A construction project is a long-term process, and the longer it takes, the more situations that can arise that extend the construction. Therefore, AB 92 has adopted a set of rules for when the contractor can have the deadline for handing over the construction project extended if the construction is delayed compared to the agreed schedule. Many of these rules are so general that they can also be used even if AB 92 has not been agreed.
The starting point is that the contractor is responsible for the construction costs and for adhering to the schedule. This is because the contract is built around an obligation for the contractor to achieve a certain result, in return for payment. It is also the contractor who receives the profit if the construction is completed cheaper or faster than planned. However, there are a number of exceptions that impose the risk of construction being delayed on the client.
Both the contractor and the client may – depending on the specific situation – have the right to postpone the deadline for when they must have the work completed and when they must pay for the work.
The situations where questions may arise about whether the contractor or client has the right to extend the deadline for handing over the construction can be divided into 5 general categories.
These general categories contain a myriad of special cases that would be too extensive to review here, but as a starting point, it is important to consider whether it is the client or the contractor who is most likely to bear the risk of the delay. Could the delay have been avoided if either the client or the contractor had done something differently? Was it the client or the contractor who should have arranged to obtain the delayed permits? Was it the client or the contractor who had hired the other contractor who caused the delay?
If the work is delayed and the contractor is not entitled to an extension of the deadlines, the contractor may be required to pay the client a daily penalty of a specified amount, if a daily penalty has been agreed, or the contractor may risk having to pay compensation to the client, corresponding to the client's loss due to the delay.
Conversely, the contractor may be entitled to compensation for the time he cannot work on the construction project as planned if the delay is caused by the client.
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