Does a subcontractor need to prove its delay claim (including its lost productivity claim) with expert testimony or a CPM analysis? A federal decision out of the District Court of Maryland proposes that maybe a subcontractor does not need to go this route. See Baker DC, LLC v. Baggette Construction, Inc., 378 F.Supp.3d 399 (D.Md. 2019). If you are a subcontractor presenting a delay or lost productivity claim, you should work with counsel and ideally an expert to best present, package, and support the claim with expert analysis. However, this case, discussed below, creates an argument that the use of an expert or even CPM analysis may not be required as a matter of law to support a subcontractor’s delay-type of claim. This is good news for a subcontractor to hear, especially when the subcontractor was not the one that prepared the CPM schedule that included activities unrelated to the subcontractor’s work; and, using an expert and preparing a CPM analysis can be a costly endeavor.
In this case, a concrete subcontractor’s work on a federal project dragged on much longer than anticipated. The subcontractor sued the prime contractor claiming the contractor delayed and disrupted its work causing its work to be extended and inefficient and costing it more to perform. The prime contractor moved for summary judgment arguing that the subcontractor cannot demonstrate claims or damages for delay because the subcontractor will not be using an expert or presenting a critical path method (CPM) analysis. The trial court refused to grant summary judgment on this issue maintaining it is “unwilling to declare as a matter of law [the subcontractor] cannot prove its claim for delay damages without expert testimony or evidence of a CPM analysis.” Baker DC, supra, at 412.
In reaching this decision, the trial court analyzed the purpose and function of a CPM schedule which is to allow “contractors performing complex projects to identify a critical path of tasks that must each be completed before work on other tasks can proceed.” Baker DC, supra, at 411 (quotation and citation omitted).
As one federal court long ago explained, contractors conduct a critical path analysis on a complex construction project by analyzing each of the various separate, but interrelated, small projects within the larger whole, considering the work involved and the expected duration of each subproject. The analysis seeks “to determine the most efficient schedule for the entire project,” recognizing that some subprojects cannot proceed until another has finished its course – for example, “one could not carpet an area until the flooring is down[,] and the flooring cannot be completed until the underlying electrical and telephone conduits are installed.” Subprojects that must be performed on schedule, lest they delay the entire project, are said to be on the “critical path.”
The U.S. Court of Claims has explained:
The reason that the determination of the critical path is crucial to the calculation of delay damages is that only construction work on the critical path had an impact upon the time in which the project was completed. If work on the critical path was delayed, then the eventual completion date of the project was delayed. Delay involving work not on the critical path generally had no impact on the eventual completion date of the project.
Baker DC, supra, at 411-12 (internal citations omitted).
However, while CPM analysis through the use of expert analysis is clearly the preferred or established method, the court noted that this “is not the same as declaring that a plaintiff must provide such evidence, as a matter of law, to prove damages of this variety.” Id. at 412 (explaining that the prime contractor has not produced any cases where a court required a subcontractor to present CPM analysis evidence in its dispute against a general contractor). This is precisely what the subcontractor wanted to hear!
Another noteworthy issue raised in this case dealt with whether the subcontractor’s bid was part of the subcontract. The subcontractor wanted to argue it was part of its subcontract because the subcontractor included qualifications in its bid that would be used to support its delay and inefficiency claim. The prime contractor also moved for summary judgment arguing that the bid was not part of the subcontract because the subcontract contained an integration clause and, naturally, the subcontract contained provisions that would render moot the subcontractor’s qualifications in its bid. (The integration clause read: “This Agreement constitutes the entire agreement between the parties hereto. No oral representations or other agreements have been by [the prime contractor] except as stated in the Agreement.” There is a reason lawyers include such language in contracts! This is important language that should be used and should not be dismissed as unimportant.) The court agreed with the prime contractor on this issue stating “the parties reasonably understood the written agreement would supersede any prior negotiations or agreements.” Baker DC, supra, at 409.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.