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The general liability for delays in project delivery on the part of the contractor has substantial implications, both on the project and on the contractor. These may include the following:

1. Cost overruns:

When the contractor is unable to complete their work within schedule as a result of factors such as poor site management, poor risk management, poor change management or bodily injury on the site, the actual costs of the project may increase beyond the estimated budget hence resulting in cost overruns.

The general liability for such additional costs is often borne by the contractor. This, as a result, leads to loss of profit to the general contractor.

When delays by the contractor results in time overruns of the entire construction project, the cost of financing may also increase because of interests.

2. Disputes, Claims and Litigation:

Claims for the extension of time are often the direct consequences of delays and time overruns. The aim of such claims is often to assign the general liability of the delay and to estimate the compensable amount to the aggrieved party.

If disputes and claims are not solved amicably through arbitration, they may proceed to litigation, which results in increased legal costs, cost of damages and adversarial relationships between the contractor and the business owner. The long and tedious process of litigation may even result in the abandonment of the project by the general contractor.

This is where Contractors Liability Insurance is worth every penny. It is imperative that contractors protect themselves, their business and their team members from unexpected financial loss. Having a policy will help cover the cost of damages including potential legal defenses. For advice on Contractors Liability Insurance, give us a call (886) 225-1950 and get a free quote in just 5 minutes!

3. Low Quality and Poor Workmanship:

The contractor’s failure to complete their work on time is often remedied by accelerated operations, resource levelling, crashing and fast-tracking of schedules in a bid to complete the work within the shortest duration possible.

Such rushing may lead to compromises on procedures, materials and testing, and therefore lead to poor workmanship, and subsequently low quality of work and property damage.

4. Safety and Risks:

Time delays by the contractor are commonly caused by poor planning and organization, which in turn leave a lot of loopholes for risks and safety hazards throughout the project lifecycle.

Risk management procedures are often overlooked when making up for the time overruns, and this may result in not only time, cost and quality risks; but also, safety hazards such as bodily injury, property damage, or total collapse.

5. Bad Reputation:

A reputation of repetitive delays in project delivery hinders the contractor’s future selection and nomination for tenders. The professional reputation of the business owners to the investors and stakeholders may also be tainted as a result of their inability to achieve the return on investment within the stipulated payback period.

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