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American Subcontractors Association News

Beware of Project Schedules

Beware of Project Schedule Provisions 


Are general contractors requiring your subcontracting firm to “be flexible and adjust your schedule as necessary” without appropriate time extensions or compensation? Earlier-than-planned subcontractor start and completion dates, for example, can result in an unrealistically short installation period if sufficient labor and material cannot be made available that soon, while later start and completion dates than expected can result in higher wage and material costs. Furthermore, when subcontract work is accelerated to meet the unchanged completion date, extra costs usually occur due to overtime, out-of-sequence work, and other inefficiencies. ASA’s newest “Subcontractor’s Negotiating Tip Sheet” on the “Project Schedule” suggests that subcontractors could respond to such an argument by a GC by saying, “I understand that you may have to make subcontract schedule changes, but I can’t agree in advance to adapt and adjust my work to suit your needs without the right to more money and an extension of time for me to finish my work.” General contractor proprietary contracts sometimes include a project schedule provision, such as: “The Subcontractor shall commence its work when directed by the Contract, and the Subcontractor shall achieve final completion not later than [date certain], it being agreed that time is of the essence in this subcontract. The Subcontractor recognizes the Contractor’s exclusive right to modify the schedule or sequence of work from time to time without extension of time or additional compensation.” ASA recommends, instead, that subcontractors replace such a provision with:

“Subcontractor shall be entitled to equitable adjustment of the contract price, including but not limited to any increased costs of labor, supervision, equipment or materials, and reasonable overhead and profit, for any modification of the project schedule differing from the bid schedule, and for any other delays, acceleration, out-of-sequence work and schedule changes beyond the Subcontractor’s reasonable control, including but not limited to those caused by labor unrest, fires, floods, acts of nature or government, wars, embargos, vendor priorities and allocations, transportation delays, suspension of work for non-payment or as ordered by Customer, or other delays caused by Customer or others.”

The general contractor might insist on using its provision: “We don’t pay for acceleration. You just have to be flexible.” A subcontractor could respond, “If my work doesn’t start on time because of project delays, I’ll need to be paid for my acceleration costs or be allowed more time to finish.” If the GC argues, “There’s never an excuse for not getting the job done on time,” the subcontractor could counter: “We agree to make a good-faith effort to help you meet your completion date, but we can’t give up any delay claim rights if we incur more cost for reasons outside of our control.” The ASA tip sheets are released weekly and are designed to provide the subcontractor with the information it needs to negotiate a particular subcontract clause, including ASA-recommended language, samples of what a subcontractor may see in a client’s proprietary subcontract, an explanation of the impact of poor language on a subcontractor, negotiating tips, and sources for more information. The ASA tip sheets are available in the members-only section of the ASA Web site.