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Who pays the price when a construction project gets delayed?

Whenever a property owner and a contractor sign a contract for a construction project, there's a risk that things won't go exactly as planned. Even when the two parties are highly experienced in such transactions, the project may have unforeseen setbacks: Anything from severe weather to a labor shortage can delay a project, which can cost both the owner and contractor time and money.

So who is ultimately responsible for these losses? And what can a contractor or property owner do when a dispute arises over compensation? The answer depends on the reasons for the delay, as well as the provisions of the contract.

Delays in construction are classified into categories, which makes sorting out legal disputes easier. Inexcusable delays are either caused or should have been anticipated by the contractor, subcontractor or a third party working with the contractor. Excusable delays, on the other hand, are caused by circumstances beyond the contractor's control. Whether or not the delay was excusable dictates whether and to what extent the parties can expect to be compensated.

Some delays are compensable, meaning that the contractor can recoup some of the costs of a delay. For instance, if the delay is the owner's fault because she didn't allow the contractor sufficient access to the property, he or she may need to compensate the contractor. Others are noncompensable; the contractor is given extra time to complete a project, but not extra money. Courts and arbitrators will consider both whether a delay was excusable or not, and whether it is compensable based on the circumstances.

Many times the decision depends on whether a delay was foreseeable. Let's say, for example, that storms delayed a six-month project. If storms are fairly common in the area, the contractor should have predicted that work might be delayed, and therefore may have to compensate the owner. If, on the other hand, a construction project in Miami were to fall victim to a snowstorm, the contractor and related parties should not be expected to pay for resulting losses.

Owners and contractors can lower the risk of disputes by including "what if" clauses in the contract. Contracts that anticipate possible delays and outline who will be responsible in those events can eliminate misunderstandings and the need to go to court.

Disputes over delays sometimes happen, but they can be worked out or safeguarded against with the help of a construction law attorney. Whether you're a property owner or a contractor, you can take steps to ensure your project stays on schedule, with all the benefits you deserve.

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