The $5,500 per day Lesson to Learn from I-35 Construction Delay
Posted on 07/18/2018 at 10:54 AM by William Reasoner
Last week, KCCI in Des Moines reported that the new off-ramp being constructed on Interstate 35 near Ames must be torn down and rebuilt due to a mistake of “several inches.” As reported, the mistake was human error in the consideration of elevation issues. Aside from the frustration to those people who are anxiously awaiting the $23 million project to be completed for use in their daily commute, those “several inches” of error are likely to cause headaches to the contractor in charge of the project. And those headaches cost $5,500 for each day of delay.
Apparently, the contract between the Minnesota based contractor and the State of Iowa includes a provision which requires the contractor to forfeit $5,500 for each day of delay. To be clear, I have no idea how long it will take for the contractor to finish this project, or how long of a delay the “several inches” of error will cause. But for illustrative purposes, it will only take just over three months of delay to cost the contractor half of a million dollars.
Anyone who will ever be involved in a construction project, whether it be a general contractor, a subcontractor, or the property owner, should take away a valuable lesson from the I-35 delay. And that lesson is simple: make sure you are aware of each and every provision in the contract. Is there an anticipated date of completion included in the agreement? If so, is the risk of delay put on the contractor or the owner? Is there a simple liquidated damages provision, or is it a complicated formula? Does the general contractor have to pay the owner for a delay even if the delay is caused by a subcontractor?
Whether your construction project is big or small and regardless of your role in the project, knowing the terms of the agreement, and taking the opportunity to negotiate terms such as liquidated damages for delay is always worth your time. Take a lesson from the I-35 project and make sure you are as protected as possible from the inevitable delays in almost every project.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
- William Reasoner
Categories: William Reasoner, Real Estate & Land Use
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