Is Coronavirus an Excusable or Compensable Delay
This is a question we often hear from contractors, and the answer is a little complicated. First, it is important to make the distinction between the virus and other diseases as well as the varied responses to these problems.
The disease, COVID-19 is caused by the coronavirus. If several employees miss work because they have contracted the disease, there is probably no basis for a claim for delay. This situation has occurred in the past, where a contractor was unable to timely deliver products because a flu epidemic caused 30-40% of its workers to be out sick for several weeks. Based on what we know so far, it’s unlikely that any one company will lose that many employees at once to COVID-19 and so employee illnesses do not look like they will give rise to an excusable delay.
Additionally, COVID-19 is considered an ordinary disease rather than an occupational disease like silicosis or asbestosis, and so it is also unlikely that workers compensation claims will cover the employees.
Responses to the disease
An excusable delay claim almost certainly exists if the project owner responds to the disease by shutting down the project and denying access to the work. Most contracts have a suspension clause that provides for an equitable adjustment in the contract sum and the contract time if an owner decides to suspend operations on a project.
As always, contractors should carefully check their contracts, and subcontractors should check their subcontracts as well as the prime contract. Be very careful to comply with all of the notice deadlines and requirements in the contract. Keep accurate records and logs and keep a close eye on the costs caused by the suspension. In some cases, the costs incurred in the suspension may be compensable.
Government mandated shutdown
An excusable delay claim should also exist if local, state or federal government mandates closure of project sites. If the government directs project owners to close down their projects, then contractors will have recourse to the suspension clauses discussed above. If the government issues the directive to contractors or simply states that construction must cease, then contractors should look at the force majeure and delay clauses in their contracts. Such unavoidable and unforeseeable delays are excusable and, depending on the contract, compensable. AIA, ConsensusDocs and federal contracts allow for compensation, EJCDC contracts do not. Because most contracts