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Telling the Owner's Story: The Art of Winning a Delay Claim

A claim we constantly encounter while advising owners of large construction projects is the delay claim. As owners know too well, resolving a delay claim requires a forensic analysis to determine the causes and impacts of delay, and an assessment of the relevant contract provisions and applicable law. However, if an owner and contractor are unable to negotiate a resolution of a claim and a formal legal proceeding is necessary, it is possible that the factfinder—whether judge, jury or arbitrator—will not have experience resolving construction disputes or be familiar with industry practices, concepts and terms that are central to resolving such a claim (for example, CPM, concurrent delays, float, etc.).

Therefore, it is essential that an owner in a legal proceeding strategically develop a well-reasoned theory of the case and present to the factfinder a clear, understandable and compelling narrative of the project. While the construction lawyer is the director—he or she designs, supervises and shapes the narrative so that it is tailored to the audience—the owner’s scheduling expert is the storyteller.

The scheduling expert, who is typically an engineering consultant, will analyze as-planned and as-built schedules and other project records to determine causes of delay and the impact(s) for which the project participants are responsible. Next, a written report will be prepared that explains his or her analysis and conclusions, and if necessary, an oral testimony will be provided. The scheduling expert has a critical role in a delay claim proceeding. He or she will develop the project narrative based on scheduling events from the project schedule and present to the factfinder a convincing story that supports the owner’s theory of the case.

Following are our top five tried and true strategies for telling a winning story during a litigation or arbitration proceeding involving a delay claim:

1. Retain a Skilled and Highly Experienced Expert

In addition to having experienced and skilled counsel, the owner should retain a scheduling expert who has substantial experience analyzing delay claims and testifying in court, and has the resources available to execute the level of analysis needed for the case. Owners should retain an expert who not only understands the issues and has the skill to analyze the claim, but also someone who is articulate, poised, will appear competent and authoritative before the factfinder, and will have the skill to defend his analysis during cross-examination.

2. Develop the Key Facts

Although experts are typically called to testify to provide an opinion or conclusion, winning a case requires concrete evidence. The scheduling expert should identify the key facts that underlie the claim and develop a thorough understanding of the project events, which ultimately will support the expert’s opinion or conclusion. The expert should then prepare an as-built schedule that highlights the key facts and issues supporting the owner’s theory of the case. By converting the facts into a detailed schedule, the expert becomes the owner’s project historian as he or she is able to draw conclusions that flow directly from the schedule of events.

The expert should also create a document trail based on the schedule; each key event should be supported by contemporaneous project records, such as correspondence, meeting minutes, emails, contract documents, RFIs, field notes and diaries, project photographs, progress reports, and witness statements. Demonstrating the expert’s detailed understanding of the facts and evidence is critical to establishing the expert’s credibility and may determine whether and to what extent the factfinder will be persuaded by his or her testimony.

Developing a project narrative is not without challenges. It is not uncommon for an owner to trust that the contractor is getting the job done without carefully reviewing each project schedule and ensuring they are timely, shared and upto-date. Every owner also runs the risk that schedules, daily reports, meeting minutes and other documents will have been manipulated and/or will fail to accurately reflect what is happening on the ground. In the event there are inconsistencies, the owner’s expert and counsel should work with the owner to confirm and substantiate the actual events.

3. Select the Right Analytical Method for Proving the Claim

The scheduling expert should carefully and strategically select an analytical method to prove cause, effect and liability for the delay claim. Construction lawyers and consultants debate what is the best method for analyzing a delay claim—whether the narrative technique, measured mile, as-planned vs. as-built, TIA/schedule update methodology, etc.— but in any legal proceeding the expert should select the right analytical method for the case based on the applicable contract provisions, the facts and status of the job, the quality of the project records, the audience and counsel’s input. The key is that the selected technique is credible, accepted in the industry, legally valid in the jurisdiction, and persuasive in light of the facts. The expert should undoubtedly utilize CPM-based analysis for whichever method is chosen.

The choice of the analytical method is critically important as the selection of an inappropriate methodology could result in disqualification of the expert and have devastating consequences for the owner’s case. For a case in a federal court, after the U.S. Supreme Court’s rulings in Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993) and Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999), a federal judge has broad latitude to find a scheduling expert’s testimony inadmissible if the testimony lacks a reliable basis in the knowledge and experience of the construction claims discipline.

4. Know the Audience

The manner in which the story is shared with the factfinder depends to a large extent on the target audience. If the decision maker is an arbitrator with 30 years’ experience arbitrating construction disputes, the owner’s narrative should be told differently than if the factfinder is a judge or jury, who may not have the slightest understanding of the meaning of “float” or the various industry practices that may be addressed.

