractor does not relieve the general contractor from paying its subcontractor.  However, a general contractor can shift the risk of non-payment by the owner to its subcontractor.  This type of clause is often referred to as a pay-if-paid clause.  A pay-if-paid clause must be clear, express and free from ambiguity to relieve the general contractor of its obligation to pay its subcontractors for their work.

If the contract language the general contractor relies on to deny payment to its subcontractor is not express or is ambiguous, the clause may be treated as a pay-when-paid clause.  A pay-when-paid clause does not relieve the general contractor of its obligation to pay its subcontractors.  Rather, a pay-when-paid clause will most likely require the general contractor to pay its subcontractor within a reasonable amount of time regardless of whether the general contractor ever receives payment from the owner.

A well-drafted subcontract, including payment provisions, can mean the difference between getting paid and litigation on a construction project.

Milo D. Miller Law Group, P.C. has significant experience drafting, arbitrating and litigating construction matter involving pay-if-paid clauses. For more information, contact Milo Miller of Milo D. Miller Law Group, P.C., at 720-306-7733 or [email protected]