Construction Notice of Delay and COVID-19
Are you furnishing to a construction project? If so, should you send a Notice of Delay? The National Law Review posted an article entitled “Contractors: It’s Time to Send Your COVID-19 Notice” written by R. Thomas Dunn of Pierce Atwood LLC, suggesting that contractors send a formal COVID-19 Notice of Delay as soon as possible to notify their contracting party of any delays and/or additional costs on their construction projects.
In his article, Dunn explains the time to send the notice is now. The notice is an opportunity to maintain open lines of communication during this uncertain time.
“This is not an adversarial notice. Your contracting party will understand the impacts experienced and should appreciate the proactive approach in communicating the COVID-19 impacts. If discussions have occurred between your contracting party, I would still send a formal notice as to avoid further legal defenses down the line. Also, providing the formal notice creates a structure that is helpful in creating a productive communication pathway regarding the delays/costs incurred and ways to mitigate them.”
Review the Notice of Delay with Your Legal Team
We recommend that you and your legal team review your contracts to determine whether a Notice of Delay is required. If a Notice of Delay is required, confirm the terms of your agreement to ensure the correct parties are served and served by the appropriate method (fax, email, certified mail, registered mail, etc.).
In addition to the information required to be included per your contract, it is recommended, to include a description of the expected impact of the delays and/or additional costs, the impact on the supply chain or labor chain, if applicable, and when you expect to be back to normal. Updates to the notice should be provided as additional information is known.
Notice of Delay Samples
Dunn provides a template for the Notice of Delay in his article:
[VIA EMAIL / FED EX / CERTIFIED MAIL – Contract Requirement]
[Name/address listed in contract]
RE: Notice of Delay and Increased Cost Due to COVID-19 Pandemic on Project _____________
The COVID-19 Pandemic, which has been declared a national emergency by President Trump on March 13, 2020 [and _______________ (local authorities)] has caused unanticipated delays and increased costs to the above-referenced Project that were beyond the Contractor’s control. See Sections _____ of the Contract.
In particular, Contractor has experienced the following delays and impacts to project performance: _________________. [If applicable,] the project has been suspended since ____________(date).
Contractor requests a time extension of ____ days at this time in response to the COVID-19 delays and impacts. Contractor invites the Owner to participate in a conference call to discuss this request for a time extension and to outline a plan to reduce the impact on the Contract Time and Contract Price.
In addition, Contractor is experiencing increased costs resulting from the COVID-19 pandemic including ______________ (explain). Contractor is collecting its costs and will provide updated information to the Owner in the near future. In the meantime, we are available to discuss different options to reduce the amount of costs incurred in connection with the Project.
Contractor reserves all rights and remedies it has pursuant to the Contract and is confident it will be able to get through these events with Owner and all project participants. Please contact me to discuss these issues and, again, we will provide periodic updates as soon as possible.
The Associated General Contractors of America have also provided a sample copy of the Notice of Delay COVID-19 letter.
NOTICE OF POTENTIAL DELAY AND RESERVATION OF RIGHTS
(Check Contract for person(s) to send letter and manner required to send i.e. fax, email, certified or registered mail)
Re: COVID-19 Pandemic
To Whom It May Concern:
We are all aware of the ongoing outbreak of the Coronavirus 2019 (COVID-19), which was recently declared a pandemic by the World Health Organization and the President and Governor have declared a national and state emergency, respectively. Although the situation continues to evolve rapidly, (Insert Company Name) remains fully committed to pursuing the completion of our work in a safe, diligent and reasonable manner under the current circumstances. We must recognize, however, there is a strong likelihood that we will encounter certain delays as a result of this pandemic.
We anticipate our work will be delayed and our productivity will be negatively impacted by the cumulative effect of this outbreak. Potential impacts may include, but are not limited to, labor shortages due to infection or quarantine as well as material shortages and significant delays in lead times as a result of factory closings across the globe. In addition, we are monitoring whether there will be a mandatory shut down. At this time, it is not be possible to quantify the delay or compute the impact costs.
While this notice may seem premature, our contract requires that we furnish you written notice of any delays in a timely fashion. Accordingly, pursuant to the terms of our contract, please consider this correspondence to be our formal notice of potential delays to our performance through no fault of our own and that are beyond our control, including, but not limited to, changed conditions, constructive suspension of work, constructive change, force majeure/act of God, etc. (Insert Company Name) hereby reserves all rights it may have under our contract and applicable law to protect its legal and commercial interests, including without limitation the right to seek an extension of time and an increase in our contract price. Please keep records as you deem appropriate to confirm any extensions or increased or unabsorbed costs if we do, in fact, submit same. I can assure you that we are evaluating all options to minimize and mitigate the impact to your Project. As more information becomes available, we would like to discuss our options for successfully completing this Project.
We will continue to keep your project representatives informed of these delays and their effect on overall job completion. We will diligently seek to minimize to the best of our ability, the effects of these delays on our work. Your cooperation in minimizing these impacts are appreciated as work our way through this unprecedented event.
NCS Stands Ready to Protect Your Rights During this Difficult Time
NCS has included the basic template from the Associated General Contractors of America within our Online Services Account Management portal for our clients.
Adjustments will need to be made based on the requirements of your contract and/or the information that is available to you. When finalized, the document should be signed by a person who is authorized to bind your company.
Call 800-826-5256 or email SecureYourTomorrow@ncscredit.com with any questions.