Many jurors are not particularly enthusiastic about sitting through a litigation involving a construction claim that is highly fact intensive and indeed may involve some math. Thus, it will be up to counsel and the expert to make the information as understandable and interesting as possible, which should be aided by demonstrative exhibits, such as graphs, diagrams and photographs.

5. Turn the Owner’s Story Into a Winning Argument

When presenting the owner’s story, a testifying expert should persuade the factfinder—based on the project events, the contract and the expert’s analytical approach—whether any delay affecting the critical path is (i) compensable, which will entitle the contractor to both time and money; (ii) excusable, which will entitle the contractor to only time, and not money; or (iii) inexcusable, which will entitle the contractor to neither time nor money, and for which the contractor is liable. An effective expert will present a credible story based on the facts that allocates responsibility for the subject delays.

Conclusion

An owner litigating or arbitrating a delay claim is more likely to achieve a favorable outcome if the owner’s expert has a command of the facts and evidence; articulates a compelling, understandable and relatable story that is based on the project record and is tailored to the target audience; and if the expert is sufficiently prepared for cross examination.

Judah Lifschitz, Esq. is Principal and Co-President of Shapiro, Lifschitz & Schram, P.C. in Washington, D.C. He is an experienced trial attorney and has tried cases to verdict in virtually every type of adjudicative forum. Mr. Lifschitz has extensive experience in construction related matters, including significant experience in power and energy construction representing clients with regard to EPC contracts as well as disputes. Contact him at (202) 689-1900 or lifschitz@slslaw.com.

Daniel A. Kapner, Esq. is a member of Shapiro, Lifschitz & Schram’s construction law, litigation and trial, and power and energy groups. Mr. Kapner has significant experience advising owners, contractors and other clients to help achieve solutions to complex disputes. Contact him at (202) 689-1900 x3015 or kapner@slslaw.com.

This article originally appeared in The Voice Fall 2015 Edition

The PDF version of this article can be found here.

Did You Know . . .

Members of the SLS trial group have tried in excess of 50 jury trials and 75 bench trials?

The SLS construction group has worked on sports stadiums across the country including Orioles Park in Baltimore and Paul Brown Stadium in Cincinnati?

The SLS construction group has worked on power plant projects across the country?

In 2007 SLS was selected for an Honorable Mention as one of the Best Places To Work in Washington DC?

Ron Shapiro, Steve Schram and Judd Lifschitz have all been selected as SuperLawyers by Law and Politics?

The SLS office building is an historic townhouse constructed in the late 1800s?

SLS has been selected by Martindale-Hubbell as a Preeminent Law Firm?

SLS trial lawyers have argued appeals in the U.S. Circuit Courts of Appeal for the 4th, 5th, 9th, D.C. and Federal Circuit?

SLS trial lawyers have been lead trial counsel in cases in Arizona, California, District of Columbia, Florida, Louisiana, Maryland, New Jersey, New York, North Carolina, Oregon, Texas, and Virginia, - to name just a few?

Virtually all the cases that SLS trial lawyers mediated have been favorably settled at mediation?

The transactional group at SLS was lead counsel on one of the largest, most complex mixed-use projects in downtown Washington, DC involving 4 lenders and 6 property owners?

In appreciation for the outstanding efforts of each of its employees during 2007, SLS gave everyone (attorneys, paralegals, and staff) a 4 day/3 night expense paid trip to Key West, Florida?

The transactional group at SLS has represented tenants in more than 200 retail leases in the Mid-Atlantic region?

Every attorney in the transactional group at SLS has at least 15 years experience?

The transactional group at SLS has represented developers in the purchase, construction, financing and/or sale of more than 75 multi-family apartment projects?

The transactional group at SLS has represented real estate investors and developers with respect to property in Pennsylvania, West Virginia, Delaware, Maryland, the District of Columbia, Virginia, North Carolina, South Carolina, Georgia, Florida, Texas, Tennessee, Michigan and the U.S. Virginia Islands?

Attorneys in the transactional group at SLS have represented eight national banks in commercial real estate loans?

Attorneys in the transactional group at SLS have represented the FDIC, the Resolution Trust Corporation and several banking institutions in loan workout transactions throughout the Mid-Atlantic region?

The transactional group at SLS has represented homebuilders and commercial real estate developers in work-outs of individual loans and also for work-outs of large portfolios involving dozens of properties in several states?

The trial lawyers of SLS have numerous reported decisions to their credit?