“Natural Consequences” of Delay

By statute in Ohio, if an owner causes a delay, the owner cannot invoke a “no damages for delay” contract clause to prevent a contractor from recovering damages arising out of that delay. O.R.C. §4113.62. The statute does not, however, expressly address whether a contractor can recover damages due to acceleration or loss of productivity costs when the project completion date has not been changed but owner-caused impacts occurred during performance. The question remained whether a “no damage for acceleration” or “no damage for loss of productivity” clause would be enforceable in light of §4113.62.

Pursuant to a Court of Appeals decision on April 3, 2008, “The statute does not simply preclude recovery of ‘delay damages’, rather, it precludes waiver of liability for delay.” Cleveland Construction, Inc. v. Ohio Public Employees Retirement System, 2008 Ohio 1630. “The statute clearly invalidates any contractual provision that not only waive liability for delay, but also limits or waives any remedy for delay.” Id. Thus, if an owner’s actions impact a contractor’s work and the contractor is forced to accelerate or otherwise work inefficiently to meet the substantial completion date, the contractor is entitled to recover the costs incurred due to this impact.

Part of the “natural consequences” of delay may include recovery for various types of damages, including inefficiency costs, acceleration costs, loss of productivity costs, and unabsorbed home office overheard costs. Contact one of the members of Frost Brown Todd LLC’s construction law group for more information about this topic.

Posted by: John S. Higgins