Editor's note:Not every project goes as it is outlined on the scheduling board. Jobsite complexities can create unforeseen problems. The following is a reprint of a legal review of a recent court ruling.
Murdock & Sons Construction Inc. was the masonry subcontractor for building a maximum-security state prison in Terre Haute, Ind. Goheen General Construction Inc. was the general contractor. Murdock bid $1,629,825 for the masonry work. The only other two bids exceeded $2.4 million.
The project was very dense with masonry because it involved building 288 7x12-foot cells. There were many small, short walls to be constructed of concrete blocks. Masons had to work in small spaces. The specifications required both horizontal and vertical rebar every 8 inches. Continuous grouting with concrete rather than mortar was required. The plans called for extensive placement of embeds, which required that blocks be cut frequently.
Murdock, although generally experienced, had no prior experience with prison projects. For this project, Murdock was required to use union labor and could not set minimum productivity levels. The contractor never dealt directly with the local union. Based on prior projects, Murdock believed that a mason could lay 200 blocks a day. Because of the complexity of this project, Murdock estimated that it would be able to achieve, with local union labor, productivity of 150 masonry blocks per day per mason. In fact, Murdock's workers were able to place only an average of 50 blocks per day per mason.
Murdock attempted to increase productivity several ways, including modifying the construction process, adding equipment, and firing slow workers. It increased crew size from the planned 35 to 83. But none of the steps provided more than a temporary increase in productivity and Murdock fell behind schedule.
The State of Indiana, as project owner, and the general contractor demanded that Murdock pick up the pace. Murdock made a contractual request for more time and more money. The general contractor forwarded the request to the state, which denied it nearly five months later, stating that any such request must come directly from the general contractor.
Shortly afterward, Murdock stopped work, left the job, and sued. Murdock argued that its contract entitled it to relief because the delay either was caused by a labor dispute or by a cause beyond Murdock's control. It asserted a claim for constructive acceleration. After a bench trial, the U.S. District Court ruled against Murdock and in favor of the contractor and the state. The U.S. Court of Appeals for the 7th Circuit affirmed. (Murdock & Sons Construction Inc. v. Goheen General Construction Inc., 461 F.3d 837 (2006)).
The appeals court wrote that a claim for constructive acceleration arises when the project owner requires the contractor to meet the original project schedule, even though the contractor is entitled to time extensions under the contract. To recover on such a claim, the contractor must prove that:
In the eyes of both the trial court and the appeals court, Murdock failed to prove that it had experienced an excusable delay. The appeals court noted that Murdock conceded it had introduced no evidence at trial explaining why productivity was low and instead admitted that “the reason for the slowdown was never determined.”
The appeals court also held that Murdock's claim of delay caused by a labor dispute with its masons was “based solely on speculation.” The claim rested on Murdock's testimony that he believed there was a labor dispute because he did not receive a fair day's work from the union masons in return for a fair day's pay. Rather, he claimed there was an organized work slowdown by the masons to force him to hire more masons for the job. But at other points, he and other company executives testified that they could only speculate on the cause of the low productivity. The appeals court also found that Murdock had failed to introduce evidence of activities that satisfied statutory definitions of a labor dispute.