Delay Changes Negating Early Completi...

Log Out | Topics | Search Moderators | Register | Edit Profile

Author Message Nathan Woods, CSI, CCCA, LEED AP Senior Member Username: nwoods Post Number: 425 Registered: 08-2005 Posted on Thursday, March 08, 2012 - 07:47 pm:    At the recent CSI Academy - CA Tract, an interesting discussion was brought up about how changes in “anticipated” completion dates affect early completion bonuses if the project still is completed within the Contract Completion Date/Timeframe. Is the GC entitled to payment for lost bonus opportunity? Would love to know your thoughts on this subject. I have my own opinions of course. Personally, I feel that because the contract completion date did not change, the bonus is simply dissolved, regardless of fault in the supposed “delay” for not finishing early. The contractor is lucky not to go over the scheduled date and incur a performance penalty. But, I can see the other side of it too. Its an interesting question. Your thoughts? Ronald L. Geren, AIA, CSI, CCS, CCCA, SCIP Senior Member Username: specman Post Number: 995 Registered: 03-2003 Posted on Thursday, March 08, 2012 - 08:28 pm:    I don't understand the logic... If the contractor caused the delay, he should get less of a bonus. If, for example, the contractor was delayed 10 days by the owner, the contractor should make a claim for a 10-day extension to the contract time. Thus, if the contractor finished by the "anticipated" completion date plus the 10 days, there is no true delay by the owner. If there were any other delays, not casued by the owner, then the contractor gets less of a bonus. Any delay not caused by the owner is the contractor's, with the exception of those common force majeuer clauses. Bonus/penalty provisions should take into consideration delay not the fault of either the owner or contractor. I know there've been situations when an extension was granted, but the date on which penalty/bonus is based did not change. I don't think that is fair. Ron Geren, AIA, CSI, CCS, CCCA, SCIP www.specsandcodes.com Anne Whitacre, FCSI CCS Senior Member Username: awhitacre Post Number: 1250 Registered: 07-2002 Posted on Monday, March 12, 2012 - 05:48 pm:    I agree with Ron about this -- it depends on who caused the delay and how the delay is handled contractually. So technically, if the original deadline is met, and the owner caused a 10 day delay, then the contractor should get the benefit of that. I've seen a variety of incentive clauses though, and I don't think any one of them has addressed that issue. if of course, the contractor had planned an early completion and figured the bonus as part of their profit -- well, that's sort of like counting on your office bonus as part of your yearly budget. its not sound financial judgement. every good contractor knows that you just can't control everything. Nathan Woods, CSI, CCCA, LEED AP Senior Member Username: nwoods Post Number: 426 Registered: 08-2005 Posted on Monday, March 12, 2012 - 06:24 pm:    In the scenario as discussed in the original seminar, the sticking point is about the term "delay". If the contractual completion date is still met, the contractor would have a hard time convincing me that they were delayed, and a CPM schedule would only underscore the point. Did they lose bonus opportunity? Yes. Are they justified in claiming a delay to recoup that lost bonus? Not in my opinion. I recognize that nothing is that cut and dried. For example, if the concrete and steel subs expedited their work at an additional expense to them, and then the "delay" occurred later on, they could argue that they were "harmed" by the bonus clause pursued by the GC. I think the best way to handle a performance bonus clause would be to tie the bonus to identifiably milestones, so that it can be awarded on an incremental basis. However, if I were an Owner, and paid a bunch of bonus money, only to hit a snag in the project near the end and blow the completion date out of water and suffer actual damages due to a missed scheduled completion date, I'd be pretty disappointed. That then raises the question of penalty clauses, which I think are only fair when combined with performance bonuses in the first place. So should we tie penalty clauses to the same milestone schedule as the bonuses? That certainly would help in identifying who the affected parties are. I think in the end, treating projects as multi-prime is the only fair way to reward or penalize a contract team. What do you think? Dave Metzger Senior Member Username: davemetzger Post Number: 417 Registered: 07-2001 Posted on Monday, March 12, 2012 - 10:29 pm:    We have been including the following wording in Supplementary Conditions (based on the used of A201) for years: 8.3 DELAYS AND EXTENSIONS OF TIME Add the following Section 8.3.4 to 8.3: 8.3.4 If the Contractor submits a progress report indicating, or otherwise expresses an intention to achieve, completion of the Work prior to completion date required by the Contract Documents or expiration of the Contract Time, no liability of the Owner to the Contractor for failure of the Contractor to so complete the Work shall be created or implied.