No Damage for Delay Many contracts contain a clause
limiting a contractor’s recovery for any and all delays to
a time extension only, no delay damage costs. While
some states have adopted statutes precluding no damage
for delay clauses in public works contract, others strictly
enforce such clauses provided they are clearly written
and the delay involved should have been within the con-
templation of the parties at the time of contract execution
(owner review of contractor submittals, for example).
• Order of Precedence –Contracts often recognize that the
potential for conflicting provisions in a contract is fairly
high. Accordingly, most contracts contain an order of
precedence clause, intended to provide guidance to both
the owner and the contractor in the event of conflicting
provisions. Typically, specifications have precedence
over drawings, details over general, special provisions
over general provisions, and so on and so forth. The
legal concept is to provide guidance to people on projects
in the event there are two or more conflicting provisions
relating to a topic.
• Owner Responsibilities—Similar to a contractor
responsibility clause, an owner responsibility clause
ordinarily sets forth the obligations of the project owner,
including adequate project financing, all required and
necessary permits, appropriate site access, etc.
• Payments—This is a key contract clause in terms of proj-
ect cash flow. This clause sets forth how often the con-
tractor is to be paid, in what manner, and what are the
conditions precedent to the issuance of payment.
• Quantity Variations—Many contracts contain estimated
quantities to be installed. In the event as-bid quantity
estimates vary substantially (+/- 10 percent or more)
many contracts (both unit price and lump sum) contain
a quantity variation clause which allows either the
owner or the contractor to request a redetermination of
the as-bid unit price on affected portions of the work.
• Schedules—A schedule clause typically sets forth the
requirements for contractor scheduling, including for-
mat (bar chart vs. CPM), level of detail, submittal
requirements, frequency of schedule updating, damages
for failure to submit, delay or time extension analysis
of the suspension order is something for which the con
tractor is responsible (i.e., unsafe work conditions, work
not in compliance with contract requirements, etc.) no
recovery of time or cost is allowed.
• Termination—Almost all contracts have a provision
allowing the owner to end, in whole or in part, perform-
ance of the work prior to project completion. There are,
typically, two types of termination: termination for con-
venience and termination for default. Termination for
convenience usually occurs when a project owner
decides, for their own reasons, not to complete the proj-
ect as designed. Such situations might arise if the
owner’s needs change, if project financing fails, or if the
underlying project economics change substantially. In
such a circumstance, the owner may elect to terminate
the contractor’s performance for the convenience of the
owner and pay off the contractor in accordance with the
terms of the clause. Termination for default arises only
when a contractor is found to be in material breach of the
contract, has been provided with a cure notice from the
owner outlining the material breach, and has failed to
remedy the breach in a timely manner. (For example, fail-
ing to man the project in such a manner as to assure time-
ly project completion.) Usually the owner will terminate
the contractor from the project and call upon the con-
tractor’s financial guarantees to complete the work (i.e.,
letter of credit or surety bond). Some contracts also pro-
vide a contractor the right to terminate their participa-
tion in a project. Under certain carefully proscribed cir-
cumstances (such as, failure to make payments, bank-
ruptcy of the owner, suspension of work for more than a
defined period of time, etc.) the contractor is allowed to
terminate their own involvement in the project.
• Time of the Essence/Time of Performance—If project
completion by a time or date certain is important to an
owner, then they must say so in the contract. As timely
project completion is normally important, most contracts
contain a clause stating that “Time is of the essence of this
contract.” Such a clause must be included to make enforce-
able a time of performance clause and collection of late
completion damages. Absent such a clause, the time of
project completion is considered unenforceable. The time
of performance clause, typically expressed either in work
or calendar days after issuance of the notice to proceed,
sets forth when the work must be completed and the con-