Whose duty is the schedule?

August 11, 2010

Profitability on any construction project is determined in part by the schedule. To a certain extent, general contractors are dependent upon owners to schedule and coordinate their work; but subcontractors, to an even greater extent, rely upon their general contractors to efficiently coordinate the work of all of the subcontractors.

During contract negotiations, contractors and subcontractors alike should protect themselves from potential harm caused by poor scheduling and lack of coordination. At a minimum they should:

  • Qualify bids for specific start and finish dates;

  • Avoid "no damage for delay" clauses; and

  • Craft reasonable notice requirements in case of delays.

In addition, subcontractors should not assume the duty to coordinate their work with that of other subcontractors.

Limitations on scheduling

Both GCs and subcontractors should state in their bid qualifications what the commencement and completion dates are and further qualify their bids by saying that the bid is dependent upon a mutually agreeable schedule. Subcontractors may invite trouble if they agree to perform "promptly as requested by the contractor."

For example, the progression of a subcontractor's work may be dependent upon testing of conditions or materials before the subcontractor can proceed. For instance, soil compaction and density should be tested before asphalt is placed, and concrete must be tested for proper strength or mix before it is poured. Subcontractors should be able to rely on these test results without fear of having to redo their follow-along work or of becoming liable for consequential or delay damages if it is later determined that the test results were in error through no fault of the subcontractor.

Thus, the subcontractor needs contract protection to ensure the testing has been completed before its work is scheduled, something like: "If the subcontractor proceeds with its work in reliance upon the contractor's approval of any prior work or material, whether by testing or otherwise, the subcontractor shall be relieved of all responsibility for any later discovered defects, deficiencies, or omissions that were not discovered or disclosed before approval or testing unless the defects, deficiencies, or omissions could have been disclosed or discovered due to the fault of the subcontractor."

GC has an implied duty

Even if it is not expressly stated in its subcontract, a general contractor has an implied duty to schedule and coordinate the work of its various trade contractors in a logical and orderly fashion. It cannot be done in an arbitrary and capricious manner to the prejudice of subcontractors. General contractors have this duty because they are in the best position to orchestrate scheduling issues among the various trades.

Some general contractors are attempting to purge themselves of this responsibility, however, by shifting the duty to coordinate work to their subcontractors. Subcontractors need to respond by saying it is the general contractor who is in the best position to schedule and coordinate the work of all of the trades. Subcontractors should be willing to "cooperate" in sequencing the work, but it is the general contractor who should retain overall coordination responsibility. Whether the subcontractor has the duty to coordinate or merely cooperate in scheduling can make a huge difference in whether the job is profitable.

Owner's changes to schedule

General contractors may not always have an obligation to inform their subcontractors of changes to the schedule made by the owner. Some courts have ruled that a prime contractor's failure to inform the subcontractor of the owner's extension of the completion date was a breach of the GC's implied duty to cooperate. However, since this implied duty may not be read into all contracts, it is prudent for the subcontractor to expressly require such notification.

Finally, sometimes there is a delay in commencement of work that is not known until after the contract is signed. The parties in such a situation should clarify as early as possible whether the delay in starting the job will extend completion by a like number of days or whether completion will be compressed into a shorter period. Obviously, potential additional costs must be measured in either situation.

         
 

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