Shortly after the downturn of the financial markets in 2008, the value of construction starts in New York City tumbled, jobs in the construction industry fell, and contractors competed heavily for new projects. But in the last few years, a dramatic upswing has changed the landscape. In 2014, construction starts in New York City increased by over 30 percent from the previous year, fueled mostly by the boom in high-end residential construction, and the New York Building Congress now forecasts increased spending on construction in 2015 and 2016. With the demand for reputable construction firms high, contractors are faced with an increase in opportunities and, as a result, construction firms are less tolerant of developer-caused delays that keep them from starting on the next lucrative project. These recent changes in the market increase the risk to developers that contractors will assert claims for compensation due to such delays.
Compensation For Delay
There are an infinite number of factors that can cause delay on a construction project for which a contractor may seek compensation. If a developer fails to make the work site available on the anticipated commencement date, embarks on a redesign of the project, engages a separate contractor that interferes with the contractor’s work, fails to properly coordinate contractors, or issues extensive change orders, the associated delays in the construction project schedule result in lost profit for the contractor. If the offending delay is deemed “excusable” (i.e., not caused by the contractor), it will entitle the contractor to extra time for completion. If the delay is deemed both excusable and compensable (i.e., the owner is responsible), the contractor will be entitled to extra time and an increase in the contract price.
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