For project architects and other design professionals who have contract administration responsibilities, claims for an increase in the project schedule or costs have started and will continue. You need to be prepared to handle these force majeure claims now.
A force majeure clause excuses a party from performing its services when performance would be impractical or impossible because of uncontrollable circumstances. “Force majeure” means “superior force” and denotes the type of events excusing performance, including wars, strikes, natural disasters, and, most likely, international pandemics. The applicable force majeure language in the typical AIA contract is located in the AIA A201-2017: General Conditions of the Contract for Construction:
§ 8.3 Delays and Extensions of Time
§ 8.3.1 If the Contractor is delayed at any time in the commencement or progress of the Work by
(1) an act or neglect of the Owner or Architect, of an employee of either, or of a Separate Contractor;
(2) by changes ordered in the Work;
(3) by labor disputes, fire, unusual delay in delivery, unavoidable casualties, adverse weather conditions documented in accordance with Section 126.96.36.199, or other causes beyond the Contractor’s control;
(4) by delay authorized by the Owner pending mediation and binding dispute resolution; or
(5) or by other causes that the Contractor asserts, and the Architect determines, justify delay, then the Contract Time shall be extended for such reasonable time as the Architect may determine.
§ 8.3.2 Claims relating to time shall be made in accordance with applicable provisions of Article 15.
§ 8.3.3 This Section 8.3 does not preclude recovery of damages for delay by either party under other provisions of the Contract Documents.
Certainly, it seems that the COVD-19 pandemic is a cause “beyond the Contractor’s control”. Accordingly, pursuant to § 8.3.1(5) of the standard AIA form, the Architect is tasked with implementing a “reasonable” time extension. Even if the project can proceed under a shelter-in-place order, continued work and application of the force majeure clause will prove to be a challenging balance between the Owner’s desire for the project to be completed in a timely manner and the potential cost of modifying construction and/or substituting workers to get the work done.
We recommend that the Architect communicate often with the Owner and Contractor to address force majeure claims. The communications must include discussion regarding:
- How critical is the completion date to the Owner?
- How much potential additional expense can the Owner tolerate to achieve the desired completion date? This needs to be discussed early as the delays will likely continue to compound for months.
- Can the Contractor rearrange tasks on the project schedule to adhere to social distancing guidelines or work around shortages of employees or trade subcontractor employees? Design professionals must become very familiar with the project schedule and understand critical path activities.
- What if employees of a trade subcontractor cannot come to the site because of requirements to quarantine?
- Can the Owner force the contractor to locate substitute subcontractors to fill in where necessary under the existing contract?
- Can the Owner (and is the Owner willing to) order the Contractor to work overtime and extend work days?
Ongoing candid conversations and assessment of claims is going to be a necessary and difficult task for design professionals in the coming months.
If you need legal advice concerning a design or construction issue, please contact the attorneys of Gibbes Burton, LLC at (864) 327-5000. We want to help make your projects a success.