Whitney Judd | Kilpatrick Townsend & Stockton
Construction projects are rarely completed without delays or adjustments made to the project schedule. To avoid liability when scheduling disputes arise, parties must prove that they are not responsible for a delay to the project schedule. The exact cause of a delay however becomes difficult to prove where there are concurrent delays and both parties contributed to schedule disruptions. Pacing is a self-imposed delay where one party makes a conscious and deliberate decision to suspend performance of an activity on a construction schedule in response to a preceding delay caused by the other party. A party may choose to pace if it is more cost-effective to do so, but the decision to pace a scheduled activity does not come without risk. Pacing done to mitigate the impacts of a delay and to assist the project, may provide the true delaying-party with evidence to later claim that the paced activities were concurrent delays that relieve it of responsibility for the delay it caused.
Pacing can be direct or indirect, depending upon the paced activity’s relationship to the preceding delayed activity. Pacing is direct where the performance of the paced activity is dependent upon performance of the preceding delayed activity. For example, a contractor may choose to delay the production of window panes where the owner is already delayed in delivering the glass for the windows to the jobsite. Pacing is described as indirect where the paced activity is not dependent upon the performance of the preceding delayed activity. Here, an owner may choose not to rush its approval of shop drawings where the contractor has already delayed project commencement. Courts in various jurisdictions have supported decisions to pace activities by both contractors and owners, recognizing that there is no need for parties on a construction project to “hurry up and wait.”
While pacing can, under some circumstances, prove to be cost-effective, it is not a decision that should be made without careful thought and consultation with legal counsel. If an activity is paced and then later determined to be the cause of the delayed completion of the project, the decision to pace may in the end result in liability for the delay. As a general matter, if the pacing party causes additional delays to other critical activities on the project schedule, the pacing party may still be liable for delay damages. A contractor or an owner who decides to pace an activity should be diligent and consistent about properly documenting the preceding delay by the other party, as well as any costs associated with the delay. The pacing party should also document the status of the paced activity before it is intentionally delayed, as well as the progress of the activity after it is paced. This documentation is critical because it may otherwise be challenging to legally distinguish a paced activity from a concurrent delay if a scheduling dispute arises.
One way to keep a thorough record of the cause of project delays is for the pacing party to send notice of the other party’s preceding delay and to clearly communicate in writing the pacing party’s intention to relax performance on a subsequent activity. The notice should include documentation of the other party’s delay and proof that the succeeding activity to be paced is not already delayed or otherwise off schedule. As the project continues to move toward completion, the pacing party should also continue to maintain records of the timing and progress of both the delayed and the paced activities, as well as the costs associated with each.
Additionally, parties to a construction contract may prepare for future pacing of activities on a construction schedule at the time of contracting. Parties should engage experienced and knowledgeable counsel to negotiate construction clauses that add “pacing” or “paced delay” as defined terms and that address when pacing may be appropriate and how pacing may be utilized. Use of counsel in the contract negotiation phase may limit future liability for delays and allow the parties greater control over the possible legal outcomes in the event of a dispute.
Footnotes
[1] Appeal of MCI Constructors, Inc., D.C.C.A.B. No. D-924, WL 331212 (June 4, 1996) (holding that delays by a contractor’s supplier were excused where the owner had caused previous delays: “Although it is clear that MCI completed roofing later than the date called for in the as-planned schedule, and it is true that MCI was having difficulty prodding [its supplier] …to complete its delivery instrumentation, we conclude that those delays simply did not affect the project completion in view of the overriding [owner-caused] critical path delays”). See also Balfour Beatty Rail, Inc. v. Kansas City Southern Railway Co., 173 F.Supp.3d 363 (N.D. Tex. 2016) (where an owner’s delay in delivering materials to the contractor was not consequential because the contractor previously delayed commencing the work and was already behind schedule).