Loss of Productivity Claim Allowed Without a Request for Additional Time
A recent Massachusetts Appeals Court decision affirmed a trial court’s award to a subcontractor for a loss of productivity claim despite the lack of a time extension request. See Central Ceilings, Inc. v. Suffolk Construction Company, Inc., 15 -P- 1117 (March 29, 2017). The contract between the Owner and the General Contractor (Suffolk Construction) provided for a significant bonus for on-time completion, but also significant liquidated damages if Suffolk did not complete the project as scheduled. Subcontractor, Central Ceilings, entered into a subcontract with Suffolk that was time sensitive and dependent on the flow, sequencing, and coordination of the project.
Central Ceilings incurred significant damages due to inefficiencies on the project resulting from Suffolk’s alleged poor coordination and refusal to consider time extension requests. Central Ceilings alleged damages associated with constant remobilizations, changes, stacking of the trades and additional manpower due to time restraints. Due to the financial incentives tied to the completion date, Suffolk Construction made it clear to Central Ceilings that no time extensions would be allowed. As a result, Central Ceilings never made a request for a time extension request and instead increased its manpower and costs in order to timely complete the project.
Suffolk argued that the subcontract’s “no-damages-for-delay clause” barred recovery. The Court rejected this defense because a “no-damages-for-delay” clause leaves the subcontractors with a time extension as the exclusive remedy for lost productivity. Because Suffolk advised Central Ceilings that no time extensions would be granted, the Court concluded that Suffolk breached the subcontract by leaving the Central Ceilings with no remedies for increased costs due to Suffolk’s alleged poor project management. Suffolk argued that there was no breach the contract because it never received and/or rejected a time extension request. However, because Suffolk’s project manager testified that no time extensions would be granted, the court did not penalize Central Ceilings for never submitting a formal time extension request; Suffolk’s conduct had foreclosed the possibility of an extension.