On a high level, construction delay litigation involves sorting out the impacts to the critical project path and determining which party is responsible for those impacts. One of the more difficult elements of this process is determining whether a delay would have occurred regardless of one party’s critical path impact due to a separate, independent impact to the critical path by the other party. For example, a contractor cannot collect delay damages for delays caused by the owner if the contractor itself was causing independent impacts that would have pushed off the completion date anyway.
However, the concept of “pacing” provides a potential defense for a party who is not on pace with the as-planned schedule for noncritical activities, even where those activities are still ongoing after the planned completion date. “Pacing delays” are a type of concurrent delay that occur when one party makes a conscious decision to decelerate or slow down the pace of noncritical activities to keep pace with the critical delays of another party. A more formal definition would be “deceleration of the work of the project, by one of the parties to a contract, due to a delay caused by the other party, so as to maintain steady progress with the revised overall project schedule.” Zack, Pacing Delays–The Practical Effect, Construction Specifier 47, 48 (Jan. 2000). A party to the construction process may decide to slow down its performance of noncritical activities to keep pace with the delayed progress. For example, contractors may adjust the pace of their work in light of delays in owner-furnished equipment, delays by other multiple prime contractors, delays in permits, limited access, or differing site conditions. Owners may slow down their response time to requests for information or submittals, or postpone the delivery of owner-furnished equipment or the processing of change orders. Id. at 48.
The ultimate result of a pacing claim is that, instead of an alleged concurrent delay being considered independent and thus non-compensable, concurrent delays can become arguably a direct result of work keeping pace with delays caused by the other party, thus triggering a claim for a compensable extension of time. In other words, why “hurry up and wait”?
These concepts have been considered and accepted by courts, which generally hold that the party not causing the delay has the right to slow down work when faced with delays caused by another party. However, a party seeking to pace their activities should be very comfortable that the delays by the other party do have a direct and uncurable impact on the critical path. If a party slows its work, and it is later determined that the project would have been completed earlier but for that slowing, then the “pacing” party will likely be liable for delay damages. The dispute becomes a “chicken or the egg” argument, and “pacing” by any party responsible for performance of work impacting either the preceding or succeeding activity represents a gamble that scheduling analysis, in hindsight, will not show “pacing” to have been justified because the “paced” work activity created additional float for completion of either the preceding or succeeding activities.
The practical effect of a pacing argument on presentation of or defense of claims is that the schedule analysis becomes more complex than it might be otherwise. Claimed concurrent delays take on more significance and need to be carefully analyzed and apportioned. On a big project, this is complicated, expensive, and sometimes uncertain. Not surprisingly, vague or ill-defined pacing claims are often looked at critically by the courts or boards in these circumstances. An analysis of float and which party is entitled to it also becomes an important and complicating factor in the analysis. Also not unsurprisingly, these types of cases often turn on the terms of the contract, the efforts of the parties to overcome the delays as shown in the project record, attempts to mitigate, and timely notices.
This blog post is based on an article by Dan Frost and Luke Mecklenburg in the September 2017 Edition of Snell & Wilmer’s Under Construction newsletter.