Shipyards that are building or repairing ships operate in a very complicated marketplace where costs are carefully monitored. Often claims are submitted requesting additional costs above the stated contract amount because problems beyond the shipyard’s control resulted in disruption of their as-planned flow of work. All too often, the alleged problems follow a pattern that becomes apparent when analyzing such claims. Common allegations of disruption include excessive owner changes, delays in approving changes, late responses to inquiries and problems, defective design, late or defective information or equipment supplied by the owner, and over-inspection. Such allegations form the basis for requests for equitable adjustments, claims, and lawsuits. However, many claims overlook problems that may be the responsibility of the shipyard such as underbidding the costs, rework due to poor performance, management and planning inadequacies, detail design errors, procurement problems and labor difficulties.

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“No damage for delay” clauses continue to divide the country and the courts on their application and interpretation. Although owners and prime contractors insist on enforceability, the net result typically shifts the risk onto the party least likely to negotiate fair limits, to control events on the jobsite and absorb the ultimate cost. Nevertheless, these clauses are found in most construction contracts in some form or another.

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